Hard News by Russell Brown

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Hard News: Housing, hope and ideology

166 Responses

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  • artemisia, in reply to Sacha,

    Even if only half the places advertised are actually vacant (unlikely, but just say), good tenants will eventually find a place of their own to live since thousands of properties are available across Auckland and of course thousands more elsewhere in NZ. And there is significant taxpayer top up for rent.

    Some overcrowded family situations will be just temporary while they apply for their own rentals. In which case, that is not a permanent problem for them.

    Longer term overcrowding probably has causes other than supply. Let's face it, some would be tenants will find it hard to rent regardless of supply.

    New Zealand • Since Nov 2014 • 8 posts Report Reply

  • Sacha, in reply to artemisia,

    Why do you want to believe this isn't a real problem?

    Ak • Since May 2008 • 19740 posts Report Reply

  • artemisia, in reply to Sacha,

    Which 'real problem' are you referring to?

    New Zealand • Since Nov 2014 • 8 posts Report Reply

  • Sacha, in reply to artemisia,

    Housing shortage. When someone argues despite evidence, they usually have some reason.

    Ak • Since May 2008 • 19740 posts Report Reply

  • artemisia,

    Actually I was commenting on the proposition that overcrowding was caused by shortage of supply, and pointing out that there are thousands of properties available to rent in Auckland and NZ overall. So that maybe there are other factors to be considered.

    If that's the case, then increasing supply may well be a good thing - probably hard to argue it is not at least in Auckland and Christchurch - but may not solve the overcrowding problem.

    New Zealand • Since Nov 2014 • 8 posts Report Reply

  • BenWilson, in reply to Sacha,

    Official figures show without any doubt there is more demand than supply.

    OK, but demand is a function of how much money you have for something you want, not just of how many people want or need those things. So saying "supply does not meet demand" absolutely does not mean that there are not enough of the things to go around. It means people haven't got enough money to pay for the things that there are to go around. Which means a great deal of the supply is completely idle.

    Which is what I'm saying is the case for our housing stock. It isn't the case that there aren't enough houses for people to live in, it's that they're not allowed to live in the ones we have because they can't afford to pay the price.

    Yes, typically, if you increase supply, then demand can reduce in conditions that have many caveats. And the caveats around it in the case of housing are sufficient to cast a lot of doubt on whether anything short of an enormous building drive would actually bring prices down so that those at the bottom of the heap would be positively affected as a whole.

    Just as an example of what I mean about idle housing, consider how many idle holiday homes there are in this country. 95% of the time they're completely empty. There are tens of thousands of these perfectly acceptable dwellings all around the country. But the owners are well off enough that they don't want to rent them out at anything less than a fortune. It's pretty much not on the table. But that doesn't somehow magically mean they're not houses or not idle.

    Then there's the even greater number of idle rooms in existing houses. I have an office in my house. I don't absolutely require an office, and a person could live in it. But I keep it for me, for my office, because it's mine and I'm allowed to, and I want an office. I could easily house a student in it. But I don't want to. Gut feeling is that the number of such places is in the low 6 figures range (but I don't have any data, just guessing off the number of idle rooms I see in people's houses).

    Let’s face it, some would be tenants will find it hard to rent regardless of supply.

    Well certainly if increasing supply does not drive prices down, and their income is not increased, then that is the case. It is not at all clear that anything short of an enormous house building project would drive down prices, because there are so many other factors at work. Houses are mostly made privately, for a start, so a government drive to build houses could just eat into the numbers being built privately. Also, considering that there are almost no restrictions on foreign ownership, the demand has to be taken not just as NZ residents, but the entire population of the world who could buy a house in NZ. The number of people who have enough money to buy a house in NZ if it seemed like a good price is many, many times our population. We can't do a damned thing to make a dent in those actual numbers. Only legislation to control foreign purchases could impact on that side of the demand equation.

    And by an enormous housing drive I mean building tens of thousands of houses. Which would cost billions, possibly tens of billions. Building one thousand houses in NZ would add 0.1% to our housing stock. You wouldn't be able to distinguish the effect on prices from random noise, and it would be drowned out by 10 days worth of inflation.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • BenWilson,

    None of my previous comment should be taken as evidence that I think the government should not build a lot more houses, though, or that we don't have a severe problem. But it's a really complicated problem and simple solutions just aren't good enough. I think we should build a lot more housing and a lot higher density too, even though I don't think that will bring prices down or help poor people. I actually think Key's idea that giving poor people more money is correct. But I'd be giving them way, way more than him. And I'd be investing in housing anyway not instead.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Sacha, in reply to artemisia,

    pointing out that there are thousands of properties available to rent in Auckland and NZ overall

    which contradicts official statistics. got any alternative link to evidence?

    Ak • Since May 2008 • 19740 posts Report Reply

  • Sacha, in reply to BenWilson,

    It isn't the case that there aren't enough houses for people to live in

    evidence, or stop making shit up.

    Ak • Since May 2008 • 19740 posts Report Reply

  • artemisia, in reply to Sacha,

    Have you looked on TradeMe. I did. Today.

    http://www.trademe.co.nz/property/residential-property-to-rent

    And of course by no means all rentals are advertised on TradeMe.

    New Zealand • Since Nov 2014 • 8 posts Report Reply

  • Sacha,

    No more interest in discussing like this than I am in climate change deniers or flat earthers. Enjoy your day.

    Ak • Since May 2008 • 19740 posts Report Reply

  • artemisia, in reply to Sacha,

    Don't be like that! It just looks like you run away in the face of some actual real world info. I'm sure you are not like that really. (Serious, not being sarcastic.)

    New Zealand • Since Nov 2014 • 8 posts Report Reply

  • BenWilson, in reply to Sacha,

    evidence, or stop making shit up.

    You might have to be a bit more specific about what evidence you're after. Which would mean engaging in the discussion more than that.

    Serious, not being sarcastic.

    I think you're being serious too. I haven't heard you say that you think house supply shouldn't be increased, you're just saying that the lack of supply isn't the sole cause of people being inadequately housed. There's much more to it than that.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • BenWilson,

    OK, so a little bit of data to bolster my point. From the 2013 Census, there are 141,366 unoccupied dwellings. That's not unoccupied because the residents were away at the time, or unoccupied because under construction, both of which are separate categories. They are unoccupied because nobody lives there most of the time. This covers holiday homes.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Steve Barnes, in reply to BenWilson,

    They are unoccupied because nobody lives there most of the time. This covers holiday homes

    Right. So here is the anwer then, more holidays. :-)

    Peria • Since Dec 2006 • 5521 posts Report Reply

  • BenWilson, in reply to Steve Barnes,

    Exactly wrong!! NO holidays. Then we get almost 10% more houses free :-)

    Of course, for reasons already given, it wouldn't work like that. There would still be people without a home. Just because you can't go to your holiday home, as if you're going to sell it to some poor person for peanuts. You'll sell it to some property investor who will rent it to tourists, and tourism will have a giant bonanza, and poor people will still not be housed (although there might be a lot more jobs cleaning up houses). Because, like I said originally, it's a whole economy problem.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Andre,

    Foreign ownership drives prices up since foreigners aren't constrained by local conditions such as wage, inflation or interest levels and show no local favouritism towards and have no social or cultural unwritten contract with tenants. Landlords often care about their tenants and care what the community think about them. The foreigners literally couldn't give a flying f¥<{ about us - it is just money. There are no records about real foreign ownership levels because the liberal governments we've had for the last 30 years have declined to collect the data but I suspect it's over 50% of all Auckland rental property now. These foreign investors are who this new housing policy mainly benefits, and the TPPA will set their rights to do do in stone. This is the elephant in the room.

    New Zealand • Since May 2009 • 368 posts Report Reply

  • Steve Barnes, in reply to Andre,

    There are no records about real foreign ownership levels because the liberal governments we've had for the last 30 years have declined to collect the data but I suspect it's over 50% of all Auckland rental property now.

    That old dogwhistle. Last figures I saw was about 10% foreign ownwership and the majority of that was Austrtalian, about 20% of that 10%, next was British then South Africans.
    Considering the majority of NZers came from British stock all those numbers are bollocks. Perhaps the question should be "why are so few houses owned by Maori?"
    Anyway, as I said in another post on another thread, the concept of owning your own home is out of kilter with most other countries and that is a large part of the problem.

    Peria • Since Dec 2006 • 5521 posts Report Reply

  • BenWilson,

    A couple of numbers just to put the property giant into perspective. There are 1,756,143 dwellings in NZ. (source, Census 2013). The average value $484,307 (source, QV). That means the total value of all of them is $850,512,347,901 (source, pocket calculator). Yes, that's 85% of a trillion dollars.

    For perspective, the government's entire annual revenue in 2013 is $67.3 billion (source, Treasury). ALL the money the government pulls in every year is less than 1/12 of the total value of our housing stock. Does anyone still believe the government has the power to substantially change prices just by building houses?

    They can obviously alleviate poverty by building houses and giving them at much reduced rates to the most needy people. I think they should do this. But it's not going to change affordability for anyone else. And the cost of doing it really is huge.

    It's a cost I think we should wear, but that's because I'm an "extreme" socialist, the kind of person voting for a party that got wiped out at the polls completely. No major party is proposing anything nearly on the scale of housing for 40,000 people in extreme need. Which is why I think that this problem will not be solved. It should be solved, but I'm not optimistic about there being any kind of courage to do anything more than make token gestures from our politicians. Key is suggesting a thousand houses would be too much for us to bear. In that context, his idea of giving more money to them instead is actually good. Except he actually won't give them enough.

    If they actually want to influence prices, the tools are much more than tax and spend, which might do the exact opposite in practice anyway. There are a great many macro economic options that could affect prices. But even thinking about that kind of thing is outsourced to bureaucrats, it's not a political football at all. We don't have a national conversation about it, because it's just too hard.

    What we can have is a targeted discussion about how we could build some houses to alleviate the poverty of 1/20 of those in extreme need. And they could even have their need alleviated, whilst thousands more pop up at the same time, driven that way by the simple fact of housing being unaffordable in the first place.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Steve Barnes, in reply to ,

    How about we spread the rumor that ISIS are targeting all houses valued above, say $400,000 in Auckland and Wellington?. I'm pretty sure Key would run with that.
    The other thing, of course, is that builders have too many tea breaks thus causing high house prices.

    Peria • Since Dec 2006 • 5521 posts Report Reply

  • Kumara Republic, in reply to Steve Barnes,

    In any case, a modest non-resident stamp duty would be a partial solution - non-residents would not be banned outright from buying houses, they'll just have to pay for the privilege of doing so.

    The southernmost capital … • Since Nov 2006 • 5441 posts Report Reply

  • Sacha, in reply to BenWilson,

    OK, so a little bit of data to bolster my point. From the 2013 Census, there are 141,366 unoccupied dwellings.

    Thank you.

    Ak • Since May 2008 • 19740 posts Report Reply

  • WH, in reply to Kumara Republic,

    In any case, a modest non-resident stamp duty would be a partial solution - non-residents would not be banned outright from buying houses, they'll just have to pay for the privilege of doing so.

    I agree with the point you made regarding the need to tackle the financial incentives underpinning New Zealand's housing market. We've already done too much to normalise the idea that residential property investment is a free lunch paid for by your tenants.

    I don't think we gain anything from allowing non-resident non-citizens to own residential property.

    Since Nov 2006 • 797 posts Report Reply

  • Chris Waugh,

    Time to rein in the investor landlords, says Bernard Hickey. I dunno, maybe if we're going to stick with the idea of everybody owning their home, but others upthread of floated ideas of improving tenants' rights. Maybe both?

    Wellington • Since Jan 2007 • 2401 posts Report Reply

  • Moz, in reply to Chris Waugh,

    improving tenants' rights

    Both, but a bit of this would go a long way. As with many things, it's all fine as long as your landlord is reasonable (or your tenants are reasonable, as the case may be). The problem is that there's no social pressure to be a decent landlord, and no real legal requirement either. The idea that any tenant should be able to stay in the property until they're ready to leave just doesn't occur in the law, or to most landlords.

    The law is almost written around the needs to "accidental landlords", those nice upper class people who get the opportunity to study at Cambridge for a year, or a grant to finish their novel in Paris. So they want to rent out their house while they're away, but they have no idea what they're doing and they might need to come back unexpectedly (etc).

    If we flipped that and said to those people "hire a professional", and directed the law at the 99% of landlords who buy investment properties with the intention of renting them out, I think we'd do a lot better by the people we choose to exclude from home ownership.

    Sydney, West Island • Since Nov 2006 • 1233 posts Report Reply

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