Hard News: The Boom Crash
131 Responses
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Kath, in reply to
I beseech you sir, harm not yourself with your vexation; Shakespeare thought it was OK:
"...Puts to him all the learnings that his time
Could make him the receiver of..." Cymbeline (Act 1, Scene1 43/44) -
Let’s not forget: This “boom” is THE GROWTH of the New Zealand economy that is supposed to be the “brighter future”. Fueled by still rather “easy money” from well resourced Australian owned banks happy to lend, many get carried away, and as news out today reported, the banks already got many inquiries for new loans and added mortgages, so people can get extra credit to spend on cars, boats, a “deserved” overseas holiday and newest consumer gadgets.
Here we go again, and I am sure Mr Hickey will agree with me, too many never seem to learn, that this is exactly the same trap this country with a fragile economic makeup has been caught in for decades.
The milk solid auction prices have already dipped, or “crashed”, so when will this “boom” turn to bust, one wonders? Some corrections are part of the economic cycle, usually. But hey, we can have more migration, increase numbers, add consumers, workers to do whatever precarious and also durable jobs, to pay more tax and rates. One day those migrants will also be older and more prone to sickness and injury, will retire, so they will add costs, which will inevitably, according to the “Kiwi growth recipe” mean further population growth, migration or else, to increase numbers of workers and consumers yet again.
The sky is the limit, it seems, build up and outwards, whatever, keep growing, and do not bother planning and worrying, no matter what the finite future holds.
Winners are property owners, in the right spots, like Auckland, and they will keep voting in for governments keeping this whole system “working” (for themselves, never mind those that will not get onto the ladder). There are always some assets for sale, to foot the bill one day, whether SOEs, state houses, land or ordinary real estate for investment by others. Buy, invest, speculate, sell and be happy.
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We moved to the Chev in 1995….we bought an old stucco house on a postage stamp for a fair price…..most of the street was state housing…the nats proceeded to sell a lot of these off in the mid to late 90s,because that is what they do ….Im really worried that the remaining state houses in our street will be judged by Bill English as being in the" wrong place"….I mean its social engineering to have refugee families living north of Meola Road isn't it?…..and we can't have the poor kids accessing good schools…much better engineering to shift them south/west into a ghetto and offer them scholarships…..and our streetwill then turn into a nice white ghetto ...yay bloody yay………………….Chrys Berryman
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BenWilson, in reply to
The milk solid auction prices have already dipped, or “crashed”, so when will this “boom” turn to bust, one wonders?
That's the 800 billion dollar question. Been waiting a long time. I think ultimately property is too big to fail. Which sounds like famous last words, but really, once it's the main source of wealth, how can it?
The social issue isn't really whether property will crash causing some terrible catastrophe, but actually what the slow burning catastrophe of it not crashing is. Essentially, wealth is concentrating. Do we move from long-since-egalitarian to outright plutocracy? There are people that rich here now. It's a pretty symbolic shift, to me, that the super-rich banker is the great man-of-the-people.
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Sacha, in reply to
Winners are property owners, in the right spots, like Auckland, and they will keep voting in for governments keeping this whole system “working”
and the financial sector will oblige with reverse annuity products to let down the value of those overpriced piles until their final gasps. No worries about inheritance taxes. And thank goodness for Skyping the grandchildren.
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Marc C, in reply to
40 percent of home buyers in Auckland are now investors, who already have some "nest eggs":
http://www.stuff.co.nz/business/money/10608219/Investors-move-in-as-first-home-buyers-fold
Home afford-ability is at its lowest for decades, Housing NZ stock is going to be put onto the block, and liquor firms, cash rich iwi authorities and some well financed new migrants and also off-shore buyers line up to buy what is left on the kitchen shelves.
http://www.nzherald.co.nz/simon-collins/news/article.cfm?a_id=135&objectid=11356294
http://www.nzherald.co.nz/simon-collins/news/article.cfm?a_id=135&objectid=11354515
Meanwhile more live in garages, in cars and caravans, or even in parks and open places.
Welcome to YOUR "Brighter Future", the government is "working for NZ" (the top percentages that is).
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Marc C, in reply to
As a matter of fact, we already have de-facto ghettos, they are simply not fenced off or otherwise called what they are, as that is not politically correct. Now we have the NZ National Party apply their version of social engineering, the trickle up method, defying all natural laws. But as Key has a dim view of science (remember that BBC Hard Talk interview), National are about to establish totally new facts, based on “new science”.
Indeed, I know of people still living in Housing NZ homes in the “wrong” streets, in Epsom and so, and these few properties will be some of the first that will go under the hammer soon. The ones at the bottom will be offered multi-level, cheap, “affordable” new dwellings, where they can be stacked on top of each other and forced to be “appreciative” of the “hard working” New Zealanders “caring” for them.
And as it was mentioned before the last election, the next “tax cut” carrot is already being prepared, come 2017. Work will set you free, on a minimum wage even, that is “increased” each year (marginally inflation adjusted, not more).
How long can people put up with this, I ask?
At some point and time there will be some kind of social explosion, as endless pressure cannot continue to build up, without finding a release (physics Key won’t understand or won’t want to understand).
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Jack Harrison, in reply to
The problem is the National Party is soulless.
A bad trait that has manifested itself across all English-speaking Conservative Parties in the last 30 odd years. National as a governing party need a generational change and a party soul to actually bring the nation forward. No heart.
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nzlemming, in reply to
It's pre-electronic, unfortunately, but if anyone's in Auckland and wants to have a look at the University copy (or wants to do an interloan from elsewhere), it's Webb, Larisa, 1999. Living together? : change and continuity of a New Zealand intentional community. MA Thesis, University of Auckland. Library listing here. And I'll ask her if she happens to have an electronic copy at all.
1999 was hardly "pre-electronic"! :-D
There's another MA thesis by Robert Jenkin which is online and refers to her paper, if anyone is interested.
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Sacha, in reply to
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nzlemming, in reply to
Looks like what we’re almost certainly going to be doing – around Waikanae isn’t exactly hipster heaven, but a manageable place with good bones would leave us with enough that you could afford to redo a “tired” bathroom and/or kitchen and splash some paint around without taking out a second mortgage on the immortal soul of our improbable first-born. (Though one does have to draw the line somewhere – mine is Levin.)
Wait at least 5 years. There's a massive shortage on the coast due to the expressway workers gobbling up homes (mainly so they can go to meetings and say "I'm a ratepayer too, y'know" - bastids), so prices are climbing. Also, electrification of the rail line to Waikanae has pushed the commuter belt that much further north. Te Horo is still affordable, as is Otaki, but the old Saturn cable network only goes to the south side of Peka Peka Road (it was a significant factor in where we bought, trust me).
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Sacha, in reply to
How long can people put up with this, I ask?
until they find leaders worth the name
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Jack Harrison, in reply to
The business model applied to nation building means you get to fire citizens. The unemployment rate sits like a demoralising bubble on a generation of adults who under a 3% unemployment rate would be happily engaged in the lovely money happiness hours of our daily living .
You can’t just put a generation on the back burner unless you don’t see them as people (voters) . Heartless shit
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Sacha, in reply to
Totally agree. Bubble looks like shit from the inside. And the outside.
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Pete, in reply to
Godwin!
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Sacha, in reply to
way too subtle
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Nah, stop censoring the debate on working for the private sector as a work ethic or working for the community and nation as a whole as a work ethic.
Fuck Godwin. Western Europe can't even call 100 years on that politics yet we tut-tut about the failed societies of the middle-east. Right wing ideology has a visual reminder of its ultimate playout. Sorry but it's the truth. Running a country like a business is cold and is the golden rule of the modern right.
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BenWilson, in reply to
How long can people put up with this, I ask?
Well people put up with a lot worse for thousands of years. Which doesn't make it right, it's just a fact about people.
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Jack Harrison, in reply to
They’re all dead now Ben, this is our politics.
Happiness is the pursuit and it is the greatest pursuit.
We want to change our environment for the better and 10,000 + years of philosophy suggests that wont be achieved by having a class of poverty trapped in a low-market participation bubble for 10-20-30 years.
Empathy is less a virtue and more an understanding of our combined advanced academic thought of the last 10,000 years . Empathy moves civilisations forward.
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BenWilson, in reply to
our combined advanced academic thought of the last 10,000 years
From neolithic to neoliberal in only 10,000 years!
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Hebe, in reply to
The people of Christchurch who’s Red Zone payouts were based on their CV might disagree. Actually reasonably important that the CV has some resemblance to reality, esp. when they are recent CV’s.
And @Sofie: Oh good God don't. I know people who purposely kept their CV low over decades and have been buggered by red zone payouts based on a tiny CV. The landlord friend who kept costs down by having indemnity insurance rather than replacement (now agreed value) insurance bitterly regrets the few hundred bucks a year saving that cost 250K.
While on insurance: do, please, be very wary of the agreed sum insurance. Building law changes, cost inflation, fees - for engineering, geotechnical, resource consents, architectural/design to name only a few - can be much more than you guess.
Wellingtonians in particular would be well advised to get an idea how much hillside geotech + ground testing for site-specific foundations would be. Then retaining walls: massive cost that seems to be not covered by insurers, so much so there is a specific group fighting that battle.
Whatever, do not accept the default sum proposed by your insurer.
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Jack Harrison, in reply to
What are you measuring against?
Micro-chip - good for light hairy-hominid, yes.
Spekay on webbysite, ~~~si gut to understand dir.
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nzlemming, in reply to
Jack, are you Shulgin under another name?
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Kumara Republic, in reply to
If you want a good idea of how to package complex issues like CGT, the housing bubble, and the TPPA for the layperson, the Aussies seem to have one with "Roy" in a new climate change campaign.
Such messages would probably be most effective towards the 'low-info' set. It's probably not going to sway those already "gaming the system" - they've simply got too many eggs in the speculative basket to see anything other than attempts to make them surrender wealth and power voluntarily.
Unless the housing bubble simply becomes too big to ignore - or politically manage, for that matter - it'll likely take something cataclysmic to get anything done - as in World War or Great Depression cataclysmic.
And Britain's housing issues are remarkably similar to NZ's.
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Sofie Bribiesca, in reply to
And @Sofie: Oh good God don’t.
I was speaking from an Auckland pov. Don't have earthquakes yet. Insurance screws you one way or another. The Council can too. Rates in the thousands and climbing for small sections with ever decreasing amenities doesn't feel like value. As I said the family home will remain so and it's value to us is that it's family not money value. But yes it's still worth something so Insurance wins again. Plus, don't go digging for oil , if you found that ,it would belong to the state. ;)
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