Polity by Rob Salmond

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Polity: House-buying patterns in Auckland

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  • Craig Ranapia, in reply to David Hood,

    My reason for that is by saying mainland China migration to Ponsonby is not the cause

    Well, you've done a splendid job of rebutting an argument Rudman wasn't actually making. Care to take another pass?

    North Shore, Auckland • Since Nov 2006 • 12370 posts Report Reply

  • David Hood, in reply to Craig Ranapia,

    Ok I will try again,

    by writing things like

    "Of course in gentrifying areas like Ponsonby, the $20,000 villa of the 1970s is now fetching closer to $2 million than $1 million. All without anyone from mainland China in sight.

    The only ethnic change in these desirable suburbs is the Polynesian renters who'd made the suburb home were driven out to the fringes by Pakeha baby-boomers like myself."

    Where he is factually wrong in a delicate area, any discussion of his factual wrongness feeds into a wrong-headed focus arguments about what percentage of houses in Ponsonby have been bought by Chinese people. I wish he hadn't written that whole section, and had stuck with carefully thought out factual based arguments. Being factually wrong about anyone is bad, and drawing attention to the Chinese immigrants to Ponsonby is going down the wrong route.

    Dunedin • Since May 2007 • 1445 posts Report Reply

  • BenWilson, in reply to David Hood,

    Yup, it's pretty glib stuff. Just because Ponsonby's extraordinary growth isn't the fault entirely of mainland Chinese doesn't really prove anything at all about what Salmond's research shows. It's not to the point at all. The aspirational person looking to get into the Auckland property market isn't looking at Ponsonby anyway, and haven't since the 20th century. But getting priced out of suburbs like Albany and New Lynn are experiences entirely new to people trying to grasp what it is to be getting started in Auckland property. Getting priced out by foreign capital influxes is something that even living Maori wouldn't have personally experienced, even if the bitter taste of having lost their inheritances that way is still with them.

    This is quite aside from the point that Rudman offers no evidence at all to support his assumption that foreign capital hasn't also become a factor even in Ponsonby. How would he know? By not noticing Chinese faces on his street??? Really? That's part of the point of Salmond's analysis - that it's not easy to know who owns what here at all.

    It's also aside from the frustration many people who at least roughly do understand how to model property values must feel - that all debate about it boils down to silly single issue rebuttals. When value is a function of a number of variables, then of course it's not a function of only one variable. That's always a straw man. The argument needs a lot more sophistication in it than that, but it seldom gets it because understanding such modeling isn't simple. So we get a lot of opinions presented as facts, the feelings of real estate agents, of speculators, of economists, of the PM.

    We get babyish rebuttals like "It isn't capital influx, it's a lack of supply". Rather than looking at the possibility that it's both (and a lot of other things besides) and one is a whole lot easier to solve than the other. You can legislate to slow capital influx but to increase supply significantly you need one hell of a lot of money. More money than the government even has at all, probably. And to legislate to encourage supply is possible, but it's a whole lot more of an ask because it's a vast bundle of different laws across multiple bodies, and many of those laws exist for sensible reasons.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Sacha,

    Metro's Simon Wilson has some housing answers for any politicians bold enough to lead.

    Ak • Since May 2008 • 19745 posts Report Reply

  • simon g,

    Barfoot & Thompson have fired the leaker.

    I really hope their statement said "As real estate agents, we pride ourselves on the highest standards of integrity at all times." That would be awesome.

    Auckland • Since Nov 2006 • 1332 posts Report Reply

  • BenWilson, in reply to Sacha,

    I like his checklist as a starting point, but as he notes, there's plenty more possibilities.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Russell Brown, in reply to BenWilson,

    This is quite aside from the point that Rudman offers no evidence at all to support his assumption that foreign capital hasn’t also become a factor even in Ponsonby. How would he know? By not noticing Chinese faces on his street??? Really? That’s part of the point of Salmond’s analysis – that it’s not easy to know who owns what here at all.

    Even taking it to the place of counting Chinese-looking faces in a suburb was a weird thing to do. That column was well below Rudman's usual standard.

    Auckland • Since Nov 2006 • 22850 posts Report Reply

  • Sacha,

    Could be worse - check the utterly deranged Colonel Trotter's latest reckons.

    Ak • Since May 2008 • 19745 posts Report Reply

  • Kumara Republic, in reply to Sacha,

    Could be worse – check the utterly deranged Colonel Trotter’s latest reckons.

    Col Trotter's trying to play the Waitakere Man "PC gone mad" card again. He goes to show the neo-cons don't have a monopoly on playing it.

    The southernmost capital … • Since Nov 2006 • 5443 posts Report Reply

  • BenWilson, in reply to Kumara Republic,

    Nah he doesn't have a special trump card, he just calls misere every time and dares the Liberal Intelligentsia to outbid him so he can send them out the back door. It's amazing how many tricks you can lose with a good hand playing that way. He'd chuck the joker and both bowers out in the kitty just to play misere against the LI one more time.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Swan,

    "We get babyish rebuttals like “It isn’t capital influx, it’s a lack of supply”"

    Except that one fundamentally affects housing costs (i.e. rent), the other merely affects asset prices.

    Birkenhead • Since Feb 2011 • 86 posts Report Reply

  • Dismal Soyanz, in reply to Katharine Moody,

    The wealth effect is not that significant. There's quite a bit of research on this even in NZ.

    Wellington • Since Nov 2010 • 310 posts Report Reply

  • Steve Barnes, in reply to Sacha,

    #knarley.
    Hands that do dishes....
    With respect of course.

    Peria • Since Dec 2006 • 5521 posts Report Reply

  • Swan,

    Crampton nails it

    Birkenhead • Since Feb 2011 • 86 posts Report Reply

  • Steve Barnes, in reply to Swan,

    Nailed?
    I think what he has nails is the real problem with the foreugn investmet problem. Property is not a good investment for the country. We need real investment in industry and technology, not property, unless you want to be a tenant in your own country like Maori have mostly become.
    At the real risk of being called a racist or worse? Xenophobic. I really think foreign ownership of land is the wrong way to go,for any sovereign state.
    We need more housing in Auckland for sure but perhaps we should be looking for foreign investment in the provinces to create employment and wealth for more than just the “well heeledThia needs a forward looking Government,not the financial clowns we have to put up with until the next election.

    Peria • Since Dec 2006 • 5521 posts Report Reply

  • BenWilson, in reply to Swan,

    Except that one fundamentally affects housing costs (i.e. rent), the other merely affects asset prices.

    When you own a house, or aim to own one, those are the same thing. The cost of owning a more expensive house is a larger mortgage. You’d have to be an economist not to realize this. Furthermore, if you buy a larger asset, it’s usually on the expectation of larger future gains, so asset prices do fundamentally have an effect on rents too. Which kind of explains why it costs more to rent more expensive houses. Again, this is not something I would expect an economist to understand. To them, it’s all in the wash, and money doesn’t really exist. Bankruptcy is just pre-greatness.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Alfie,

    Meanwhile, whole milk powder dropped another 13.1% in last night's GlobalDairyTrade auction. That will drive the NZ dollar lower making NZ property even more appealing to overseas investors.

    And so it goes on.

    Dunedin • Since May 2014 • 1440 posts Report Reply

  • Alfie,

    John Armstrong has a (rather brief) peek at restrictions on land sales to foreigners in seven other countries.

    Dunedin • Since May 2014 • 1440 posts Report Reply

  • BenWilson, in reply to Alfie,

    It's amazing, really. A Herald reporter who actually did a little bit of research. I came away from the Armstrong article a little better informed than I entered it. If only that could be a model for the rest of the Herald's commentary team.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • BenWilson, in reply to Steve Barnes,

    I really think foreign ownership of land is the wrong way to go,for any sovereign state.

    I think it should be limited at the least. In the long run, there's no way that gradual racial integration can happen if foreigners are blocked from owning at all. And in bringing money here, something good is being done. But it can't be without limit or caveat. The rate at which we accept foreign capital ownership should roughly coincide with the rate at which we accept foreign immigration of their physical bodies. Then we have people that are investing a whole lot more than speculative hot money into the country. They're bringing their whole selves with it, their labour, their knowledge, their skills, their willingness to work, their culture. At a gradual rate, it gives everyone a chance to keep up.

    We do have limits on the total number of possible immigrants for a reason. The nation would quite simply not cope with unlimited bodies coming here. But when it's happening economically, the damage is harder to see. It shouldn't be hard to see, it should be utterly transparent, and controlled to reasonable limits.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • BenWilson, in reply to Steve Barnes,

    I think you probably meant "non resident foreign ownership" anyway, right? Because it would be pretty hypocritical thing for an old Pom with multiple property assets and a Mexican mistress in NZ to be saying shouldn't be allowed :-)

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Alfie, in reply to BenWilson,

    If only that could be a model for the rest of the Herald's commentary team.

    Agreed. And bingo... the Herald has a very informed commentary from Rodney Jones -- Principal of an Asian macro advisory firm based in Beijing.

    China is looking to implement a programme called QDII2, which will significantly expand the number of Chinese residents eligible to invest abroad in both financial assets and property.

    To express concerns about the potential impact of these flows is not racism; it is sensible macro prudential management. We need to ensure that the capital flows into the property market do not prove destabilising, or create the risk of financial or asset shocks in New Zealand. Moreover, there are very real distributional effects that as New Zealanders we should be very concerned about; inequality matters.

    Fortunately, Singapore and Hong Kong - and some cities in China - have been down this path before. We can draw on their experience. Singapore imposes a 15 per cent stamp duty on non-resident purchasers of residential property, as does Hong Kong. In China, in order to restrain the property boom in 2011 cities such as Beijing and Shanghai - amongst others - imposed a blanket ban on non-resident purchases of residential property, which in practice blocked purchases by Chinese residents from other provinces.

    I believe we should take the lead from Singapore and Hong Kong and impose a 20 per cent stamp duty on non-resident purchases of Auckland property. Moreover, we should use the measures announced at the last budget on IRD numbers and NZ bank accounts to ensure that any resident purchaser is the beneficial owner.

    This is not an anti-Chinese policy, in the same way that the Singapore, Hong Kong and Beijing property measures are not anti-Chinese. It is a macro-prudential measure, designed to prevent a property bubble.

    Dunedin • Since May 2014 • 1440 posts Report Reply

  • Sacha,

    Editorials from DominionPost and Otago Daily Times.

    Ak • Since May 2008 • 19745 posts Report Reply

  • Rob S,

    Overseas money from non-residents is driving up prices, all you need for a bidding war is 2 keen buyers i.e. one local and one from overseas with access to cheaper money and more of it and the local guy is stuffed. So the next auction he goes to, rinse and repeat.
    The banks are loving it as more people commit themselves to increasingly higher mortgages where they cream the profit for a very long period.
    Look at their profits which are at record levels.
    The real estate industry love it as they are usually on a percentage basis for their profit. Note that as house prices have tracked at a vastly higher inflationary rate to that of the country as a whole their cut has gone up exponentially in dollar terms with little downward fall. If they charged a standard fee as a set sum it almost certainly not cost as much to sell a house. All it does is to encourage more people into an essentially non productive business.
    To an extent the damage is already done. The fallout from this has the potential to stunt NZ’s growth for a generation as our nations youngest overpay for a house for the next 10-20 years, sending the money overseas to the banks.
    Same deal for our farmers who are now finding that what goes up comes down.
    The country is being bled white on a real estate ponzi scheme as our politicians, especially those in charge right now point the finger of blame whilst simultaneously sitting on their hands.
    National were happy to jeer down any attempt at controlling the property speculation industry whilst seeking election it is now time for them to show some spine and sort it out. If we could afford to build state houses previously why not now? It had a successful outcome for Mr Key.
    Encourage growth in the regions, improve public transport, admit that the Government can have a serious role to play in this mess. Something better than Nick Smith wandering around pointing at land he doesn’t own.
    The money spent on the flag debate has a whiff of Nero fiddling while Rome burns.

    Since Apr 2010 • 136 posts Report Reply

  • BenWilson, in reply to Rob S,

    The real estate industry love it as they are usually on a percentage basis for their profit

    Yup, which is why they can't be treated as impartial commentators, and it's also why they're crucifying the leaker. Not the only reason, of course - issues of confidentiality come up in data mining, even if they had agreed to it. It's their data and stealing it is illegal. It exposes them to risk, especially of reputation loss with a big client base. But I can't help but feel that they are also extremely pissed off that an insider would be leaking about what a massive, massive gravy train they're on. If the public debate leads to a lockdown of foreign capital, that's the end of the ridiculously good golden weather for them. We're not talking small potatoes. This leak could have cost them hundreds of millions in the long run.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

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