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Auckland house prices – the good ol’ days ’05

Written By: - Date published: 7:14 am, July 17th, 2015 - 58 comments
Categories: capitalism, class war, cost of living, Economy, housing, uncategorized - Tags: ,

People often don’t understand the devastating impact of the exponential function (or the garden variety version which we often call “compounding growth”). It is a steady rate of increase which seems fairly easy to ignore – right up until the point the growth curve suddenly seems to ‘go vertical.’ And that’s where Auckland house prices are, right now.300px-Exp.svg

NZ politicians have played ‘pretend and extend’ around this issue for about as long as they can.

As Jeremy Grantham, head of investment firm GMO says, Compounding growth is never sustainable. And when it comes to house prices, that loss of sustainability happens in many different ways: from a financial perspective, an economic perspective, and a social perspective.

The New Zealand Institute (of all outfits) published in 2004 that home ownership rates had been drastically declining for years, and that young adults were the worst affected. (And we know why – thanks Douglas and Richardson).

The steep decline in home ownership rates has been particularly acute among younger age groups (DTZ(2004)). Whereas overall home ownership rates dropped by six percentage points between 1991 and 2001, ownership rates fell by 12.7 percentage points for 25-29 year olds, 12.5 percentage points for 30-34 year olds, and 10.4 percentage points for 35-39 year olds.

homeownership ratesIndeed, in 2006 Demographia declared that Auckland was ranked 15th least affordable city in the world for housing, with house prices sitting at 6.6x the median household income. They classified Auckland housing as “severely unaffordable” – their worst category. They also emphasised the broader importance of home ownership:

in addition to its quality of life, neighborhood, community and social cohesion benefits, home ownership represents an important “pillar” of a
sustainable affluent economy.

But Auckland should not feel picked on – Wellington and Christchurch housing were also categorised as “severely unaffordable” i.e. over 5x median household incomes.

The following graphic, sourced from the NBR, shows that in a space of roughly 5 years from 2002-2007, inflation adjusted Auckland house prices smashed upwards from approx $350K to approx $600K, a ball park 71% price increase after inflation in a very short space of time.

Auckland CPI adjusted since 92

Assuming a median Auckland household earning approx $1050 pw in 2002, that 71% house price increase represented a scary 238 weeks of earnings. But what if todays median house price of $720,000 increased by the very same 71%?

With todays Auckland median household income of around $1600 pw that would represent an absolutely horrendous 318 weeks of earnings. In other words, the exact same % house price increase is far more damaging to affordability than ten years ago.

That’s the effect of compounding growth in action over time, and it drives both the perception and the reality that Auckland house prices have been ‘rocketing away’ from ordinary working New Zealanders. Of course, that was 10 years ago during a Labour Government. The difference now is that Auckland house prices are ‘rocketing away’ from the (formerly) comfortable middle classes, the top 10% to 20% of society.

The cynic in me says that this is why politicians are starting to pay serious – if misguided – attention to the problem at last.

IMO, only measures which make it clear that NZ houses are no longer an investment asset class where capital gains are available, is going to stop this compound growth in house prices continuing. Banning foreign ownership of NZ land will help, but in of itself will be utterly insufficient. Even a total price freeze at current property values will leave Auckland homes “extremely unaffordable” for most New Zealanders for the next 10 years or more.

58 comments on “Auckland house prices – the good ol’ days ’05”

  1. Roflcopter 1

    It’s easy to blame Douglas and Richardson, but this problem is not unique to New Zealand, it’s happening everywhere.

    Introductions of CGT’s Stamp Duties etc., have done nothing to stem rising house prices in overseas cities.

    Even forcing immigrants or investors to purchase only new housing hasn’t worked.

    Which only really leaves 1 option: stop immigration

    I don’t think we want to go there.

    • Paul 1.1

      That leaves doing nothing as the solution! Well that suits some people,doesn’t it?

      Of course you can blame neo- liberalism for the crisis of housing. And Richardson and Douglas were the carriers of the virus into New Zelaand. In the UK, Thatcher delivered its ghastly medicine, selling off stet housing.
      Housing no longer was a right of being in a society, but rather just another asset to flick on for profit.

      I know from experience that debating with devout believers is a pointless tasks and you, Roflcopter, appear from your outpourings on this site, to be a true disciple of the Randian cult of neo-liberalism.

      So I guess we should just repeat the mantra.
      “The market will solve it, the market will solve it, the market will solve it ,the market will solve it,……”

      • Brendon Harre 1.1.1

        Thanks CV for the constructive addition to the debate. There are a number of places around the world where NZ could look to answers.

        Singapore has cheaper more stable housing than Auckland relative to local incomes, yet it is higher in density and has greater geographic constraints on supply. 80% of the population live in high rise apartments which is very different to how Aucklanders live. Bernard Hickey wrote about this here http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11394719

        Houston a favourite of the Demographia crowd is also cheaper and more stable (they neither boomed nor crashed pre/post GFC) but it is way less dense than Auckland and has few geographic constraints on supply. Houston and similar affordable US cities are very automobile dependent, in part because the US Federal government has overfunded “freeways” since the 1950s, thus encouraging increasing housing supply to be auto-dependent.

        German cities are comparable in density and size to Auckland but have had minimal real growth in prices for decades. This is well described here. http://www.macrobusiness.com.au/2011/06/how-germany-achieved-stable-affordable-housing/. German cities provide a mixture of dwelling types and transport options.

        Shamubeel Eaqub book “Generation Rent” gives a good description of the NZ problem and possible solutions.

        • RedLogix 1.1.1.1

          From your Singapore link above:

          One of his first and major achievements was an extensive programme of public housing construction. Year after year, Singapore’s government and its version of our New Zealand Superannuation Fund invested in building apartment blocks.

          Yes public housing construction.

          • Colonial Viper 1.1.1.1.1

            And 80% of Singapore’s new accommodation is government developed. The government builds everything from affordable mass housing to million dollar condos. It tightly regulates and intervenes in every aspect of the housing market in Singapore.

  2. Exponential growth explained

    Dr. Albert A. Bartlett
    Professor Emeritus
    Department of Physics
    University of Colorado, Boulder

  3. Aaron 3

    Brian Gould is pointing the finger at the Aussie banks on this one
    http://www.bryangould.com/chinese-buyers-no-australian-banks/

    • Paul 3.1

      Fractional reserve banking is the problem.

      • Lanthanide 3.1.1

        And the solution is, what?

        This youtube video is very popular. But I’ve never seen anyone credibly suggest what we should do next.

        • Paul 3.1.1.1

          Steve Keen has a lot of good ideas.
          Here’s one solution

        • Draco T Bastard 3.1.1.2

          Really?

          And, yes, that is credible as the research has shown.

          • Lanthanide 3.1.1.2.1

            So credible precisely 0 sovereign countries do it.

            • vto 3.1.1.2.1.1

              I think you are asking the wrong question as it presumes something similar is needed.

              Should you question be more like: why do we need a fractional reserve banking system, with interest?

              It aint like it has been even remotely part of long human existence – it is very recent and look at the carnage that results

              • Lanthanide

                We don’t need a fractional reserve banking system with interest.

                What we need is a way to distribute limited and scarce resources in some sort of fair and equitable manner.

                The current system distributes resources using money, and the ‘fair and equitable’ part hinges on the assumption that everyone individually is capable of producing value, and those that produce the most value get the most reward and this is deemed to be ‘fair’.

                If you want to suggest a credible alternative to using money (or a different system of money) to distribute limited and scarce resources, go ahead.

                • vto

                  Oh I do ‘go ahead’ with that from time to time…

                  One such suggestion is cutting interest out entirely from the system. Another is limiting the security that the money system desires (and currently has) for its printing of this fractional money. In the past banks used to take ownership of homes as security under the excuse “blah blah it is what we need to be comfortable issuing money” but of course it was totally inequitable and required government legislation to prevent that practice by banks and limit them to a mortgage security. Even that security needs looking at again as it is at time too onerous – and it ties in with the interest component point.

                  It aint necessarily a case of throwing out the baby with the bath water – it can be more a case of adjusting it around the edges to get it to a more sustainable position…..

                  … because at the moment the entire monetary system is unsustainable and insolvent

                  edit: do you have any ideas? Or are you happy just stating that the current system is useless and have no idea of an alternative so lets stay with our current useless system? Your position is defeatist and also useless itself, it seems.

                  • Colonial Viper

                    unfortunately, directly confronting the financial interests of the international banking system is a very quick way for a government to end its term in power.

                    • vto

                      Yes and that is another extremity of the current system that is unsustainable and simply wrong.

                      The banking system is our master when it must be our servant.

                      wrong
                      wrongwrong

                      wrong wrong in the head

                      If only people appreciated the cost the banking system imposes on our lives…

            • Draco T Bastard 3.1.1.2.1.2

              Why do you insist that we continue do something that’s already been done considering that everything that’s been done has failed?

              Or, to put it another way, why do you insist that we continue being insane?

  4. Sabine 4

    There is a natural growth of Cities and a subsequent raise in Accommodation Costs and rates due to increased need for Infrastructure and costs of maintaining existing immensities.
    Then there is runaway growth due to unfettered access to Land and Properties to investors homegrown or imported which is happening in NZ due to the lack of political foresight in the case of previous governments, and outright disdain by our current Government.

    And those that want to limit the discussion to Auckland alone are doing themselves no favour, Auckland is just the canary in the Goldmine. And it is dying.

    The ones at fault are easily identified,

    The Kiwis that sell to the highest bidders because they want theirs and then some, the Kiwis that believe the only way to make money in this country and get rich is by buying up a property and selling it on as fast as possible, and the Kiwis that allow foreign money to come in such large amounts that even the rich Kiwis are starting to realize they can’t compete.

    At the end of the day, you will find out, that you have sold the ground under your feet and now have to pay a big tithe just to walk down a road.

    What could be done?

    A Rent Freeze. That would be the very first thing to do.
    A Capital Gains Tax on any other Property then the one that is owner / occupied
    Income Tax to be charged in full on any sale of property (cause really who believes that someone would not sell their property at a loss unless seriously underwater and distressed?)
    A WOF for any and all rental properties including double glazed windows, wall, floor and roof insulation, integrated heating, and the right for tenanats to hang pictures and curtains on the wall.
    Tenancy protection in the case a property is sold. Selling a property should not mean that a Tenant is going to have too loose their flat or expect a rent increase. Simple as that.
    No sales to foreign investors, hedge funds and speculators.
    no sale of land to non NZ owned businesses, let them lease the land, and if they shut or sell the business a new lease will have to be negotiated.
    no sale of farm land to overseas investors, hedge funds and speculators, they can lease the land
    And yes Migration should be looked at, (and I am still wanting to increase the Numbers of Refugee NZ takes in), the Business Migrant Category should be disestablished as it was in Canada.
    Full stop on the sale of State Houses, and a programme to update all existing State Houses to the Building Wof mentioned above. (That would also create a few jobs i would believe).

    It might not fix anything over night, but then no one but the most idealist of idealists thinks that stuff needs to be done overnight.

    Changes take time, but frankly if we don’t start now, we might aswell just make sure our kids are equipped enough to migrate elsewhere because in this country they will have no future.

    OH and the must do’s to get a Wof for a rental, should be the minimum requirements for a new build. No more housing to be build like this award winning drafty crappy building. ( I actually don’t understand how the architects and the builders can be proud of their work, but maybe pride is overrated as long as they get paid). http://www.stuff.co.nz/dominion-post/news/wellington/70225087/Elderly-residents-freezing-in-draughty-Wellington-council-flats

    • Paul 4.1

      Key and his mates are setting New Zealand as a bolt hole for the global elite when the shirt hits the fan with a combination of climate change and the collapse of unsustainable capitalism.
      That’s why so many wealthy Americans are buying up the South Island.

      • Sabine 4.1.1

        It does not matter anymore what Key and his mates do. Really, i think that that ship has sailed.

        But we need to discuss what to do, and the Labour Party has to be steadfast in demanding these things.

        There are a lot of all sorts of wealthy nationals that are buying up the South Island, and frankly if the guys in the South Island are okai with this, then they can opt to do nothing.

        But I want something done, I don’t want to die without a fight. Fuck it. Kick me until i stop breathing, but don’t expect me to just simply take it.

        No fucking way,
        so look at the things that can be done, add to them and start demanding them.

        Fuck it with this defeatists attitude.

        • Paul 4.1.1.1

          Agreed.
          That’s why what Twyford is doing is good.

        • George Hendry 4.1.1.2

          ‘It does not matter anymore what Key and his mates do. Really, i think that that ship has sailed.’

          Yes, Sabine.

          We know what they’re doing and lying about and that they have no plan to change that, so how are we going to handle our new planned tenancy and serfdom?

          With one person at a time I talk about the need for abolishing the secret electoral ballot. There was good reason for it back in the day, but now that secret vote rigging is with us (the ‘something special’ we were on the cusp of?) open ballot seems the only way that ‘key and his mates’ will no longer be able to claim that however we may grumble, at the end of the day we still voted for them.

          Open election will be risky and take courage. But no more than what’s coming to us anyway will take.

        • Skinny 4.1.1.3

          That is not technically true depending how you look at it, Key and his regime are doing something. They are protecting the interests of their rich backers who’s generous donations help pay the spin merchants like Crosby & Textor and a host of plebs working in the back office of the National Party snake oil department. These parasites time and time again keep the Tories in power not just here but in Aussie & the UK.

          Here is a link that illustrates the age old saying “who pays the piper calls the tune.” http://m.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11444408

          For those who don’t want to puke reading the whole article here are a couple of exerpts of large donators linked to Auckland property and the NZNP;

          “The National Party’s donor list is a round up of multi-millionaire businesspeople and Auckland property magnates with an estimated joint worth of almost $2 billion”.
          “They included a $20,000 donation from the director of Barfoot & Thompson real estate, Garth Barfoot. Mr Barfoot said some had qualms about donating above the threshold for disclosure but he chose to do so anyway”.

          “If you want to influence the Government it’s a disadvantage being identified as a donor. It’s like joining the Business Roundtable, it’s the kiss of death. But I just think you shouldn’t not do something because of disclosure.”

          A long-term National supporter, he was asked to help the party by fundraising for them.
          “I wasn’t very good at fundraising from other people. It’s very hard when you’re on the richlist to ask other people for money. So I thought it was just easier to give myself.”

          He said it was a small sum compared to what he gave to charity.

          National also got $30,000 from property investor Mark Wyborn and $22,500 from Herne Bay’s Adrian Burr. Mr Wyborn and Mr Burr developed vast tracts of land around the Viaduct Harbour and in Newmarket along with Trevor Farmer, Ross Green, and Act Party donor Alan Gibbs.

      • Clean_power 4.1.2

        “That’s why so many wealthy Americans are buying up the South Island.”
        Facts, figures and links, please.

        • Paul 4.1.2.1

          Do the research yourself.

          Here’s a start for you.

          ‘Of the 646,190 hectares sold during the five years, Americans bought the most at 168,154 hectares. UK residents, who headed the list in 2010, came in second over the five-year period buying a total 66,932 hectares, followed by Israel on 52,325 hectares and Switzerland on 36,965.’

          http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11393727

          • Clean_power 4.1.2.1.1

            Putting your xenophobia aside, what difference does it make if a farm (and great deal of the figures quoted and S.I. farmland) is owned by an American, a Brit or an Israeli? (to keep pace with Mr Twyford, let me add Chinese you the list.)

            P.S. The S.I. is a very, very big place.

            • Sabine 4.1.2.1.1.1

              because you are risking to loose sovereignty.

              But then, i guess if you have a house or a property to sell, and you may make a profit of it, then I guess its okai and does not matter.

              As I said before, you become not only a tenant in your own country, effectively you become homeless.

              But I guess that is okai, as long as you have yours, and the rest of the country can go to hell.

              Lets not address what could be done. Lets only scream racism and Xenophobia (for the more educated amongs us) when it is pointed out that it might not be a good thing to do.

              And one might not compare NZ to the US, China or other large landmasses. New Zealand is two little island at the end of the world and if you guys can’t live in your own country anymore because you sold it off to the highest bidder you don’t really have anywhere else to go. Ponder that.

            • Paul 4.1.2.1.1.2

              Happy to discuss issues, but if you expect a response ( other than troll) kindly avoid the ad hominem slurs.

            • vto 4.1.2.1.1.3

              “what difference does it make if a foreigner owns the farm?”

              You need to go and do some reading on the very massive implications this has on a society. ANY society. You aint even at first base if you don’t what the problem is.

            • Draco T Bastard 4.1.2.1.1.4

              No xenophobia – just the understanding that selling out the country is bad for our society as it will turn us all into serfs for the new foreign owners.

              And, no, Te Wai Pounamu isn’t that big a place.

              • RedLogix

                Notice how they slide neatly from racist to xenophobe.

                Anything to avoid discussion of the sovereign interest of people to defend themselves from the predations of global capital.

                • Colonial Viper

                  although the last thing that Labour wants to start is a discussion on the problems caused by global financial capital flows. Too ‘hard left’ for their new image.

                  • RedLogix

                    Agreed. But oddly enough I think the ground is shifting under them. A lot of Kiwis, like the Europeans, are switching on to what is happening.

                    If Labour is too chicken to go there, then NZ1 – or more likely a scarily fascist successor – will be quite happy to.

        • George Hendry 4.1.2.2

          Type in ‘americans buying up south island’ (ps I think you’d have done it already if you really wanted to know 🙂 )

    • Mike the Savage One 4.2

      “The ones at fault are easily identified,

      The Kiwis that sell to the highest bidders because they want theirs and then some, the Kiwis that believe the only way to make money in this country and get rich is by buying up a property and selling it on as fast as possible, and the Kiwis that allow foreign money to come in such large amounts that even the rich Kiwis are starting to realize they can’t compete.

      At the end of the day, you will find out, that you have sold the ground under your feet and now have to pay a big tithe just to walk down a road.”

      Yes, and I have seen enough of this going on. Where there is a buyer, there is a seller, and I know of many who do not have any interest but self interest, they do not really care about their fellow citizens, the future of their country, it is all about ME and MY GAIN, right NOW.

      Then they move on to the Gold Coast or elsewhere, where they have their “refuges” as “white folk” in retirement, amongst “like minded” people who have mostly done the same. So much for “patriotism” – which only really exists when there is a major All Blacks game on.

    • Draco T Bastard 4.3

      It might not fix anything over night, but then no one but the most idealist of idealists thinks that stuff needs to be done overnight.

      Which pretty much includes everyone in Treasury, probably the RBNZ and National.

      I’ve seen it too often over the years to hope that the majority of people realise that doing anything takes time.

  5. DH 5

    IMO it’s wrong to look at house prices from a multiple of earnings perspective, that doesn’t mirror reality on the ground. For the average buyer real house prices are not what they pay for a house but what the house costs them because they’re borrowing the money to buy it.

    In 2007/08 mortgage rates were over 9% and mortgages were taken out for a 20-25 period. Today they’re down at 5.5% and banks extended mortgages to 25-30yrs

    In 2007 a $300k 25yr mortgage at 9% cost the home buyer $580 per week.

    Today $580 per week pays off a $443k mortgage at 5.5% over 30yrs.

    That’s about a 40% increase in house price covered at no extra cost to the buyer. Wage inflation and immigration would likely cover most of the rest.

    People might like to cast their mind back to 2008 when the RBNZ cut interest rates substantially. That cut was never intended to be permanent, it was a reaction to the GFC and intended as an economic stimulant to counter the expectation of global deflation. Now it is near-permanent and the market is reflecting that new reality.

    Initlally banks cut way back on lending post GFC so we couldn’t take advantage of low interest rates & buy a house. When they did start lending large again we kept being told the low interest rates wouldn’t last and taking out a big mortgage would be very risky. When low rates finally looked to be near-permanent they brought in the LVR 20% deposit which prevented most low income earners from buying a house and left the market to the asset rich who could pony up the deposit.

    • Sabine 5.1

      this is the elephant in the room

      When low rates finally looked to be near-permanent they brought in the LVR 20% deposit which prevented most low income earners from buying a house and left the market to the asset rich who could pony up the deposit.

      many of those that can’t possible come up with 20% deposit on a house price that goes literally up by a grand a day, are of course rich enough to pay the rents on these properties. The rents of course reflect the weekly mortgage payments.

      So they are simply locked out of a housing market by the Lending rules, that were ….giggles … brought in to dampen the housemarket. Remember that?

      • DH 5.1.1

        “The rents of course reflect the weekly mortgage payments.”

        When interest rates are static, and housing inflation low, the maths on housing does seem to follow a fairly logical progression. Rents tend to reflect interest on the mortgage but not the principal. The difference between rent & mortgage is usually about what the average person manages to save towards a deposit so when they buy a house they stop saving & instead pay off the mortgage.

        What’s really killed many low income earners was the deposit increasing faster than they could save. They had a double whammy of huge inflation on the deposit and rent also going up faster than wages. The perfect poverty storm really isn’t it.

        “o they are simply locked out of a housing market by the Lending rules, that were ….giggles … brought in to dampen the housemarket. Remember that?’

        What I remember is LVR never being intended to dampen the housing market. The RBNZ are not the Govt, they’re beancounters with authority only to do certain things and halting housing inflation is not in their mandate. LVR was solely intended to reduce the banks’ risk liability by increasing their security over mortgages; the RBNZ was protecting the banking system there.

        • Sabine 5.1.1.1

          I know that, you know that. Hence, giggles.

          But that is not what was said to the average voter, who only after the new Lending Rules were implemented realised that suddenly THEY did not manage to secure a mortgage anymore.

          They really beleived it was to take the “Heat out of the Auckland Housing Market” by making sure that only those that had money could actually play the game.

          When I say that tenants now pay mortgages instead of rent, it refers directly to the fact that any now pay 450+ for a two bedroom that previously would have been only 350 per week. At 350 per week they might have managed to save 100…but not anymore, because if you have a look now, 450 is pretty muc h the lowest rent you can find in AKL, or you move out to the whop whops behind the hills and at that stage any savings you thought would have will be eaten up with increased costs to get to that job in Penrose or the CBD.

          Want to make home speculation ugly, freeze the rents that can be charged and b. set rules about minimum standard that a rental has to adhere too. And not some wishy washy rules that start in 4 years, and don’t apply to 75% of them cause its not easy to fix insulation in these houses for what ever reason.

          Heck we have more rules and regulations on Dog Kennels then we have on Habitat for human consumption.

          • DH 5.1.1.1.1

            Unfortunately I think the horse has bolted Sabine. It’s only going to get worse too, they’re talking about cutting interest rates further which will push up asset prices even more.

            A big problem with housing is any moves to cut house prices seriously penalises recent buyers, many of whom have bought in good faith and are really just innocent victims of the whole housing ponzi scheme.

            What I think is needed is a scheme of affordable housing that doesn’t lower the value of existing houses. The only way I can see to achieve that is for the state to step in and create a new housing market that works in parallel with the existing one. The state could own the land and let (lower income) people build their own houses on it. Everyone can afford to pay the mortgage on a house it’s the land they can’t afford so remove land from the equation.

            The cheapest houses in Auckland are the leasehold ones, for obvious reasons. It wouldn’t be hard to work out a housing scheme where first home buyers could lease the land off the state at a peppercorn rental and then prevent speculation by putting up the lease to market rates if the house is sold or rented out.

    • Colonial Viper 5.2

      IMO it’s wrong to look at house prices from a multiple of earnings perspective, that doesn’t mirror reality on the ground.

      Yep the multiple earnings perspective is a simple and quick measure which does not capture the actual cost of finance.

      As debt and leverage around the world has been going up, they have deliberately driven interest rates lower and lower to try and keep the game of ‘pretend and extend’ going.

  6. Ad 6

    Housing ownership is decreasing to the point where it is a less and less attractive investment for most people who can accumulate savings. Which is in part a good thing. Housing is the wrong asset class for growing the productivity, exports, or innovation of the New Zealand economy.

    People like Shamubeel Eeaquub deny that home ownership is necessarily good. The market is changing our investment priorities away from housing, without government intervention.

    i can’t remember if it’s in his book, but the one thing we could do with is a rental price regulator.

    • Draco T Bastard 6.1

      People like Shamubeel Eeaquub deny that home ownership is necessarily good. The market is changing our investment priorities away from housing, without government intervention.

      Depends upon the circumstances. Under capitalism home ownership is good because it decreases rentier behaviour but we’ve made it so that the majority of people will never be able to afford a house and so rentier behaviour increases which puts paid to you second sentence there which is just wishful thinking.

      i can’t remember if it’s in his book, but the one thing we could do with is a rental price regulator.

      Actually, what we need is a Housing NZ government department tasked to provide an over supply of housing which is then rented out at 10% to 20% of household income. This would kill the private rentier behaviour that is helping push the housing market while also making it better to rent than own.

  7. Mike the Savage One 7

    We are SCREWED here in Auckland, that is most of us ORDINARY or even poor persons living in the supposedly “booming” city. When I read this from what CV wrote above, I have endless question marks run through my head:

    “With todays Auckland median household income of around $1600 pw that would represent an absolutely horrendous 318 weeks of earnings. In other words, the exact same % house price increase is far more damaging to affordability than ten years ago.”

    Who the hell earns that much per week? Yes, the upper middle class professionals living in places like Mt Eden, Remuera, Epsom, Parnell and so may earn above that, but few even in places like Mt Roskill, Three Kings, One Tree Hill, Western Springs, Pt Chevalier, Mt Albert, and definitely very few in South Auckland, much of Henderson, Ranui and many other places have such “median household income” to their avail.

    What about those on benefits, often getting just about $ 500 in total a week (with accommodation supplement and other allowances), like single parents, or unemployed couples on the Jobseeker benefit, what about singles without work, or sick and disabled, who may even get less, where are they supposed to go for “housing”?

    The ones sitting in the Beehive live in another world, on their incomes, John Key living in his Parnell mansion and relaxing in his Omaha beach home is absolutely out of touch with ordinary Aucklanders, he has forgotten where he grew up, I dare say.

    Those that follow the hearings for the Auckland Unitary Plan here in Auckland, also know that Auckland Council has long given up trying, having plans for “affordable housing” that are not even feasible, given land prices, development costs and so forth. Even intensification, and building up in more places will NOT be cheaper, as developers tell me, given massive speculation or excessive demand driven by investors (40 percent of buyers), some from off-shore, but also unconstrained immigration. Let us talk immigration, as that is where the tap could be turned off immediately, by capping it now, which the government does not do either.

    Over the whole of Auckland land costs have exploded, and every person holding land, with or without build, is going to gain immensely, also due to the Auckland Plan, the Auckland Unitary plan and Auckland Councils obsession with growing the city population by a million in the next two to three decades.

    The people living here have no real say, and most simply resign and take no action. I am desperate to get out of this place, to be honest, I see NO future in Auckland, the supposedly “most liveable city” in the world (according to Len the Mad Mayor Brown).

    • Draco T Bastard 7.1

      Who the hell earns that much per week?

      That was my reaction as well. My landlord, as a self-employed builder paid ~$35/hour + GST doesn’t bring in that much and at that rate he’s decided he can’t afford to be a builder any more.

    • Colonial Viper 7.2

      What about those on benefits, often getting just about $ 500 in total a week (with accommodation supplement and other allowances), like single parents, or unemployed couples on the Jobseeker benefit, what about singles without work, or sick and disabled, who may even get less, where are they supposed to go for “housing”?

      Excellent point. The discussion is always seems centred on what the comfortable middle classes can afford, with everyone else considered as an after thought. Which is why I made the cynical comment – now that housing is being pushed beyond the affordability of the top 10% to 20%, it is suddenly an urgent issue requiring all manner of political stunts so that something looks like it is being done.

    • Clemgeopin 7.3

      “What about those on benefits, often getting just about $ 500 in total a week (with accommodation supplement and other allowances), like single parents, or unemployed couples on the Jobseeker benefit, what about singles without work, or sick and disabled, who may even get less, where are they supposed to go for “housing”?

      Here?
      https://www.tvnz.co.nz/one-news/new-zealand/moving-homeless-on-shame-the-people-of-auckland-for-allowing-this-q01952?autoPlay=4357344927001

      • Mike the Savage One 7.3.1

        Exactly, I saw that, it is disgraceful what we have now, in our largest city, soon to come to Wellington and Christchurch too, unless we do not already have similar cases of such despicable treatment of the poorest of the poor there also.

    • Melanie Scott 7.4

      ‘The people living here have no real say, and most simply resign and take no action. I am desperate to get out of this place, to be honest, I see NO future in Auckland, the supposedly “most liveable city” in the world (according to Len the Mad Mayor Brown).’

      I hope you realise your wish soon. I am one of the lucky ones who got out and I’m so much happier. Sold a house just before prices jumped (2002) as I didn’t need the space anymore and bought a tiny apartment and a small piece of land ‘up north’ to one day build on. Sadly apartment turned leaky (designed and buit by Shonkey’s good mate Colin Leuschke) so had to sell the land to pay the repair bill. Nearing retirement age, I sold that, went flatting and bought smaller piece of land in a cheaper market. Now living the good life, growing vegies, shovelling horse pooh, helping neighbour paint cafe, giving free grazing to neighbours so don’t have to mow grass. It’s great to experience the feeling of ‘community’ again, now sadly lost in Auckland. I really enjoyed getting stuck into local issuess 25 years ago in Auckland but it would be a waste of time today.

      Auckland now has all the disadvantages of a big city – stress, dirt, ugliness. gridlock and few of the advantages – inspiring and beautiful architecture, readily accessible and affordable cultural entertainment. Even the harbour and shorelines have been wrecked. Feel very sorry for the young who worked hard to get qualifications for jobs only available in Auckland. Student debt, no chance of owning a nice house in which to bring up a family. They have been sold a pup.

  8. Olivine 8

    Hmm, looking at your last chart there, I see a significant blip around 2007. Wasn’t that the year of Keys’ speech that just got reprinted here? (‘National’s leadership on home ownership’, Anthony R0bins.)

    Didn’t he slag off ‘rinky-dink, knee-jerk, quick-fix plans’ that would have no effect? Seems like they were effective, as the prices corrected within a year!

  9. dukeofurl 9

    “Auckland house prices have been ‘rocketing away’ from ordinary working New Zealanders. Of course, that was 10 years ago during a Labour Government. The difference now is that Auckland house prices are ‘rocketing away’ from the (formerly) comfortable middle classes,

    True , so very true.

  10. Clemgeopin 10

    It is all very well blaming past governments from the benefit of hindsight.
    The more fruitful discussion is what are the various measures and solutions that will ease the current serious crisis? I would like to hear those ideas.

  11. Mike the Savage One 11

    What Auckland and New Zealand need is an urgent rethink, a radical rethink, as it seems to be madness in my eyes, to have an immigration policy, and a laissez faire economic development approach, that simply allows for most population growth to happen in ONE major city. Do we really want to follow Iceland and Uruguay, and a few other places, many rather less or underdeveloped, where the bulk of a country’s population lives in one major megalopolis?

    This may be stuff to consider also, like health hazards living in large cities:
    http://healthland.time.com/2011/06/22/stressed-in-the-city-how-urban-life-may-change-your-brain/

    http://www.theguardian.com/cities/2014/feb/25/city-stress-mental-health-rural-kind

    http://www.world-heart-federation.org/press/fact-sheets/urbanization-and-cardiovascular-disease/

    Even the WHO has a list of negatives under this bulletin:
    http://www.who.int/bulletin/volumes/88/4/10-010410/en/

    “City facts”

    * More than half the world’s population now live in cities.
    By 2030, six out of every 10 people will be city dwellers, rising to seven out of
    every 10 people by 2050.
    * Between 1995 and 2005, the urban population of developing countries grew by an average of 1.2 million people per week, or around 165 000 people every day.
    * One in three urban dwellers lives in slums, or a total of 1 billion people worldwide.
    * Globally, road traffic injuries are the ninth leading cause of death, and most road traffic deaths occur in low- and middle-income countries. Almost half of those who die in road traffic crashes are pedestrians, cyclists or users of motorized two-wheelers.
    * Urban air pollution kills around 1.2 million people each year around the world, mainly due to cardiovascular and respiratory diseases. A major proportion of urban air pollution is caused by motor vehicles, although industrial pollution, electricity generation and in least developed countries household fuel combustion are also major contributors.
    * Tuberculosis (TB) incidence is much higher in big cities. In New York City, TB incidence is four times the national average. In the Democratic Republic of the Congo, 83% of people with TB live in cities.
    * Urban environments tend to discourage physical activity and promote unhealthy food consumption. Participation in physical activity is made difficult by a variety of urban factors including overcrowding, high-volume traffic, heavy use of motorized transportation, poor air quality and lack of safe public spaces and recreation/sports facilities.”

    Regional development and more focus on balanced development across the country, also putting more resources and migration incentives into other cities down south seems to be a better solution, which would relieve pressures on the Auckland housing market, and on future infrastructure costs.

    In many developed countries in Europe most people live in small to medium size cities, not the mega cities like London or Paris. I would prefer living in a city that is still sufficiently urban, but that is not a mega city.

  12. greywarshark 12

    A clever cartoon by Toby.and explanation of the ripple effect from the house buying boom and Chinese flareup on all Chinese people.
    http://thewireless.co.nz/articles/chinese-nz-bloggers-on-the-housing-debate-turning-racist

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  • Kiwis better off under Coalition Government
    New Zealanders are increasingly better off under this Government as wages rise and families have more disposable income, Finance Minister Grant Robertson says. Stats NZ reported today that average household disposable incomes after housing costs rose 4.9% in 2019. This was the highest rise in four years and came as ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Another step towards restoring rights for screen production workers
    All New Zealanders need to have their voices heard at work to ensure we have an inclusive and productive economy. Today we introduce a Bill to do this for workers in the New Zealand screen industry, Workplace Relations and Safety Minister Iain Lees-Galloway says. “The Screen Industry Workers Bill will ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Enhanced Taskforce Green for Southland and South Otago
    The Government has announced further help for the Southland and Otago regions to speed up recovery efforts from the floods.  “I’ve approved Enhanced Taskforce Green (ETFG), making $500,000 available to help with the clean-up in Fiordland, Southland, and the Clutha district in Otago,” Minister for Social Development Carmel Sepuloni said.  ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Employers and Industry take the lead to connect students to vocational education
    Following the announcement that more than 340 schools will be funded to run events promoting vocational education, the Government has announced it will fund a further 257 events to be run by employers and industry. “These industry-run events will allow more than 30,000 students to connect with more than 2,000 ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Rental reforms a step closer with the introduction of the Residential Tenancies Amendment Bill
    Today the Government is making progress on a fairer and more secure rental market for renters and landlords with the introduction of the Residential Tenancies Amendment Bill in Parliament.  “This Bill includes a series of reforms to improve the wellbeing of the 609,700 households that live in rented homes, and ...
    BeehiveBy beehive.govt.nz
    1 week ago