Daily review 14/12/2020

15 comments on “Daily review 14/12/2020 ”

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1. Phillip ure 1

   14 December 2020 at 6:50 pm

   'the detail' on rnz today is a must-listen…

   it's on housing/poverty..
2. McFlock 2

   14 December 2020 at 10:29 pm

   Been thinking about home ownership.

   According to the recent stats NZ housing publication that cause the news (link to pdf), 2/3 of households own their own home. So that means most NZers would be concerned about the market sale value of their house, right? Wrong. Looking at p34, only half of individuals (>=15 years old) own (directly or via a trust) the dwelling they live in.

   And I'm sure some homeowners are good people who realise the escalator needs to slow down a bit.
   • weka 2.1

     14 December 2020 at 11:03 pm

     Curious. Is that homeowners with flatmates? Couples where only one person is listed as the owner?

     I see very few homeowners saying house prices need to drop. Escalator needs to slow down a bit is a euphemism for 'my lifestyle income is more important than you having a home you can afford' (home = rented or owned).
     • McFlock 2.1.1

       14 December 2020 at 11:25 pm

       lol I used it, and I rent, and don’t exactly have a massive “lifestyle income”.

       But house prices dropped under the GFC. Big deal. Homeowners bitched for a couple of years, but shit was still in overdrive. A drop just puts them a few years behind the 8-ball, but if home ownership is a priority, then median incomes need to increase faster than house prices.
       • weka 2.1.1.1

         15 December 2020 at 9:24 pm

         yeah, well, I wrote a post the other day asking someone to explain the 'rising incomes will solve the housing crisis' theory and no-one did. Doesn't make sense to me but then I'm mindful of how low benefits are. I just can't see how incomes will ever catch up. I can see how median incomes rising will help the middle classes be able to afford homes again, but won't they want house prices to keep increasing because it's lifestyle and retirement income not just a home?
         • McFlock 2.1.1.1.1

           15 December 2020 at 11:08 pm

           Yeah, I just finished a fecking big project at work so if the framing or length of a post doesn't spark joy in my direction, I have very little battery power to apply to it. It's pretty simple. When incomes increase relative to the cost of housing, housing is more affordable and people are spending a lower propoertion of their income on accommodation. Whether one chooses the median, or a fraction of the median, or average wage, or all-source incomes as the benchmark measure, people can rock their world debating that.

           As for property speculation, not all homeowners are looking for the highest sell price. Some actually don't want to see their wee cottage bowled for a five-house subdivision on the rural lot, or the house they just worked on be sold to an absentee speculator rather than a family. It's a culture thing, I guess.
           • weka 2.1.1.1.1.1

             16 December 2020 at 12:01 am

             Totally support people reading what sparks joy. Wasn't expecting you to front up with an explanation, so much as pointing out that I can't find anyone to explain it to me.

             I get the general theory about income/affordability. I just don't see how it will work given the massive gap between income and house prices now, and how we will all catch up. Raising the median income obviously makes housing less unaffordable, but that's a different thing. Middle class people will be best placed to make use of it, because they're closer to affordable than others, but I can't see how people on the dole will afford rents again unless house prices drop.

             Agreed about not everyone is in it for the capital gains. But culturally NZ is a country of housing = investment. Those that don't treat it such as in the minority. Even those who don't want to sell their cottage to the developers still often want some kind of return.
             • weka …

               16 December 2020 at 12:03 am

               I don't even really blame people for that, been there myself so I know what it's like. If we spend 30 years telling people that the govt probably won't look after them in retirement, but hey if they buy a house and then another one they'll be sweet, then that's what people will do and then they will vote for govts that protect that.
             • McFlock …

               16 December 2020 at 1:06 am

               Rents aren't directly linked to property prices. Rents are generally how much can be extracted from someone. Sure, decreased ownership means more people looking to rent, but there are also other issues like the decrease in state housing stock and the feedback loop that means the accommodation supplement is simply a subsidy to landlords because people don't have the same choices in housing that they used to. When people had discretion in picking flats, it was a top-up to their rent. But at the moment people have to take whatever they can get.

               Kiwibuild was a sort of levelling-up idea. Most of the 100k new dwellings would have gone to the middle class, sure, but would have also hit the rental market. Additional measures like taxing ghost houses or CGT pressure were some of the reasons I was hoping the Greens would be required by Labour, not an optional nicety. But houses are like boots or anything else – poor people end up paying more because they have to take the short term solution, not the initally more expensive but cheaper over the long term option.

               I'm not sure any party in parliament has the vision of a long-term beneficiary being able to buy their own home. Secure and habitable rentals, sure, but ownership isn't for everyone. It should be an option for the overwhelming majority of people at some time in their lives, though – and at the moment it's becoming an option only for a minority.
       • Pat 2.1.1.2

         15 December 2020 at 9:33 pm

         "But house prices dropped under the GFC."

         Not really, they dipped for a very short period…we didnt have the real property deflation suffered by some other markets…the trend continued.

         https://www.rbnz.govt.nz/statistics/key-graphs/key-graph-house-price-values

         Remember that we are looking at aggregate effect.
         • McFlock 2.1.1.2.1

           15 December 2020 at 10:53 pm

           After how many consecutive quarters of falls in house prices does a "dip" become a "drop"?
           • Pat 2.1.1.2.1.1

             15 December 2020 at 10:58 pm

             look at the graph in the link
             • McFlock …

               15 December 2020 at 11:15 pm

               Look at the left side scale. The cumulative value is not relevant, because it includes new housing stock. But if you look at the prices, it looks to me to be a cumulatively double-digit "dip" in house prices over a brief period. So you say "dip", I say "fall", meh. Without a longer term effect all that happens is some dickheads moan that they're "under water" for 18 months. But if they don't have to default on the mortgage, it doesn't fundamentally change things for them.
               • Pat …

                 15 December 2020 at 11:32 pm

                 They dipped…the trend remained. The cumulative value is of course relevant, it is after all that which determines bank credit and solvency.

                 The dip was a cumulative single digit drop of around 9% over 12 months before returning to increase followed by a single quarter drop of around 2% before an increase after a further quarter of no change.

                 Without significant or prolonged change there is no impact on the banking requirements and therefore no pressure on mortgagors.
                 • McFlock …

                   16 December 2020 at 10:01 am

                   There were at two datapoints of about 9% by themselves.

                   The point is, prices fell in some way, and it changed nothing after a year or two. I think we both agree that there's a longer term systemic change needed, rather than a short term "correction" (as economists love to call them).

                   Even if house prices halved overnight, in ten years the situation would still be even more fucked than it is now.

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