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Nats’ affordable housing policy: for the 70-80th percentiles

Written By: - Date published: 6:56 am, August 12th, 2013 - 140 comments
Categories: class war, housing - Tags:

So, let me see if I have this right: National’s big announcement on affordable housing was the increase the income and house price limits for getting the Kiwisaver First Home Deposit Subsidy. In other words, pour more money into the over-heated housing market. And do that, not by helping those in real need who are shut out of the market now, but by giving cash to people previously considered too well-off for the subsidy – ie families in the $100,000-$120,000 income bracket, that’s the 70-80% highest income households.

What a fantastic idea! That’s far better than building affordable homes, passing on the government’s low cost of borrowing to young families to buy a home, and locking out speculators both foreign and domestic. Just give piles of public money to people who, let’s face it can buy a house anyway – it’s not like $5k more for your deposit when you’ve got an income over $100,000 is going to be absolutely crucial.

140 comments on “Nats’ affordable housing policy: for the 70-80th percentiles”

  1. karol 1

    How much worse can Key’s government get. I am amazed at how blatantly and cynically this Key announcement supports the haves and thumbs his nose at the have-nots.

    And Tracy Watkins reckons it is Aucklanders who will most benefit. So not doing anything for the rejuvenation of the provinces either.

    • Maybe in the short run but with people walking away from properties such as this I reckon Auckland will also suffer while the rich get richer

      • Draco T Bastard 1.1.1

        That’s a good example of the greed in NZ and the rentier attitude of charging for nothing.

    • muzza 1.2

      The provinces are finished, many of them!

      Under current monetary/fiscal conditions, money will be sucked out of the provinces, such as can be seen around NZ via factories closing, services being cut off etc.

      The roll up effect will continue, and is tied UN Agenda 21!

  2. Dv 2

    I just heard Key on MR!!!
    He was asked how he bought his first house in the 80s. He had saved a deposit (from a good income) and borrowed balance from the bank.

    Reminded me about how I bought my first house in 1979.

    Cost $43k – 3x salary
    I had a deposit of ca $18k – mostly from a saving scheme with the post office for housing.

    I borrowed about 15k? from state advances at 3%? – That is all they would lend!!!! (about 33%)
    I had to get the balance from the bank as 2 mortgage at 15%!!!

    What sticks in my mind were
    the very good govt supported housing saving scheme
    the low amount in % terms from the state advances. (33%)
    The low interest by state advances.
    The high interest from the bank

    The govt support with
    saving scheme
    low interest state advances loan

    were critical.

    • Mike S 2.1

      I’d also add that it was probably critical that the house was only 3x your salary. These days, 6x and 7x are the norm and that’s for household incomes. For individuals it is way way more.

  3. BM 3

    I don’t want the government in the House building market.

    Sure, build state homes but keep out of residential housing market.

    You may want this big government runs everything, builds everything “utopia” but I certainly don’t and a so do a large chunk of NZ.

    • One Anonymous Knucklehead 3.1

      Your proposal that the government only provides when there is genuine need makes a lot of sense. It also seems in complete contradiction to your avowed political allegiance.

    • Colonial Viper 3.2

      If the private sector cannot or will not provide social housing, then the Government must.

    • mickysavage 3.3

      You may want this big government runs everything, builds everything “utopia” but I certainly don’t and a so do a large chunk of NZ.

      Yep Central and Local Government have never built anything of use to the country.

      Apart from the hydro dams and the roads and footpaths and electricity delivery systems and sewerage plants and water delivery systems and libraries and schools and railway lines and stations and …

    • vto 3.4

      “I don’t want the government in the House building market.”

      It already is in the house building market BM. It has a bigger effect on house building costs than any other organisation in NZ. Examples;

      1. GST and its recent 20% increase.
      2. Lack of intent to attack building supply cartels.
      3. The largest landlord in the entire country.
      4. Constant upgrade to building code by government depts. and cost effects.
      5. Control over money supply by act and ommission.

      Wake up fulla, you’re in dreamworld if you imagine govt isn’t in house building right now today.

      It is the biggest player of the lot.

      • BM 3.4.1

        But it’s not competing directly with private building companies.

        The governments role is to provide services that can’t be met or supplied by private business not to compete with private business.

        • vto

          Who says so BM?

          It is a free market isn’t it? This is your political fancy isn’t it? Free market? If the people of NZ choose to get together collectively via government and build themselves houses then good fucking luck to them – this is the free market in action. Stop imposing rules on it.

          Suck it up mate, it is a free world.

        • miravox

          “build state homes but keep out of residential housing market”

          State houses are homes therefore they are in the residential housing market. They reduce demand, which would affect private builders if private firms were actually in the business of producing affordable housing.

          “But it’s not competing directly with private building companies.”

          Who do you think does the builds, BM? The government has not competed with private companies when built houses before, it has bankrolled them. The MoW didn’t build those houses, Fletchers did.

          “The governments role is to provide services that can’t be met or supplied by private business not to compete with private business.”

          That’s one of the reasons why the first state houses were built – private firms didn’t have the money to do the job (or there was no profit in putting their money into it). We’re in the same situation now, with the the profit margins on affordable housing so poor the private builders concentrate on expensive housing. There is a gap in housing that the government needs to fill so people aren’t living in garages, caravan parks or other over-crowded, sub-standard accommodation.

          Key is not even bothering to try and lie anymore. The believers seem to have made him think he can chuck any useless policy out there and it will be lapped up. Actually it’s not even policy, it’s just changing the threshold on Kiwisaver and removing the only assistance that might have been available for people who have difficulty scraping together enough for the Kiwisaver bonus.

        • muzza

          BM – But your cool with the govt bailing out private enterprise ?

    • Sable 3.5

      Really, took a survey of New Zealanders in your spare time did you? If so lets see the stats of people lining up to agree with you and no quoting government crap or the herald, etc, we all know what that’s worth!!!

        • Molly

          Sable said a survey of NZers… you have replied with a link to the 2011 election – why??

          Given the historically low turnout your 47% for National translates to 1,058,636 votes.

          Using NZ population clock – 4,472,481 at 10.37am this morning, this means your “survey” has the recorded support of 27% of NZers.

          Of course – this is a pointless exercise, as it seems that many voters – including National supporters – don’t bother reading policy before voting.

          Also, as this is not a policy that was floated at the time, your somewhat simplistic point is moot.

          Lastly, you are making the erroneous assumption that one vote every three years is the full extent of democratic participation – aligned with the equally immature expectation that once you have aligned yourself to a particular party, all criticism is withheld as a indication of strength.

    • Richard Down South 3.6

      While im not a fan of the Government as a landlord, you must remember that Market Rentals mean that if people are willing to pay $500 a week for a 3 bedroom home, then thats ‘the market’, and there should be a means tested State-run rental option, for those that need it… the other option means the government (aka tax payers) lining the pockets of investors through subsidizing ‘market rentals’

      Id rather see the Government make or lose a little each week on a house (remember a house should last 50+ years, where as investment wise, its looked at over 10-15 years), than helping someone make $100-200 extra a week because they went and bought a few houses

    • xtasy 3.7

      BM – The market, the much hailed “market”, meant to be the “free market” has failed the average and low income earners, when it comes to housing, and as so much distorting and re-distribution of wealth in the form of housing investment has occurred, ONLY the government can within reasonable time change the housing market, to actually deliver what it is there for, to provide housing for those that need it to live in.

      This endless mantra about supply needing to meet demand may sound nice to free market purists, or near purists, as there is NO place on earth where there is a real “free” housing market anyway.

      Also only the state can generate the financial capital needed to pull off big enough, economically viable project, by introducing new laws, rules and mechanisms, to deliver what is needed.

      The individual small scale Donald Trump made in NZ housing investor, owning one to three or so homes, plus the bigger players, they are only interested in maximising returns and profits, and they are playing the market as it is. Extending portfolios is the agenda, to own more, to have a bigger foothold and generate more returns into fewer hands. Sadly most middle class property owners (whether paying off mortgage or not), also fall for the Hooton spin that is now being spread around by an unholy “Matthew” (not the one mentioned in the “gospel”).

      Too many are only self interested, and for the fear that their property, on which they can borrow more money from banks to spend on a new car or whatever (money going into imports), to lose value, they fall for this spin and will keep on voting National or National Light (aka “Labour”).

      But that is the biggest problem the NZ economy faces, this obsession with property ownership, investment, in borrowing ever more off-shore to finance this “addiction”. As if the lesson of the time between 2003 and 2008 has not been learned.

      Homes must be affordable, based on income people earn, and other earnings should go into other investment and consumption to keep the rest of the economy moving somewhere.

      I see a disaster, where dairy exports may suffer due to NZ’s reputation having gone down the toilet, this meaning less exports, the manufacturing sector being unable to replace such shortfalls, the rest of the economy standing still, and people again sitting on truck loads of borrowed money from overseas. Thank you John Key and consorts, you are digging a big hole here, and offer no answers to it getting bigger by the day.

      When are the ones in NZ politics learning true economics 101, that actually serves all the people, not just a few that have the cash and incomes, to play the local markets, housing or whatever?

      For a start, put in restrictions on property investments by overseas players, also forcing them to disclose local front people involved, bring in capital gains tax, bring in also a version of Gareth Morgan’s land tax idea, and only allow a few exemptions, so “land-banking” in the urban zones does no longer get encouraged, same as property speculation driving up prices. More can be done on top, like a proper home building scheme, better than what Labour have come up with so far.

      I am waiting for some up there in Wellington to bloody wake up! Wakey, wakey David!!!

      • Richard Down South 3.7.1

        All a free market provides is things which bring profit… businesses dont generally set up to make 1% or less margin…

        MONEY MONEY MONEY… thats what counts… when it comes to a free market

  4. Colonial Viper 4

    Dont know why we are complaining. Labour’s $400,000 “affordable housing” targeted the 60th-70th richest percentile households.

    Both major political parties idea of “middle NZ” are quite similar.

    • Lanthanide 4.1

      Sure, but at least Labour were trying. They looked at the figures, talked to some industry people and had to conclude that $400k was as cheap as they could make them.

      Should they try and do better? Yes. Can they do better easily? Difficult to say.

      • geoff 4.1.1

        $400,000 is not as cheap as houses can be made, they can be made significantly cheaper. This is the problem with talking to industry players as partners to these social projects, the industry partners have absolutely no motivation in providing for the social good, it’s all about money.

        The fucktards in the Labour caucus may have good intentions but in terms of understanding what is technically and economically possible they have no fucking idea.

        • Bunji

          $400,000 (price in Auckland) includes the section – which if you can’t get a section under $300,000 in Auckland without going out to the whops, makes it hard to make a house+section under $400,000.

          That’s looking at $1000 / sq m, which is what it should be, vs the $3,500 most Kiwis are paying right now. So it is looking at putting the screw to those big players in the building industry & buying in bulk.

          As I understand it they are hoping to have apartments for less than $400k in AK, but it’s hard to put promises on any price until you’ve had the negotiations etc. (Also, apartments aren’t for everybody…)

          Building a lot of houses may help section prices go down (or more likely stay flat and drop in real value with inflation), which would attack a harder part of the problem.

          Providing enough supply will help the equation, increasing demand (from the already comfortably off) will not.

          • Jackal

            Isn’t $400,000 the average price? Meaning that some builds will cost more (Auckland) while some will cost less.

            Also, Labour and the Greens housing policy’s actually increase the housing stock, which would reduce demand. This will be advantageous for poorer families as well because there will be less renters competing for the same houses.

            Furthermore, the government already owns thousands of empty sections zoned in residential areas of New Zealand, meaning there is no capital expenditure to purchase those sections. The only cost is in building the actual houses, which would be easily recouped from the people placed into those new homes.

            • Lanthanide

              “Also, Labour and the Greens housing policy’s actually increase the housing stock, which would reduce demand.”

              Pedantic nit-picking here: increasing supply doesn’t reduce demand, it simply increases supply. What it does do is satisfy demand.

              In fact, increasing supply, if the new supply is in excess of demand, results in a drop in prices, to the point where demand increases to meet the price resulting in demand and supply being back in equilibrium.

              Eg, flood the market with imported cars, people will decide they should pay less for a car since so many are available, and the price will drop to a point at which all of the cars can be cleared out of the market.

              • Jackal

                I guess that’s why Labour’s policy only proposes to meet demand, thereby not spooking those voters who already own their own homes with reducing values. However the effect of stabilizing the market on rental accommodation should be positive, which is more than can be said for National’s pathetic excuse for a housing policy.

              • Draco T Bastard

                In fact, increasing supply, if the new supply is in excess of demand, results in a drop in prices, to the point where demand increases to meet the price resulting in demand and supply being back in equilibrium.

                Ah, yes – the Market Equilibrium hypothesis. You know, the theory that just crashed the entire global economy.

                It’s cheaper to buy outside of Auckland so why are people moving to Auckland?

                • Lanthanide

                  Because price of housing is only a small factor in why they choose to move to Auckland.

                  Market Equilibrium is a very simple theory, so I don’t think anyone claims that it always correct and explains everything.

                  I just brought it up as an example to show that “increase in supply” can lead to “increase in demand”, assuming that the supply increase results in a price drop. Which if you think about it is actually the same thing as Jevon’s Paradox.

                  • Draco T Bastard

                    Market Equilibrium is a very simple theory, so I don’t think anyone claims that it always correct and explains everything.

                    The economists do.

          • Draco T Bastard

            (Also, apartments aren’t for everybody…)

            No they aren’t but I think you’ll find that most people would be happy with them and that a fairly significant amount of the population will prefer them once they get to live in one. Same can be said of terraced housing and pretty much all other forms of higher density housing.

    • SpaceMonkey 4.2

      Which is why they are natural coalition partners…

    • Draco T Bastard 4.3

      And “middle NZ” are solidly in the 7th to 10th deciles. Everything below that is ignored by both main parties.

  5. BM 5

    Yes build state houses for those who can’t afford it and they can rent off the government/taxpayer

    Don’t build houses to sell that will just fuck everything up.

    Buying a house has never been that easy, the media, once again is being very irresponsible and presenting a view that basically in the “old days”, houses were pretty much free and every one had one and it took no effort to buy one.

    Which is complete rot, buying a house is a big commitment, it may take people 5 -10 to save up enough for the deposit and meet the criteria required for a mortgage.

    Young people are fussy and expect everything to be handed to them on a plate, I say fuck them and make them work for it like every one else.

    • One Anonymous Knucklehead 5.1

      Do the words “housing bubble” mean anything to you?

      Here’s a picture.

      • BM 5.1.1

        I have to say.

        Why the hell did Labour let it get so out of control.
        That line was practically vertical when Labour was in power, it’s only since when National took the reins that the housing market has started to stabilize.

        Why didn’t Cullen do something about the banks throwing money at people.
        Why did he allow this insanity to continue.

        • Lanthanide

          Yes, that’s what happens when the economy is growing vs the economy being stagnant.

          In Labour’s case, they didn’t want to seriously upset the housing market (eg, put capital gains tax in place or other measures to cool investment) because it would have made them a gonner at the 2005 election, which they only managed to scrape through with the student loan bribe (which is excellent policy, but a bribe nonetheless).

          If Labour had put in some sort of CGT, you can be sure that National would have vowed to repeal it and then given tax cuts to everyone, which is what they did after winning in 2008 even though we can’t afford it.

          So, blame National.

          On the other hand, working for families is exactly the sort of middle-class welfare that we don’t need, and that is something that you can pin squarely on Labour – but note also that National hasn’t repealed that either.

          • vto

            “working for families is exactly the sort of middle-class welfare”

            working for families is actually corporate welfare

          • BM

            On the other hand, working for families is exactly the sort of middle-class welfare that we don’t need, and that is something that you can pin squarely on Labour – but note also that National hasn’t repealed that either.

            See paragraph 2 and 3 of your post.

        • One Anonymous Knucklehead

          BM, I note that the graph at 5.1 utterly refutes your assertions at 5. Your credibility is suffering again, especially when the best you can manage in response is to blame Labour. We’re talking about the situation now. I further note that Labour’s current policy is a lot closer to your stated preferences.

    • Skinny 5.2

      Hey BM someone above has made a very good point. Back in the baby boomer days the relative annual household income compared to house prices was 3 years. Not sure what it running at the moment, but I’d say it’s x 6 & growing. 

      I take it your of the baby boomer generation? Compare apples to apples mate. It’s not really a case of work hard like you did. It’s a different playing field today.

      • BM 5.2.1


        I brought my first house in 1999.
        Paid 130k for it, was valued at around 350k there for a while, thanks to Helen and team labour, probably dropped around 20k under team National.

        Labour blaming National for out of control house prices, fuck they must think people are stupid.

    • Draco T Bastard 5.3

      Buying a house has never been that easy,

      Back a few years ago they were actually that easy to buy. Has something to do with house prices only being between 3 and 4 times the median wage rather 5+ times.

      • BM 5.3.1

        You buy what you can afford.
        Problem is first home buyers these days are a bit older now and have normally rented out quite good digs.

        They won’t settle for a house in the not so good areas or the house without the brand new new kitchen or bath room.

        Younger people are soft cocks they can’t handle roughing it at all.

        • Draco T Bastard

          You fail to understand the problem, even cheap houses are out of reach of the younger generation due to a few people buying up all the houses as rentals.

      • johnm 5.3.2

        +1 In 1980 I was earning $10,000 a year and was able easily to buy a three bedroom house on a very large backsection overlooking central Johnsonville for $32,000. The house was only 18 years old at the time…FANTASTIC! All gone now destroyed by greed.Meaning the greedies have totally stuffed up the market for all time. 🙁

  6. srylands 6

    You are missing the point. If you have a household income less than $100,000 you are not going to be able to afford to service a mortgage no matter what the Government does. $100,000 is 2 x average salary earners (a bit over).

    Getting poor people signed up to mortgages caused chaos in the USA. It won’t happen here.

    For those with permanent incomes less than $100,000 it is renting, unless their baby boomer parents hand over some of their equity before or after death.

    For those with household incomes less than $50,000 welfare housing is the best bet.

    • Lanthanide 6.1

      Ah, really?

      Just did ANZ mortgage calculator. Two people on $48,000 each, with 2 dependants and 2 cars, calculator says ANZ would lend up to $608,000 at maximum for such a couple.

      Now if we’re realistic about it, and say they borrow $320,000 with an $80k deposit for a ‘reasonable’ house in Christchurch or Wellington for $400k. Repayments on such a mortgage, at 5.85% interest, is just $1,888/month for a 30 year term. I’d say that’s likely to be around what this family is paying in rent.

      Now if we go to $400k borrowed with $100k deposit for a $500k house, repayments are just $2,360 for 30 years at 5.85% interest.

      Looking at the above figures, the biggest thing that stands out as being impossible to achieve is the initial deposit required to get you up to 80% LVR, not the monthly repayments. Which is exactly what all of the media commentators have been focusing on – saving for a deposit is hard.

      • just saying 6.1.1

        To put your “just $1888” per month in perspective, Lanth, that’s pretty much the net minimum wage.
        Oh and $96,000 would probably be the 90th decile for young couples. I presume the mummy-and-daddy bank stump up the 80,000 in this kind of situation.

        How is the air up there?

        • Lanthanide


          I’m simply refuting srylands statement that those earning a household income of less than $100,000 could not afford a mortgage. Using the calculator I showed that it is possible for a household income of less than $100,000 to afford a mortgage.

          I made no claims about how many people have household incomes of $96,000, or the ages of such people. I’ll note that srylands also didn’t say anything about the ages of such couples, either.

          • srylands

            Just to amplify my earlier statement which may have been a generalisation. It is more correct to say that it is very difficult for a household with an income of less than $100,000 to service a mortgage covering 80%+ of a sale price on a median value home in the main centres. Sure your ANZ bank calculator shows that the bank will lend but do they really want to go there? The couple (lets say it is a couple) should do their modelling based on interest rates 2 percentage points higher than currently. Then look at the money they have left over after their mortgage payments and ask themselves so they want to lead that life for the next decade?

            The policy announced yesterday will do nothing for affordability.

            In Auckland, the biggest problem to tackle is that section prices average $300,000. It is mad. Find ways to get that down to $200,000. There are many other things to do on the policy front but that would be a good start.

            Introducing policies that just add to demand are a waste of time – they will actually make things worse.

            • Skinny

              I’ll start the day off nicely because I want an answer. Good afternoon srylands please tell us how Mr Keys tinkering in housing encourages punters to the share market and out of property?

              • srylands

                “I’ll start the day off nicely because I want an answer. Good afternoon srylands please tell us how Mr Keys tinkering in housing encourages punters to the share market and out of property?”

                It does nothing at all. In fact it will have the opposite effect. Stupid policy.

                • Skinny

                  Question by me for John Key today after 5pm on Duncan Garner’s Radio Live Drive show. Tune in or drop out!
                  Q: Why is National sending mixed messages. PM John Key wants the public to stop investing in property & invest in the share market i.e. Power shares & in NZ listed businesses. This tinkering does nothing to encourage the shift. Probably the opposite, increasing house prices in Auckland’s case. 

            • Lanthanide

              Actually srylands a higher interest rate doesn’t make a huge difference:
              $320k at 6.85% = $2,097 over 30 years
              $320k at 7.85% = $2,315 over 30 years

              Now, we’re not at those interest rates just yet – 5 year fixed is 6.60%. It’ll be some time before the shorter rates approach the 6.85% level, maybe 2-3 years, and probably longer still for the 7.85% – after all the current 5 year fixed rate is still 1.2% lower than that. So if you make more than the minimum payments in the short term, then when these higher rates kick in, you may still only be paying the equivalent of $1,888 per month of current money, however inflation and pay rises should mean this is a smaller proportion of your paypacket in the future than it is today.

              Of course that’s assuming you pay more than your minimum, which a lot of people don’t or can’t, etc. But it’s also not taking in account that banks will often give you a discount off their posted rates.

              I currently pay $1,603.33 a month rent for a decent 3 bedroom house near central Christchurch. It’d be perfectly suitable for a family with 2 kids, perhaps a little cold but hardly terrible like many rental houses are claimed to be. The area isn’t the greatest but good enough. Stretching out to pay a mortgage at $1888/month isn’t too much to ask I don’t think.

          • just saying

            Sorry Lanth.
            It was the “just” $1888/month” and the “just $2360″ that set me off.

      • infused 6.1.2

        They may say that, but they will never lend it to you.

      • Mike S 6.1.3

        ‘two people on 48k each’

        All well and good, but 70% of the population earn less than 48k.

    • vto 6.2

      And with each of srylands four paragraphs he pleasingly provides perfect proof that the current capitalist system fails the vast majority of the population.

      • Sable 6.2.1

        That’s why poor old srylands is here. I suspect he knows National have failed but isn’t quite ready to admit as much to himself yet. Why else bother with a bunch of lefties???

    • Sable 6.3

      I think you protest too much srylands. If you are so sure of Nationals glorious success in all aspects of government why are you worried what the left thinks???

    • Lightly 6.4

      my family income is well less than $100,000, but is still more than 50% of households. We own our place and the mortgage is less than renting would be. The secret? We were lucky enough to be able to buy a modest house. What we need is more houses like ours that people can actually afford, and a revived State Advances for people on middle and lower incomes.

      • BM 6.4.1

        Key word there -modest

        You’re responsible enough to realize you don’t have the coin to buy a mansion, so settle for a house you can afford.

        You’re not like that young fuckwit first home buyer who was on the news last night swanning around some brand new palatial house having a cry that house prices are too expensive for first home buyers.

        “Buy something you can afford dumb arse”

        • One Anonymous Knucklehead

          No, you’re back with the same failed argument you had at 5. Housing bubble, remember?

          We need better wingnuts.

        • Te Reo Putake

          C’mon, BM, don’t be dissing the aspirational, you’ll make John Key cry.

        • Lanthanide

          This whole “young people want to buy massive mansions, they need to get real and settle for less” thing really annoys me.

          Sure, there are *some* who have unrealistic expectations, but a lot of people are simply wanting a ‘reasonable’ house, eg not something you have to literally slave over after you’ve book to make it livable, and these people still are shut out of the market. Note that buying something that needs substantial work is not really practicable if you’re already working full time, have children and don’t have the skills to do the work – if you’d even be allowed to do it under the law these days.

          Characterizing such people as being unrealistic is IMO unfair.

          • infused

            Some, more like most. Read the facebook comments. ‘there are no houses in auckland’. Bullshit, there are tons. People just don’t want to live there.

            Well tough shit.

            • Colonial Viper

              Hey aren’t you the big tough man lol

              Meanwhile, it’s time for a government who is willing to take structural societal and economic problems seriously. Not sure where we’re going to find one, but it’s needed.

    • bad12 6.5

      SSlands, in your own words oh economic genius, give us the numbers of families, individuals in New Zealand who’s household income is 50,000 dollars or less…

    • Jackal 6.6

      You’re obviously an idiot srylands.

      For those with permanent incomes less than $100,000 it is renting, unless their baby boomer parents hand over some of their equity before or after death.

      People earning under $100,000 per year should just be stuck renting until their parents clock out and leave them an inheritance, if there is one. Seriously?

      That means the majority of generation X Y and Z will be fifty, sixty or seventy years of age before they can hope to purchase their own homes, well past the age of requiring security in the form of a house to raise their own families in. No wonder Kiwis are choosing not to have children anymore.

      Such a system is clearly detrimental to society. But I guess that conforms with most of National’s defunct policy ideas eh srylands.

      • srylands 6.6.1

        “You’re obviously an idiot srylands.”

        Stop shooting the messenger. You do the calculations.

        If you don’t like what you see you need to (a) bring down house prices by at least 30% and (b) introduce policies to increase incomes (and no you can’t do (b) by regulation).

        but RIGHT NOW what I am saying is beyond dispute – in the main centres any household earning less than $100,000 cannot afford a mortgage of 80% of the value of a median house, without incurring considerable hardship.

        • vto

          “If you don’t like what you see you need to (a) bring down house prices by at least 30% and (b) introduce policies to increase incomes (and no you can’t do (b) by regulation).”

          Incomes are set by regulation now srylands, why do you ignore that? Employment regulation, tax regulation, welfare regulation, corporate welfare regulation, on it goes… You yourself said that per capita GDP is a tad under USD30,000. That should be ample for everyone in NZ to adequately live on, but it aint because the regulations currently governing wealth and income distribution in NZ are all fucked up so that a few get too much and too many get insufficient.

          “but RIGHT NOW what I am saying is beyond dispute – in the main centres any household earning less than $100,000 cannot afford a mortgage of 80% of the value of a median house, without incurring considerable hardship.””

          Equals system failure. The system you continue to support. You are confused man, confused.

          • srylands

            No you are confused.

            I recommend this:

            “Working Towards Higher Living Standards for New Zealanders”


            It does not say more regulation is the answer. Heh. So it isn’t just me.

            • vto

              Is the same treasury that has been advising governments for the last 30 years and more? The one you work for?

              And good to see that you recognise that regulation sets income and wealth distribution at the moment. It is not a matter of more regulation to provide a different pattern of distribution …. it is a matter of re-regulation. See the difference? And please don’t try and tell us this distribution can be attended to without regulation… that has never been the case.

          • srylands

            “Incomes are set by regulation now srylands, why do you ignore that?”

            Really? My income is only set by how hard I am willing to work. No regulation in sight.

            • McFlock

              You really don’t believe your own shit, do you?

              The correct neoliberal argument is that your income is determined by how much demand there is for the services you provide and how much competition you have in providing those services. The effort you put into it is immaterial by that theory. But, being a randian superhero, secretly you believe that you are the arbiter of your own fate.

              Holding these two fundamentally contradictory ideas in your head isn’t really all that healthy.

              • srylands

                You really don’t believe your own shit, do you?”

                Well you believe your shit, so yes.

                • McFlock

                  however, my shit doesn’t require the doublethink to believe that my income is “only set by how hard I am willing to work”, and that my income is only set by supply and demand within the labour market.

                • vto

                  tax regulation determines that people who make money by capital gain receive a certain amount of the nations wealth.

                  tax regulation determines how much of your gross income you get to keep relative to others in the nation.

                  minimum wage regulation determines that nobody can earn below a certain income and so receive a relative and predetermined amount of the nations wealth..

                  maximum wage regulations determine that no certain types of people can garner more than a certain amount of the nations wealth… oh wait, not that one.

                  employment law regulation determines that a proportion of a persons income is paid into a retirement scheme called kiwisaver thereby determining their future wealth and income.

                  cartel and monopoly regulation determines that there is a limit to how much relative income and wealth can accrete to certain players / sectors.

                  tax regulation determines that those who make money by wage and salary pay a share of the tax and those who make money by capital asset and gain don’t pay a share of the tax, thereby determining their relative shares of the available wealth and income.

                  public sector regulation determines certain sums payable to certain departments from which they must operate thereby determining their incomes.

                  …. you see srylands, the wealth and income of New Zealand is currently determined by these and myriad other regulation, legislation, policy and other settings……

                  …. adjusting those settings to change those wealth and income distribution is nothing new………

                  • vto

                    edit oops:

                    “…. you see srylands, the distribution of wealth and income in New Zealand is currently determined by these and myriad other regulation, legislation, policy and other settings……”

        • Lanthanide

          I disagree srylands, they can afford a mortgage without incurring considerable hardship; *if* they can rustle up the deposit first, through some magical means.

        • Draco T Bastard

          If you don’t like what you see you need to (a) bring down house prices by at least 30% and (b) introduce policies to increase incomes (and no you can’t do (b) by regulation).

          Translation: You need to do something but you can’t use the tools necessary to do so.

  7. just saying 7

    It shows they are worried about the comfy children of the comfy (especially in Auckland and Christchurch), venally voting Labour for their offer of a $35,000-40,000 subsidy on a new home. It seems National felt they had to chuck something their way. The equivalent of six months of dole money vs 3 or 4 years.

    I doubt they see the irony, and frankly the whole thing makes me sick.

  8. Sable 8

    This is a typical National policy but comes as no surprise. They don’t care about the large majority of the population, only those with deep pockets. Having said this yet to see anything from Labour that helps the working classes too.

  9. pollywog 9

    Cheap affordable housing…

    Pruitt- Igoe anyone?

  10. Stephen 10

    One feature of home ownership that is not commented on often enough is its role in funding business. Like ALL small business people (we employ more New Zealanders than any other group, so I guess we are sort of important even if ignored by left and right?) I have for 45 years funded my business and my colleagues wages on guarantees linked to the mortgage over my family’s home. When the prices of these houses drop to the level that means that all of us can own and live in our own, safe homes, how will the banks react? By calling up all loans and overdrafts that currently keep New Zealand in what little work there is still available.
    The housing problem is a great deal more complex than the easy point scoring your articles and comments suggest. If we go back to first principles, that we want people to have a stake in society, and to have safe and warm houses, isn’t a better way of achieving this to (a) make our tenancy laws secure for tenants so that they have a commitment to “their” home as they do in European countries and (b) make landlords provide a minimum standard of home if they want to rent it out?

    • geoff 10.1

      So you’re suggesting that we should keep a housing bubble going just so that businesses that borrowed irresponsibly off the back of the fictional value of their houses can keep living in fantasy land?

    • vto 10.2

      Stephen, you do highlight a problem in your post there but not the one you think. The problem with funding from banks against homes for businesses is not the value of a persons home but the manner in which banks conduct their business.

      Banks will take anything and everything. If rules, or settings, in NZ were changed that meant banks could not do the things they currently do, do you imagine they would turn tail and leave the country? Not in our wildest dreams fulla….

      Let the banks fund against cashflow instead of asset, as it should be. But the banks will cry…. “1wah wah wah… this is the way it has to be… wah wah wah….” But don’t believe them – they deceive for their own ends. Get this….

      In days past banks used to take not a mortgage as security, they used to take ownership of the property as security. The banks insisted “wah wah wah… this is the way it has to be… wah wah wah”. But their nasty ways were seen through and the state removed the ability of banks to take ownership as security and limited it to mortgage…. and guess what has happened…. the world didn’t collapse and neither did the banks.

      Don’t listen to banks. They lie and they are the most cold-blooded of all.

      • srylands 10.2.1

        “Let the banks fund against cashflow instead of asset”

        You are confusing funding and security.

        The banks would not leave the country. They would certainly reduce credit for loans not secured by assets.

        • vto

          No, I am not confusing anything. The security is the cashflow / business instead. They simply have to adjust their own view on what constitutes a security. It used to be that ownership was the security and laws were brought in to limit that security to mortgage instead – don’t see banks issuing less credit as a result of that change. In fact they issue more.

          • srylands

            OK whatever – get it adopted as Green party policy. When they win office next year we can add it to the great experiment.

            • vto

              Looking outside the current paradigm is difficult for you isn’t it. Even when historic facts are put in front of you.

              And I would suggest that the great experiment is the one which is playing out its end game right now. The realities you point out on this thread elsewhere that even people with large incomes are unable to genuinely afford housing in our main centres are proof that the current capitalist system is failing.

              And all you propose is more of the same srylands. How is that going to help?

              • srylands

                The last thing I want is more of the same failed policies. We need radical change. Where we differ is the nature of the change required.

                • vto

                  From what I recall, what you suggest is more of the free market approach, the privatisation approach, the globalisation of capital approach, the small government approach, all of which are more of the same just with greater intensity.

                • Colonial Viper

                  If your “radical change” doesn’t take into direct account real resource limits and energy constraints, it’s simply a fairytale and therefore the wrong change.

                  If it does, then we can talk.

                • Draco T Bastard

                  You’re not advocating for change though, you’re advocating for more of the same policies that crashed the global economy.

        • muzza

          Fraud-lands – Demographic meta-data llort boyeeeeee!

        • Colonial Viper

          Ummmm, except banks will use securities over mortgaged properties as collateral in the hypothecation process, allowing them to access cheaper interbank funding.

          So really, vto can be said to be correct in that these banks do sometimes fund themselves (i.e. access short term liquidity) against assets, and you can be said to be the one who is confused.

        • Draco T Bastard

          That’s ok, just have the government make the loan instead from the money that they create and charged out at 0%.

    • Colonial Viper 10.3

      Like ALL small business people (we employ more New Zealanders than any other group, so I guess we are sort of important even if ignored by left and right?) I have for 45 years funded my business and my colleagues wages on guarantees linked to the mortgage over my family’s home.

      This is a really risky thing to do for anything longer than the shortest amount of time. Tying together your two largest assets – your business and your home – is not advice which is ever given under normal circumstances.

      The fact you say that ALL small business owners do this suggests that you have a very small circle of colleagues and that you make very big assumptions about how they finance their activities.

      Its no way to build an economy or conduct a housing market.

  11. millsy 11

    We probably should build more state houses and target government house buying assistance at state housing tenants who want to buy their own home through rent to buy schemes and the like.

  12. Greywarbler 12

    I listened to Radionz 9toNoon and turned off a speaker who just was repeating the status quo and the accepted wisdom. I had heard it all before almost line for line. How do you get to be a media commenter – offer yourself? Send in your own glowing testimonial? Stand outside the media studios showing your chest?

    Where are the people who actually think about finding what is being done elsewhere in the world, what modular designs, what mass produced designs and specs? – simple but strong, comfortable and safe dwellings are available?

    Report of study published in NZ –
    John Gibson an eminent NZ Valuer published 1987
    Affordable Housing – No Modular House Systems
    p.186 on PDF (thumbnails 28-45)
    Some NZ experiences…
    This paper has outlined some of the experiences of the HCNZ in affordable housing, and identified some of the constraints to reducing house and land costs. It has also shown that with sympathetic Government actions in rebated interest rates, flexible loan policies and other actions modest cost housing is attainable and affordable.

    This much seems clear from my research: there is relatively little room for substantial savings in building costs if we are to retain the standards of construction and land subdivision that prevail at present. My research indicates that lowering of costs can only be achieved by changing of standards – but this is only if our present standards are used as a basis for comparison, or by standardisation of design and high volume production of uniformly consistent housing.

    Changing standards for both housing and subdivisional design need not necessarily mean a lowering of standards, nor should closer living patterns necessarily result in loss of privacy or an
    increase in nuisance. Medium density developments by both the Housing Corporation and the private sector have proved that properly designed complexes can provide a very acceptable living environment whilst intensifying the use of land. With the closer living patterns implied there would need to be greater attention given to the privacy of individual home owners – perhaps communal planting and short screen fences could achieve this.

    Roading standards may also need review. Some subdivisions seem to have roading standards of width and construction that would seem to be excessively high. Perhaps more use could be made of single lane, one way roading in small subdivisions, with associated cost savings.

    My paper has identified several factors affecting the affordability of housing some of which will require further consideration and development by Governments and housing agencies, if housing is to remain within the reach of at least the modest income earner.

    From USA
    Where once the company`s product consisted almost entirely of 8-foot wall panels, today`s manufactured components include roof and floor truss systems, 30-foot sections with windows and flashings in place and such modern options as vaulted ceilings.
    From Vic Uni on Australia
    Significant techniques have been developed in Australia, for example, in the field of high-rise buildings. The construction of buildings from the roof down, which is claimed to cut construction time by at least one third and reduce building costs by about ten per cent, has played an important role in several cities.
    Pre-cast concrete, with its savings on erection time, has been called the most exciting of structural materials, …
    The useful life of pre-engineered formwork can be ten years or more, [don’t like the sound of this but could be improved to triple the lifetime] and the number of re-uses offers tremendous savings when measured against the costs of site-made, tailored form work. This factor has lead to broad use of pre-engineered form-work.

    Prefabricated components have come to hold an important place in many types of construction. One Australian company producing modular panelised house offers nine different basic plans which can be constructed from the 22 standard panels in the system….
    The only stage of construction where a skilled tradesman is really required is for the layout of the sub-floor channel. Both the channel and the floor must be square and level, with the required degree of accuracy being comparable with that for a conventional home.

    Other headings on google that could provide fruitful ideas:
    [PDF] A history, development and exploration of panelized construction.
    [PDF] Evaluation of a single-board microcontroller suitable for rapid …
    Keeper Of The Flame, Managing Technology Article | Inc.com
    Managing Natural Disasters and the Environment – Greenstone
    Sep 19, 1985 – Mr. Aguilera was director general of the Popular Housing Reconstruction Unit ( RHP), the organization responsible for the reconstruction of 90,000 low-income …
    and interestingly
    [PDF] Glebe Report – Volume 4 Number 7 – July 10 1976
    On Ian Athfield’s award winning design for slum housing in Manila

  13. tricledrown 13

    Stephen I know a lot of people who have proped up their businesses by borrowing against: their houses its a dumb
    Idea most have lost everything
    Due to the GFC.

  14. bad12 14

    The facts are that the majority of houses built in Auckland presently and in the recent past are those of 200 square meters or more,

    Perfectly adequate 3 bedroom houses can be built at 100-120 square meters which will take out a third of the current costs of new build housing irrespective of land prices,

    Much of the current million dollar monopoly chips being bought and sold in the Auckland market are just that 100-120 square meter houses,

    Nationals latest effort at adding even more fuel to the fire of housing affordability in Auckland will achieve very little for the buyer but provide a larger pool of prospective buyers to those who are selling thus increasing the house price inflation,

    When we consider this latest ‘effort’ alongside of the removal and non replacement of 100,s of State houses within the Auckland City boundary the only logical conclusion that can be reached is that the National Government are only too happy with the current rate of inflation in that market…

  15. tricledrown 15

    The big banks and speculators are having a fielday National aren’t going to step on the toes of their biggest donors.

  16. tracey 16

    Did the pm say what interest his employer charged him for his first loan?

  17. xtasy 17

    My question re all this talk about affordable housing, the crisis in Auckland and Christchurch, and demand not being met with supply is: Where does the demand actually come from???

    We have only slow growth of the population, while migration of course occurs and has recently increased. We have a growing older population, and many will naturally over coming years pass away and inherit properties to their off-spring, we have only very slow economic growth, at best “moderate”, so where is the cash coming from for the demand in housing?

    In today’s Herald there are a few interesting articles on housing, but none deliver much clear information and answers. It was clear from listening to two “experts” of sorts on Nine to Noon on Radio NZ National this morning, that what National have proposed as new policies at their weekend conference is at best a “band aid”.

    Some say that off-shore “investors” are only marginal, others claim otherwise. There is a lack of reliable information available on housing ownership, on sales, on other relevant bits that any government would need to present sound and effective policies.

    What seems clear is: There are more willing buyers than sellers, hence the price increases.

    While many home buyers may be first home buyers, or such re-arranging their live-in property (selling one for buying a more suited or desired one), these must be limited though, as I have not witnessed a substantial growth in incomes and savings, apart perhaps for the few that benefited from the tax cuts by the government a few years back.

    So investors seem to be playing an important role, that is such who buy to rent out, to lease out or simply intend to resell for a nice tax free gain in a hyped up market.

    Has anybody considered, that besides of the present investors, already sitting on the market here, who are born and bred New Zealanders and perhaps some well cashed migrants that are permanent residents and citizens, there may be more to what is happening?

    What if there is also some “investing” done by residents and citizens, who are counted as New Zealanders, but may be acting as fronting investors, for relatives or business mates off-shore, who buy up numbers of properties for the future benefit of all parties involved? New Zealand is one of few countries that has liberal rules for off-shore buyers, and if such may also involve locals to do more buying, this may actually be quite a big factor in the whole equation that goes unnoticed, as the buyers are residents and citizens, and are thus counted as New Zealanders.

    Even Labour’s plans to put limits on such “investments” by off-shore buyers could be circumvented by such practices.

    New Zealand needs to get a national register for all private and investment home owners, disclosing information that is urgently needed to find out the facts. The Councils have some information, so do some other government departments, but as it seems, there is a true lack of information about what really is going on.

    There is of course some over-crowding, where some live in overcrowded homes, in garages or whatever, but that alone cannot explain the housing crisis.

    For low income earners and beneficiaries some large scale investment will be needed to offer affordable rental homes, as neither Labour nor National have sufficient answers.

    • Skinny 17.1

      You have put out a number of interesting points cobber. National should, and by some quarters are being taken to task on doing little more than tinkering. A register of foreign property investor would be a great start. Surely some loop hole expert can enlighten us how some foreigners are getting away with hiding their ownership?

    • johnm 17.2

      mho the housing bubble is primarily fueled as a ponzi scheme by speculators for capital gain and is maintained by the hapless plebs who have to rent to pay the landlords get rich mortgage scheme.All the main Parties are in on the Ponzi too and foreign banks Aussie make a killing on the principal plus interest.

  18. tracey 18

    Property as investment is where the demand from inside and outside new zealand.

  19. BrucetheMoose 19

    I wonder if the question was asked at the National Party Conference, “those without an investment property, put your hands up,” how many people would have sat there with their arms crossed. Most of the room I would say. Sums up National’s and Key’s interest in affordable housing – not much.

  20. It happened in the US, it happened in Ireland (John “I would like New Zealand to be like Ireland”key knows all about how that happened) it is happening in the UK and of course it is happening in New Zealand too. It’s just another bankster scam to rob the middle class blind, usher in the neofeudal era and fuck everybody up the ass while they live it up on the remaining world’s resources.

    Over here is will be a good little twoofer. Fucking the Kiwisaver fund and all those pennies Kiwi’s managed to save over the last couple of years and the middle class who will be left holding the can while John and his bankster mates laugh all the way to their respective banks as it all goes pearshaped.

    But talking about his behind closed doors? Neh, that would be conspiring and our governments would never do that!

    • blue leopard 20.1

      @ Travellerev
      Yes, I agree.

      It doesn’t seem like much of a solution to encourage people to go into debt at this time (or ever).

      Isn’t this type of approach exactly what propelled the mortgage loan crisis in America? (I believe that is what you are saying)

      People get given access to loans and seem to forget that their wages should supply them with their living costs; not bank debt.

      Once they have a house in their name (owned in reality by the bank) it appears people seem to be fooled into feeling pretty well off and then keep voting for stupid policies that keep the situation degenerating.

      Only something like 10% of the world population ‘own’ land, so I guess anyone who has a mortgage is somewhat well off.

      There are more important things going on than owning houses. Large-scale fraud, degenerating working conditions, joblessness, spying, RMA & more, but guess this will fool most like all other already-proven-failure political approaches seem to.

  21. tricledrown 21

    Srylands you have shot your self in the foot so many times today what’s happened .
    The party after the party conference!

  22. Drakula 22

    Key is just buying votes. Where is going to get the money from? Remember last election he promised tax deduction to the same middle class bracket? By achieving this he had to increase GST by 5%!!
    And Nats call this guy a genius??? He’s only robbing Peter to Pay Paul. Poor Peter to Rich Paul.

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    7 days ago
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