- Date published:
11:16 am, January 9th, 2016 - 249 comments
Categories: capital gains, capitalism, debt / deficit, Economy, families, housing, john key, national, poverty - Tags:
This morning’s Herald contains a story about an individual who has purchased eleven houses over the past five years and can now afford to play World of Warcraft all day.
Gary Lin says he started buying houses only so he could play World of Warcraft on his computer all day every day.
Now he’s a multimillionaire who owns 11 rental properties in the soaring Auckland market.
The 32-year-old – originally from Guangzhou in China but a New Zealand resident since he was 13 – started buying property in June 2010 with a $200,000 wedding gift from his father. He and his wife Cindy bought one place for as little as $173,000.
Now his portfolio is valued at $6.5 million, which earns about $275,000 in gross rent each year.
And he is more than happy to increase rentals depending on market conditions.
It is hard to work out the purpose of the article apart perhaps from serving as click bait. But the story does highlight an increasingly disturbing problem and highlights the weaknesses of the current economic system.
Firstly it neatly skewers one of the myths of the system, that anyone can make it through hard work, where even the son of a refugee can become the Prime Minister. While in days gone by New Zealand’s society was egalitarian, to make it now you need to have a wealthy father in law willing to gift you a sum of money most people can only dream of. And it is interesting that the Prime Minister’s biggest cheerleaders are those who had privileged rather than modest starts to life and want to preserve that privilege.
Secondly you have to wonder what contribution the individual concerned is making. Renting out existing houses to desperate tenants and playing World of Warcraft every day contributes nothing whatsoever to the society, apart from eleven families having to work harder just to pay the rent. Private enterprise has been responsible for many fantastic technological and innovative developments. Investing in existing houses provides no such benefit.
Thirdly the real estate inflation caused by this sort of activity drives up personal debt and increases our exposure to Australian banks. We are borrowing more and more money to buy the same houses off each other.
And finally but most importantly this activity ensures that the rich become richer and the rest become poorer. If you accept the market is always right and this is an inevitable occurrence then you are probably fine with this. Of course the contrary argument is that everyone is free to engage in this behaviour but not all of us will own eleven tenanted Auckland residential properties. Just like a ponzi scheme it is a system where most people will inevitably fail and pay for the success of the few.
The recent changes made by the Government appear to have have had a beneficial effect (yes you read that right) and Auckland’s runaway house inflation appears to be stalling. But more is needed.
For instance Germany regulates house prices and officials have the power to reduce the price payable for an apartment even if the parties have reached agreement. The German economy has not suffered, in fact it seems clear that there are benefits in this approach. Forbes Magazine describes the benefits:
How does all this contribute to Germany’s economic growth? Locke, a prominent critic of America’s latter-day enthusiasm for doctrinaire free-market solutions and a professor emeritus at the University of Hawaii, notes that a key outcome is that Germany’s managed housing market helps smooth the availability of labor. And by virtually eliminating bubbles, the German system minimizes the sort of misallocation of resources that is more or less unavoidable in the Anglo-American boom-bust cycle. That cycle is exacerbated by tax incentives which encourage citizens to view home ownership as an investment, resulting in much hoarding and underutilization of space.
In the German system moreover, house-builders rarely accumulate the huge large land banks that are such a dangerous distraction for U.S. house-builders like Pulte Homes, D. R. Horton, Lennar, and Toll Brothers. German house-builders just focus on building good-quality homes cheaply, secure in the knowledge that additional land will become available at reasonable cost when needed.
So imagine having as a policy setting the maintenance of housing affordability to help the stability of the labour force and to avoid housing bubbles. If only …
Sounds like this guy had the capital to start off with good on him more people need to do this instead of coming over here and scrounging
The capital was gifted and he is not contributing. Has “scrounging” changed its meaning? Does it only apply to poor people?
[lprent: Troll. ]
He didn’t provide them. Some else provided them. It would have been better for society if he had stayed out of the market and the house sold at a lower price to someone who wanted to live in them.
He bought them – probably off an owner occupier & has made them available for rental. The owner occupier he bought from has probably upgraded to a “better” house. By staying out of the market wouldn’t have reduced prices. In every country in the world where prices of houses & rents have been regulated, it is harder for the less well off to buy or rent.
You need a lesson in economics & how a free market works. This whole argument is driven by jealousy not rational thinking. According to Mickey Savage etc it would be better for the economy if he had spent his $200,000 windfall on toys etc rather than providing quality rental housing which successive governments have proved incapable of doing.
You must be right, because homelessness has doubled. No, wait, perhaps you need a lesson in how the market works on Earth.
There is a market for rental accommodation; not every wishes to own their place of abode. In this sense he is probably providing a service, though it must be admitted that the market for rentals is augmented by those who would prefer to own but are simply unable to afford today’s overblown house prices.
No . . . it would be an awful lot better if he had BUILT some houses!
He provides nothing without being handsomely paid. He is a parasite not a benefactor
Good on him for being born into a family wealthy enough to give him a $200k wedding gift. Such hard work, that.
If everyone had rich parents then everyone would have the opportunity to retire early.
You realise you’ve just presented for the argument that inequality reduces opportunity’s available to the poorest within society?
Isn’t a rack-renting property speculator who no doubt receives taxpayer subsidised rent payments and aspires to play games all day instead of productively working for a living the epitome of a scrounger?
And Key Supporter proves just how he loves and supports the true bludgers of society.
Pity he didn’t put that capital into productive enterprise, which can have much much higher rewards. But also significantly higher risk.
Perhaps instead of the government subsidising rents, they should subsidise start up companies.
I’m all for that, or other similar concepts.
The policy problem is that you will always need landlords who can offer rental accommodation to those wanting to rent (students, those living in a place temporarily etc.) but how to determine who is a “serious” landlord and who is just recklessly speculating.
That need is ameliorated by having sufficient state owned housing. By doing that and charging affordable rents, the “market” for private rentals is less and will be harder for short term speculative and exploitative landlords to operate and profit.
And when we do that we’ll get the bludgers complaining that the government is crowding out private investment. The same argument that was used in the 1980s to dismantle and privatise government services such as Telecom and, amazingly enough, to lower welfare payments.
We have to get rid of private investment.
“We have to get rid of private investment”
Whoa. Care to qualify that statement, or are you an advocate of communism?
Private investment/ownership results in rentier behaviour which is, IMO, really what the post is about. It’s detrimental to our society causing all sorts of ills such as inequality and poverty.
Now, we actually do want to encourage entrepreneurialism and innovation but we can do that without private ownership.
I have an idea of cooperative businesses. The business is self-owned and has no shareholders. Anybody working there gets paid their negotiated pay and has a say in running the business. Nobody outside of the business has a say in its running nor gets any direct benefit from it. To start this business a group of people put together a business plan and gets 0% interest loan from the government.
IMO, this system would encourage and support entrepreneurship while getting rid of the parasitical aspect of capitalism.
Housing is slightly different in that, IMO, everyone has a right to decent housing and thus land and housing is state owned/administered for a modest rental. I also think that natural monopolies should be state owned/administered.
What you have proposed is capitalism.
“Housing is slightly different in that, IMO, everyone has a right to decent housing and thus land and housing is state owned/administered for a modest rental. I also think that natural monopolies should be state owned/administered.”
Well that’s nice, where has state housing ever delivered decent housing to all? Does this mean nice houses in Ponsonby will be available to all at a modest rent, or will they get reserved for party members only?
Perhaps housing could be allocated by lottery instead?
No it’s not. Capitalism hinges upon private ownership of businesses/resources and the usury that comes with it. No private ownership in my model and the only people who get rewarded are the people who work.
It provided decent housing in NZ for decades – until the Labour Party started dismantling the state apparatus. Not to all maybe but it could have been extended.
But if everyone wants one, how do you chose who gets one? There are far more people who want one than there are available properties.
First come, first serve – life time lease. If there isn’t one available then you don’t get one.
A couple of points:
Firstly, who shares in the profits/ losses of the business.
Second point would be, how negotiable is the salary. Thinking of the Bill Gates type of people here. Would they be encouraged to adopt this business model? Or would the only ones that would, would be the high risk ventures.
Third point is who gets to vet the business proposal? Are governments the best people to decide what is a good business plan or not?
Fourth point would be, would this model be used by people to “developlop an idea” and get the government to fund it, but the run the real live model privately?
Lots of fish hooks with no good bites.
“would this model be used by people to “develop an idea” and get the government to fund it, but the run the real live model privately?”
Yes. Managing IP would be needed to prevent it. Good luck.
That would be the workers at the business.
I suppose the people at the bank.
Are private banks that benefit from loaning out the money at interest the best people? I.e, is the present business model the best model?
I hadn’t actually thought about that. I usually hold that the government should just fund R&D and get rid of the BS that the private sector does (Apple, despite using technologies developed by the US government pays almost no taxes – anywhere).
Considering the number of business that collapse in the first couple of years, would the lower paid workers be happy to have that much skin in the game? Or would they be willing to mortgage their homes to keep the business running. Or, as in some cases with private companies, be jointly and severally liable for periodic payments if the business goes under.
Another thought, what about current fraud / H&S laws where directors can also be held personally liable for fines of the company if the company is unable to pay.
What lower paid workers?
They don’t own homes to mortgage.
If the business goes under then all debts that the business had would be annulled automatically.
Fraud and corruption would still be a criminal matter.
I assume then that the office secretary is rewarded at near the same rate as the person with the idea. Why would that person want to work in that situation when they could reap much greater returns elsewhere. Which also means that as a director, would they not want greater returns if they are going to be held criminally liable if something goes wrong? Especially if it not actually them personally who offended. Risk vs return.
If losses are annulled, and it is the government has been the primary funder, then aren’t we creating the same problematic environment as the too big to fail banks? Profits are privatised, whilst losses are public.
Or, for lenders that are private, why would they lend? Banks ALWAYS get their pound of flesh. And then some. It is why they lend to dodgy developers. The banks are first in line, and get great rates of return. Which also means that they don’t lend to start ups unless there are assets to hold securities over, which are the private homes of the business owners.
The fundamental rule of business is “cash is king”. And any new business burns it. All businesses burn cash. It’s that great challenge of spending money to make money.
That would be a collective decision of the workers.
If they can get better elsewhere then they’re welcome to leave. But my experience is that the people in the workforce don’t get rewarded for their ideas anyway – the shareholders and upper management do.
That said, I suspect that the workers discussing the idea openly are more likely to recognise and reward the person with the idea.
They’re only going to be found criminally liable if they did something criminal. No business should be rewarding criminal behaviour.
You didn’t read my link did you?
I’m working to get rid of private banks as well so as to get rid of their ponzi scheme.
I’m working for a system that gets rid of private lending so as to get rid of the bludging.
I believe a director can be prosecuted for health and safety breaches that the company failed in, so not something done in a personal capacity.
There was nothing to read in the link.
For smaller companies an original idea for the business comes from someone, the foundation idea. If a person comes up with a company changing idea and isn’t compensated for it, then they aren’t in the right company, and soon leave anyway. Or if they believe in the company and idea, they can invest in the company as well.
Lending is all about risk. The higher the risk, the higher the rate. One furniture chain I know made more out of the interest on HP, than the actual product sold. That was their business model. A low priced item, with a high interest rate.
Anyway, I can see we could debate this forever. I’d personally be wary of a government being a primary source for business lending. Too high risk, and too much of a chance of privatising profit, and nationalising losses.
So, they would have committed a crime then through negligence.
Real Monetary Reform
Try reading the entire thread.
The nationalising of losses and privatising of rewards happens already. In fact, it’s pretty much how our entire system is designed. It’s achieved via excess income, low taxes on that excess income, and other loopholes.
It has to be looked at whether we change the system or not but we most definitely won’t be able to fix it without changing the system.
“Reckless” and “speculating” are not necessarily linked especially not in the Auckland housing market where a very good return and profit are almost a given [yes, pun alert]. Thus I’d say that “reckless speculation in the Auckland housing market” is an oxymoron.
Well its like a game of musical chairs. While the musics playing Im sure pfoit is a given.
When the music stops, prices devalue and these highly geared individuals go tits up do you not think theyll go crying to the govt for bail out – just like the GFC? Thats why its reckless investment imo.
Draco – yeah quite supportive of the co-operative model. Probably why the investors couldnt keep their grubby mitts off Fonterra.
Recklessness can also refer to a want of consideration of harm. The speculation in Auckland is driving up rents and impoverishing those without property. It is financially prudent (for the moment) but socially and in the long term economically reckless.
“. . .more people need to do this. . . ”
What, get two hundred grand as a wedding present?
I guess you’re right.
The capitalist system’s biggest flaw has always been ‘Greed’ and those willing to manipulate the system so that the market works in their favor at the expense of everyone else.
While there is unemployment and no unions to stand up for the workers the bosses can afford to not give workers the real market share of the profits in wages and keep them artificiality low.
John Key comes from a background of manipulating the market for his benefit. Some say he actually had his hands all over the setting up of the system that caused Ireland to get into a financial crisis.
The markets run on Greed and Fear and Animal Spirits
Take the cash-cow element out of the land-lord caper. Take a GV and work a formula around that for a mandated maximum permissible rent. Pitch that formula so that it results in a rent that falls short of covering average term mortgage repayments. Re-draught tenancy rights. Bring in squatting rights and compulsory purchases on properties left vacant for speculation.
Do those things, and I don’t then give a toss how many properties someone owns to rent out.
There’s a simpler method Bill. Use the system, and their greed, against them.
Here’s what I’m certain would work and what the likes of Labour could introduce without alienating the majority of home owners. It would only upset property investors and there ain’t many of those voting left anyway……
CGT only needs to be introduced for investors, there’s no need for a CGT on owner-occupied houses. Property investing is a business and it should be taxed like a business at the same tax rate as any other business
The vital ingredient is to collect the CGT when the gains occur, not when the property is sold. That is done by making rent increases the trigger for a CGT assessment. Council valuations for rates can be the platform for assessing the actual gain. Final accounting can be done when the property is sold.
The first reason to do that is because rent increases are tied to capital gains, can’t have one without the other. We also have a system already in place for monitoring rents via bonds & the tenancy tribunal so the trigger can be automated.
Second reason is that the investors will need to borrow against their increased equity (the capital gain) to pay the CGT. That will prevent them using that equity to buy more properties.
Third reason is it will slow down rent increases substantially. The greedy investors won’t want to pay the CGT so they’ll hold their rents to avoid triggering the CGT assessment. That will give renters breathing space to save enough to buy their own home if they wish to do so.
It can be further fine tuned but essentially it’s about playing smarter and using the system to one’s advantage.
“The vital ingredient is to collect the CGT when the gains occur, not when the property is sold. That is done by making rent increases the trigger for a CGT assessment. Council valuations for rates can be the platform for assessing the actual gain. Final accounting can be done when the property is sold.”
How can you have a capital gains tax that is triggered by changes in income?
If you really want a capital gains tax that is paid before realisation then just apply the FIF rules to property.
FIF rules is one idea but that puts the cart before the horse David. It really comes down to what you’re trying to achieve. A party on the left for example should be asking the question; what can we do to stop rents continually rising?
To answer that question try putting yourself in the shoes of a property investor. What would stop me putting the rents up?
A FIF based CGT would act as a trigger for rent increases. A Rent based CGT wouldn’t trigger anything except a CGT. In short it gives investors the choice of whether they pay a CGT or not and since a good 95% of investors won’t want to pay tax they’ll all think very hard before they raise rents.
If rent increases are reduced then housing inflation will also reduce.
google meaning for scrounging –
He seems to be a scrounger himself, a non-productive member of society, having been given his seed finance rather than earning it himself, made investment in established resources, living off the returns and playing computer games all day.
You call yourself a Key supporter which seems reasonable as this is the sort of wealth that he and fellow Nasties support. Not a healthy, working economy, just people gaining advantage and gaming the financial system till it falls over.
We should look from Gary Lin to Joseph Needham, a man who was extremely intelligent, questioning, thinking, working and living life to the full and involved with people not sitting in front of a computer screen living out his virtual life. He would have made $200,000 work a hundredfold for him, his team of academics and advances in knowledge that would benefit humankind, as well as himself.
This is about Joseph Needham, well known as a great studier and writer about China. This excerpt from The New Atlantis:
A further example of his energetic, unconventional and bold way of coping with life, people and the unknown:
The opportunity to experience China firsthand came in early 1943, courtesy of the British government. A body called the Sino-British Science Co-operation Office had been attached to the British Embassy in Chungking, China’s wartime capital. Needham was to go out there and see what could be done to help Chinese scientists.
Off Needham went, taking his limitless energies with him. During the next three years he traveled all over China, although Simon Winchester’s claim of 30,000 miles should be taken with a grain of salt. His travels were organized in eleven separate expeditions, the primary purpose of each being to seek out Chinese scientists and hand-deliver any books or equipment they needed. Under the dire conditions of the war with Japan, China’s experts were to be found in the oddest places: a team of biochemists deep in caves beneath Yunnan, physicists holed up in an ancient pagoda, statisticians at work in a Confucian temple.
Needham’s travels in China generated a vast apocrypha, the stories — I have no idea how many of them were true — still eagerly being retailed around the School of Oriental and African Studies in London when I attended there in the early 1980s. I wish Simon Winchester had found space to include a few. A sample from the ones I heard, reproduced from memory: Needham and his party were traveling on horseback with guides through a remote, forested region. Suddenly they came up against another horseback party on the trail — led by a notorious local bandit, their terrified guides whispered. Needham dismounted, stepped in front of his party, up to the bandit leader’s horse, and with his customary vigor executed an English folk dance. The bandit leader watched with interest. When Needham had finished, the bandit dismounted, stepped forward, and performed one of his own people’s dances. The ice thus broken, everyone laughed and shook hands, and the two parties proceeded on their respective ways.
Needham returned from China in 1946 with a huge trove of knowledge. In his own notebooks he had recorded hundreds of observations of Chinese craft and technology. He had also purchased trunks full of books dealing with the history of science in China, the foundation for Cambridge University’s splendid East Asian science library.
Only just read the wiki log on him, but it is interesting that the commentary on the Needham question, gave the result of private enterprise being the reason for the wests massive scientific advancement.
In taking the good with the bad, free enterprise can make the advancements required by society, if there is profit to be had.
People are simply motivated by profit (financial well being). That is the norm.
Try reflecting on your attitudes to humans. David Whyte has written a book
called How corrupt is Britain and in my comment below there is a link to a video piece discussing the idea that we all have dollars for eyeballs.
This idea that people are only motivated by profit is merely transference on your part, and wish fulfilment. People are much easier to dismiss when there is an inherent bias against our common values and occasional greatness.
Speak for yourself.
“It is hard to work out the purpose of the article apart perhaps from serving as click bait. But the story does highlight an increasingly disturbing problem and highlights the weaknesses of the current economic system.”
In my view these articles are to draw attention AWAY from big business controlling the financial markets and TPPA deals and making a private landlord (and immigrant) a scapegoat. While people are venting at the unfairness of the Chinese Landlord, they are not getting active on the overarching issues against neoliberalism.
Look a Panda.
Look a Chinese Landlord.
Then business as usual, with BIG business, surveillance, national debt and IDU a far right wing think tank for neoliberalism on steroids.
And that is why Corbyn and Sanders are considered such a threat. They are challenging the established structures of neoliberalism and will seek to curb them if they get power. They don’t get bogged down with ‘smaller issues’ like immigration but are wholly focused on social justice and economic reform and articulate it in a clear way.
And before someone thinks that Labour under Cunliffe was advocating the same as Corbyn and Sanders last election from Labour, think again.
Labour focused on economic reform of the local middle class, they wanted to introduce a capital gains tax, but not on companies and trusts. There were so many loop holes only the honest would get caught. It did not address immigration, in fact helped it, the locals were taxed when they sold, those with overseas cash and wanting to immigrate here on the property investment criteria were welcomed in.
Labour wanted to increase pension age for locals, but not have any curbs for the people who never paid any taxes in this country and on social welfare.
Labour never addressed big business or corporations who pay little or no tax. They did not address the problems with our farms and properties being sold and actually support free trade agreements that do this.
Labour did not focus on social justice or corruption. Dotcom and the revelations from Hager about dirty politics were ‘a distraction’ and was not pursued on any depth. Even though Goff was caught being manipulated by the SIS they never demanded reform of the organisation and a look at corruption.
Labour were more interested in fighting against Hone Harawira than the Nats. Hone a guy who they might not like, but at least cares about social justice for the poor.
Labour fought amongst itself more interested in infighting and personal gain than the country.
1 million people did not vote. Labour’s focus on economic austerity of the middle and lower class while championing global neoliberalism Lite, big business and global foreign investment did not resonate with voters.
I wonder why?
Labour are still in denial about what happened.
+100%…Labour is NOT the party to vote for
immigration under “property investment” criteria is a complete sham.
doesn’t help the local housing crisis one iota.. makes it worse if anything
the only property developers we should allow in are tradesmen not f*cking speculators
In fact I think they should halt immigration until the 60,000 new jobs and houses are met to match the yearly immigrants.
Perhaps invest in training our own unemployed and youth to do tradesman jobs. Two birds with one stone, giving someone unemployed a job AND having enough tradespeople to meet demand.
There used to be apprentices for this work and in other areas the old electricity sector trained workers and in telecoms. Now there is no training and reduced wages.
It should be noted that many of those apprenticeships/cadetships etc. were made available through various state agencies and entities. Privatization of those entities and the outsourcing of services required by government to private concerns reduced the availability of them fairly dramatically as the private sector had no real interest in picking up the slack created when the government based apprenticeships went. I’d assume it just went onto the bottom line of the private concerns now sucking on the teat of the taxpayer.
WOW sounds great BUT
Need to drill down in figures to check it out
He has been in the market for 5 years.
Even with a start up of 200k, he must have a significant mortgage
Income – $275000
Rates est 50,000
Say 50% mortgage @5%
I doubt if he’ll be paying out $30k in maintenance. It’d probably be more like one to two thousand.
He should probably be paying about $20k per annum, in terms of painting and general maintenance like replacing a roof etc. It’ll be lumpy expenditure, and for a lot of maintenance the key cost is labour, so if you’re skilled and can do things yourself it makes a big difference.
I’ve just come from fixing a leak in the toilet at my rental. My uncle who is skilled helped me out. It’ll cost me a 6-pack of beer, rather than $90-120 for a plumber to come do the same thing.
Even so the surplus then would be only about 25- 30k
No a lot of room for vacancies, mort inc , drop in value- upset the bank.
Probably but that doesn’t mean that he’s paying that much. A house can go a long time without maintenance.
And that is just another example of the free-market not working. The people who have to charge don’t get the job or if they do then the amount that they can charge is lowered below sustainability and so society ends up with less skilled people.
Bigger ticket maintenance such as painting and roofing ?
Unlikely, anything like that looms and the property will be flicked on pronto.
These guys are not providing a service. They might replace tap washers, broken windows and lost keys, but that is about it.
If you sell a house that needs a new roof or *needs* painting, without having done that maintenance first, it will sell for less on the market than otherwise.
You end up paying, one way or the other.
But with an overheated market, while you were not maintaining the house its value still went up so even if you will get a bit less than you could have, you’ve still made a nice profit.
And let’s face it, that is a big “if”.
To spend 20k+ on a proper paint job for a 3 bdrm house is considered an over-investment to all but owner occupiers.
When I was buying if I put any conditions on a sale agreement such as wanting to get a building inspection to discover all these flaws in a building than I missed out because other buyers were putting in unconditional offers because they were desperate to buy. The market is currently run so that such information that might effect the price of the house is effectively hidden from the buyers.
I wondered if it was a bit high but he said he didn’t want to be a slum lord and i gave him the benefit of the doubt.
But a 3k fig would still only give a surplus of 30k.
Still not a lot of room for tenant vacancy, mortgage rate increase. etc
And still leaves one helluva lot of debt.
And if another global financial crisis happens he’s going to find himself in a lot of trouble. He may have negative equity when the property market bubble in NZ bursts. And if that drags rents down with it then his income may not be enough to cover his debt and he may be forced into mortgagee sales.
And that’s the problem with debt. It’s leveraging on your own equity to invest in a market.
If anyone in NZ did that to invest in a financial market, say our share market, we’d all recognise the risk and know the behaviour to be stupid.
Because NZers remember what happened to those invested in our share market after the 1987 crash. It hit us hard.
But plenty of NZers are now investing in our property market. With debt. And no one seems to recognise that the risk is exactly the same.
If he never leaves his computer, the living costs might be low. Takeaway noodles, toilet paper, a bit of soap and water, rent, limited furniture. Providing maintenance on a need basis say $10,000, that would leave $20,000 p.a. which he could pay himself as an agent of his company or drawings? Could he avoid tax somehow?
He could end up with the rich, fulfilling life that Howard Hughes enjoyed. /sarc
(Howard Hughes, USA business tycoon, inherited wealth, ended up sitting on a toilet for long periods, little human contact, eating chicken soup in hotel rooms with windows darkened by black plastic.) The ultimate end of the self-centred wealthy individual scorning others and parasiting the world.
Where did you get your numbers from dv? They look too high. His average house value is $590k and rates should be around $2k per house in most areas that an investor like him would buy in. Insurance I’d expect to be no more than $15k in total either.
My mortgage rate was 50%, which probably is too low, and that is the key.
At 70% mort is will cost ca 275k, which means withe expenses he has a negative cash flow.
they can borrow money offshore at near zero interest rates all that QE money average NZ citizen does not have access to. its not a level playing field
The elephant in the room of our economy is quite clearly here but entirely whooshes over everybody’s heads…… debt
Without more gifts from his family this guy must have purchased all other houses with debt.
What is going to happen when the world of debt finally collapses? This guy and countless others like him will have their day of reckoning when all his days of computer games will race back to karma-rise him and he will be left with the absolute nothing that he has contributed.
and negatively contributing
he is not wealthy, he is a zero
Debt to New Zealand/Australian banks or Chinese banks or other money lenders?…a crucial difference as to the terms and interest rates and ability to buy houses…it is not a level playing field
really this jonkety Nact government is selling New Zealanders out of their birthrights
No it is the Owner Class of New Zealanders that are selling their children out of ‘their’ birth right and a decent future.
Dear Leader got voted in by a segment of the population for their benefit. These are the same people that will sell to the highest bidder their properties or other goods, knowing full well that their children can’t actually afford to buy the house of them for the same price. They know, and they still don’t care.
It is the owning class of NZ that is selling the country, John Key is just the paid underling that does their dirty work, and that includes the odious Mrs. Bennefit and Mr. 20.9% Vice PM Bill English.
Sadly, one days these children will wake up, and look at their Parents and ask :Father why have you forsaken me? And Dad will answer, Son, I need the money to keep up my lifestyle.
I suspect that many if not most of them DON”T make the link between what they are supporting and their children/grandchildrens future….they believe they will always be in a position to “buy” them out of that situation….mistakingly in the majority of cases.
And I find it very interesting that the article made no mention of his level of debt.
None at all.
Because it’s an extremely important point.
Our household debt is extraordinarily high. It is again close to 160% of household income.
Who is the troll??
This article explains the Auckland Housing Ponzi Scheme with more and more Asian buyers entering the market there is only one direction for Auckland Housing Prices to go, especially with a limited supply of stock and expensive building supplies and labour building costs.
He sound like he would be a cunt of a landlord. Really.
Altough he could have gotten more bang for his buck had he bought houses in the provinces, they are really cheap (though creeping up).
No way would I be doffing my hat to him.
Know someone in akl renting off a similar landlord, they persisted with wanting to come around over the festive period without 24hours notice, Xmas , Boxing Day etc.
Finally came around, removed structural items so recent rains flooded a storage area as they never get anything done professionally to any of their properties.
Tenant now has an insecure and leaking dwelling, ruined items from water damage and a landlord who still doesn’t see any issue…..they just raised the rent 10% as a merry Xmas present.
That’s reality of the akl market…..speculators who see the property as an investment they just sit on and not a dwelling they must maintain basic standards over. Nats have enabled this not addressed it.
That is awful, I hope he goes to the Tenancy Tribunal and gets recompensed. Sounds like this landlord needs a gee up as well.
A place I rented in Christchurch had some very dodgy wiring and one day the attached toolshed caught on fire. Landlord tried to blame us but he always kept that room locked and nobody could use it. Then a few months later a power bill arrives for $1000. Apparently his house next door was being billed as an “attached dwelling” and we had the privilege of paying for his power. Landlord told us to stop complaining or he’d put the rent up. Eventually he turfed us out, can’t remember the reason… about 6 months later the same house was for rent again.
I hope that dodgy crook got wiped out in the quakes.
The Classical Economists (Smith, Ricardo, Hume, etc) all expounded upon the dangers rentiers pose to society. This guy, and many others like him, is a rentier. The ancient word is usurer. He lives, not on his own contribution to society but the contribution of others.
Of course, this is actually the heart of capitalism. The capitalists seek to live on the work of others while contributing nothing themselves. The more people they live off of the richer they become.
Wealth is proof of theft.
The Nats and other neoliberals tend to forget the teachings of Adam Smith is that you can only get a “perfect market” through proper regulation which ensures competition, access to market information, control of monopolies and reduction of barriers to entry. The “free market” is a con avoiding all of those prinicples and allowing more and more concentration of wealth in the few.
Yep, it’s the regulations that truly define the market and allow it to work.
+1 nailed it
parasitic rentier behaviour = naked capitalism
there’s nothing “free market” about it. it’s all about
– exploiting fellow citizens without access to huge wads of capital
– using political influence and insider connections to get sweet deals
– running a long term PR campaign to hide your shitty scam
Yes, he got the first lot of $$$ from his family. But where did they get it from? I worry that a lot of the money now sloshing around Auckland’s housing market comes from ripping off the Chinese people by official corruption, running sweatshops and/or despoiling the environment. It gets laundered through corruption in Indonesia – burning Orangutan habitat to grow Palm Oil or dynamiting reefs for seafood. It comes here and builds 6br/7bathroom monstrosities that will fall apart in 20 years, or enables some looser kid to sit on his backside for 15 hours a day playing video games.
I couldn’t believe what I was reading & thought to make some comments until I belatedly figured that was the Herald’s intention. Click bait indeed.
The solution to the housing problem is so obvious, why didn’t any of us think of it? Just give everyone without a house a free $200k… so easy.
If he really owns $6.5 million in property why does he still work a 9 – 5 at Auckland Transport?
I don’t see that in the article. Did I miss something?
No – He worked there up until when I left, which was only last Nov.
I would assume because they pay him.
From the article Gary Lin is quoted in “I’ll be putting the rents up $10 to $20 a week because all my expenses are rising.”
Really I thought that mortgage rates had reduced lately, and by inference his largest cost would be in servicing debt, so he along with many other landlords who are geared should be reducing rents.
Maybe he meant his expenses for playing Warcraft all day? Probably needs a new desk and widescreen monitor, the poor lad.
Stephen King on guns
But yeah, whenever you see someone pontificating about ‘authoritarian left’ chances are they mean ‘someone I harassed wanted me stopped.’
Dammit, for these two I thought I was on OM. Can someone be nice and move them?
To: [email protected]!5
“The solution to the housing problem is so obvious, why didn’t any of us think of it? Just give everyone without a house a free $200k… so easy.”
But the chinaman got a wedding too. So don’t be mean DH. Give $200K to everyone without a house PLUS a happy wedding.
This will bring the giftees $6.5 million in 5 yrs. More than a million a year.
That’s if The Herald got their sums right.
I wonder if youre Maori/Pasifika what your chances are of owning a second property. 10x or 20x less likely than Pakeha?
My guess is the parents would have stood as guarantors as well.
BS plain and simple. Go up.
Oops, some how commented here when ment else where and can’t delete.
I’ll reply anyway, home ownership rates:
European – 56.8 percent
Asian – 34.8 percent
Māori – 28.2 percent
Pacific peoples – 18.5 percent
But to be fair – Europeans are older so are more likely to live as singletons or couples while Asians/Polynesians/Maori are more likely to be living in multi-generational homes with more young people and mostly by choice.
A more interesting figure would be the proportion of each ethnicity living in a home that was owned by a family member. I think the proportions would shoot up for everyone except Europeans.
Don’t worry, National’s plan to solve the housing crisis is to sell 5000 state houses to foreign corporations. They wouldn’t jack up rents would they?
this post exemplifies the malaise affecting western “civilization”:
from: Empires: The Rise and Fall
sounds like the demise of the USSR
And Rome, Egypt, Chinese dynasties .. every corrupted empire.
Question do these Chinese Landlords qualify for residency by buying into Auckland’s Residential Property Market, if they do our immigration policies are a farce and a joke?
Yes, buying up residential properties is counted as investing in NZ for immigration purposes.
It is outrageous that people are actually buying up our country and then getting residency at the same time, when their is a shortage of houses for local people!
I wonder why house prices are rising?????
Our government and some of the opposition parties are ‘comfortable’ with this policy.
Gary Lin appears to be a legit skilled immigrant with residency and a day job. The Herald has made the article as provocative as possible. Yes this guy has been given some ridiculous advantages, but he’s acting rationally given our policy settings (reward the rich and punish the poor).
New residential development counts as investment for immigration purposes, but buying currently-existing houses does not.
I have now checked the immigration site, and you are correct.
Thank you. I was not aware I hadn’t checked this fact previously. Immigration: Acceptable Investment
It’s clear that either the law has changed and I was not aware of it, or all the conversation bandied about a couple of years ago making that assertion was factually wrong.
Of course it does beg the question; What if your investment was in a new business*?
* that happens to purchase and let residential housing stock?
Although the Immigration Act 1987 was replaced by the current Immigration Act 2009, this type of aspect is not legislative, it is policy. Immigration policy is reflected by the Immigration Instructions authorised by the Minister in line with the Act, and can be viewed in the Operations Manual on the INZ website – the archived version from the 1987 Act is also available on the INZ website.
New residential property development became a permissible form of investment on 25/7/2011 – prior to that, it was not an acceptable investment in any form, either directly or indirectly. This may be the change you referred to.
Not sure if, given the wording of the instructions, it is acceptable to invest in a company which owns and rents out existing residential property, but given the minimum funds are $1.5 million to even start to qualify, and personal use of investment assets is not permitted, I don’t why know one would bother – there’s better money in commercial property (better yields and tenants, and capital gain is just as strong).
Yes, but these kind of “investors” are supposed to help develop the economy by building NEW houses, not grabbing the existing stock
True in Australia. Not here under the rules put in place by *our* current ruling dunderheads.
What a cheek, been Chinese, successful and living in NZ, disgraceful !
What a cheek someone as intelligent as yourself putting that mindless dribble of a comment up.
Yes his WoW skills must be a real asset to the NZ community.
What a brilliant example of RW idiocy you are
Why don’t you ignore him then. His comments would become little potholes in the busy highway of comments. It would annoy him greatly and gradually he would become more openly niggly really begging for a response. But you like to be amused don’t you ropata.
sometimes I enjoy a bit of sarcasm before dinner 😀
Since Labour ruled out a Capital Gains Tax, and with no policy work to regulate rents, we’ll see more of these stories no matter whether Labour or National are in power.
The best we can hope for in an alternative government beyond November 2017 is the state developing thousands of cheaper houses for owner-occupiers to get more people out of renting. It’s not going to change the tide of home ownership, but it may slow it.
Property, tourism and agriculture keep this country afloat. Coincidentally, none are well regulated. Under no alternative government will it be politically worth further regulating property ownership.
Bring in a UBI and phase out rent subsidies.
“phase out rent subsidies”
Absolutely, but how would it be done without putting people out in the street?
Build more state housing.
Under an alternative government, building more state houses is about as good as you are going to get.
Its still more likely we will get this current government for one more term.
Surely the market would ensure that rents came down to match people’s ability to pay. Landlords (mostly) don’t want their rentals empty.
And their should be some kind of cost for having a house empty for more than 3 months.
“Surely the market would ensure that rents came down to match people’s ability to pay”
Whatever gives you that idea? It hasn’t happened yet.
Isn’t there some economic term about elastic and inelastic? The ability to pay would make a difference if there wasn’t so much demand. At present they have to scrape up the dosh, or sublet couches. The demand could be cut by some means, ie new immigrants had to build if coming in on the money criteria, and if coming in on jobs then they would have to go outside Auckland,
say Hamilton at least.
And owning more than two houses would put you in a particular category where property had to be self-supporting and not make losses that could be offset by the owner’s income for tax purposes. The uneconomic level would be reached soon and buying and then prices slow down.
Due in affordability, investors would have no choice but to lower their rents. Ither that or sell the house that would hopefully be brought by a home owner. Government subaidies in combination of lack of supply are the issue.
“Investors”, it has been widely reported, don’t need tenants for houses that make >$1k per week on their own.
and remove wage subsidies via WFF as well.
You’re really saying get rid of Working For Families?
Replace with UBI and higher minimum wage.
We got rid of so many benefits, why not get rid of that one too?
Those of us that don’t have children are to expected to pay for families to have children that otherwise they can’t afford? Or to have children and not go to work, lest they loose that benefit? And yes, all of that exists.
I rather have a child benefit that is paid universal to each kid. I’d rather feed all the kids a good healthy breekie and lunch at school regardless of the income of the parents. I’d rather use the money saved to have free dental care for all children until they reach 18. Etc etc. In my eyes that is a better use than to feed it to people that have children they could / would without that WFF not have.
Ooh-er Sabine. I think that has been said before, many times, and as long as there have been purse-lipped people who can’t stand others from behaving like the human animals we are. Having children, disgraceful.
In the old days, you couldn’t get married until the young man was earning. That was effective for keeping people apart, or they might hold a war and thousands of young men who would have married and had children were decimated. Their potential wives remained single for all or most of their lives.
One had hoped that this sort of attitude was defunct, we had outgrown it and replaced it with encouragement to have small families, and some discouragement for the few that see themselves as baby machines on the state. A small minority who are feckless, and would probably accept a free hysterectomy and a short holiday with the children while she (or he) recuperated. I think that some guys need tying off too but not with such distaste and disapproval. (People who need people, They’re the luckiest people in the world. Barbara Streisand))
We already have free dental care for children < 18, but I agree with your broad points. Removing WFF is not inconsistent with the UBI, however as the child benefit could also be a UBI for the child.
I also generally agree with largely replacing accommodation supplements with substantially better provision of state housing – one of these pushes rents up, while one of them pushes them down, so it's not hard to see good reasons for doing it.
“In the German system moreover, house-builders rarely accumulate the huge large land banks that are such a dangerous distraction for U.S. house-builders like Pulte Homes, D. R. Horton, Lennar, and Toll Brothers. German house-builders just focus on building good-quality homes cheaply, secure in the knowledge that additional land will become available at reasonable cost when needed.”
This is, of course, a great argument against the planning system as it exists in NZ. I wonder why you published it here?
Our planning system especially for new residential areas is basically a no planning one. Any issues around the effect on the environment, landscape values and sustainability are usually sidelined. Common sense stuff like, will public transport be provided? Will the development supply any of their own energy needs (i.e. solar)? Does the development have any community space or business/commercial focal points? From what I can see most of this ignored and it will have repercussions for people living in those areas down the line.
Council’s will give the big rubber stamp to most crudely designed developments as the new rates money is too tempting for them to turn down. This framework nicely complements our housing bubble.
Sorry, but you clearly have no idea how expensive & time consuming it is to get planning permission. Adding requirements like public transport and, lol, solar power, just makes housing even more expensive.
Actually, it makes it cheaper in the same way that building upwards makes housing cheaper than building outwards. Ongoing costs are reduced but, IMO, National and business people don’t like that idea as it means ongoing profits decrease.
Building upwards is much more expensive than building outwards. Apartment buildings are 3-4x as expensive to build compared to single level dwellings.
So if it costs $250k to build a house on a quarter acre section (sans cost of section obviously), then it must cost 21 million to build a 28 unit apartment block on the same spot*?
What building materials are you using, stone and platinum?
* (250k X 28units) X 3 (David’s multi level building multiplier)
Yes I’m sure. Apartment buildings are far more expensive per sqm, they require a lot more engineering and materials than a house as well as fire protection, lifts etc. It costs around $2500/sqm for a standard house build and an apartment is running at between $6000 and $8000/sqm.
The only reason apartments are not far more expensive than houses is that they are, on average, far smaller.
Just to add, he is an example of an apartment in a 29 unit block. Do you think the price reflects your maths?
Yes, isn’t it truly amazing how much people will pay for places that they don’t want to live?
Of course, just because some people are paying that much doesn’t mean that it costs that much. And if they’re public owned apartments that are rented out as a percentage of household income…
It will cost less and be better than our present sprawl.
“Yes, isn’t it truly amazing how much people will pay for places that they don’t want to live?”
Mostly, people who buy top end apartments don’t live there. They are just expensive hotel rooms. Apartments in Auckland are primarily purchased by overseas investors.
“Of course, just because some people are paying that much doesn’t mean that it costs that much. And if they’re public owned apartments that are rented out as a percentage of household income…”
I’ve lived in Soviet apartments. No thanks.
Not my maths – it was you who asserted that apartments were 3 to 4 times as expensive to build as a detached house.
I was simply pointing out the ridiculousness of your assertion.
Bollocks. Sure, the buildings cost more as you go upwards but the services cost more as you go outwards.
Quantifying the Cost of Sprawl
The reason why rates are going up so fast is because of sprawl and you RWNJs always complain about that as well but it’s you who are forcing those rates up every time you demand more sprawl.
A few more links:
The cost of intensification is far more than the cost of sprawl. Upgrading existing infrastructure is much more complex and expensive than building new. Upgrading a sewer or water main in the inner city, for example, takes far longer and involves a lot more effort than green field.
Just asking, but shouldn’t you also be doing an actuarial exercise which takes into account things like increased transport infrastructure, car usage/ fuel costs/ pollution, environmental damage, long term loss of land with environmental or agricultural value, loss of productive human time in commuting etc etc.?
“Just asking, but shouldn’t you also be doing an actuarial exercise which takes into account things like increased transport infrastructure, car usage/ fuel costs/ pollution, environmental damage, long term loss of land with environmental or agricultural value, loss of productive human time in commuting etc etc.?”
People make this calculation whenever they look at a place to live.
No, they don’t. They only look at the personal and short term costs to themselves. Not to the wider community or the environment and often not even to themselves long term or in travelling down time which is simply something that is forced on them by a system that makes living more centrally impossible.
“No, they don’t. They only look at the personal and short term costs to themselves. Not to the wider community or the environment and often not even to themselves long term or in travelling down time which is simply something that is forced on them by a system that makes living more centrally impossible.”
Nonsense. People are very aware of travelling time and costs, to workplace, schools and recreation. You also seem under the illusion that living more centrally is something everyone wants or benefits from, in Auckland this is simply not true. Lifestyle is also a huge factor, the vast majority of NZ’ers prefer houses to apartments and apartments suitable for families are simply affordable to most, even compared to Auckland house prices.
You’re starting to sound a little incoherent.
Maybe so but is that actually true? Or, to be more precise, if they lived in an apartment for a time would they then be willing to move out into the burbs?
People are creatures of habit and after living in self-contained houses their entire life they simply don’t have a reference point to know if they would prefer apartment living or not. I suspect that many who say that they prefer stand-alone housing would quickly find that they would actually prefer apartment living – if given the choice.
Your beliefs aren’t good enough or, to put it another way, you’re talking out your arse.
I don’t need a citation, I run these construction projects. My experience is first hand, it’s not a ‘belief’.
The problem is that your balance sheet doesn’t include costs to the wider society and environment, or the cost of ongoing maintenance, or the pressure on the housing market caused by inefficient structures.
These are just externalities to be ignored, right?
“The problem is that your balance sheet doesn’t include costs to the wider society and environment, or the cost of ongoing maintenance, or the pressure on the housing market caused by inefficient structures.”
Quantify them for both scenarios.
Shouldn’t the major players be doing the quantifying? Actuarial exercises of that nature are totally beyond the average citizen. It’s up to Developers, Councils and Govt. to decide what the true long term costs are and who should pay for them using what mechanism.
As a project manager of large scale construction projects you cannot be unaware of the ongoing discussion about including externalities in the cost of doing business.
Yes you do. All your experience tells you is the limited range of what you deal with. It doesn’t include anything else. And even then you’re probably getting it wrong.
Which means that you’re spouting shit and so we need to see the research that includes all of the costs.
I’ve supplied links, you’ve supplied ignorance.
Here ya go (Canada data, same links as DTB mentioned above):
Annual infrastructure costs:
– suburban sprawl: $3462 per household
– urban high density: $1416 per household
There are a whole lot of hidden costs associated with endless sprawl, not least is the impact of more cars and more accidents.
(US estimates put the cost of sprawl at $1 trillion annually)
When the city sprawls you still have to upgrade the existing infrastructure to take the increased load. If you don’t then you get all sorts of problems. This totally negates this particular argument of yours.
“Annual infrastructure costs:
– suburban sprawl: $3462 per household
– urban high density: $1416 per household
There are a whole lot of hidden costs associated with endless sprawl, not least is the impact of more cars and more accidents.”
Which is fine if your not dealing with existing infrastructure. The cost of intensification of existing cities is huge and far outweighs additional costs of less dense greenfield development.
I suspect that you’ll find that the studies that prove you wrong in your beliefs have taken that into account.
David is referring to the upfront investment required to build out new developments rather than the ongoing annual costs. I would have thought a big reason that denser housing is more expensive is due to location. Also if you’re talking apartments no doubt the build cost is higher. But if you are just talking townhouses / terraced housing then these homes should end up cheaper per sq.m.
Quote: Auckland property – the squeeze is on
“But if you are just talking townhouses / terraced housing then these homes should end up cheaper per sq.m.”
2 story terraced housing is about the most economic form of build.
“I suspect that you’ll find that the studies that prove you wrong in your beliefs have taken that into account.”
They haven’t, really.
It’s also bloody expensive (and not just in monetary terms) for residents to be tied to their cars and to go without a bus service for the next 30 years because someone never thought about it for 5 minutes at the start. Or because solar wasn’t mandatory when their house was built, which would have added only a small fraction to an already expensive build price that they have to go on haemorrhaging money to a private power company for decades. It seems the people paying the real planning costs are the ones living in the shonkily planned burbs.
Solar can be added and given it’s falling in price at about 20% pa it makes a lot of sense to wait for it to get cheaper. Cars will be far less of an issue when self-driving vehicles become the norm over the next 10-15 years. The convergence of solar power and self-driving cars is inevitable and doesn’t require any intervention.
You are trying to solve problems that will solve themselves.
No it doesn’t and, in fact, doing so is really bloody stupid and short sighted.
1. Solar panels will be cheaper next year so wait until next year
2. Next year comes, got to 1
You put yourself into a perpetual loop waiting for the price to drop resulting in never installing solar panels. And while you’re waiting more and more damage is done to the environment.
Second best idea is for the government to force the issue requiring new homes to have solar panels installed when built. This would increase demand and allow increases in economies of scale allowing prices to drop even faster. Installation of solar panels reduces damage done to the environment.
Best option is for the government to build the full run process of making solar panels here and installing them on all houses. Prioritise state housing and new builds. This drops the prices down and reduces environmental damage the most and fastest as fossil fuelled generation gets taken off line.
Cars are uneconomic and even with full renewable generation we simply can’t afford them and so they’ll be going the way of the dodo except for government and business use. There’s a reason why only 16% of commuters in Manhattan use cars.
“You put yourself into a perpetual loop waiting for the price to drop resulting in never installing solar panels. And while you’re waiting more and more damage is done to the environment.”
No you don’t. You reach the point they are economic and everyone will be installing them without any enforcement.
That’s just it – they’re already economic. Have been for some time due to the simple fact that they don’t use scarce resources during their operation and they can be recycled at the end of their life time.
What you’re really calling for is that economics be ignored so that things can stay the same and we can’t afford to do that.
“As the price of grid connected solar power systems has decreased dramatically over the last few years, investing in a system now produces a high return on investment (ROI) making it FAR MORE ATTRACTIVE than putting your money in bank term deposits or similar investments.
The size of the solar system that you install will determine your ROI, which will generally range between 7% and 12%.”
“Cars are uneconomic and even with full renewable generation we simply can’t afford them and so they’ll be going the way of the dodo except for government and business use. There’s a reason why only 16% of commuters in Manhattan use cars.”
Self-driving cars & trucks will be final nail in the coffin of rail.
Nope. Put it this way. Which is cheaper:
Processing tens of millions of tonnes of resources to move a couple of million people or processing processing a few hundred thousand tonnes to move the same people?
And then there’s the fact that cars are only used ~5% of the time. Then there’s the wasted land that goes to storing the cars for the ~95% of the time that they’re not used. Not to forget the pollution as all that rubber gets washed into the seas and surrounding land poisoning it.
Real economics will be the end of cars and see trains and ships flourishing.
You won’t need to own a self-driving car. You just call them when you need them for both long and short journeys door to door. They can pick up multiple passengers as well with minimal fuss. If you do own one, you can rent it out when not needed and the utilization skyrockets.
The economics of cars go up markedly and trains die the final death except on very specific high volume, high speed routes.
a lot of road freight companies and couriers will probably go the same way. but rail is absolutely the winner for shifting volumes of city commuters.
They will do nothing for congestion and they will require a huge amount of energy to create in numbers. Why not try to suppress the demand rather than always trying to feed the demand?
As soon as that happens the bus is faster, less inconvenience and still uses less resources thus is still more economical.
You do understand that economizing is about using less resources to achieve the same end don’t you?
As far as I can see the middle class is shrinking not growing, wage increases are not meeting the rise in everyday consumer costs, and I would say this is the case in most western world countries. Who will actually be able to afford these self-driving cars when they become available? One of the reasons for the cheap commodity prices at the moment is collapsing worldwide demand/growth. There’s the other problem of resources costing more to extract as time goes by (Ugo Bardi is an expert in this), so I expect any new production cars in the future to cost consumers more as well, money they don’t have. This goes for electric cars too. Even if self-driving cars get off the ground, I can’t quite see how they solve any traffic efficiency problems or reduced transport costs.
Regarding solar, we should have at least made solar hot water systems compulsory years ago on new houses, the technology is pretty basic and much cheaper than making your house completely off-grid with solar panels. I think a home’s water heating requirements makes up about 40% of your power bill, a no brainer.
“This goes for electric cars too. Even if self-driving cars get off the ground, I can’t quite see how they solve any traffic efficiency problems or reduced transport costs.”
Your not looking very hard then. Self driving cars are a convergence technology.
“Lol, solar power”
So renewables are a joke? Most estimates that I have seen recently suggest that solar is cost effective, especially when you take into account there is no need for transmission and the decommissioning costs are minimal.
If solar was economic it would not require subsidy and everyone would be installing it right now. It isn’t just yet, but likely in the next 5 years for some regions in NZ. At that point most people will be installing it and you don’t need to legislate.
So the market will always win? What about the inability for a solar panel owner to sell power back into the grid at a proper price. And if the benefits are there why should we wait for the market to eventually persuade people to change. If it is good for the climate why not accelerate change now. After all government does huge amounts to help businesses, for instance providing free roads, why not channel change in a direction that is good for all of us?
What subsidy? There isn’t a subsidy for solar installations here, and hasn’t been for decades (and the last was for solar heating rather than power). Are you another aussie or IQ raising emigrant thinking that NZ is the same as New South Wales?
The economics of solar power in NZ are very good on an operational basis – ie recovering the installation costs and providing cheap power.
The only real issue with the economics of solar power here at present is the upfront capital cost and the costs of financing it.
What that means is that it particularly suits people who have upfront money and don’t need to borrow to install, and who reap the benefits of massively reduced outgoings on power. In other words the optimal installers are people who are on or about to go on to superannuation.
They (on average) have several decades of life ahead of them with vastly reduced incomes. Dropping the average monthly power bill down to half or even a quarter makes a hell of a difference to their cash budgets, and they hit the break even point in about 7 years. And that is even after ignoring the paltry income for feeding power into the grid.
They also tend to double glaze, insulate, and put in ramps for much the same reason. It makes sense for them to maintain their active life at home for as long as possible and as cheaply as possible. Because the medical bills from poorly heated and fall prone buildings are way too much. For them the cash return is immensely higher than any investments.
Do you apply the same logic to fossil fuels?
Because fossil fuels get far more subsidies around the world than renewables. I suspect that if those subsidies were dropped fossil fuels would stop being ‘economical’ overnight.
What do you mean with this query? ” I wonder why you published it here?”
It doesn’t fit the context.
Because it doesn’t fit with the general ethos of The Standard.
It was a thoughtful, well-referenced and persuasive comment — I can see why it might not fit your ethos 😜
Not really given I agree with it completely. Scrapping the planning system is a great idea.
I could support reforming it so that
a) land-banking and planning is managed by a government department not a bunch of speculators
b) some form of Land Value Tax (LVT) or Community Ground Rent (CGR)
c) houses become places for people to live not vehicles for speculation and flipping
d) only actual NZ citizens are allowed to own land
Member of the Act Party are we?
The other issue is that the banks are falling over themselves for Asian investors. They are giving them preferential rates below what they give Kiwis.
A friend was complaining about it, his friend a Korean pensioner got a rate of 4.3%, who has never had a job here, is full of debt and the houses are not even in their name. In contrast to how they treated him with his bank who he had been with for years, wouldn’t give him a decent rate, and they advised him to float until they lowered the interest rates (a ruse to get people to pay more and have to wait) and he found out he was paying a business rate of 5.99% on floating – that was ANZ. He was furious and has worked all his life and still works and has an A+ rating.
ASB are doing the same thing, they will not give top rates for existing customers and then encourage ‘floating’ at a higher rate until they can be bothered to give the same ‘special’ rates they are falling over to give their Asian customers through Asian brokers.
Clearly the banks in particular OZ banks are betting that Kiwis will not be owning much property in NZ and the Asians are the ones to win. They love screwing the Kiwis, especially their existing long term “Kiwi” customers.
I think the days of long term loyal customer are gone. There is little to no advantage and by switching banks you can get better offers. It’s become just like the phone companies. People shoud not be afraid of shopping around for a better mortgage rate and change bank if needed, though I would guess that when presented with the possibility of losing a mortgage paying customer, the bank will match a better rate. Even with a slighly lower rate, a mortgage is still a cash cow.
Banks, and such like, run algorithms to see which customers are likely to leave and then offer them special deals before they do. The truth is that it’s better to be a bastard of a customer so that they’ll fall over backwards to keep you rather than be loyal and have them ignore you.
My point is, within the algorithms I suspect there is a bias towards favouring Asian customers with better rates than Kiwi customers.
In this situation the Korean was a terrible risk (old, no income, not great security, did not speak English so could not negotiate the rate or be a bugger of a customer etc) but still managed to somehow secure a top rate.
She does not even pay any taxes or declare the rents!
Personally I would like to see a human rights/race relations audit on bank rates given to their customers.
I bet they would find Asian customers get the lowest rates and Maori the highest.
Very hard to negotiate for example if you are a farmer and in drought. At the very time you might need a decent rate from the bank they would be as mean and unaccomodating as possible.
It is not really a ‘free market’ when you can borrow money at 1% in Asia and then buy up NZ properties and then get residency for doing so at the same time. win win.
Buying existing houses isn’t a pathway to residence, although new residential development is.
New customers are often given better rates than existing companies. This is not an Asian thing.
I have found this with banks telcos, electricity retailers and many other corporate abnomations. They milk their existing customers for revenue and don’t give the cheapest rates to their best/longest/least troublesome/most loyal customers. Instead, if you are somebody who swaps every 6 months, bargains with them, complains, badgers them then you will get all the lowest rates and signup incentives.
I think part of this is that most of these business (term used loosely) create incentives for staff signing up new customers and not keeping old customers. So that’s what the sales and marketing people do: focus on signing new customers. But the cost of acquisition is high and sometimes detrimental to the business.
Anyway, my approach nowadays is to ring up call centres/personal consultant and tell them I am swapping unless they can better what there competitor is offering to switch. The key is not to use what prices they publish, but choose some arbitrary lower figure. I was asked by one bank to make my own proposal on what the rates should be for mortgage and credit card and insurance.
so his banks own five properties and he gets to pretend he is the landlord until the day he defaults on his mortgage payments?
Well I heard the WoW is a good game. 🙂
WoW – World of Wearable Arts?
World of Warcraft
But your one works to
World of Warcraft™, the world’s biggest MMORPG
The article in the NZ Herald reads like I am already in support of this creature. Typical of the Herald, but I will not buy into it
So yet again, we have someone who has a rich mummy and daddy that can afford to splurge out 200k as a wedding gift. 200k that at the time, brought him a house freehold. How many families in NZ can afford to gift their children a house? There’s your example of ‘having extra advantage’ right there and the comments coming from some that if you work hard then you can have the same are automatically thrown out due to this huge advantage of this kid being given by his rich mummy and daddy.
What he has done is no different to what a lot of investors have and are still doing. Due to having a family home, he has used it as leverage to purchase other homes to rent out. What this does is gives him and others like him more bidding power than the first home buyer who is saddled with high student debt so that they can get a half paying decent job and who don’t have the benefit of mummy and daddy buying a house for for them. Due to lack of supply, people like this Asian kid are buying all the homes and leaving no other option for others who don’t have these advantages, to rent of them. It’s a very grim future for Kiwis.
This Asian kid has done nothing special, he has not worked hard, he has not given anything beneficial to our economy, has not created jobs(and please do not tell me that he employes tradespeople to maintain his rentals as this work would still be happening if the home had been brought by a kiwi family rather than some rich kid investor).
But what we need to look at is how to stop this. The first thing is what is making housing so attractive to investors? Lack of supply vs demand will always see that rental demand will be high and will enable them to charge high rent and do little or no maintenance. Due to lack of supply, renters will have no choice but to suck it up. Increase supply will stop this. The other issue is rental subsidies from government. Due to government sudidies propping up appalling wages and the lack of supply, we have people paying rent rates that far exceed their incomes. If you abolished this and increased house supply then I would have the great pleasure of seeing this privledged Asian kid no longer in a position to put average kiwis out of home ownership.
But unless we address the issues, then we can expect so see these types of situations occurring on a more regular basis. I will be honest, I was actually quite depressed after reading that story in the herald today. So what’s it to be, pretty green parks with rich kid investors owning our limited housing stock along with employers paying wages that are exceedingly below housing costs or do we deal with the issues of supply vs demand and government housing subsidies to sort it out.
I fear that people are ither too entrenched in their ideology or gutless to do what is really needed to fix this issue.
And if figures in NZ are anything like Australia, about 20% of speculative house purchases are sitting empty. Bring back squatter’s rights!
“In Auckland, more than 33,000 houses were registered as unoccupied in the most recent data from 2013.”
See also London (25% empty), Melbourne (20% empty):
So an Asian immigrant is granted residency for purchasing NZ housing stocks as a legitimate business activity which is beneficial to the growth of the NZ Economy?
+ 100 The BlackKitten
Why isnt it as simple as banning foreigners from purchasing housing?
Part of our shonky trade deals because Roger Douglas already threw out our other bargaining chips (tariffs)
subsidization of rents as well that is basically welfare for landlords it does nothing to help the tenants long term the rental supplement should be put into building homes not propping up landlords balance sheets
So we in NZ are racists if we criticize Chinese coming to NZ under our immigration laws and set up a business buying NZ housing rental stocks as a legitimate business, but they are not racist by not letting us buy their housing stocks in China. The media and John Key have a fuzzy form of logic here in NZ.
I do not see how allowing truckloads of Chinese into NZ with suitcases full of cash, to buy up existing NZ housing stock is a legitimate business activity, ie investment. This property speculation with our limited housing stocks should not be a valid criteria for granting residency status to Chinese immigrants. If they were establishing new viable export businesses which were benefiting NZ, I might agree, however what I hear is Chinese companies are pirating existing exporters businesses in certain industries here in NZ.
If you frame the problem as “chinese investors” or “asian speculators” or whatever, then yes it is bigoted.
Why? Becuase the issue isn’t asian people. It’s giving unfettered access to every investor in the world to our housing market.
How can young families on low wages compete?
Simple, they can’t. They get to pay rent instead.
Good thing though, is they can get a rent subsidy to pay their overseas landlord.
Your tax dollars at work.
The issue is a policy setting, not a person with a different sounding name to yours.
Actually Chinese capital is pouring into property markets all around the Pacific rim and beyond.
Not a race issue, simply a feature of Capitalism
Yes, but by targetting an obvious “other” (different language, skin colour, culture) people can fall into the trap of confusing the symptom (lots of chinese people buying property here) with the cause (policy settings that allow all international speculators and investors to generate huge tax free capital gain in our housing market).
When Government fails in its duty to curb rentier behaviour it is understandable that people get upset. It’s undeniable that Chinese cash is screwing with global markets, and it’s not racist to identify it as such.
the point as it has been made often already though is it is not just Chinese nationals cash and nor is it a recent phenomenon…the same has occured in central Otago these past decades and the main culprits are not Chinese in origin….raising the issue is correct, the framing however is flawed
Buying existing housing (rental stocks) is not a pathway to residence, although new residential development is.
if the rental supplement was cut that would pull the rug from underneath these parasites i still be leave we need an effective capital gains tax a property crash is best way quickly to get housing cost back in line with income
So successive Governments have established a framework which has caused the Auckland Property Price Bubble? Cheap overseas money and finance, limited housing stocks, limited land supply, and Government rent subsidies, hence an artificial market.
Surely the answer is build more State Houses, this generates employment and provides housing for the lower socio economic sectors of society.
It worked in the 1930’s under Michael Joseph Savage, why would it not work now?
Or am I simplifying things too much, hence I am just stupid?
Makes sense but that doesn’t keep rents high as it supplies stock so the Nats took the logical step of flogging off more state houses even to the extent of lying about no more asset sales at the last election.
It’s deliberate wilful locking out of kiwis who don’t have privilege or wealth behind them from owning their own homes for speculators. They after all are a target demographic they want to keep voting blue
Not stupid!! Here are a few good sayings to match the situation.
Read more at http://www.prosebeforehos.com/quote-of-the-day/12/28/bertrand-russell-quote-fools-fanatics-wise-men/#VbsqR47tMbEcHcJ7.99
As the number of comfortably off grows, who have become rentiers trying to ensure their retirement income remains comfortably high, and who have been encouraged to despise the welfare system that grew their parents so they could better themselves, the market for cold-blooded rentiers grows, and so does their support for the sere, blue, frost-bitten party.
Neo liberal economics and social engineering is how I would describe it?
The housing bubble in Auckland can only be pricked by increasing supply, curbing foreign speculation or increasing interest rates (however that only increases banks profits), so the first two items are the key, a simple solution, maybe someone should explain this to John Key and the National Party?
The Gnats endorse the housing bubble/crisis – it’s how they pay off their wealthy
With housing two things should happen:
1. Homeowners should be taxed on the rental value of their properties. The free accommodation they receive is the return on their investment in property and, like any return on investment, should be subject to income tax. It should be noted that mortgage repayments don’t cover this as these are simply repayments of monies borrowed in the past, together with the interest thereon.
2. Interest should be made non deductible for tax purposes. Deductibility of interest is an anomaly in the income tax act as it does not contribute to to the generation of taxable income. Removal of interest deductibility would not affect homeowners but would affect landlords who have borrowed, particularly the highly leveraged.
Neither of these measures would be politically saleable without cross party agreement.
Homeowners living in that home being taxed on the rental value of their property.
B.gger that idea.!
“B.gger that idea.!”
The idea is perfectly rational, but it would probably go against the entrenched vested interests of homeowners. That is why I said it would probably need cross party agreement to get it through parliament. However it would result in an expansion of the tax base and it is possible therefore that it may be offset by reductions in tax rates.
The people to benefit of course would be renters, who would receive any tax reductions that might eventuate, while not being subject to this “homeowner’s” tax.
Since it came up a lot above – purchasing existing rental properties is not a pathway to residence. New residential development, however, is a pathway to residence.
Just a note that the form of capitalism we have now, is not “free market” – it is actually more like bankster led corporate crony capitalism. As evidenced by the TPPA, as evidence by central banks manipulating interest rates towards 0% while printing massive amounts of new money, as evidenced by outright manipulation of financial and commodity markets.
The Left needs to update its intellectual frameworks to correctly analyse the situation we are facing in the 21st century.
Sometimes Adbusters helps.
Like a sorbet between courses.
Also the new Stiglitz is good.
Max Keiser, zerohedge.com, theautomaticearth.com, ourfiniteworld.com definitely help puncture the free market propaganda.
For economists, Stiglitz and Keen are a couple of renegades worth listening to. And Matt Taibbi‘s analysis is always razor sharp. 🔪
Indeed. Yet the establishment left on six figure incomes does little except repeat and reinforce the ideas acceptable to the establishment.
What the Herald reporter knew – but failed to mention – is that Gary Lin does actually hold down a full-time job as well as working on his property-related activities.