What about those neat capital gains on housing, eh?
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- Date published:
12:48 pm, January 14th, 2022 - 184 comments
Categories: capitalism, Economy, housing, jacinda ardern, Metiria Turei -
Tags: This is fine
Ardern has previously declined to advocate for a drop in prices, instead describing the government’s goal as “sustained moderation”.
Speaking to RNZ for an extended end-of-year interview, Ardern said she hoped 2022 would halt the recent “runaway increases in house price growth”.
Asked directly whether she wanted prices to come back, Ardern said: “Yes”.
“We need [the market] to stop heading in the direction it is,” she said. “Even if you saw [prices] come away, in many cases it would be bringing [them] back to levels that we were at only a year or two ago.”
Ardern stressed she did not want the market to collapse.
“The reason that we cannot afford to have a housing market collapse is because, of course, this is the most significant asset that most New Zealanders have.
The national average house price rose nearly 30 percent last year. Figures from QV show the average house price went up 28.2 percent in 2021, with the new national average hitting $1,053,315.
Once again we are reminded that the hopes of the PM mean nothing to a market off it’s leash, and that Labour can not and will not do anything that will actually cool this market:
The national average house price rose nearly 30 percent last year. Figures from QV show the average house price went up 28.2 percent in 2021, with the new national average hitting $1,053,315.
Christchurch saw the strongest growth. The city’s average price rose 40.2 percent. The average price is now $785,000. In January 2021 the average price was $560,000.
QV operations manager Paul McCorry said he did not expect prices to keep rising so much.
“It’s a huge, a huge increase for a year. Still a very good supply of homes in Christchurch, and probably in the wider Canterbury area, I don’t think it’s sustainable into 2022 at that level, so we would expect that to reduce.”
It seems Labour is happy to let the market correct itself, hopefully when they aren’t the Government. There’s been much discussion about the Greens and their failures or lack of successes; what logical reason is there to continue to vote for Labour when they consistently fail to achieve the meaningful material change they campaign on?
Note that the QV operations manager isn’t talking about a drop in property values, just a slowing of the increase. Which is until recently what Ardern has been saying she wants. Let that sink in – Labour have deliberately prioritised protecting the assets of the land owning class over the ability of low income to afford rent or a mortgage.
Metiria Turei, July 2016, in Stuff,
On Wednesday Turei, the Greens co-leader, put her neck out politically calling for house prices to be slashed, particularly in Auckland, where the average is knocking on $1 million.
She’s considering policy that house prices drop to about three to four times the median household income.
In today’s terms that would be roughly an $80,000 income and houses valued at about $300-$400,000.
Her party’s approach is not dissimilar from former Reserve Bank chief economist Arthur Grimes and former National and ACT leader Don Brash, who are calling for a 40 per cent drop and as much as a 60 per cent fall respectively.
Turei says she’s doing work around what a policy would look like but she’s taking a lead from initiatives, such as Auckland Council chief economist Chris Parker’s report picked up by the council to aim for house prices five times the household income by 2030.
“We are saying it like it is. Most people believe house prices are far too high, most people believe house prices need to come down.”
Turei was very clear that this wouldn’t and shouldn’t be a crash. She says timing is critical, to have a long term plan. And that it’s important to not get alarmist about this. People shouldn’t get into trouble with their mortgages, hence the necessity of a plan. RNZ,
“The only way to prevent a bust, and to protect families in the short and long term is to lay out a comprehensive plan, which means using every comprehensive tool that we’ve got so that we can slowly bring down house prices so that they’re reasonable.”
Ms Turei said the government was not admitting there was a problem with housing prices, let alone putting in place a plan to deal with it to protect families.
(and that, btw, is how the Greens used to use their voice).
Interview with Guyon Espiner on RNZ is here. Housing price drop starts at 3m, including the ‘crash’ issue.
Labour point blank rejected the idea of a drop in housing values, Andrew Little’s response at the time was to say Labour’s plan included building more houses, ending overseas speculation, and raising wages.
Here we are nearly a half a decade later, and the cost of housing situation is worse. We’ve had some reprieve with the housing crisis due to the international border being closed and the pressures of immigration and mass tourism having lifted.
While wages have risen, benefits haven’t in any meaningful sense. Accommodation supplement is still a mess. There’s been some good intial work done on tenancy law reform, but the gap between rentals and what low income people can afford is a still a chasm.
So please spare me a rehash of ‘Labour are building more houses’. Yes they are. Building houses for the private market fuels the market. It won’t help low income people and renters. It will make things worse for them.
Labour are doing the things they said they would. It’s not working.
The key questions here are:
- will Labour voters who own property be willing to give up some of their capital gains in order to make housing affordable again in New Zealand?
- will they vote Green in order to make that happen?
- failing that, what pressure can be brought to bear on Labour to take action?
Beyond that, the core issue here is one of values. Do we want housing to primarily be a financial investment or to be about homes? Do we want everyone to be have a good home that they can afford, or are we ok with some people doing without while others make shitloads of cash?
Green Party housing policy core principle (link below),
Housing is a social good and a basic right; all people should have access to secure, affordable, good quality housing
Labour don’t seem to have a set of principles, but this is from their current housing policy,
Here are some of the ways Labour is making sure everyone has a warm, dry place to call home:
The first item is about paving the way to home ownership. The second is about building more houses for the private market faster. Only then does Labour talk about public housing and renters. I have no doubt that Labour MPs want good housing for all people, but they won’t prioritise that in their policy or actions.
A more recent document makes it clear Labour are focused on:
- getting first home buyers into the market
- getting more investment in the house building market
- removing barriers to that
Build Moar Houses Investments.
So I guess it is a statement of values after all.
We should also, as a matter of urgency, be designing housing policy in the context of climate change and the ecological crises. Mitigation (reducing GHG emissions associated with houses from cradle to grave) and adaptation (regulate efficiency and construction with probably climate outcomes of the next 200 years).
Green Party Housing and Sustainable Development policy (PDF)
Front page photo via the Guardian July 2021 House with no toilet sells for $2m as New Zealand property market soars
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When the Government says it has reduced the number of people in emergency housing, what it means is it is stopping people from accessing it in the first place. ...1 day ago
- Govt’s child wellbeing strategy ‘shallow and shameful’
The Government is turning its back on children by not only weakening child poverty reduction targets, but also removing child mental wellbeing as a priority focus in their Child and Youth Wellbeing Strategy. ...1 day ago
- Release: A historic win for Samoan communities
Labour warmly welcomes the Restoring Samoan Citizenship Bill as it passes its third reading, before becoming law. ...1 day ago
- Government plan to reinstate live animal exports a “national disgrace”
The Government has taken a giant step backwards by reinstating live animal exports. ...2 days ago
- Pasifika justice as Member’s Bill passes final reading
Teanau Tuiono’s Member’s Bill, the Citizenship (Western Samoa Restoration) Amendment Bill, has passed its third reading and will become law. ...2 days ago
- Release: Minister of Education thinks New Zealand ends at the Bombay Hills
The Minister of Education has shown complete disregard for rural communities and their school bus routes in Question Time today. ...2 days ago
- Economists sound alarm on Government’s slash-and-burn approach
A group of prominent economists has released an open letter to the Government, raising grave concerns about the far-reaching consequences of its fiscal policy. ...2 days ago
- Release: Smoking numbers up under Costello’s watch
National’s repeal of Labour’s smokefree legislation has taken New Zealand further away from achieving a Smokefree 2025 and a smokefree generation. ...2 days ago
- Release: Call for Palestine recognition by NZ, Australian and Canadian MPs
Parliamentarians from Australia, Canada and New Zealand have written an open letter to their respective Prime Ministers calling on them to recognise Palestine. ...2 days ago
- Justice Select Committee opens floor for Treaty Principles submissions
Today, the Justice Select Committee has decided to officially open submissions for the controversial Treaty Principles Bill. ...3 days ago
- Power of the people on full display as hīkoi approaches Parliament
Today, Hīkoi mō te Tiriti arrived in Wellington, with thousands gathering to march in unity against the divisive Treaty Principles Bill. ...3 days ago
- Hypocrisy as Te Whatu Ora contractor bill balloons
Te Whatu Ora’s bill for contracting and consulting staff has ballooned by nearly 20 percent under the National Government, breaking a promise they made during the election campaign to cut contractors. ...4 days ago
- Release: Growing pressure to scrap Section 7AA Repeal Bill
The newly released Section 7AA Repeal Bill's select committee report is further evidence that the Government should scrap it. ...5 days ago
- Government’s move to monetise access to nature a slippery slope
The Green Party is voicing serious concerns over the Government’s proposal to charge for access to public conservation land, released today. ...1 week ago
- Green Party condemns the passage of Treaty Principles Bill
The Green Party condemns the passing of the Treaty Principles Bill at first reading, and is clear that the fight is not over. ...1 week ago
- Stand Up for Te Tiriti
Te Tiriti o Waitangi is our country’s founding document. It forms the basis of the relationship between Māori and the Crown – and the Aotearoa New Zealand we live in today. ...1 week ago
- Release: Over 15,000 sign Labour’s open letter to Luxon
As the hīkoi to Parliament continues, Labour has sent an open letter to Prime Minister Christopher Luxon in a last-ditch attempt to get him to kill the Treaty Principles Bill. ...1 week ago
- Fast Track Bill threatens environment, climate and reputation
The fast-track legislation passing its second reading in Parliament is another step towards environmental ruin. ...1 week ago
- Greens join King’s Counsel in calling for Treaty Principles Bill to be abandoned
The Prime Minister must answer the call from a group of senior lawyers of the King’s Counsel to abandon the divisive Treaty Principles Bill. ...1 week ago
- Chris Hipkins’ apology statement to state and faith-based care survivors
...1 week ago
- Release: Labour formally apologises to state and faith-based care survivors
Labour joins with the Government in unreservedly apologising for the abuse, neglect and trauma including torture in state and faith-based care and for ignoring the voices of survivors for too long. ...1 week ago
- Green Party stands in support of survivors of abuse in care
Today, the Green Party stands alongside the survivors of abuse in state care and faith-based care as the Government issues an historic apology. ...1 week ago
- Green Party calls for conscience vote on Treaty Principles Bill
The Green Party has written to the Speaker of the House requesting he enable a personal vote on the Treaty Principles Bill. ...2 weeks ago
- Govt move to exclude journalist risks chilling effect
The Green Party is alarmed by the Government’s move to exclude a journalist from covering this week’s apology for the survivors of abuse in state and faith-based care. ...2 weeks ago
- Without action, an apology will be empty air
For tomorrow’s apology to survivors of abuse in state and faith-based care to hold any water, the Government must not pursue the same policies that drove the abuse in the first place. ...2 weeks ago
- Release: Concerns remain over tobacco interference
Concerns about the tobacco industry’s ability to interfere in government policy making remain, despite the inability of the Office of the Auditor-General to investigate the Government’s decision to halve the excise tax on heated tobacco products. ...2 weeks ago
- Urgent wake-up call on climate
The Climate Change Commission’s latest advice indicates Aotearoa needs to be stepping up on climate action. ...2 weeks ago
- Green MP’s Meme-ber’s Bill set to save the world
Break out the punchlines and dust off your meme folder: Green Party MP Kahurangi Carter’s Copyright (Parody and Satire) Amendment Bill was pulled from the Ballot yesterday. ...2 weeks ago
- Release: Poroporoaki: Ta Robert (Bom) Gillies
Kua hinga te manawa kairākau o Te Rua Tekau Ma Waru Tiwhatiwha te po! Kakarauru i te po! Ka rapuhia kei hea koe kua riro! Haere e te Ika a Whiro ki o tini hoa kua ngaro atu ki te Pō ...2 weeks ago
- Labour, Greens and Te Pāti Māori call on the Prime Minister to block the Treaty Principles Bill
The opposition parties stand united for an Aotearoa that honours Te Tiriti, rather than seeking to rewrite it. Labour, the Greens and Te Pāti Māori are working together against the Government’s divisive Treaty Principles Bill. ...2 weeks ago
- Release: Labour, Greens and Te Pāti Māori call on the Prime Minister to block the Treaty Principle...
The opposition parties stand united for an Aotearoa that honours Te Tiriti, rather than seeking to rewrite it. Labour, the Greens and Te Pāti Māori are working together against the Government’s divisive Treaty Principles Bill. ...2 weeks ago
- NZ must pursue independent foreign policy
The Green Party says the need is greater than ever for Aotearoa New Zealand to pursue an independent foreign policy. ...2 weeks ago
- Appointments strengthen Predator Free 2050
The latest Predator Free 2050 Board appointments will help to strengthen biodiversity efforts across Aotearoa New Zealand, Conservation Minister Tama Potaka says. Mr Potaka today announced two appointments to the Board of Directors of Predator Free 2050 Limited, a key player in the wider Predator Free 2050 Programme. “The Predator ...2 hours ago - New facility in Christchurch will improve the lives of young New Zealanders
Mental Health Minister Matt Doocey today opened Kahurangi, an innovative and much-needed facility for Canterbury’s Child, Adolescent, and Family Mental Health Services. “The new state of the art outpatient facility opened today will be a gamechanger for the way mental health is delivered for young people in Canterbury,” says Mr ...2 hours ago
- Driver safety screens to be installed on Auckland buses
Transport Minister Simeon Brown has welcomed news from the NZ Transport Agency (NZTA) that bus driver protection screens will be installed across Auckland’s bus fleet by 2026.“The Government is committed to improving the safety of working environments for bus drivers, and Budget 2024 allocated $15 million of Crown funding over ...2 hours ago
- Government action provides Southland farmers more time to meet plan requirements
The Government is taking action to ensure Southland farmers and growers are not affected by unreasonable regional farm plan deadlines, Agriculture Minister Todd McClay, Environment Minister Penny Simmonds and Associate Environment Minister Andrew Hoggard say.“Cabinet has agreed to provide more time for farmers and growers to comply with regional rules ...19 hours ago
- Bill reaffirms Government’s commitment to crack down on serious youth offending
The Oranga Tamariki (Responding to Serious Youth Offending) Bill had its first reading at Parliament today. The Bill reaffirms the Government’s commitment to crack down on serious youth offending, Minister for Children Karen Chhour says. “In recent years we have seen an unacceptable spike in youth offending. “This Bill makes ...20 hours ago
- Critical milestones for earthquake buildings review
Fairer, more sensible rules about managing earthquake risks are a step closer with the passing of legislation and the appointment of an independent chair to provide expert advice, Minister for Building and Construction Chris Penk says. “The Government is committed to reinvigorating our cities and regions to support economic growth, ...20 hours ago
- State of the art radiology machine for Auckland
People in Northland and Auckland will benefit from a new machine for cancer treatment installed at the Regional Cancer and Blood Service at Auckland City Hospital. The MV5 linear accelerator, or LINAC machine, officially opened today targets cancer tumours with pinpoint accuracy. Health Minister Dr Shane Reti says this new, ...20 hours ago
- Foreign Minister to visit Europe
Deputy Prime Minister and Foreign Minister Winston Peters will travel to Europe for high-level talks with France, Germany and the United Kingdom next week. "Since taking office almost a year ago, the Coalition Government has emphasised the importance we place on New Zealand's traditional and likeminded diplomatic and ...21 hours ago
- First arrests made under gang patch ban
Police have made their first arrests under the new gang patch legislation, with two gang members arrested, says Police Minister Mark Mitchell. “Just before 11 this morning, Police in Wairoa apprehended a gang member for wearing a patch to the supermarket. He has been arrested and will now face enforcement ...22 hours ago
- Better support for victims of sexual violence
The Government is proposing two major changes to name suppression laws that will put the views of victims of sexual violence first, Justice Minister Paul Goldsmith says. “We are committed to restoring law and order and these two proposed changes will help ensure the victims of crime are put at ...23 hours ago
- Government moving forward with Regional Deals
Cabinet has agreed to invite all regions to submit proposals for Regional Deals between central and local government that drive economic growth and deliver the infrastructure our country needs, Local Government Minister Simeon Brown and Infrastructure Minister Chris Bishop say. Inviting all regions to propose a Regional Deal that boosts ...23 hours ago
- MSA pilot participant update
One of the ten young men selected to participate in the Military-Style Academy Pilot has allegedly reoffended. Children’s Minister Karen Chhour is disappointed but says it would be naïve to think that none of these young men would reoffend. “I’m saddened that this young person has not taken this opportunity ...24 hours ago
- Fighting for Kiwis in Trade
Delivered at Auckland Trade and Economic Policy School Good morning and thank you Deputy Vice Chancellor Lithander for your warm welcome and for inviting me to open Auckland Trade and Economic Policy School today. A Special thanks to the University of Auckland, the Ministry of Foreign Affairs and Trade and ...1 day ago
- Attendance rates increase, again
Associate Education Minister David Seymour says that school attendance is continuing to rise. In Term 3 of 2024 51.3 per cent of students attended school regularly, an increase of 5.3 percentage points from 46 per cent in Term 3 of 2023. “This Government has prioritised student attendance and it is ...1 day ago
- Improving the lives of young New Zealanders
Ensuring New Zealand is the best place in the world for children and young people is the vision at the heart of the Government’s new Child and Youth Strategy, Child Poverty Reduction Minister Louise Upston says. “Childhood represents a huge opportunity to set people on a positive path towards living ...1 day ago
- Government continues work to reinstate livestock exports by sea
The Government is reinstating the trade of livestock exports by sea while ensuring the highest standards of animal welfare, says Associate Minister of Agriculture Andrew Hoggard.“The Government will introduce legislation changes to reinstate the trade, enhance oversight, and strengthen requirements for exporters to identify risks and manage the welfare of ...2 days ago
- Speech to the National Quality Forum 2024
Tēnā koutou katoa – it is a pleasure to be here today. I would like to begin by acknowledging the important leadership role you all play in ensuring a quality health system New Zealanders can trust. There is enormous clinical expertise in this room covering a wide range of disciplines. ...2 days ago
- New Zealand’s COP29 National Statement
Tēnā koutou katoa. Mr President, Excellencies, Delegates. New Zealand, and all nations represented here today, are already dealing with the impacts of climate change. Our households, businesses, and economies are bearing the costs of its effects. The choices we make now will shape the severity of these impacts for generations ...2 days ago
- Latest Quarterly Investment Report released
The Government has released its second Quarterly Investment Report (QIR) which shows substantial work still to be done by agencies to improve investment reporting and meet the Government’s expectations, Infrastructure and Acting Finance Minister Chris Bishop says. “New Zealand has significant infrastructure and investment needs. The Government is determined to get ...2 days ago
- New Zealand supporting loss and damage fund
Climate Change Minister Simon Watts announced New Zealand will contribute NZ$10 million to the new Fund for Responding to Loss and Damage while at the annual United Nations Climate Change Conference (COP29) in Baku, Azerbaijan. “New Zealand is joining the global effort to address the significant challenge of responding to ...2 days ago
- Gang crackdown begins at stroke of midnight
The free ride for gangs is over when the clock strikes midnight tonight, with tough new laws officially coming into effect, Justice Minister Paul Goldsmith and Police Minister Mark Mitchell say. “Gang patches will no longer be able to be worn in public. To earn the right to wear a ...2 days ago
- LGFA increases borrowing capacity to support high growth councils
The Government is welcoming the decision by the Local Government Funding Agency to increase access to financing tools for fast growing councils to support greater investment in critical infrastructure, Local Government Minister Simeon Brown says.“Communities across the country are facing an infrastructure deficit and significant population growth is projected in ...2 days ago
- Temporary Traffic Management costs revealed
The Government has revealed that over the past three years, the New Zealand Transport Agency (NZTA) has spent an eyewatering $786 million of taxpayers’ money on road cones and temporary traffic management (TTM), Transport Minister Simeon Brown says.“When I became Minister, I was surprised to learn that that NZTA did ...2 days ago
- Jurisdiction of Disputes Tribunal to double
Legislation that will double the financial jurisdiction of the Disputes Tribunal from $30,000 to $60,000 has passed first reading in Parliament today, Justice Minister Paul Goldsmith. “We need to improve court timeliness and access to justice so that Kiwis and get on with their lives. Court delays affect everyone, the ...3 days ago
- Protecting New Zealand from foreign interference
Legislation that will specifically criminalise foreign interference and strengthen espionage offences has passed first reading in Parliament today, Justice Minister Paul Goldsmith says. “It is normal and appropriate for states to interact and work to influence one another. This encourages cooperation and can have mutually beneficial outcomes. “However, the reality ...3 days ago
- Significant milestone for Canterbury Road of National Significance
Transport Minister Simeon Brown has welcomed news that the NZ Transport Agency (NZTA) Board has approved funding towards pre-implementation and early works on the State Highway 1 (SH1) Belfast to Pegasus Motorway and Woodend Bypass Road of National Significance (RoNS). “Reaching this significant milestone is a reflection of our Government’s ...3 days ago
- Health survey results to help drive change
Health Minister Dr Shane Reti says findings from the annual Health Survey highlight the need to continue driving better health outcomes for New Zealanders. The New Zealand Health Survey is an annual snapshot of key metrics measured from July 2023 – July 2024. Findings released this morning include: In 2023/24, ...3 days ago
- Final push needed to get to Smokefree 2025
A renewed effort to get people to quit smoking will build on what has worked to date and target the groups who most need support, Associate Health Minister Casey Costello said today. “The latest New Zealand Health Survey results show the daily smoking rate at 6.9 per cent and we ...3 days ago
- New diplomatic appointments
Foreign Affairs Minister Winston Peters has announced four new diplomatic appointments. “Our diplomats play an important role in ensuring New Zealand’s interests are maintained and enhanced across the world,” Mr Peters says. “It is a pleasure to announce the appointment of these senior diplomats from the Ministry of Foreign ...3 days ago
- Next steps for Regulatory Standards Bill
Regulation Minister David Seymour has today announced the next steps in the Government’s plan improve the quality of regulation by opening consultation on a proposed Regulatory Standards Bill. “New Zealand's low wages can be blamed on low productivity, and low productivity can be blamed on poor regulation,” says Mr Seymour. ...3 days ago
- Red Tape Tipline goes live
Minister for Regulation David Seymour has today announced that the Ministry for Regulation’s Red Tape Tipline is now live. “We want to hear about your red tape horror stories. From today, New Zealanders will have a say on how they are regulated through an online portal,” says Mr Seymour. The ...3 days ago
- Youth Parliament 2025 announced
The Minister for Youth Matt Doocey has today announced the eleventh Youth Parliament will be taking place in 2025. “Youth Parliament offers a unique youth development opportunity to young people from across New Zealand to experience the political process and learn about how government works,” says Mr Doocey. “The two-day ...4 days ago
- Police stats show promising change
After nearly a year in Government, Kiwis have seen significant change across law and order with promising early results shown across some Police statistics, says Police Minister Mark Mitchell. “In August 2023, I told New Zealanders that if they had not started to see a change in public safety within ...4 days ago
- Better coordination of anti-scam efforts
With the launch of Fraud Awareness Week, the Government is committing to new coordination efforts across industry and government to combat online scams, Commerce and Consumer Affairs Minister Andrew Bayly says. “Online financial scams are a growing problem for New Zealand. New data released today shows that Kiwis lost nearly ...4 days ago
- Minister to consider 7AA select committee report
Minister for Children Karen Chhour will consider the recommendations made by the Social Services and Community Committee in its report back to Parliament on the Oranga Tamariki (Repeal of Section 7AA) Amendment Bill. “I want to thank the people who made submissions and those who appeared before the committee in ...4 days ago
- Defence Minister to attend ASEAN meeting
Defence Minister Judith Collins will this week attend the Association of Southeast Asian Nations (ASEAN) Defence Ministers’ Meeting-Plus in Vientiane, Laos. “We need to take every opportunity to engage with our international partners, given the increasingly unstable geo-political situation,” Ms Collins says. “New Zealand has a long-standing commitment to this ...4 days ago
- Launching the White Ribbon Ride
The Minister for the Prevention of Family and Sexual Violence, Karen Chhour, was on hand to wish riders well at the start of the North Island leg of the White Ribbon Ride in Whakatāne this morning. The ride helps mark the International Day for the Elimination of Violence against Women, ...5 days ago
- Construction to begin on next stage of Papakura to Drury
Construction on the next stage of the SH1 Papakura to Drury project will begin early next month, with the contract for works awarded to Fulton Hogan, Transport Minister Simeon Brown says. "SH1 Papakura to Drury is a key project that will drive economic growth and productivity, reduce congestion, and enable people ...6 days ago
- NZ signs trade deal with Costa Rica, Iceland and Switzerland
Trade and Agriculture Minister Todd McClay has signed a pioneering trade agreement that prioritises New Zealand’s sustainable exports at a ceremony during APEC in Peru today. “The Agreement on Trade and Sustainability (ACCTS), between Costa Rica, Iceland, and Switzerland was concluded in July of this year and opens up significant ...6 days ago
- Government and iwi work together on aquaculture
Five new Aquaculture Settlement Areas will help ensure Ngāi Tahu shares in the opportunities aquaculture offers for Southland’s economy, Oceans and Fisheries Minister Shane Jones says. “The Aquaculture Settlement Areas (ASAs) I’m announcing today set aside space so the Crown and Ngāi Tahu can assess their potential for aquaculture development. ...7 days ago
- Justice Committee Makes Further Decisions About Submissions Process For The Principles Of The Treaty...
The committee plans to hold hearings in the week starting Monday, 27 January and the weeks starting 10, 17 and 24 February 2025. ...56 minutes ago - Watch live: Christopher Luxon faces questions during power station visit
It comes as Labour accuses National of not listening to evidence about boot camps. ...1 hour ago - Survivors of abuse in care know how redress should work – will the government finally listen?
Source: The Conversation (Au and NZ) – By Stephen Winter, Associate Professor in Political Theory, University of Auckland, Waipapa Taumata Rau Getty Images When Prime Minister Christopher Luxon stood in Parliament last week to apologise to survivors of abuse in care, his words were among many fine speeches by ...1 hour ago - Review: The Day of the Jackal is a riveting and ridiculous ride
Eddie Redmayne’s globe-trotting assassin thriller on TVNZ is worth putting your phone down for. This is an excerpt from our weekly pop culture newsletter Rec Room. Sign up here. This is a vulnerable thing to say as someone who often writes about television for a job, but boy am I really ...1 hour ago - RNA editing is the next frontier in gene therapy – here’s what you need to know
Source: The Conversation (Au and NZ) – By Flora Hui, Research Fellow, Centre for Eye Research Australia and Honorary Fellow, Department of Surgery (Ophthalmology), The University of Melbourne IoanaB/Shutterstock The United States Food and Drug Administration has just approved the first-ever clinical trial that uses CRISPR-Cas13 RNA editing. Its ...3 hours ago
- Yes, you still need to use sunscreen, despite what you’ve heard on TikTok
Source: The Conversation (Au and NZ) – By Katie Lee, PhD Candidate, Dermatology Research Centre, The University of Queensland Karolina Grabowska/Pexels Summer is nearly here. But rather than getting out the sunscreen, some TikTokers are urging followers to chuck it out and go sunscreen-free. They claim it’s healthier ...3 hours ago
- Humans are killing off the old and wise animals that hold nature together. Here’s what must change
Source: The Conversation (Au and NZ) – By Keller Kopf, Senior Lecturer in Ecology, Charles Darwin University Laxmikant Ameenagad, Shutterstock In humans and other animals, ageing is generally associated with a decline in biological function. But scientists are now discovering older animals perform vital roles in populations and ecosystems. ...3 hours ago
- A man scouring Google Earth found a mysterious scar in the Australian outback – and now scientists...
Source: The Conversation (Au and NZ) – By Matej Lipar, Adjunct Research Fellow, School of Earth and Planetary Sciences, Curtin University Author provided/Google Earth Earlier this year, a caver was poring over satellite images of the Nullarbor Plain when he came across something unexpected: an enormous, mysterious scar etched ...3 hours ago
- Design as a movement: how First Nations people take ownership of their cultural stories through fash...
Source: The Conversation (Au and NZ) – By Treena Clark, Chancellor’s Indigenous Research Fellow, Faculty of Design, Architecture and Building, University of Technology Sydney Once located 250 metres to the east of the Art Gallery of South Australia, the grand beaux-arts style Jubilee Exhibition Building was constructed to house the ...3 hours ago
- ‘We need more doctors’ – Support for new Waikato medical school
The Association of Salaried Medical Specialists says a third medical school and more students in Auckland and Otago are both needed. ...3 hours ago
- Cricket balls can concuss and even kill batters – at all levels, helmet use must be taken seriousl...
Source: The Conversation (Au and NZ) – By Annette Greenhow, Assistant Professor, Faculty of Law, Bond University Linda George/Shutterstock The ten-year anniversary of the death of much-loved Australian cricketer Phillip Hughes falls on November 27. The 25-year-old’s life was tragically cut short in 2014 when a bouncer ...4 hours ago
- Hold the roosters, no economic dawn yet
Treasury likely to downgrade economic forecast while Chris Bishop says the government won’t be ‘a slave to a surplus’, writes Anna Rawhiti-Connell in this extract from The Bulletin. To receive The Bulletin in full each weekday, sign up here. Recession will be deeper and last longer — Treasury At a recent Spinoff ...4 hours ago
- Knowing superstitions aren’t real doesn’t stop us behaving superstitiously – why?
Source: The Conversation (Au and NZ) – By Stephanie Gomes-Ng, Senior Lecturer of Psychology, Auckland University of Technology Getty Images Former New Zealand prime minister John Key has three white rabbits painted on his helicopter, a nod to his “massively superstitious” habit of repeating “white rabbits” three times at ...5 hours ago
- Government slammed for pushing ahead with boot camps while trial still under way
The coalition has "absolutely no intention of listening to the evidence that comes out of their experiment", Labour MP says. ...6 hours ago
- Smoke and mirrors in tobacco debate
Labour claims Government is ‘cherry-picking’ smoking trends data to hide decade-first increase in daily smokers The post Smoke and mirrors in tobacco debate appeared first on Newsroom. ...6 hours ago - Smoke and mirrors in heated tobacco debate
Labour claims Government is ‘cherry-picking’ smoking trends data to hide decade-first increase in daily smokers The post Smoke and mirrors in heated tobacco debate appeared first on Newsroom. ...6 hours ago
- Treasury bangs the drum on ‘unsustainable’ superannuation
The Government’s economic adviser is sending a message it doesn’t want to hear – superannuation is increasingly unaffordable The post Treasury bangs the drum on ‘unsustainable’ superannuation appeared first on Newsroom. ...6 hours ago
- Victims of sex offending welcome shift on name suppression laws
A man abused by a former political figure is "immensely relieved" at a government proposal to end secrecy around sex offenders' identities. ...7 hours ago
- This week three parties stood together – can they withstand the storm to come?
There is plenty yet to play out, but the next election is at this rate shaping up as trio versus trio, writes Toby Manhire. A subplot of this week’s historic hīkoi mō te Tiriti has been the sight of the three opposition parties presenting a unified front. Te Pāti Māori ...7 hours ago
- All 33 malls in Auckland ranked from worst to best
From the low lows of abandon empires to the high highs of a mall done just right. This is the second in the Malls of New Zealand series, where we rank the malls in major centres. Next week: Wellington. A note from the editor: This is the hardest ranking we’ve ...7 hours ago
- The cost of being: A clothes-mad 20-something who walks everywhere
As part of our series exploring how New Zealanders live and our relationship with money, a 27-year-old apartment-dwelling marketing exec explains her approach to spending and saving. Want to be part of The Cost of Being? Fill out the questionnaire here. Gender: Female. Age: 27. Ethnicity: Pākehā. Role: Marketing exec at ...7 hours ago
- Daily crossword, Friday 22 November
The post Daily crossword, Friday 22 November appeared first on Newsroom. ...7 hours ago
- China likely to strengthen regional relationships in response to another Trump term
Opinion: Recent discussions in Shanghai provide some insight into what’s likely to be on the table The post China likely to strengthen regional relationships in response to another Trump term appeared first on Newsroom. ...7 hours ago
- Nuclear winters know no borders
Opinion: The immediate horror of nuclear weapon explosions – the blinding flash, crushing blast wave, and radioactive inferno – is well documented.But what nuclear-armed nations either don’t grasp or won’t admit, is far more chilling: how their weapons could devastate even countries thousands of kilometres from any mushroom clouds.The collapse ...7 hours ago
- This week’s bestselling books – November 22
FICTION1 Kāwai: Tree of Nourishment by Monty Soutar (David Bateman, $39.99)Sample dialogue, all from one chapter:“That can’t be,” replied Taona doubtfully.“You were right. The pā is unnervingly quiet,” Taona murmured.“The Hākuwai,” Motukia breathed. “Our grandfathers told us they rarely saw the Hākuwai in daylight,” Motukia muttered.“Their fight would have been futile ...7 hours ago
- Burma the flying elephant
After about two and a half years of planning and waiting, New Zealand’s last elephant has moved to her new home at Monarto Safari Park in South Australia.Burma and her “human herd”, that is, her keepers, arrived last week, and she’s settling in well, according to Auckland Zoo’s Andrew Coers.“Something ...7 hours ago
- NZ’s membership of Beyond Oil and Gas Alliance in jeopardy
Senior ministers in the coalition suggested NZ’s membership will be re-evaluated if it restarts offshore oil and gas drilling The post NZ’s membership of Beyond Oil and Gas Alliance in jeopardy appeared first on Newsroom. ...7 hours ago
- Raw Politics: Six months in a leaky Bill
Prime Minister Christopher Luxon did not meet the Treaty Principles Bill hikoi crowd, sees “nothing” of merit in the Act-proposed law but the Parliament his Government dominates will spend six months debating a “divisive” measure.That’s because he has accepted there needs to be “aeration” of people’s views on the Treaty, ...7 hours ago
- Taken to the brink, Govt is now close to selling big Whakapapa ski field
Bidder Whakapapa Holdings walked away from the sales process last year, but says it’s now ‘95% there’ on a purchase agreement – so who blinked first? The post Taken to the brink, Govt is now close to selling big Whakapapa ski field appeared first on Newsroom. ...7 hours ago
- Newsroom daily quiz, Friday 22 November
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- Watts nears a landmark deal on global carbon trading
A framework for global carbon trading under the Paris Agreement is finally nearing completion at COP29 in Baku, Azerbaijan after years of halting talks.Climate Change Minister Simon Watts is one of two ministers tasked by the COP29 hosts with landing a long-sought deal on Article 6 of the climate accord, ...7 hours ago
- Grattan on Friday: Marles plays a defensive bat on nuclear as the government rushes to get though la...
Source: The Conversation (Au and NZ) – By Michelle Grattan, Professorial Fellow, University of Canberra Richard Marles is an ambitious man who hasn’t given up the dream of one day reaching the top job. But, despite being deputy prime minister, his profile is much lower than that of Treasurer Jim ...12 hours ago
- Fears Māori will pay heaviest price if police carry guns
"Overwhelmingly, those people who die will be young Māori men," the spokesperson for People Against Prisons Aotearoa says. ...14 hours ago
- NEW POLL: Kiwis Overwhelmingly Support MPs’ Expenses Transparency Law Change
62% of respondents support the extension of the OIA to cover MPs’ spending, compared to just 13% opposed and 24% were unsure. ...14 hours ago
- The House: Meanwhile, a week of passing law
The political week has been packed with worthy distractions, but all week Parliament has focused on passing new laws. Here are the highlights. ...15 hours ago
- The biggest difference between Hīkoi mō te Tiriti and past hīkoi: More support from non-Māori
Analysis - The diversity of voices during the hīkoi was noticeable - from tangata moana to young immigrants to elderly Pākehā from the South Island. ...15 hours ago
- The House: Samoan citizenship restoration – ‘It means we belong to this land’
When the bill to restore NZ citizenship to some Samoans passed this week, Parliament's galleries were full to the brim with members of the community. ...16 hours ago
- More Delays In Action On Use Of Puberty Blockers With Children
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Hi Weka, you might find this interesting:
https://www.globalpropertyguide.com/Pacific/New-Zealand/Home-Price-Trends
Something weird going on with their graphs there. The 2021 values are all above 5% but contain negative quarters in the tabulated data.
Makes you wonder about the veracity of information we're fed…
And just who fed you that information?
To be fair I just read this:
'We use the The Real Estate Institute of New Zealand (REINZ) housing statistics. The Reserve Bank of New Zealand (RBNZ) also publishes Quotable Value Limited’s house price time-series of all residential properties in New Zealand starting in Q4 1989. Data before that calculated by RBNZ stretch back to Q4 1979.'
and went off that but if you've got more accurate graphs I'd be interested in seeing them
I don't, so I don't know if one of the graph or table is correct (one of them seems wrong).
It wouldn't be hard to deflate the RBNZ house price data by inflation rates however.
Yet another post outlining and whining about the problem, but being a bit thin on solutions and lacking a realistic discussion of the political context – namely, around two thirds of New Zealanders still own their own home, they tend to vote a lot more than non home owners, and they don't like politicians talking about tanking the value of both their main asset and their retirement fund.
In that sense, it is dumb asking if people who are not rich and have worked hard to save and buy a home are prepared to put their financial security at risk to help out others. The answer is no, of course not. Altruism may extend to being the bank of Mum and Dad, but not risking living in poverty to help out people they don't know.
No major political party that wants to stay a major political party is going to do anything that will potentially alienate 70% of voters.
The Greens are a marginal party for marginal people, and their housing policy reflects their determination to stay that way. It doesn't talk to "middle New Zealand" it just waffles on about the Treaty, sustainability, and has a bit about community and social housing and suggests a CGT, a pointless suggestion since it is rejected by all other parties.
That is the central political problem. And if you see the political problem as the first port of call for a solution, then I'd like to hear how anyone plans to solve that.
yet another comment outlining and whining about how others see the problem, but being a bit thin on solutions. I can write a post about solutions, but would expect to get the same response from you. Mostly it's a lack of imagination. Turei was talking to the political classes, saying we have to develop a plan. Labour said nope, we're doing this instead and everyone knows it's not working. It's NZ's Emperor's New Clothes.
Change always comes from the margins. The centre is incapable of making the kinds of changes needed. Nowhere it this more easily demonstrated than NZ's housing crisis (and climate of course).
We don't need working class home owners to vote Green. We need left wing liberal voters who say they want the housing crisis and poverty solved which is why they've been voting Ardern to stop and think. Time for those people to front up and be honest. If they truly want something to change they either need to vote Green or find another way to hold Labour to account.
Your argument is predicated on the idea that change only happens by the majority party and they're not going to rock the boat. That's old FPP mentality. In an MMP world, smaller parties can effect change by raising the issues that larger parties' can't. Turei was really just saying, let's have this discussion.
The irony of your comment about the waffling Greens is that Turei was looking out for low income home owners. And she was talking about a plan that would indeed protect the people you are talking about. Maybe read the post next time.
The Greens have been campaigned on a CGT that excluded the family home (or their main asset if you prefer), Ardern ruled it out. The Greens continue to offer potential solutions from the margins too:
https://www.rnz.co.nz/news/political/438535/greens-urge-capital-gains-tax-in-plan-to-address-housing-crisis
Solutions are hard, they takes guts, and they are riskier than hope. Which is all Ardern has offered on this issue.
Well put Weka, for hundreds of thousands of New Zealanders, Labour allowing and seemingly promoting housing as a loot generator rather than accomodation, will be the defining failure of this once in a generation MMP majority Govt. What happened? some of the Labour faithful will say–well this happened…generation rent, generation student loan, generation living in sheds, garages, and overpriced dumps…
A state house/apartment mega build, along with tiny houses for homeless and emergency houses in every NZ region and sizeable town, needs to happen with active funding and implementation via a rejuvenated “Ministry of Works”. Import Euro and Asian flatpacks if the local “property developer” bludgers will not co-operate on a grand social project.
It is time for Labour Ministers to be followed by protest where ever they appear, and time to start occupying empty residential and commercial properties on a politically organised basis till the point lodges in the neo liberal, TINA, Blairite consciousness of the majority of the Labour Caucus.
No CGT? change it, implement in next budget. Rent Control and Rent Freeze now. Train thousands and build house after house until every speculator, landlord and grasper have had enough.
“Time to start occupying empty residential property and commercial property “ all 100,000 of them – ASAP
And while we’re talking active politics let’s consider making phoney religious and charity. businesses pay the same level of tax as everyone else
There is rather a nice place in Wellington you could start with. It is at 260 Tinakori Road in Thorndon.
There might be a bit of garden to look after though. It is on about 1.5 hectares and it has a ratable value of $37,000,0000. It is occasionally occupied but for the last 6 weeks it has been empty. There is an aerial photo here.
https://wellington.govt.nz/property-rates-and-building/property/property-search/details?account=1191611
I would be possible for the Government to reduce the rate of growth of house prices by doing one simple thing.
Make more land available. It won't solve everything but if there was no increase in the land prices there would be little increase in the value, and the price, of existing homes.
I have chosen one property in Wellington to illustrate this. The rating value of a property in Wellington is a reasonable estimate of the selling value I gather.
Between September 2018 and September 2021 the land value rose from $425k to $980k. The Capital value went from $870k to $1,460k. Hence the value of improvements (that is the house) went from $445k to $480k. That hardly changed. The increase was all in the land.
The Government could, if they wanted to, make much more land available. Certainly it will mostly be on the outskirts of the city but so what? Buy the land in large quantities and do the subdivision. Then sell it, one section per buyer, and require them to build within a couple of years. Do it on a massive scale. A really massive scale so that there is no gain for people trying to land bank the sections.
This is the only way I can see to bring the prices down. Sure you will have to open up the borders and let builders enter the country. Surely they are vastly more use the bloody DJ's?
Note. This is not within my specialist field of expertise in Economics but I can't see anything in the argument that is likely to be way out. Just do it.
By the way. A CGT, particularly if it excluded the main family home will do absolutely nothing to solve the problem. It will only impoverish the elderly wanting to live out their life in their own home.
Freeing up land but only if the houses are built outside of the housing market and stay that way.
If you allow private development, it will just fuel price increases. This is exactly what is happening currently. At some point that will stop when there are more houses than people needing them, but the damage is done in the meantime. I can't see how private housing will ever lower house prices, because house owning is now primarily a financial investment.
The other issue with freeing up land is that we should be viewing land through and ecological and climate lens first and foremost and then designing human habitation within that. Stop building on good agricultural land on the outskirts of cities, and stop chopping down trees ffs.
I'm not sure what you mean by the first sentence. People don't stay in their first house forever. If they need to move, for a new job say, they have to be allowed to sell a nd buy an alternative place.
For most people house owning is not a financial investment. It is a place to live in. They may think they are better off because their house value has risen but very few see themselves as being permanently better off. It is still the same house after all.
As far as your last paragraph goes we are going to have to agree to disagree. If you want prices to go down you are simply going to have to put building more houses at the heart of the solution. Preserving large areas in trees because they are "nice" is going to have to go. If we want lower prices we are simply going to have to provide lots of land for housing. If that means chopping down trees so be it.
'nice' is microclimate creation when the weather is in the high thirties. It's going to be essential over the rest of the century. You can't easily replace a mature tree because it takes decades to get to that size.
We don't have to build on fertile land, we don't have to chop down trees. We can build more houses without doing that. We apparently can't Build Moar Houses without doing that.
If land is "freed up" the government, I think, should retain the land and just sell the abode that sits on the land. They could charge a modest rent for the land while the buyer's outlay for the property is greatly reduced.
Then you are buying a leasehold property and you have no idea or control over what the rental payment may go up to when it comes up for renewal. Plus the Banks are loathe to lend on these properties.
I, personally, wouldn't ever consider such an option. Note. I am not giving advice to anyone. This is just my personal opinion.
Here is an article on the subject. It is a bit old but the principles still apply.
https://www.westpac.co.nz/rednews/what-will-happen-to-leasehold-property-in-new-zealand/
You mean like rental properties now? That would be the private market btw. No reason why the government couldn't set stable rents. Caps even.
It is a great deal easier to shift to another rental property that it is to pick up your whole house and shift it to another piece of land. Even Clarke Gayford found that that was not easy.
Renegotiating the lease is, or so I have been told, extremely stressful and the party with the deepest pockets wins. I've never been involved but I know lawyers who have. I wouldn't have a bar of it.
A fair bit of leasehold land is Maori owned I believe. You might find yourself up in front of the Waitangi tribunal then if you don't go along with the increase asked.
If a lot of land was publicly owned and rented out so the practice was considered reasonably normal I think would-be owners would accept such arrangements.
If some scheme could be devised to enable the crown to nationalize all of NZ’s land then I think this could be beneficial.
'If some scheme could be devised to enable the crown to nationalize all of NZ’s land then I think this could be beneficial.'
I'd couldn't even imagine what the odds would be for this to…happen!
Another “out there” idea I’ve heard discussed is Property Investment Zoning
Taking Auckland as an example an outer zone (including existing and greenfield property) reserved for single and first home owners .
A middle zone allowing some multiple home ownership and speculative development .Without specific qualification requirements
An inner zone ( The central isthmus) where an open uncontrolled market operates
Value movement in all three zones reliant on demand
I suspect those zones could be 'gamed' quite easily.
Simplicity…stamp duties,CGT,levy empty homes,soft loans for first home buyers.
Yes agreed in this form gaming the zones would be easy
However this is very simplistic modelling of.what could be a workable option
Even if Labour built enough houses, what guarantee do we have that they will be of sufficient quality and won't leak or fall down within 3 years?
Building standards seem to be pretty low these days, as anyone whose house was rebuilt or repaired after the Christchurch earthquakes will tell you.
Final para makes a good point. Good planning and design is essential, not kneejerk political reactions to a crisis that was ignored for years.
'At some point that will stop when there are more houses than people needing them, '
There already are!
Jacinda Ardern not convinced by 'ghost home' concerns despite data showing 40,000 vacant in Auckland | Newshub
The housing shortage will resume if Labour resume mass tourism and immigration.
Do you think with eye watering house prices that emigration by the young and skilled may just ramp up to negate …that?
I think more people will want to live in NZ in the next five years than will want to leave. By a long shot.
Why do you think that?
Blazer
15 January 2022 at 8:45 am
…..there are more houses than people needing them, '
There already are!
Jacinda Ardern not convinced by 'ghost home' concerns despite data showing 40,000 vacant in Auckland | Newshub
Mass tourism and immigration have nothing to do with it.
The Ghost house problem existed long before mass tourism and immigration had a crimp put on them by the pandemic.
The social damage wrought by homes as commoditites
By: ANTHONY R0BINS – Date published: March 4th, 2017
This report makes for depressing reading:
In June 2015 this “ONE News investigation” caused quite a stir:
In 2016::
https://thestandard.org.nz/the-social-damage-wrought-by-homes-as-commoditites/
I wasn't talking about ghost houses, I was talking about availability of housing. Tourism and immigration have a lot to do with it.
eg in tourist towns, people who own housing that they don't live in, shift it out of longer term rentals and into air BnB.
Many tourism jobs are done by people on work or holiday visas, those people need accommodation.
The Key government actively sought to bring in a high number of additional residents to NZ while not creating the infrastructure necessary to house them.
This is not rocket science. If there are 40,000 empty houses in Auckland, and you free those up for housing, once they are full and if we go back to mass tourism and immigration, it's pretty clear that we will replicate the housing shortage.
I've long said there are plenty of houses in NZ. The problem isn't that at the abstract level, it's how to provide housing to people where and when they need and want it.
Impoverish seems a little of an overstatement.
Yes, for a genuine CGT that was only charged when it was realised it probably would be a bit overstated. It would only bite very deep if you needed the money from selling you home to put into a retirement Unit. Then it would be very painful.
On the other hand if it was charged on un-realised gains, or like a wealth tax, it would be very painful and impoverish would be a fair description of the result.
Tautoko weka.
There are other options to supply-side ‘solutions’ that rely on private developers to build the right kind of properties, perhaps looking at other models of ownership and development like this in Austria:
https://www.newsroom.co.nz/as-far-from-the-nz-housing-market-you-can-get
I don't know why this doesn't get more interest in NZ. Cultural maybe? I know the Greens have been pushing for alternative models, and Māori too. I guess it will grow in time, but Labour really are a massive problem here.
Even in the Austrian example Government support is needed to create these developments and co-ops. As has been endlessly noted, a number of successive governments have contributed to this mess of issues that culminates in our housing crisis, but Labour have campaigned, and won, offering a 'solution' that has patently not worked, and they've shown no interest in trying to undermine our cultural (and financial) relationship of housing as an asset.
quite the opposite in fact. It's very clear from their website that they view home ownership as investment is the core of it.
This is what galls me most, commodification-as-a-solution is definitional neo-liberalism, but Jacinda Ardern:
https://jacobinmag.com/2021/05/new-zealand-labour-party-socialists-jacinda-ardern
(The Standard even get's a mention in this article from last year)
Interesting read.
She's sort of right that democratic socialist is not well-understood here. Democratic socialist and Social democracy have different underlying principles.
whereas
The Austrian SPO is social democrat & our Labour party (assumed by Ardern’s comment) is leaning to democratic socialism. In other words she's a Blarite. Meanwhile, Austria, and more specifically the State of Vienna, has safe and affordable housing (still majority rented) for its people rather than as a retirement fund for landlords.
https://www.newstatesman.com/spotlight/2019/09/housing-basic-human-right-vienna-model-social-housing
How it works (YouTube 25:45 mins) High quality, affordable city housing is combined with a high proportion of the city area in green space and affordable and frequent public transport network (365 euro/year for residents – often subsidised by employers – when we left our home there in 2018).
An observation.
I was in Ireland as I watched their housing crisis destroy their banks. The large pot of stamp duty resulted in the government accounts becoming distorted by all this extra money.
When the party stopped in 2008, all the money Stamp duty generated needed to be replaced. Taxes had to go up – in the middle of a recession.
If you bring in capital gains tax, then be aware that this money is not a conistant and long term funding stream. Be very careful. Problem is that National and Labour will assume that the party will never end…….
This is more of an issue for Ireland than NZ. Ireland depends on the ECB as its central bank. Around 2010 Irelands interest rates went through the roof and they needed a bailout which came with conditions on how to run their economy. Actually the ECB has been regularly facilitating Eurozone deficits since soon after then till today by buying up debt to keep interest rates down. During the start of the Eurozone debt crisis however the ECB was letting govt interest rates go sky high, and negotiating economic policy when countries came forward for a bail out.
In NZ however parliament sits above the RBNZ legally. If they want to spend (as during 2020) they can just instruct the RBNZ to facilitate that spending.
If money from stamp duties was quarantined for public housing programmes that be a net benefit.
The Greens need to say they will restore the Kiwi Dream of home ownership.
It can be done by lunchtime.
-Tweaking Singapores stamp duties recently increased would be one step.
-levy on homes ,empty for more than 6 months as per Vancouver.
-soft loans for first home buyers.
Gov’t unveils 3 new property cooling measures (msn.com)
'The reason that we cannot afford to have a housing market collapse is because, of course, this is the most significant asset that most New Zealanders have.'
If most NZ'ers actually utilised this asset as a long term home for living in,a decline in house prices would have no effect over the 30 yr ave mortgage term(provided they can pay the mortgage).
The recent Valocity data showed just how few so called 'mom and dad' investors there really are.
There are solutions,but the Govt is not interested.
NZ has the highest house prices in the world.
NZ has the highest rents in the world.
A 30% annual increase in property prices is beyond a…joke!
yep, it ties into how mobile NZers are. Almost like the housing crisis sits within a broader economic and social context 😉 This is why starting with values matters. Maybe people would move around less if they had good community and stable jobs.
I recall the average time NZ'ers stayed in their home was at least 7 years.
Buying and selling in the same market is a fairly neutral exercise..
Who benefits from rampant housing prices=Banks,RE professionals and insurers ,Investors .-how many votes there?
A home to live in and raise a family gives people a real stake in society and leads to good communities.
There is truth in the argument that investing in property is just so rational its a govt guaranteed winner.
who does that now though?
People retiring,downsizeing.
yeah, I don't think that's most housing sales though right?
Exactly….so people living in their own homes would not be badly affected by a housing crash/readjustment.
Those leveraged and receiving tax free CG and unearned income….=not so..happy.
Perhaps three things need to be pointed out to that dance of envy everywhere.
Firstly, homeowners have paid for their roof over their head by working hard, sometimes more than one job. For those who find that these homeowners have got something they want but are not willing to work for – get a grip and get you back side into gear
Secondly, governments and even the reserve bank has allowed this situation to go completely out of hand by throwing money around like candy. We have local councils who have syphoned some 70% of the money from the replacement fund for infrastructure to increase their wages and run their pet projects. Hell, why do I need a rainbow walkway if it is doused in shit.
Thirdly, banks are businesses that make a profit. If you have interest rates at that giveaway level than it stands to reason that they only leverage is housing stock has to increase in value otherwise inflation will bring the return into negative territory. I think this is just about on the cusp now. To me the way homes are being traded at ever increasing value with more and more people joining the ranks of buying….its like a pyramid scheme.
The only solution is to firstly build a proper infrastructure and repair all pipes first. The laying of new pipes needs to be financed by those who develop housing. Engineers (pls pls educated ones with experience) need to assess the egress further down the line of any storm and sewage pipes capacity so that they unwashed don't end up swimming in shit. Only when this has been done properly can plans for social housing go ahead. I can't for the life of it understand why large business blocks are build in central areas, close to supermarkets, council, swimming pools, libraries etc. Who ever has designed and planned the cities (the pattern is the same everywhere) needs to be made to walk from the furthest reach in a suburb to the supermarket close to the town center at least once a week for a year.
As for 1, I'd have needed to boost my retirement savings by 30% last year just to not be able to afford a home deposit to the same degree that I couldn't afford to put a deposit on one then. I'd also have had to increase my income by 30% to not be able to afford to service the payments on that home to the same level.
Lots of people who can't afford homes work hard. If it were just me, fair enough. But we have a real problem in this country, and it's not the laziness of renters.
McFlock, my comment was not aimed at those who try to gain traction but rather all those who seem to believe that some ones hard earned possessions should be theirs. Envy is another issue that seem to be encouraged.
I am acutely aware that people in retirement often go by by the smell of an oily rag. And yet it seems that group gets constantly the finger pointed at.
Hence my comment.
The point 2 and 3 has shown where the issue is and I made a comment as to how logistically and reasonable this could be approached if we would have people in charge who actually worth the money they get paid. Sorry, but this is my true opinion. If I would work like some of these extremely well paid to the grave people work I would get sacked. Simple as that.
what would be some examples of that? It's not something I come across.
Or is it the politics of jealousy, worried that something being affordable for someone else means my capital value might be a bit less?
The "just do hard work" thing pisses me off. some of the hardest working people I know get paid fuckall. Capitalist organisations don't reward effort, they reward the value one brings to the company vs other people, and only if one might stop delivering it.
But cheap credit and few restrictions on overseas money have been a way for governments to pay off the propertied class. Many MPs are part of it anyway, which is easy when you earn a minimum deposit in a year.
I thought the government were off to a good start in 2018, not so much kiwibuild but the prefab plant to lower building costs. Other ways to make housing more affordable without necessarily pissing off the propertied class would be to directly build rent-to-own developments, or simply massively increase state housing purchases and sell directly to the tenants, no bank needed.
But the govt is a little too invested in the public-private partnership model to just take the bull by the horns.
No, you don't have a right to own a house. Or even a right to a mortgage.
No, the Greens don't have policy on it. But they happily cooperate with every housing announcement that this Labour Government had initiated, further last 5 years. Check Scoop for all the joint and parallel media releases .
No, Labour are not able to control real estate capitalism entirely. HNZ is about 10% of it.
Yes, I am quite happy to rearrange my affairs for a 5 and 10 year investment horizon. As are all my relatives.
Yes, Ardern was weak at the time folding on CGT. – but right in hindsight since property and agribusiness are the only two parts of the private sector keeping this country solvent.
Yes the Greens should put up an election policy to deliberately tank house prices by 30%. Please, go do it.
Is that an admission that Labour can't solve the housing crisis? That's some progress I guess.
It's at least an admission that an increasing number of people aren't worthy of having assets.
I guess it's not a coincidence that some would view it that way considering the market they're in.
https://twitter.com/EmmaVitz/status/1473908519543861248
“Won’t” solve, is the reality so far Weka.
Embedded neo liberal thought and legislation for nearly 40 years have helped create new generations with no direct memory of anything different from hegemonic Chicago School dog eat dog economics.
This is evidenced in a minor way by some of the selfish ones commenting in this post, who are blaming non home owners for macro economic factors well beyond their immediate control.
The numbers will favour boomer successor voters from 2023–hopefully new activism will take hold and give the ladder pullers a knee in the nuts.
And if nobody has a right to own their own home, nobody has a right to own an extra one. Is it about rights, though?
Or is it that somehow we've managed to push out of the reach of young adults today that which their grandparents could routinely achieve?
Is our society better off that home ownership is dwindling? Or is it generational ladder-kicking?
You appear to be saying that you have never owned a house. Why not?
Ever hear of a concept called "money"?
If it were just me, your question might have a point.
Last census we had the lowest home ownership rates since the 1950s.
It's not about me. There's a decades-long systemic problem that is getting worse and worse. But sure. Try making it about one person in the entire country.
I think that a major reason for the decline in house ownership is the change in marriage and family creation patterns.
In the last 50 years the change in first marriage has been.
"In 2020, the median age at first marriage or civil union was 29.5 years for women and 30.6 years for men … … . In 1971, when marriage rates peaked, the median age at first marriage was 20.8 years for women and 23.0 years for men."
https://www.stats.govt.nz/information-releases/marriages-civil-unions-and-divorces-year-ended-december-2020
I can't readily find figures for the age of first birth for the same time period but it has apparently increased by about 6 years since 1980.
https://www.statista.com/statistics/1081327/new-zealand-median-age-of-mothers-at-childbirth/
I suspect that there are far more childless couples that there were when I was young but I don’t have any figures to prove that.
When I got married, way back in 1968, we married young, saved furiously to buy a basic house, and then within 2 or 3 years after marriage started our families. It is much later for those stages today and I think that much longer period before marrying and having children is what is reflected in house ownership.
' think that a major reason for the decline in house ownership is the change in marriage and family creation patterns'
alwyn,I say alwyn,that would have to be the most delusional theory ever offered up to explain the decline in home ownership…stick to…cricket.
You never do have anything sensible to say do you?
Just abuse someone rather than contribute anything to the discussion is your only activity. Why do you bother? Just give up and let the adults talk.
I mean, it's actually one of the times I agree with Blazer's general sentiment, if not the extent (or grammatical peccadillos).
Ignoring housing affordability to concentrate on marriage etc is a bit of a stretch.
Cool story.
Home ownership peaked in the 1991 census, so doesn't really line up with your marriage hypothesis. Could be a lag, maybe.
I assume that you were looking at this material.
https://www.stats.govt.nz/news/homeownership-rate-lowest-in-almost-70-years
I agree that the peak was 73.8% in 1991 but I think that there is no difference from the 73.7% of 1986..
The numbers do lend a bit of support to my theory. There was a slight dip in 1971, which would tie in with the very low age of marriage where you have a new household who certainly couldn't buy a house immediately.
The numbers by age group would fit in with my theory although they only start with 1986. The younger groups, who I suggest showed a marked decline in marriage or at least household formation certainly dropped faster in home ownership rates than did the older, more likely to be married contingent.
It doesn't mean they weren't starting families of course. In my day though you were far more likely to be married if you had children, even if the reason for the marriage was the pregnancy.
My whole proposal could be completely the wrong way round of course. People could be postponing marriage, and starting families because they can't afford a house rather than not buying a house because with no family and no children they don't see the need to own a house.
I don't see, by the way, that houses are actually more expensive to buy today than they were 50 years ago. The price is much higher, as a multiple of incomes but interest rates are vastly lower. I can personally remember paying 13% interest rates on a first mortgage and I think they were up to 20% in the mid 1980s. A mortgage for two thirds of the property value was also about the maximum you could get.
https://teara.govt.nz/en/graph/23100/interest-rates-1966-2008
However it still remains that the major problem today is the ridiculous price of land. When a 600 square metre section at Snell's Beach has an estimated price of $1.4 million I certainly wouldn't be in the market.
https://www.realestate.co.nz/42084393/residential/sale/11-awatere-place-snells-beach
No. Let the Government open up large blocks of land on the fringes of Auckland and flood the market with developed sections and the market might fall. Anything else is doomed to fail.
'I don't see, by the way, that houses are actually more expensive to buy today than they were 50 years ago. The price is much higher, as a multiple of incomes but interest rates are vastly lower.'
alwyn,I say alwyn the income multiple demands interest rates be low.
The ponzi could not go on without them.
Now the obvious inflation from trillions of Q.E can no longer be dismissed ,the banks are reigning in loans because they know when prices accelerate by another 30% in one year it has finally become unsustainable.
Interest rates are an artificial construct to stimulate spending.
5 billion per annum profit to foreign banks….all done in the best…possible taste!
You have it backwards. Family formation and establishment of households is hugely delayed, or not possible at all, because of the low incomes and high cost of living in NZ, this archipelago of greed and selfishness, where we steal the future from our own children.
You may be right. I only noticed this after I had posted my comment at 10.06 am where I alluded to the option you mention.
How would one decide on the direction of the causality? Do you have any way you can think of that will differentiate between the two options?
At the moment I can't think of one.
You could ask people?
https://morningconsult.com/2020/09/28/millennials-economy-children-poll/
I'm not sure that this survey done in the United States would be terribly relevant to New Zealand conditions.
It also seems to be mainly about their reaction to the Covid 19 pandemic, which has only been here for about 2 years whereas our statistics show that later marriage and older parents has been the pattern for at least 40 years.
I was highlighting a survey which showed some evidence that millennials have been delaying starting a family but also to point out that surveys are the ideal way to determine peoples thoughts about their own situation.
In my admittedly short search I found numerous studies from around the world showing a lot of millennials are delaying these 'big life steps' because of their financial position, I am fairly confident the results would be the same here and the anecdata I know of mostly supports this.
OK. I took the topic a little too literally I see,
How could we distinguish between the options for putting off having children, or getting married perhaps, to separate the effects of, say, "I need to work fulltime to keep up my progress in my wonderful career" from "I can't afford to have children because I need the money from my job and can't cut back on my hours".
Write a survey and ask them. That's how you do that analysis. Better than trying force a theory by inference.
A person has a right to housing however. And so many people have to rent, which is also poorly regulated, and favours the property owners over everyone else.
https://thespinoff.co.nz/money/22-12-2021/all-i-want-for-christmas-is-a-landlord-register
'The right to housing is the economic, social and cultural right to adequate housing and shelter. It is recognized in some national constitutions and in the Universal Declaration of Human Rights and International Covenant on Economic, Social and Cultural Rights.'-wiki
So no right to own a house or a mortgage….put em in motels=problem solved.
put the link please.
Right to housing – Wikipedia
Ad: wrong
Every living person has a right to work and provide for themselves and their family adequate housing, food and clothes and living with dignity. Human rights is not a tradeable item.
I left the Greens way back when they declined to adopt a CGT. Then the dirty politics folk (the exclusive brethren) put out a leaflet 2 days before the election claiming the Greens would introduce a CGT. Lying bastards – and they got off scot free.
I was busy in China for a while after that – but my initial analysis stands. We needed a CGT then, and we need one even more now. We cannot repose much hope of our parliament delivering one however – the corruption runs too deep.
We are a nation of sheep, led by goats and monkeys. On a good day.
The Greens still advocate for a CGT? It's Labour, specifically Ardern who ruled it out.
https://www.rnz.co.nz/news/political/438535/greens-urge-capital-gains-tax-in-plan-to-address-housing-crisis
So how does a CGT solve the affordability issue?? There are plenty of countries that have CGT and still have large (perhaps not as severe ) increases as we have here.
not one person supporting a cgt has commented how that will improve affordability, and I will take that further nothing that I can find on the Green Party website comments on this either.
it doesn't solve the affordability issue, it's not meant to. It's meant to slow the buying and selling of property by investors.
https://www.greens.org.nz/economic_policy
https://d3n8a8pro7vhmx.cloudfront.net/beachheroes/pages/9646/attachments/original/1596420974/policy-Greens_Economic.pdf?1596420974
Bear in mind, it's a whole package. A CGT on its own will so something, but not much.
'Taxes should discourage speculative investment in non-productive assets'
Hence the core of right wing political policy….no or less taxes for the…wealthy.
You are correct. Every measure taken by govts over the past decade have failed to touch the issue. A CGT will only make matters worse – and the Greens have a long history of bad ideas.
I voted for the Greens four elections in a row, in the expectation that their good intentions would translate into good policy. It was a bitter lesson to understand that the exact opposite happens every time.
How would CGT make things …worse?
There are plenty of countries that have CGT and still have large (perhaps not as severe ) increases as we have here.
Anything that slows speculation will improve affordability.. CGT included.
"There are plenty of countries that have CGT and still have large (perhaps not as severe ) increases as we have here".
You answered your own question. "Less severe".
The idea that "CGT won't work" has gained credibility from repetition, not evidence!
The evidence around the world, is that taxes on speculation do slow it down.
In NZ, CGT is obviously not enough on its's on to slow the runaway train. Other measures such as mass State house building will be needed to dampen speculative expectations.
The real point of CGT, however, is tax fairness, and removing the economic distortion of untaxed wealth. In NZ taxes are disproportionately paid by middle income wage earners.
In NZ taxes are disproportionately paid by middle income wage earners. – glad there are others that have this same thought 👍.
the reason imo is that their main source of income that is taxed is PAYE and GST no ability to minimise any tax, and they to the main own 1 property. Sure there is increase in wealth but own 1 property and live in 1.
I still cannot find how a CGT will undo the massive (up to 100%).property increases over the current labour govts time in power, with pay increases for most at best in line with inflation(and let’s not forget the loss in real terms due to tax creep).
Vested interests will not allow this. Parliamentarians to a large extend would be affected for a start and lets just look at the building of bolt holes for all those overseas residing "residence" holders. Not to mention all the land barons. Its like the 1600's in disguise.
https://thespinoff.co.nz/money/22-12-2021/all-i-want-for-christmas-is-a-landlord-register
The party at the time was the New Zealand Liberal Party. A party that arguably still exists in blue and red flavours. Also interesting to see that mislabeling liberals as ‘socialist’ has a long tradition in NZ too.
Ah. The New Zealand Liberal Party.
Those were the days. In addition to creating a large class of small land-owning farmers they provided old age pensions, created the industrial relations system for settling disputes which was accepted by both employers and unions and extended voting rights for women in 1893.
The remnants of the Party merged with the United Party to create the National Party. They would seem to have Weka's interests at heart. Perhaps Weka should switch her vote to National?
Those really were the days
"Bloody Communists".
We already have a quasi CGT in the brightline test. All it does, however, is provide further proof – if, indeed, further proof were needed – of the uselessness of capital gains taxes when it comes to controlling property prices. What is really needed is a land tax, so the problem with a CGT, once introduced, would be that people would say "why do we need a land tax when we already have a capital gains tax"
Stopping the banks creating money would also help,.
New Zealand has existing land taxes also, they are called rates.
Rates are not taxes, since they are paid to local authorities rather than to central governments. They are designed merely to recover local governments' costs, while land taxes would be based on land values rather than governmental costs.
Rates are a tax and the amount due is worked out split between the land value and the value of improvements (the property built on the land). Of course these days the land value is the most significant of those.
Rates are based on an authority's costs, and are more of a re-imbursement than a tax. That's why rates attract GST. Taxes are based on percentages – of land values, incomes etc.
https://en.wikipedia.org/wiki/Rates_(tax)#New_Zealand
Kind of says it all in the title.
"What's in a name" as Shakespeare said. The point is that rates, whether one calls them "taxes" or not, and real taxes are two different things.
I'm no expert, but when Juliet says "What's in a name? That which we call a rose by any other name would smell as sweet." to Romeo she (Shakespeare) seems to be implying quite the opposite of your point, that she would love Romeo if he is wearing the name Montague or not.
So I don't think it makes much difference if we call them Rates or Council Taxes (as in the UK) in how they impact the economy.
Rates affect only particular localities, with different rates of "rates" being charged in different areas. Land taxes are universal, so where land is is cheaper, and the tax therefor lower, an incentive is provided for businesses and people to move to those areas. Rates provide no such incentive; in fact rates, being based on local authority costs, can actually be greater where land is cheaper.
Land taxes are better at rationing the benefits of different locations.
Are there any councils you want to call out in particular for driving people away from their cheap property and wealth of opportunities with unreasonably high rates?
No. But if there are none that would just prove my point.
If there are none then rates are functionally an effective land tax as far as you seem to be saying, because you can't identify the extremes of the behavior your describing anyway. It's not like councils all apply the same rates.
How much rates do we need to abolish rates for your land tax to work? I mean if your paying this land tax on top you still have a bunch of differing services and costs between councils which apparently invalidates the policy.
If there are none then rates are functionally an effective land tax
No. It just means That rates are having no economic effect.
However, just to conclude this rather stupid argument, I would have to add that, even if rates were in fact land tax equivalents payable to local authorities, this should not stop installing additional land payable to government.
So to recap, rates are not land taxes, because they have an economic effect as different councils charge rates matching their expenditure, but then we can't discuss actual examples of this because, rates are not land taxes and they have no economic effect and if we just put in an additional reasonably flat tax that will have an economic effect (because, its called a land tax after all, and not that the name is actually important to your argument) and by increasing the direct costs of owning a house this will make it cheaper to own.
No. Rates are not taxes because they are not paid to central government. Full stop.
Therefor, the existence of rates should not prevent central government imposing its own land tax, which is what you seem to be implying. And if that is not what you are implying, then why the hell are arguing about that in the first place by trying to imply that we "already have a land tax in the form of rates".
So, who really cares. If you want to call rates “taxes”, that’s your problem.
My original point was that, as we have quasi CGT taxes which don't appear to have much effect, we also have quasi land taxes which also don't appear to have much effect.
Personally, I don't agree with the brightline test basis. That all started when the IRD said that if a property (or other asset) was purchased "for the purpose of resale" then any profits made would be taxable. This didn't seem to work since they could never show that that was the case. I understand that they originally stipulated six months tenure before the rule took effect, but this didn't seem sufficient time to catch ALL the bad guys so John Key increased te period to two years; when that didn't seem to work Grant Robinson increased it first to five years and now to ten years. What nonsense! Nobody seems to have realized that the IRD's criterion relying on "intent" or "purpose" is just downright silly.
The brightline test suffers from the same defect as a CGT. It is not levied until after a property is sold, and it can therefor have no effect on the housing market.
There are several reasons for a CGT, which of course will not resolve the housing crisis on its own. One reason is justice – working people must pay tax, but the unproductive (and in fact counterproductive) parasitic so-called 'investor' class have a myriad of avoidance options. A government with any integrity would be concerned to level that playing field.
Justice has nothing to do with it. The only persons affected by capital gains are the two parties to the property transaction. It has nothing to do with anybody else. Nobody else is made worse off as a result.
Justice would be better served with a land tax.
Justice has everything to do with it.
The speculators take the undeserved gains from property and use them to compete for scarce resources against actual working people. And the thing they do most often is to increase their investment in property – after all, one would need to be unusually stupid to entrust one's money to NZX.
The speculators take the undeserved gains from property and use them to compete for scarce resources against actual working people. The is only a certain amount of income in play. No addition to income has bee created as a result of the transaction All that has happened is that the buyer has transferred part of his income to the seller.
This alleged "crime" would be offset by the fact that the buyer of the property would have less to use to compete for scarce resources against actual working people. "Actual working people” may include both the seller and buyer.
one would need to be unusually stupid to entrust one's money to NZX.
I have entrusted part of my money to NZX. I don't consider myself "stupid".
All that unearned wealth, high rents, misallocated investment, and the impossibility of buying a house " only effects those who can buy and sell. Sure.
There is no moral difference between hoarding houses in a shortage, pushing costs up for everyone else, and hoarding food during a pandemic to onsell at inflated prices.
"Speculators" are not hoarding houses if they rent them out to tenants, or if they flick them off quickly after purchase. I agree that purchasing houses and leaving them unoccupied represents a moral problem but land taxes would be a better remedy against that than a CGT.
Why the hell would"land taxes work better than a CGT”, to slow speculation? Where’s your evidence apart from your often stated prejudice against a CGT.
You can probably dig the answer to this mystery out of the thread beginning at 10.3.1.
!0.3.1 is a separate issue. The reason I prefer land taxes is because they affect an owner's ongoing day to day costs, while a CGT, being levied after property is sold, does not. There are other reasons, but that is the main practical reason.
We effectively have a CG tax now (an other economies have had them for years) and the problem continues….the effect is marginal.
The settings were deliberate in creating credit growth and unfortunately NZ has pretty much only one asset class the banks are willing to lend on, other economies are less dependent on property as a source of security for lending.
The damage was done a long time ago but we had opportunities along the way to reset without too much pain but those opportunities wernt taken….nobody wanted to make the difficult call, so here we are.
Sigh.
It wasn't the Greens who "refused to support a CGT.
It is still Greens policy. It was even publicised as policy by the Greens, going into the last election. Made much of by the unthinking right wing.
The real winners are the banks, massive mortgages = massive amounts of interest and from an NZ perspective massive amounts of money out of our economy.
I'd like to see a progressive stamp duty to price out speculators, commissioning new builds would be exempt.
The Banking industry has alot to answer for in NZ they're directly behind some of our climate and water quality problems in that the willfully allowed loans to buy farms and convert to dairy which were only sustainable in terms of paying back by over stocking, palm kernel and huge amounts of irrigation.
The big 4 NZ banks are subs of the aussie entities CBA,ANZ,NAB,WPAC…whose majority shareholders are foreign,mainly Wall St banks.
Exporting profits is the name of the game…whether its mortgage revenue or bananas…it matters …not!
Shear those sheep …ewe can't go..wrong.
Imposing a 100% reserve ratio on the banks, stopping them creating money, is long overdue.
Fortunately NZ again has an effective 100% reserve ratio in the form of the bank deposit guarantee. That means the first 100K of any deposits held with a NZ bank will be recovered in the event of a bank funding issue. That's effectively identical to if the institution is forced to hold 100K of reserves at the RBNZ for every 100K of deposits it holds, except that it requires fewer reserves be in the clearance system.
Actual effective bank runs were stopped after 2008 with the creation and implementation of similar deposit guarantees (including in New Zealand).
Not yet we dont
"The Reserve Bank will lead the implementation of the new Deposit Takers Act. Deposit insurance is being prioritised ahead of the rest of the Act coming into effect and is expected to be up and running in 2023. The next opportunity for further public input will be an exposure draft of the Act later this year."
https://www.rbnz.govt.nz/news/2021/04/new-deposit-takers-act-a-step-closer
And as Australia has discovered a deposit guarantee may not prevent bail in.
When Muldoon was finance minister he set the reserve ratio applicable to the trading banks, and it was usually set at something between 20 and 25 percent. These days that ratio is probably too low to be efficacious so he banks, for safety purposes, have to rely on mandated capital requirements. However, that doesn't seem to prevent them increasing the money supply.
Whatever one might say about Muldoon, he seems to have known what he was doing when it came to monetary policy.
The mandatory reserve ratio in NZ is zero.
But if you understand the actual working of financial institutions you also realize a reserve ratio doesn't constrain banks from issuing credit in that way. This is because the RBNZ is always willing to issue reserves at the OCR as the alternative is an unnecessary bank default.
The RBNZ could implement and require 100% reserves be held, also borrowed at the OCR, in order to implement a 100% reserve policy. But ultimately they would just end up having to add more reserves to the system to validate every additional credit issued. The alternative is unnecessary defaults when some bank didn't clear its payments day to day.
The mandatory reserve ratio in NZ is zero.
I know that. And I would think that the actual ratio is also very low.
We are not talking about bank defaults. We are talking about the capacities of the trading banks to create credit and pour the money into the housing sector. This seems to be one of the factors which are giving rise to the increases in property prices.
The problem here is the reserve 'constraint' your proposing isn't actually a constraint. Even in countries with a reserve ratio banks are not constrained in their lending by it, they are still constrained by the applications of credit worthy borrowers they receive (as in NZ).
This should be absolutely clear because the RBNZ has a well known policy of lending what ever reserves are asked to any NZ bank in good standing at the OCR. This makes it clear they are never constrained by quantity but potentially constrained by the markup they can on-charge to borrowers.
When settlement happens between banks then they need sufficient reserves to clear payments to other banks. If the reserve bank didn't provide reserves there is a possibility that one bank will not be able to clear its payments to another (and will default). That includes both regular payments and settlement of mortgage payments on new lending. This is the fundamental reason that the central bank will always provide sufficient reserves to clear what ever lending banks are doing.
From the other side there was the period in economics known as monetarism. This was strongest between 1980 until 1986 in NZ. During this time central banks were carefully observing the reserves in their banking systems with the idea that this will correlate with bank lending directly. In the UK this policy was a disaster so bad that Thatcher later claimed she never believed in it. Greenspan later admitted to congress that they knew of no proxy for money, and it certainly wasn't reserves. The RBNZ stopped talking like this around 1986 (though they probably didn't take it very seriously anyway). So the concept your talking about was tried quite seriously (despite notable economists knowing better and saying so publicly) and it doesn't add up.
The problem here is the reserve 'constraint' your proposing isn't actually a constraint. Even in countries with a reserve ratio banks are not constrained in their lending by it, they are still constrained by the applications of credit worthy borrowers they receive (as in NZ).
I don't think this would be the case with a 100% ratio. And even with a lower ratio, while money can be still be created, there is an upper limit to how much.
This should be absolutely clear because the RBNZ has a well known policy of lending what ever reserves are asked to any NZ bank in good standing at the OCR. This makes it clear they are never constrained by quantity but potentially constrained by the markup they can on-charge to borrowers.
This is true, but it doesn't have to be. On top of that any loans from RBNZ can come with strings attached i.e. perhaps no lending for housing purposes.
"I don't think this would be the case with a 100% ratio. And even with a lower ratio, while money can be still be created, there is an upper limit to how much."
Here is the Bank of England telling you this is false.
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy
"The reality of how money is created today differs from the description found in some economics textbooks:
'
As far as I know the BoE has never fixed the amount of money in circulation. I don't know of any successful examples of doing this as a policy. There were some attempts in the UK in the 1980s to target the amount of money in circulation, but targets were missed. So normal is pretty broad there.
Derivatives are bets, not multipliers of actual money, though the loser of the bets will be expected to pay up eventually, and this may involve making purchases with actual money. An expansion in derivatives is a bit like more people going to the TAB for a big event.
So times are still 'normal'….not withstanding Q.E of epic proportions.
And fractional reserve banking is …dead and buried?
The idea of fractional reserve banking was always just an idea and not an accurate description of how bank lending actually works. You can find this in Keynes writings and earlier in the writing of others.
and just because a central bank policy results in a large expansion of their balance sheet, this doesn't mean they started using quantity targets. But I don't expect I should have to explain how to read english.
In normal times, the central bank does not fix the amount of money in circulation, nor is central bank money ‘multiplied up’ into more loans and deposits."
That's not what I was saying. I said that where a ratio is being applied it sets an upper limit to the amount of credit that the banks can create. A central bank doesn't necessarily have anything to do with it; a trading bank may install a ratio itself for prudential reasons (though these days trading banks probably don't). The problem seems to be that providing RBNZ with independence seems to have prevented finance ministers intervening and setting the reserve ratio himself like Muldoon used to do.
'An expansion in derivatives is a bit like more people going to the TAB for a big event'
No one needs to explain how to read English,but someone may need to learn how the TAB operates.
@mikesh
As the BoE paper repeats multiple times a reserve ratio does not limit commercial bank lending (and M3 money creation).
You can divide M3 by M1 all you like and call that a reserve ratio, but this doesn't make it either stable or a limitation on commercial bank behavior.
@Blazer
I'll obviously have to defer to your expertise on TAB operations.
As the BoE paper repeats multiple times a reserve ratio does not limit commercial bank lending (and M3 money creation).
That's pretty obvious given that the BoE is prepared to to lend the banks all the money they want. But I'm arguing from a different position from that, a position in which central banks endeavor to promote stability.
However, as mentioned the BoE and UK treasury set and tried to hit specific M3 targets during the early 1980s in a well known Monetarist period of UK history. Their expectation was that limiting the available M1 would result in some stability of M3 over the longer term (it was well understood of course this would not work short term). In order to target this goal fiscal policy was (for a while) subservient to spending limits. This was during a period when both fixed exchange rates, managed exchange rate policies and many more limits on bank credit creation were in place.
The result of the experiment was however that targets for M3 were consistently exceeded despite the spending limits imposed on the UK treasury (which was very bad for UK manufacturing sector and the UK economy in general). Of course it was fairly well understood by the UK Keynesians (and others) that commercial bank lending runs from credit to money anyway (as described by the BoE paper) so the ideas being brought in wouldn't work.
The same set of ideas were more or less tried across then industrial nations (US, Japan, NZ, Australia) but failed to deliver anywhere. They were generally abandoned by 1986 as unworkable and this concept of credit creation has been relegated to economics text books instead of actual practice (with the obvious problem that such text books no longer describe actual central bank practice).
'The mandatory reserve ratio in NZ is zero'
'However, the veil was beginning to slip in recent months, particularly around ANZ. The Reserve Bank announced in mid-May it had discovered ANZ had not been using the correct model for calculating its own capital for five years, apparently due to an internal oversight. This came at the same time as the Reserve Bank was proposing banks effectively double their capital reserves at a cost of more than $20 billion. The Reserve Bank immediately ordered ANZ to increase its capital by $285 million to $760 million.'-RNZ 2019
What does this mean then?
Capital and bank reserves are different. Reserves are central bank monies (notes and coins and their electronic equivalents). Capital is much more broad including equity, securities and quite a wide class of assets which are weighted in a capital model reflecting their value after they are traded.
ANZs capital model for this was not approved.
https://en.wikipedia.org/wiki/Reserve_requirement
https://en.wikipedia.org/wiki/Capital_requirement
Even the definitions seem quite ambiguous to…me.
So capital,capital reserves and reserves are separate when applied to our major banks.(not RBNZ)
Even the definitions seem quite ambiguous to…me.
Make sure to go through the specifics with your regulator before applying for a banking license.
.For sure.
You may need to do some homework' too.
'The mandatory reserve ratio in NZ is zero.'
The capital adequacy framework incorporates the following main parts:
A full description of all the requirements is set out in the Banking Prudential Requirements (BPR) documents. A short summary is provided below.
Capital ratios
Locally incorporated registered banks in New Zealand are required to comply with the following minimum capital ratios, which are calculated as the amount of capital that must be held in relation to risk-weighted exposures (including market and operational risk):
Registered banks must have a prudential capital buffer (PCB) of at least 2.5% of risk-weighted exposures, completely made up of common equity Tier 1 (CET1) capital, over and above the minimum requirements listed above.
I relinquish my blaze banking license effective immediately.
Mikesh Muldoon .. Really? He went cap in hand to the World Bank every opportunity.
He also knew we would have to devalue and did not hand over power for 3 days.
His rich mates took their money off shore and waited for the devaluation. He was an ego driven fool.
Dead right ..Muldoon was an absolute dud at finance…ex army book keeper ,if my memory serves me..well.
Muldoon .. Really? He went cap in hand to the World Bank every opportunity.
He wanted, rightly or wrongly, to maintain the value of the NZ dollar, knowing that to do otherwise would lead to inflation, which in his time was already bad enough, and which would have led to even more wage/price spiralling. Roger Douglas eventually put things right by devaluing, but look how popular he has become amongst the left.
There is no painless way out of this….and sadly much of the pain will be felt by those who are blameless and we seek to help.
A speculative bubble cannot be gently deflated…..and nor can it continue indefinitely.
Why not?
Did you ever blow bubbles as a kid?
When you pop them …they burst…can't pop them…slowly..same with speculative bubbles…rush to the exit.
When share prices plunge ,people try to guess the bottom..it is referred to as trying to catch a falling..knife=a bloody..finale.
Use a balloon metaphor and it works.
The point is to not have it plunge (and if Pat is right and that's inevitable anyway, best we get on with doing it a different way). Turei was talking about deflating the balloon slowly not fast. I'm asking why that can't be done.
The "bubble" will only deflate if speculators are either prevented from buying, or the expectations of making more money, than other investments, are removed.
As we have seen many times in history, speculators are like Lemmings. Once the market starts dropping they exit as fast as they can before it drops further. Crashing it.
So much money is tied up in housing that a crash would cause a recession in NZ, and the fall of the Government that did it.
Slowing the rise to allow wages to catch up is the best option available. It has gone too far for a swift correction to be harmless.
CGT, massive State house building, and similar, which put downward pressure on speculation over time, may be the only options left.
Wages "catchup" is not really a solution. As wages increase the amounts people are prepared to spend on housing will increase, so prices will continue to rise. CGT doesn't seem to stop house price rises either.
Even if whatever solution we eventually devise causes a sharp and massive decline in house prices, and brings about a deep depression, I think we would still survive.
Even if bank credit dried up the government could still expand lending through kiwibank.
No one is claiming CGT will "stop" land price inflation. No one thing will do that, as I said.
It does take some of the edge off, however. As we have seen.
The Government has to walk a tight rope between slowing demand and crashing the market. I can see why they are taking the slow approach. Too slow for my liking, but there is a rational behind it.
It does take some of the edge off, however. As we have seen.
Oh, really? Where have we seen that?
You would if you looked.
You would if you looked.
Trite. But hardly an answer. It just means that you don't know of instances either, but saying so would just make you look stupid.
Plenty. One just over the Tasman for a start.
You, are just choosing to ignore them.
As I understand it, CGT hasn't stopped price rises in Oz.
Never claimed it would stop them. Too much speculative pressure.
Most of Oz hasn't had our steep rises, however, despite the same drivers of price rises over there
Never claimed it would stop them.
But you are saying that they are slowing price rises down. So, I say again – how do you know?
Because they did slow when the bright line test was extended.
Because they did slow when the bright line test was extended.
Or was it because of the threatened rise in interest rates, not to mention the removal of interest deductibility.
Debt deflation
Asset values decrease, demand flips, defaults increase and credit contracts…..nobody wants to lend if they wont get their money back…..and that means less spending, less employment and bankruptcies….a deflationary spiral
If the effect is severe enough you have a depression.
If it was done early enough in the speculation then the bubble would have been smaller and the impact not so great…compare debt ratios in 2017 when MT floated the idea to debt ratios now.
what does demand flips mean? People stop buying and selling houses?
Instead of everyone wanting to buy (FOMO) everyone (or many) wants to sell…. and price drops.
If you think prices are going to continue to decrease you will get out at the highest possible point to reduce your loses( or possibly avoid a loss)…..and if you have finance the choice may not be yours, because the lender wants the same, to reduce their loses.
but surely there is a natural limit on that. People who need a place to live won't have to sell. People who are afraid of having an upside down mortgage or have investment properties will. How big a portion of the market is that? Won't it just mean houses get traded less often? Investment properties can become rentals. Or the govt buys them for social housing.
Yes there is a limit…there are around 30% of houses that are mortgage free…but it is at the margins that price is set. Remember that the point of encouraging rising prices is the wealth effect so even people who bought some years ago have topped up their mortgages to pay for lifestyle (or support SMEs) so a significant proportion of properties are at risk and those are the marginal price setters.
And once a spiral begins that pool increases as the reduced activity impacts more and more the ability to pay….debts get called in and assets need to be sold to clear debt….and we have most of our capital in housing.
The Gov has been buying for social housing already but they cant buy all the available property….they may end up owning a lot of the debt however but that comes at a cost in a reduction in spending elsewhere…..as said theres no painless solution, we let the bubble get too big for too long.
but why would people with mortgages on their family home be selling if prices are dropping?
Debts called in, is that the banks? Why would they be doing that?
Who sets the price of houses?….those who own a home and never sell it?
The price is set by the (marginal) buyer….and if there is a dearth of buyers the price falls.
Debts called in by banks or creditors of all sorts, it may be a trade supplier or even the IRD…if you owe money and cant pay but have assets those assets can be sold to reduce debt, (the debt dosnt have to be related to a property)…and as said NZers have most of their assets in property. Banks will be discrete about forced sales if they can be (theres quite a bit of anecdotal of 'suggested' sales already) but if a spiral develops they will be in boots and all….they hate loses as much as anyone, not to mention regulatory requirements.
Fortunately the banks have stress tested all their customers at much higher interest rates,than the prevailing rate.
So they say.
But interest rates are on the move and suddenly credit is more difficult.
Judge them by what they do,
At present people seem to be taking out short term mortgages which need to be "rolled over" from time to time.
"During 2022, a whopping $151.0 bln is exposed to rate rises this year – and that is only for owner-occupiers. Investors have another $60.2 bln exposed to rate rises in 2022. (And there is another $3.9 bln exposed in mortgages taken out to support business loans.) That means that $215 bln will be rolled over in 2022 at sharply higher interest rates."
https://www.interest.co.nz/personal-finance/113975/home-loan-borrowers-have-learned-take-out-longer-fixed-rate-mortgage
The Green Party
Dying quietly in a back room.
I did a double take on reading this post. Isn't Marama Davidson the co-leader of the Green Party?
It was then I noticed the date on the Green Party co-leader's statement on housing.
It is great that Weka has brought this matter to the attention of our readers. That she had to go back to 2016 to dredge up a statement from the former Green Party co-leader Metiria Turei in order to do so, is shocking.
The dramatic increase in property prices has coincided with the money printing that has been happening around the world, including NZ, in order to provide liquidity in the Covid crisis.
The law of supply and demand applies to fiat currencies as much as anything else. The effect of more currency being created is that the value of currency falls, meaning more currency is required to purchase finite assets such as property.
So, a lot of the increase in property values is to do with currency values falling rather than houses increasing in true value.
The inequitable part of this equation is that those who don't own property are effectively taking a huge cut in real income. That is, if their income doesn't increase at the same rate as property values, they are effectively falling further behind.
Now we are in this situation, it is very difficult to unwind it because of the economic catastrophy that would unfold should values suddenly fall back to previous levels.
The experience in Japan in this respect is a salutary warning for New Zealand, as a lot of the same conditions apply today.
https://en.wikipedia.org/wiki/Japanese_asset_price_bubble