NZIER's Shamubeel Eaqub calls for a cultural U-turn, in the wake of our housing crisis "sowing the seeds of inequality"

Economists Shamubeel and Selena Eaqub are on a mission to give power to the people. By people, they mean renters unable to get a foot in the property market; Generation Rent.

The husband and wife duo have used the catchy term to identify and give a voice to the 50% of New Zealanders over the age of 15, who rent.

While many choose to rent, the Eaqubs say exuberant house prices are leaving an increasing number without any option.

We often hear from the big bad investors who fan the raging fire that is the Auckland housing market, the baby-boomers, who are taking comfort in the fire’s heat, and the first-home buyers who can’t get close to the fire without getting smoke in their eyes. But what about the rest of us?

The Eaqubs discuss the significance of renters within the economy in their new book ‘Generation Rent: Re-thinking New Zealand’s priorities’. 

In a Double Shot interview Shamubeel Eaqub, who’s also the principal economist at the New Zealand Institute of Economic Research, outlines need for a serious change in the way we think about and regulate the rental market. 

He says, “The idea of the narrative around the book, and the narrative of where we need to go, is not just about what’s happening with house prices, and the consequences of this on economic stability and financial stability, but the much more important and insidious impact on social stability.

“What we have sown are the seeds of inequality for future generations.”

The Eaqubs’ formula for solving the housing crisis

In ‘Generation Rent’, the Eaqubs discuss three sets of solutions to help solve our housing problems.

“The first set of solutions – palliative in their nature – will be to provide better and more sustainable living conditions for Generation Rent”, they say.

“The second set will take the heat out of the housing market in the current cycle, by using levers to control demand: raising interest rates, reducing credit availability, creating a more responsive construction sector and perhaps restricting migration and limiting foreign buying.

“But these cyclical measures, though useful, will only buy us time. Throughout the cyclical ups and downs, prices have steadily trended upwards because of underlying policy errors.

“The real fixes, and the hard work, will be in correcting structural problems: slow land supply; expensive infrastructure provision and a broken model for its funding; taxes that favour housing; and policies that encourage banks to lend more for individual property investment.”

Tougher regulation of rental market

Looking at the “palliative” set of solutions first, Eaqub says the law needs to give both tenants and landlords a clearer view of their rights and responsibilities to make renting a better option.

He proposes making longer-term tenancy agreements the status quo, and lengthening the notice periods landlords and tenants need to give each other on ending an agreement.

“We compare very unfavourably [when it comes to regulating the rental market] to countries like Switzerland and Germany, which have very high rates of renting, but people are happy to rent”, Eaqub says.

Read more about how the Eaqubs want to see more regulation around the rental market here.  

Getting around the NIMBYs

The Eaqubs recognise the need to increase the supply of houses… the right kind of houses – smaller properties/apartments, as household sizes are shrinking, in high demand areas like central Auckland.

They say the way to get around property owners who don’t want to see housing densification in their backyards, is to explore ways of compensating them for the changes that need to be made to their suburbs.

“We know that the vested interests of the current owners are, ‘we want to preserve what we have’," says Shamubeel Eaqub.

“But for future generations we also know that… it cannot stay as one and two story houses. We have to get more density, we have to get more height, we have to get more capacity, because this land is extraordinarily valuable for people to be able to access work and play very easily.”

He’s calling for local government to reassess the best use of its land holdings.

“Local government may need to evaluate which of its designated ‘heritage’ sites truly merit their protection and which ones can be built over”, the Eaqubs write.

“Auckland Council owns the land for 13 golf courses. Could some of them be repurposed into well-designed, medium-density, mixed-use housing developments?”

We’re the problem… not the foreigners 

Eaqub says there’s no evidence to show foreign investors are pushing up house prices.

Figures suggest foreign purchases only made up 9% of all houses sold in Auckland over the past year.

Eaqub says it’s easy to point the finger at foreign investors, rather than admitting we’re driving up prices by bidding against each other.

However he notes comprehensive data needs to be collected, so we can better access the influence of foreign buyers on the New Zealand property market.

He's pleased that in this year's Budget released last month, the government announced foreign buyers will have to register with the IRD and have a New Zealand bank account.

This way we will have a better way of pinpointing where money's coming from, which will also guard against money laundering.  

Capital gains tax crackdown  

Eaqub is calling for the parameters around the capital gains tax we already have, to be tightened.

Currently you have to pay a capital gains tax is you buy a property with the intent of benefiting from a capital gain. You can read more about this here.

“Essentially what we have is a rule that’s there but is very vague in it’s writing, very vague in it’s implementation, and is not particularly effective”, says Eaqub.

“We don’t think this is a solution in terms of fixing the housing market, but it just acts at the margin to take away some of that speculative element that housing is tax-free, highly geared, you can’t lose kind of proposition.”

In the Budget the government announced it would introduce a new "bright line" test to tax gains from residential property sold within two years of purchase, unless it's the seller's main home, inherited or transferred in a relationship property settlement.

Reserve Bank's power limited

Eaqub recognises the Reserve Bank is between a rock and a hard place when it comes to reviewing the Official Cash Rate.

It can’t increase interest rates to try to dampen the housing market at the expense of the rest of the economy.

The Eaqubs write, “The Reserve Bank has a range of other tools it could use, including imposing loan-to-income ratios and debt-servicing ratios, asking banks to hold more capital against all lending, and asking banks to treat housing investors differently by holding more capital against their loans specifically.

“These policies are untested, but they may be worth trying in order to take the edge off the sharp peaks and troughs in the cycle.

“Ultimately, however, it is not the Reserve Bank’s policies on managing the cycle that have caused the sustained increases in house prices relative to income. They are the result of structural policy failures.

“The Reserve Bank can only buy time for other political and policy-making entities to deal with those issues.”

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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126 Comments

A NZer with a future vision. Promising.

" They are the result of structural policy failures." Undeniable true - from whichever persuasion of politics has run our country over the last 30 odd years.
“The Reserve Bank can only buy waste time for other political and policy-making entities to deal with those issues.” The time to sort this looming social disaster out was a decade ago, but it has become so entrenched that it is not possible to reach a solution without bi-partisan cooperation - and that's not coming. So the market, in all it's hideous glory, is going to have to sort this one out for us - as it eventually always does. The only question, really, is: When does the sorting out happen, and how catastrophic will it be? Over to you, Mr. Market....

even if a catastrophic event were to happen, and housing market crashed, the have-nots would still be have-nots.

No, the have nots would be have even less as the losses have to be paid for by someone, the tax payer if nothing else.

that's right, in a property crash the landlords would be broke - who would provide the renters with shelter and security then?

That is indeed a good Q. So can a bank take possession and sell it from under a renter? quite possibly.

Lets say the cash rich person now buys rentals at 25% of the previous cost, however the renter is also under stress ie such an event wouldnt happen in isolation....

I don't know if banks are permitted to let mortgagee seizures. Sounds like a bit of a conflict of interest as the requirement is for the bank to re-sell on to the market and return any excess to the owner.

One reason a bunch of empty key-mail-backs still sit around in the US. If the bank sold off it's dead security it wouldn't be able to realise the book value, so the properties are better to the bank as ballast than to push the whole market price downwards.

At the moment, some of the have-nots are employed & skilled. A housing market crash back to affordable levels for them would be a great opportunity.

I fully agree that the growing number of people stuck in renting are the start of a big social problem. For example there is the big drop, "The Income Cliff" at retirement. Generation rent are going to be really screwed at a time when they can't do anything about it. Huge societal dowgrade.
Increasing the percentage of home ownership should be a prime government objective.

And yet only a small minority of Germans own houses.

How about coming up with a solution for the REAL problem - low wages.

With the demographic problems we face - eg: high unemployment amongst the young/the elderly having to work longer, it's highly likely that what we see as 'low wages' today will look high in tomorrow's world. Some see 50% of the jobs market disappearing by 2030 due to technology on its own. That process started a decade or more back (cars being built by one machine in place of 10 people with hammers; bank tellers being replaced by Autotellers etc). What jobs that are available in the future will be fought over by an excess labour pool using the only tool they have - the cost of their labour. That fight has already started ie: today's 'low' wages and the 'selling off' of future wages - it's called...more debt.

Yes true. The future for working people looks bleak unfortunately. We need some strong unions and laws to put upwards pressure on wages. Let's start there first and then we can look at other solutions like the above mentioned in the article.

NZ has a comparative disadvantage to future real growth - wages and rents. Pretty much anywhere in the world that does what we do, does it with much lower wages and much lower rents ( shops, factories etc). We aren't going to solve that problem with higher prices of either of those. The fact that wages are so 'low' shows that whatever we produce can't feed though into wages, or it would have done, and we have replaced the missing gap in the living-costs equation with more debt. That required collateral ( banks lend against property). That can only go so far until the banks stop lending. You can see that process starting to kick in now with the LVR changes and the capital requirements that are coming in over banks. Once that has started, it feeds on itself in a downward spiral. There is no way out via higher wages - we already have them! and the debt capacity has all but run its course.

Thanks for ruining my Friday afternoon. I'm off to find a pub.

Low wages caused by large scale immigration of unqualified workers which Eaqub is in favour of.

just finished reading about how Disney in US is using a loophole to get rid of expensive highly trained US staff and forcing them to train much lower skilled foreign replacements (by the thousands).

You think if the government cared about the people, if there were thousands of skill shortages they'd make the company fund a training program for the company's needs.

What those highly trained US people supposed to do?

Why can't they use local staff if training will be provided?

but is that a symptom or the disease?

For many businesses the wages are as much as they can afford. is that the REAL problem? I think it is a symptom - but it can't be the very low interest costs (although commercial lending is still pretty high but that reflects genuine risk as much as anything)

And we know low sales revenue is directly linked to low disposable income (and too much personal debt). But wages have been lower in the past...and if cost:wage ratio is scaelable in about the same band, where are the extra costs coming from or what, apart from rates, is growing faster than wages?

Why are business costs so high to sales revenue, that they can't keep wages in pace with rising living costs (ie what makes the wages seem/be low)

Maybe one day there would be too many renters in AKL only so that a communist party could be formed and influence some decision making process.

? Because any of the Communist conventions worked out so well?

Eaqub says there’s no evidence to show foreign investors are pushing up house prices.

Figures suggest foreign purchases only made up 9% of all houses sold in Auckland over the past year.

Eaqub says it’s easy to point the finger at foreign investors, rather than admitting we’re driving up prices by bidding against each other.

Very strange coming from an economist. I'd have thought that the 9% foreign buyers he quotes is exactly the evidence which would point to foreign buyers having a massive influence on price setting in the Auckland market.

In a commodities market - the lowest price paid sets the market signal but in housing/land, it is the opposite - the highest price sets the market signal, as the sell price (that which the seller is prepared to take) drives price, not what a buyer is willing to pay.

For the rental market it is the opposite - what a buyer is willing to pay sets the market - as they are paying rent with earned income (not debt).

At least that's my non-economist economic understanding.

"In a commodities market - the lowest price paid sets the market signal but in housing/land, it is the opposite - the highest price sets the market signal, as the sell price (that which the seller is prepared to take) drives price, not what a buyer is willing to pay"

Now can you please explain that to Fonterra gDT and the Commerce Commission/MIE please!!
Fonterra seems willing to sell for _nothing_ as long as it moved product....

Yeah I've read it's the 'marginal buyer' that sets the price. The buyer thats willing/able to pay the most.

9% actually bought, how many auctions in total did they participate in? So they won 9% of all auctions, and were second in how many? Forcing some despirate, emotionally driven and financially illiterate (but easily manipulated by media/banks/mortgage brokers/accountants) first home buyer to pay over the top.

It's greedy Kiwi sheep creatures pushing up house prices. So often have they repeated the myth about Chinese buying everything it's become a fact in their minds. Off they go to the bank to borrow whatever it takes to snap up more houses before the Chinese get them all, and up go the prices some more.

Let's face it: Kiwis are MORONS.

LOL

You hear economists talk of 'animal spirits' and any deepish look into human behavior will show the animal/emotional brain still dominates. So yes, humans in general are morons. The market for shares often culls out the worse so only those who at least know basic math and how to calc a yield set price; unfortunately for property you have everyone including the most moronic who actually think buying a house in auck = 1k free $ a week

Dead right Kate :-

They are making music for the ears of the great unwashed

On the one hand they (he and she both) assert with regard to a CGT
We don’t think this is a solution in terms of fixing the housing market, it just acts at the margin to take away some of that speculative element that housing is tax-free, highly geared, you can’t lose kind of proposition.”

On the other hand they both deny that those with black/grey/laundered money, by buying a property at a price substantially above the market are setting prices at the margin which then immediately increases all properties in the surrounding area

Anyone with an understanding of how valuers work would know that in valuing a property they take into account all recent sales within an area of approximately 2 square kilometres of the subject property being valued, which of course takes in all recent sales at prices of majestic proportions

Simple logic tells you that

The sale of a property subject to CGT will not decrease the value of the house next door

Whereas

The sale of a property at an inflated price automatically increases the value of the house next door

The other important issue is _why_ would we need extra CGTs (over and above properly applying the existing one)?

It's simply a tax grab. When the other ripe fruits are squeezed dry the guzzlement just reaches for the unripe fruit next. It's greed and gluttony know no bounds - the more it consumes the more it thinks it wants. Introducing CGT, is just the start to land tax, asset tax, projected and theoretical valuation taxes, taxes based on predicted values...all just more pulp for the maw.

this is purely because of the misguided notion that more government spending will make more income. It's like think eating more sugar will fix the sugar addiction and give the economy energy.
It doesn't, it's a diminishing return because the cells and muscles which drive the economy can only efficiently use so much support - after that its just poured into "fat", low yielding, unproductive, _supplied_ services. Businesses that don't have to run to normal behaviours because government will prop them up, Businesses that can waste many resources being inefficient producing stupid ideas we can't afford using a raft of expensive consultants because at the end of the day the government pays them to employ people and to make good sounding ideas but their is no need for those ideas to be any use or even functional unlike an unsponsored business.

And the more fat the government carries the worse it gets because those people come to expect those processes, because that's what they've grow useful. And to trim back to affordable policies...is to diet. ....

David Chaston

You should go back and re-examine and reconsider the article I submitted to you mid-last year dealing with the discordant and disconnected nature of published house pricing and sales articles and how it should be addressed and by whom

There is nowhere to park all the cars the new Aucklanders will buy, the roads will not carry them, the water and sewage and power are already at limits; there is massive deferred maintenance on basic infrastructure already;where are the new hospitals?who can pay for all this unnecessary expansion.What about the environmental damage caused by increased population?
No city can keep on growing for ever. Don't economists know about the environment or Malthus??
Development should be severely restricted, and open areas of land should be reserved for recreation or native trees...

Here's Bernard Hickey applauding the Eaqub's on Twitter for selling Aucklands shrinking recreational space for housing "Great to see Shamubeel Eaqub calling on Auckland Council to turn some of its 13 golf courses into a lot more housing"

Auckland has never been over-endowed with parks and sports fields and recreational space
30 years ago Auckland had a serious shortage of recreational space
Since then the available space has contracted, while
An additional 1 million people have been crammed in
Now these drongos are sowing the seeds of shafting more of a limited resource
In order to accommodate ever increasing numbers of outsiders
People need recreational space
Auckland increases its population while decreasing it sports space

Nuts

And these advisory's from one who has spent a lot of his life out of New Zealand and now living in Wellington, and the other two who have only just arrived in Auckland

Nuts

Feb 2011
Commandeered recreational parks
http://www.interest.co.nz/kiwisaver/52140/migration-policy-linked-inflat...

Jan 2013
Bernard Hickey, David Chaston - listen up. Land. Availability.
Recreational Space - Auckland Golf Links - SOLD to Fletcher Building
http://www.interest.co.nz/opinion/62923/wednesdays-top-10-nz-mint-auckla...

Nothing changes much - and people who should listen - never learn

Add these to the list

Businesses Jockey for Avondale Racecourse Land
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1000...

Avondale Jockey club land goes up for sale
http://www.stuff.co.nz/sport/racing/9913016/Avondale-Jockey-club-land-go...

Alexandra Park sells off some land - Epsom - Greenlane
Auckland Trotting Club unveils $205m apartment plan in its precinct
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1136...

The market solution to the problem would be to stop the global money printing orgy that has distorted asset prices world wide.

Up interest rates in the US/EU/Japan/GB-> NZ banks have higher borrowing costs -> higher mortgage interest rates -> pop the bubble -> we can go back to normal life and young people have a fair go again.

Government and Central Bank manipulation is the problem, not the solution.

Eaqub's still annoyed he followed his own advise and rented instead of buying...i just hope not to many other people headed his advise and screwed their lives up...tony alexander knows what he's talking about...

So what you’re saying is... that the young people coming through, who have been priced out of the market will have screwed up lives?

nope, as plenty of houses still available for $500k-$600k in south Auckland etc, just that those who listened to Eaqub in 2012 would have had lost $200-300k in capital gains, now I'd call that a screw up, wouldn't you?

When did a 600K house in South Auckland become affordable? And where did that 200-300K in capital gains come from? Out of somebody else's pocket, a zero sum game. You are speaking with the benefit of Hindsight. There has been a screw up, but not by Mr. Eaqub.

Do you tell your German friends about the better way NZ does it's housing?

"Massive tax free capital gains! Anybody can do it!"

600k house became affordable when it has a dependable 700k future sale price, and enough rent to cover the investment.
The capital gains come from the different bidders in the market and from the shrinking of the dollars buying power. It doesn't actually come "out of anyone's pocket" as the system scales... and they are free to purchase in the rest of New Zealand, unlike excessive taxation people do have a choice.

He's not speaking from hindsight, he's reiterating the same thing that he's been saying since that date.
Increased immigration, additional compliance costs to lift prices, increasing wages in the area and limited career advancement in the rest of the country, constant stream of corporation and government services relocating to Auckland, OIO asleep at the wheel to protect NZ from overseas money... all factors that say the prices are going up.

They'll try to push some property investors out of the market.... Which will actually have the effect of reducing the number of remaining providers... it it will _reduce_supply_ of Landlords, giving the remaining group more power to influence prices.

And if you think NZ has tax free capital gain you are incredibly wrong, and completely naive/out-of-touch. Go do the research or do a bit of property trading then tell those that are doing the job they're wrong.

Or even tell us how you intend to do some property investing and make a tax free capital gain....
(yes, I'm calling you on your bs)

Our neighbour sold his house a year ago it was subdivided and the back one sold privately the front one was up for sale but has now come off the market since the new rules and the tenants have been given a two year lease. Clearly the whole buying was to subdivide and sell Both. I will put money on it no tax was paid on the first one and none will be paid on the second. I won't say what nationally because then there will be howls of being racist, but if you come from a country where the culture is to bend, break rules and make as much as you can and you use like minded people how are IRD going to catch them

I was particular pointing to the fact that the individual said you could buy a house for a tax free capital gain.

In fact that's exactly what we cannot do - because buying it for the capital gain means that one IS planning to sell it (which is where the capital gain is made (that was declared as the intention of the purchase).

he also approach us to sell our place so he could do the same

Sit and hold.

you don't get any capital gain while you're holding. You have to sell it to get the capital gain. Anything is just paper bait for IRD and government.

and bank

When there is a increasing debt problem, over inflated assets, international ZIRP and money printing hindsight is very useful.

Guido, in 2012 when chicken little Eaqub was telling everybody it was better to rent than buy i bought 2 Auckland properties on 30 year P&I loans as investments, paid for by the rent and topped up by yours truly, needless to say i have made a stack of paper profits, now if i had of rented and put that money into shares maybe i would have made half to quarter what i made leveraged in property. I dont intend to sell my 2 properties as one is a beach house for me and my family and the other is will be my pension in perpetuity...to answer your question on is $600k affordable, the answer for a double income young family is yes with $100k down payment, thats only $500 a week in interest, and affordable by most families median salaries...to your second question, where did i get $200k to $300k , well just take a look at Glenn Innes, Mt Wellington and even Waiheke island for instance, all $450k properties are now worth in excess of $650k...to your third statement, I was not speaking from hindsight as i actually thinking with foresight, hence why i levered 100% into Auckland property 3 years ago...to your 4th statement, do i tell my German friends that we have better housing, no i dont but i do tell them we have a better lifestyle, lastly to your final statement about capital gains, well as cowboy pointed out you just dont know what your talking about as there are capital gains in NZ

So you bought a financial asset with a negative yield, though a massive financial gain is expected. When is a meaningful tax going be paid on that gain? Never. Your tenants will be paying a lot of PAYE tax. How much NZ tax are you paying from Germany? Not selling? Yes as I said sit and hold. The bank will recognise your massive capital gains.

Affordable on interest only when interest rates are the lowest since the Black Death? Let’s hope it continues for the next 30 years. My cousins were born and bred South Aucklanders, they refused to put their kids through school there.

I’m not denying some Auckland houses inflated up a few 100K in a few years. I’m asking where the money comes from to pay for these gains, more debt loaded on future Kiwi’s.
Foresight? More like Dogma… “House prices double every 7 years”

http://en.wikipedia.org/wiki/Capital_gains_tax#New_Zealand

“New Zealand has no capital gains tax, however income tax may be charged on profits from the sale of personal property and land that was acquired for the purposes of resale.[27] This tax is widely avoided and not usually enforced”

I probably pay about $7000 in rates, $2500 in insurance, $5000 in general upkeep and about $65,000 in interest, so add a bit of GST to that and I'd say i pay a bit of tax.

As per IRD website:

http://www.ird.govt.nz/property/property-common-mistakes/mistake-dealing...

IRD quote: How long do I need to hold the property to make it a capital gain?

There is no time limit. If you buy a property with the firm intention of resale, it doesn’t matter how long you hold it - the gain on resale will be taxable (and any loss may be tax-deductible).

Hmmm...same applies to me as i pay 66% tax in Germany...every Euro i earn i pay 2 euro's to the government...i also rent here...so why not only tax me the tenant, lets alos tax the owner as well who has been paying the mortgage, tell you what even, better, why don't i quit my job and sign up and join the government, then they can tell me what to do and where to live and where to send my kids to school...

Bottom line is that it is just plain obscene that houses that people could buy and make homes of are being used as cash cows by the landed few. It must stop, go and invest in actual productive businesses

productive in what way? Productive that they pay the staff and business owner, and meet human needs and wants? That's exactly what renting property out is. What do you think that tip top ice cream represents? Combination of capital and labour sold for a profit, just the same as capital and labour should for a (meager) profit in housing.

And it's not obscene, because unlike some socialist/communist based countries you CAN go out a buy a house.

what is obscene is that the economy has been managed so only the wealthy and those who are rich enough to buy their way into NZ, or have got qualifications outside NZ can come in as advantaged people, or the few real wealthy salary earners, or those already well established families .... _and_that_the_economy_is_being_designed_around_that_as_a_norm_!!

It's not the housing or even the housing-for-investment, it's that the playing field is so uneven that most of our people have such little disposable income left and can't get opportunities (or afford to develop opportunites) of a respectable wage/yield. Anyone in the middle trying to improve their lot is quickly penalised and destroyed, leaving those at the top with no idea what happens under the surface.

remember your "cash cows" you're describing pay the same or less than a retail term deposit account. with far more risk and effort required.

The return is around 8% (mortgagee deals) to 1% (some Auckland) _top_ yield, NOT including damage, maintenance, or normal wear and tear repairs. That's rent, less rates, body corp fees, insurance. Not agent fees, not paint job or re-roof or dealing with aged gardens.

That's not much of a cash cow.

Then why bother, oh that's right, capital untaxed gain, maybe that's the cash cow

From the IRD:- "IF you buy a property with the FIRM INTENTION"

You can drive a bus through that loop hole.

And as the Wikipedia link earlier says... about gains on property "UNENFORCED".

Totally agree. Eaqoub could have known that ours is not a market economy, but one rigged by Government and Central Bank interference. Hence fancy calculations why renting makes better economic sense then buying were and are nonsense.

However: there will be an adjustment (probably traumatic) of prices sooner or later and it is better for Eaqoub and his wife to wait for this happen and buy then, instead of calling for mummy to fix it for him.

Incidentally: I think that "economists" get way too much attention. The really smart people do not study economics, excuse me.

You are being pointlessy offensive as well as Incorrect. a) if you live outside of the crazy places property is either flat or losing money. Renting is also then often reasonable and makes sense. b) as you just said there will be a correction, losing a shed load of $s isnt my idea of a great day.
c) 'dont study economics" well that explains a lot. Simple you have to study a lot of things and economics is one of them, ie not in isolation that is for sure.

Renting _should_ be cheaper based on our disposable incomes though. we can't because of the cost factors, but it _should_ be. 15% of income for shelter and storage IIRC was optimum. 10% collective improvement. 10-15% clothing. 10% future proof. 20% food and daily consumables. 10% for stored for emergencies. those give or take a couple of %, were what we worked out many years ago. Push one out by too much (eg lift the collective cost, then collective funding becomes to benefical and all community expenses go up - as the cost of services hits the whole community). drop out emergencies and there's no fall back and the damage is cumulative through the near to mid future.
I can't remember what transport was, 3 - 5% I think. Basic energy tended to tie into food & basic. Communications fell into Entertainment which IIRC was quite flexible, as increase tended to stimulate the whole economy, so 10% was ok, but care had to be taken not to fall into decreasing the other numbers in favour of instant gratification. And self-improvement was 5-10%, and varied by age and position.
All was inspired by reading the book "Richest man in Babylon". Which said "Pay yourself first", minimum 10%.

I've wasted 13 minutes listening to this Shamubeel spuffle.

He has absolutely no idea what he is talking about. He is simply trying to substantiate his incorrect prediction on renting being better than buying.

He plays up the need for increased supply which is so entirely wrong. People want freestanding homes not apartments. The pricing of the market is evidence enough for that.

Just because Shamubeel doesn't like having to move flats doesn't mean that it should be tougher to move tenants out. Good tenants don't get moved out. I've had some tenants for 15 years. Landlords like good tenants.

He denies foreign investors being a problem and then raises it as being a racist issue. Then he disregards the issue of migration all together.

He doesn't even understand the issue and that if interest rates are permanently 5%, and inflation is permanently 2% then owning a property that would have rented at 4% is still better than renting. What has happened is that the market is just repositioning itself to get in line with that. Of course in more desirable areas where higher growth maybe anticipated, an even lower return may be where the market is moving to.

Stopping the unending tide of migration, which is both lowering wages and increasing house prices is key to the solution.

CGT and other measures are one off fixes that will do nothing. And of course once the one off correction occurs the market heads back in the same direction.

If Equabb could not realise that there was a good opportunity to purchase in 2008-2011 and did not recognise that the billions of dollars in insurance funds flowing into the NZ economy were going to stimulate house prices (especially with many of the insurance company staff, their loss adjusters and engineers actually Auckland based (all the engineers and LAs I have been dealing with over the past 5 years are Auckland based)), then if he did not recognise the impact and the fact that money flowing out of ChCh would arrive in Auckland then he can't be very good at his job.

You can't just pour $40b (which is a fair chunk of the total value of all property in NZ) and expect nothing to happen. Money pouring is finishing, slow down due soon, but fundamental immigration problem remains.

I wonder how good this guy is at his job? HNZ thought $1.6 million dollars good over a single financial year;

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11460627

Not nearly good enough at this price - miracles are warranted.

Exactly right Chris J. "Stopping the unending tide of migration, which is both lowering wages and increasing house prices is key to the solution."

I just got told off for not treating Equabb as a fellow Kiwi due to his skin colour.
(and called a redneck to boot).

What the complaint didn't seem to grasp it's the _culture_ you're brought up in, not your skin colour.

So if Equabb such an expert why is he getting everything backwards?
Why doesn't he realise the damage immigration is doing?
Why is he pushing renting?

Why is he complaining about exuberant house prices where most of the houses across New Zealand aren't too bad?

Why does he still think (the thoroughly debunked idea) that houses get a favourable tax position?

The only two things he gets right are (1) increase in supply (ie MORE landlords, not less), (2) limit to foreign buying.

Auckland is eating itself

If 30 years ago Auckland had 1 square metre of open space per head of local population, now, today, that measure is down to ½ square metre of population and falling. Based solely on an increased population and a fixed supply of open space. However, they've already been selling it off

Blandford Park - gone
Carlaw Park - gone
Newmarket Park - gone
Ellerslie Race course - shrunk - part sold
Akarana Golf - shrunk - part sold
Auckland Golf Links - SOLD to Fletcher Building
Pt Chevalier Primary School playing fields - gone
Avondale Racecourse - shrinking
Alexandra Racecourse - shrinking

Eaqub and Hickey want to sell off 13 council owned golf courses for housing
Dr Nick Smith wants to sell-off unused crown land in Auckland
Land that is open space, not necessarily recreational space, but it is "open space"

Once that land is sold off it can never be re-created or replaced - its gone - any benefit is a one-off never to be repeated

quote - Crown-owned Auckland land
Land parcels from Government agencies such as Housing New Zealand and departments of defence, education and transport then make it available to private developers ... Reserves, defence land and property once earmarked for schools and hospitals is being examined for sale to help solve Auckland's surging house prices .... Land being considered for development and sale includes farmland, that held by tertiary institutions, health boards, the defence force, holdings of Housing New Zealand and land designated as reserves owned by the Department of Conservation .... It's a large mix and there's a significant amount of it," Smith said. While there some "very precious nature reserves" which would never be considered for sale, many others were effectively vacant

That is why if you want to protect a parcel of Land or landmark you should _never_ gift it to the government

That is completely inaccurate. There are 559.2 km2 in the urban area of Auckland. The whole Auckland Council area is 4,894 km2. So the built up area represents just 11%.

There are 1,527,000 people in the urban area, so for each person on average that is 366 m2, about three times the size of an average house (remember the 366m2 is per person, not per household).

Over the whole Auckland Council area, the average is more than 3,200 m2 each !

Auckland's urban footprint is small even in the recognised urban area. It is tiny over the whole Council area.

There is HUGE room for more housing or development. If the average 366m2 fell to 300m2, Auckland would grow to 2 mln people - and still have 89% not built up and leaving the greater area untouched.

You don't have to travel around Auckland very far to know we are blessed with enormous areas of open space. Using 1% or 2% more for additional housing will not change that in any noticeable way.

Well, just to start, are you including the Waitakeres and the Hunuas and Long Bay and Wenderholm Reserves. That's 4 heritage not-for-sale areas. What happens when you take those out? I'm looking at an area within a radius of 40 km of the CBD that is within easy reach of the main urban dwellers, current and future

Why take them out? I use those and many others regularly. They are fantastic places. Not included is the harbours and Gulf. But thousands use those open spaces as well. 

Within 1 km of my house I can think of eight public opens spaces. Maybe I am lucky, I don't know as I haven't surveyed. But my guess is that my access is normal. BTW, I won't be on this site tomorrow, I will be out walking in another public open space within the Auckland urban limit. (And the developing Auckland waterfront spaces probably don't feature in many discussions yet, but they too are world-class.)

I used 1 sqm as a simplistic calculation. Whatever it is, whatever the space available is per person, that space has been reduced on a per-person basis by the increase in population

I think you are conflating total-absolute-space-per-person - I'm talking about open-recreation-space per-person, ie parks, playing fields, football fields, netball courts, golf courses, tennis courts, recreational areas

Good grief. Where do you live? It can't be Auckland. I quickly made a map of the region with a 40km radius on it here. I bet everyone in Auckland thinks 40 kms from the CBD is way out there.

And what is it with the fascination with the CBD? Most people don't live, work or shop in the CBD. People in the South live and work there, ditto the West, ditto the North.

It's only Government and media people that are hung up on CBD references. The mayor's drive to get everyone 'easily' into the CBD is completely misplaced and causing a huge misallocation of resources.

And I completely disagree that 'reduced space by an increase in population' is a practical issue. It is only an issue when it becomes practical, and it is lightyears away from that at present. Currently its a non-issue and probably wouldn't be until the population reached something like 3 or 4 mln. Even then, revised provisions will likely be made. 

Auckland has dozens of Premier Parks, dozens of Regional Parks, and uncounted numbers of neighborhood parks. You forget more are being added all the time.

You've raised a non-issue for Aucklanders, one non-Aucklanders probably find hard to fathom. This is the open-space capital of the world.

And what is it with the fascination with the CBD? Most people don't live, work or shop in the CBD. People in the South live and work there, ditto the West, ditto the North.

Were that the case - why the motorway congestion? Or is AKL traffic congestion over-stated by the media as well?

It's real. Decades of ignoring the issues. But people are responding to these limits, making practical choices about where they live, work and shop. That leaves quite a few stuck with ugly commutes. Would be better to shift the jobs to where the people are in my view (although that is going on quickly now too).

A number of years ago I was having a discussion with an Air NZ cabin crew about the problems they had with Auckland traffic gridlock. They wanted "more roads", "more trains just like London", certainly "trains to the airport". It wasn't until the end that I thought of asking where they lived ... and all this cabin crew lived in Whangaparoa ! How unrealsitic is that? They thought nothing of complaining about how politicians were underfunding their 50 km commute!

Everyone wants someone else to pay for their convenience. 

I reckon the ideal commute is 20 minutes. Adjust your housing or your job. Don't tolerate 40 mins or more. Do something yourself, certainly don't wait for "the government" to solve your personal-choice problems. Which is why there is a surge in apartment living and apartment conversion. (And its creating tight office supply issues, which is why there are big new office developments coming.)

Agree...

when I was young I used to travel an hour to work, and an old wise used to live right next door to our job. he would sit on his pouch drinking his cup of tea waiting for me and we would walk in together. he always called me a young fool and used you live near where you work or work near where you live life is too short to waste your time travelling. it took me 2 years before I listen and ever since have followed his rule.
I save time and money and daily we I hear people complaining about taking an hour or more to travel I take great joy in saying it is busy takes me an extra 5 to get home.
in saying that can never get to work on time and only live 2 km away LOL

nice if you can do it. That was the bonus having to live on the farm, no commute. No lost time or transport cost. My grandfather used to just whistle his dog, and go have breakfast. when he finished breakfast the dog had already rounded the cows up into the dairy ready to go. (I was hoping for similar using a covered feed pad and a gate timer latch)

in the summer I walk which is very nice

Bike 4 km, 10 min, to work. 0 petrol, parking etc.
http://www.mrmoneymustache.com/2013/04/22/curing-your-clown-like-car-habit/

Yes comes down to forward planning. I'm not actually an opponent of high rise apartments (if you recall I state that about the "traditional backyard for the kids to play in" when the Auckland re-zone came out.)

The difficulty comes when that's the problem because people think it's the norm and that there's nothing wrong with it.
Such living works for many people - a programming colleague used to love Hong Kong because if she got a mental jam any time day or night she could just go shop and mix with people to reset her brain.
She found working in Auckland just didn't offer that. People like that (and like me) don't want to spend their day mowing lawns or gardening.
But we don't all want to rip up all the buried resources and concrete over everything and only have artifical parks and live in shoe boxes either.

But high density buildings/condo's are expensive. You can build a lot of urban sprawl for the price of 3 condo's.

Remember we're talking in a country with barely adequate roads above auckland and schools that should get a "hazardous materials" label.

And then there's the issues with Englands roading - what was it called "Worlds Largest mobile parking lot:" which was it ? The M25? around London. Many of my UK friends avoid London because of the traffic, but since rail runnings in 15 minute intervals in small towns and faster in big towns it's not really much of an issue. But the UK found a problem, it had traffic congestion problems, so they made roads that could take more vehicles.... so all those people who hadn't been driving or buying a Carbon monoxide pumping gas burner decided it was now convenient enough to get a car. And so the attempt to fix the problem, yet again made it worse than it was originally. Now they had higher fuel demand, more Carbon output, and everywhere that didn't get upgraded suddenly got massive congestion. My friends in the UK use bikes because it's a faster means to travel. That's progress for you. Most of them moved out of London, Manchester and similar cities, to get some space and piece and quiet. The horrible culture and the constant struggle and grime was grinding down their very souls (apparently).

And then there's the parking fun in Singapore or Rome :)
Or the bicycle congestion in India and China/Japan.

Ah yes, the lovely cultural advantage of high density living in the poor parts of Bangkok.

And David, the _politicians_ aren't the ones funding it.

I said "But high density buildings/condo's are expensive. You can build a lot of urban sprawl for the price of 3 condo's."

Actually I wonder how it calculates out vs Light Rail (at 4500 a meter).

Perhaps cities might start looking into Equabb towers (and I'm not being nasty, I mean full modest service, multi story apartments, with local commuters and foot/bike traffic and low asset acquistion and modern, as design principles. Nothing outrageous but not social housing/projects, something for yuppies on the start/up). But owned and built by council as an investment, and property managed through normal third parties.
Not talking social housing on the cheap, but a valid investment that provides a normal yield for that property type, and with normal agent fees. Keeping it in the median/average won't cause too much distortion to private interests, and would be good investment for council.
Possibly a valid alternative to $4500 a meter...

But your infrastructure isn't keeping up already, and you can't afford to improve it to current standards, how can you say that's a non-issue. How many gridlocks and brownouts do you need before it's "an issue". Do you really want to be a "real city" with those problems?

Sorry DC but you miss the point. While you could indeed fit people into about 1 square meter each, and thus Auckland could have a vast population, each of those would need to spend a most of the time standing up. But it's not what is called 'living'.

I couldn't agree more. In fact the whole world's population, every last human being could fit in to Southland with about 5 m2 each. (In to Stwewart Island @ 1 m2 each). That would leave the world completely empty of humans, except for Southland.

We forget how small we really are, as a world population. All the talk is how big.

But we do all make a big mess of living, and that is world-scale.

And we do get in to trouble however making up exteme points to illustrate our arguments. Best to stick to relational facts in perspective.

I just realized I could fit 160 dairy cows at 5m2 onto my suburban section!

If it were legal then all the properties on my street could have their own herd. Space is obviously not an issue, I can't understand why more people haven't thought of this before!

And they couldn't swing a cat (cat swinging requires at least a 1.8m radius for a small cat - which is over 10m2!)

DC given you're giving silly comments, I'll give one too:

If you add the weight (mass) of every single NZer that would be twice the weight (mass) of all the gold EVER discovered on earth! That shows you how many of us there are!

Good grief, so where does all the food for these billions of people occupying a couple a square metres each, come from, given that several hectares are required by each of us in order to eat? Where does all the waste go. Just because we might be all huddled and massed into one small space does not mean that we do not need it, we do.
A life of occupying a couple of square metres doing nothing at all to disturb the place up a bit, is not really a life. There is NOT room on the planet for more of us, not if we accept that other things do and should occupy it as well and that humans want and need to be able to do something with their lives.

Actually if you look at the rate species are going extinct, the rate of CO2 rise and oil gone by 2050 there isnt the space for 2billion let alone the present 7+

DC this is silly talk.

With the average future household of say 2.5 persons or less, just 900m2 per household and that includes all business premises, malls, carparks, all schools, all parks, airports, roads, motorways, gullies, streams, volcanoes etc etc.

Just the road outside a home in an average street adds 25% to the land area (based on half the width of a one chain wide (20m) road and 40m deep sections.

So our 900m2 average per household drops to 720m2 per household. Then consider all the non residential use land in the urban area, say 40% (it may be more) then we find that the average household is already jam packed onto about 430m2 of land.

That is the current density! How low can we go? Take a look at an aerial view of Auckland, it is mostly full. There is only really room for natural population growth.

Then consider if you do allow all the parks and crown land and private open space to be used for housing, then what do you do in 10 years time when that land is all used up and the same problems still exist.

DC, Auckland is on a path to nowhere with its current thinking.

Infill over the past 30 years has kept things reasonably under control, as has regeneration of rundown neighbourhoods. But now as those avenues of growth extinguish, there are few rational options left other than to address population growth by controlling migration more carefully.

Those that are profiting from growing population and the low wages that immigrants bring need to realise that the party will end one day in Auckland.

One day there will be so much gridlock, congestion and dense housing that people will be in a rush to leave rather than arrive (an eruption could also speed that up...)

They can just build cages for people like they do in Hong Kong, and the rich can live on the hills and look over top of everyone else.

Best comment this year , exactly right Auckland is eating itself bit by bit. Add to your list the Auckland Harbour. Ports of Auckland are constructing further out into Harbour today, while fighting the decision currently in court. Paid by Auckland Council rates, who own the Ports of Auckland..., keep fighting amongst your selves,
That why I am moving to Wellington for a sea view.

Gen X and Y owe me, because my grandparents lived through the Depression and my parents lived though the war, and all of them skimped and saved to give me everything I wanted or needed, and now you lot must do the same.

We babyboomers are entitled by divine right to everything, including (but not limited to) all the houses. My generation deserves to have whatever we want -- We always had it and we should always have it, even if it means you have to work harder and go without.

Gen X and Y are lazy, spoiled little buggers who seem to think they shouldn't have to support their parents in the luxurious style to which we are accustomed and entitled.

LOL

Are you serious? I'm a 68 year old BB and have never thought that way. We have no say over when we were born and most of my friends have, yes here it is, worked very hard during their lives to give their kids a better life than we had growing up during the 50s and 60s. I feel very very sorry for first home buyers now but can't help thinking that it is nothing but greed from many quarters that is driving the unsustainable housing market. Hope you are not serious LOL.

You worked really hard. That's nice. During my time 46 year old, most of New Zealand economy was either massively high interest rates. School years and just after into 15- 27 % interest rates ... great stuff for people WITH money or assets. No use at all when trying to find a job to pay rent.
Because yeah, you worked hard. But when I left school we had massive unemployment, forget the second or third job. getting something part time was challenge enough and it was always very low wage to get "a foot in the door" and didn't pay for much in the way of education or investments.

I'm sorry for you then but I have two children both in their mid40s now who by no means were born with silver spoons in their mouths, we cldnt afford that, but both have university degrees, both are in demanding high powered jobs, have kids and own their own homes and have never had problems getting employment. So maybe they are lucky because we have never given them monetary help. All we did was to make sure they received a good education, no private schools just your ordinary state school education. Didn't even help them with uni fees they worked for that themselves. So .... maybe some are fortunate some aren't whatever the times they are born into. Agree however that it's a very tough world out there now not sure what the answer is.

I didn't get monetary help either when I was younger as everything went into the farm.

Couldn't finish the degree because couldn't get the job to pay enough, the part time job at the service station gave very little so was exhausted when I got back to uni.

However you are probably overlooking the _social_capital_ involved. If you knew about the employment system or had dealt with university degrees before that makes a huge contribution. Just knowing who or what to ask, or knowing what to ignore makes an enormous difference.... some of us rednecks are very upfront and honest people because we have to work together alongside each other and trust each other, none of that "say one thing and do another because that's what is expected". that kind of behaviour got you a few licks of the dog collar around the back of your legs.

Get where you are coming from Cowboy as I live in rural NZ and know a lot of good people like you,baby boomers included, who through no fault of their own struggle every day. I also have a twin who had the same oppurtunities as me growing up but at 68 years of age, living in Auckland, he is classed as homeless as he lives in a boarding house with just superannuation and nothing else, a hard life all because he had a stroke at 45 and after that he made some bad decisions. I help him as much as I am able. Good luck Cowboy, just keep trucking.

Cracks me up every time. Economists still trying to get the real world to fit their economic models and the sheeple continue to follow along with the same ignorance.

Until we address the root cause(s) of the issues the constant tinkering around the edges will not change anything. Lets keep doing the same things over and over again that we've been doing for the past 2,000 years and expect a different result. Insanity anyone?

It's the economic/financial theory and models that are flawed in the first place and y'all think continuing to believe in the bullshit is going to fix anything. Rolling on the floor laughing my f**king head off.

The seeds of inequality were sowed the moment mankind started thinking of themselves as the intelligent and superior species, that they are separate from every one and every thing. The moment they began worshipping money and shiny trinkets, baubles of status and social standing, wants of the ego.

Equabb is completely out of touch when he suggests golf courses should be built on.

What happens when they are built on and the problem still exists? Build on the volcanic cones? Build on Cornwall Park? Fill in the harbour?

Real solutions are needed, not tinkering.

Auckland is full. Shut the door.

Looks pretty simple to me. Auckland prices are high because it's an attractive place to live. Given our finite space and nearly infinite potential demand from all over the world, why is anyone surprised? I'm not. If you want to lower house prices, do what they did in Detroit and wreck the city through trying to implement "social justice". That should do it, guys. This all seems such a waste of time.

Why are we letting immigrants into New Zealand? Whats the master plan? What are the future jobs going to be? I would of thought a country with a low population and the ability to feed itself ( and export surplus food), with a comparatively unpolluted environment (good tourism industry) would be at a great advantage over the rest of the world. So what's the point of letting in rich people to drive up our property markets and be our landlords? The simple answer i can think of is that our politicians and councils have grand ideas and want someone to pay for it. I think what we have had in NZ in the past is worth more than riches, and that's a society where we had some level of equality and fairness. Prepare to put up the security gates and bars on the windows as the gap between rich and poor grows.

Because they bring in capital that they spend with New Zealand businesses. (Which is what we did). Since we got here, we have spent several hundred thousand upgrading our home, which all went to kiwi businesses who were happy to have the work. I don't think you are going to solve very many economic problems by taking money out of the economy, mate.

Why don't the local people have the money to do that, and how come you guys get the cheap ride (having the opportunity to make money on foreign soils, which makes you more advantaged than our local folk). Shall I mention about how benefical the plantation owners were to the people "glad" to work for them?

Also, don't forget that the person who benefits from high home prices when they sell is usually going to be a kiwi who made a good investment decision (maybe several years ago) and likely deferred short-term pleasures like TVs and vacations in order to realize a gain later. If you artificially lower housing prices through government action, all you are doing is taking money out of one kiwi's pocket to put in another. This is just moving money around and generating bad will. Not smart.

bozobit, thanks bro. That's exactly the kind of thing we've been labeling under _problems_.

Yes that one person makes a temporary gain, but values of surrounding properties all rise when that happens. so one person makes a little, and most lose on the deal. repeat it 40,000 times a year.
That's _WHY_ there's a problem.

Your beneficence, and meaning no slight to you personally or singularily as you too were doing a "good thing" for yourself and on the small scale but it distorts the market for the rest of us who didn't get that windfall

It's like anabolic steroids for the economy.

If the local economy grew properly and with natural progression then infrastructure and values would be reflected in wages, savings etc and could be controlled to that level. Just like an athletes whole body develops to certain level with careful training. Even people like Equabb wanting their ideals would see them evolve in areas that supported that kind of development.

But the injection of the foreign funds, boosts localised areas, which depress the value of natural responses and mask natural adjustments.

Through good governance, like good trainers and coaches when can get better athletes and economies, even a few painkillers now and then won't mess things up too much.

But the current system is addicted and the people giving much of the advice/governance are drug dealers who really don't understand (or really care) about the damage they do.

That's what used to rip me apart working in the cow dairy. If I subjected Bessie the cow to deprivation and mental torture or withheld food or medicine I would be quickly prosecuted and demonised - heck in Australia, if I saw someone else do such things to an animal and didn't report it I'd be arrested and charged. But such actions done to unwealthy humans or those trying to get ahead is considered part of a days work and perfectly legal in NZ.
Case in point: I actually had government inspectors check my calf sheds had proper facilities, feed, water, shelter, not poisons or molds, and not damp...... if not, as farmer I was _personally_ liable for prosecution, fines, and immediate notices to fix.... conditions that were better than the classrooms human children are put in.

I think the idea importing rich people is a temporary injection of capital, much like money printing. If the industries created here are based around servicing rich immigrants we will have to keep finding more rich immigrants who want to move here. It's not a real industry it's a sell off. All it does is put the rest of us a step down the ladder, if you were middle class you are now lower middle class if you were poor you are now a peasant. What are the descendants of the new super rich immigrants going to do here when all their money runs out? Many of them made their money in asia running factories with cheap labour ( which we don't have).

Yet.

OMG. The TV3 current affairs show, The Nation, did a Gen X & Y vs the babyboomers debate following Eaqub's appearance on the show (it's in two parts linked below);

http://www.3news.co.nz/tvshows/thenation/debate-clash-of-the-generations...

http://www.3news.co.nz/tvshows/thenation/debate-clash-of-the-generations...

The vindictive nastiness of Michelle Boag and Tau Henare is an absolute eye-opener. I guess I realized there were some BBers who might express this kind of deplorable avarice and disdain towards youthful intelligence .. but I never in a million years expected them to come out of their aging corner shouting down any mention of evidence-based policy, suggesting young folks should start out in a garage if that's what it takes to put together a deposit for a house and take every opportunity to slang insults and derogatory comments across the floor at the generation that would be their children's.

They (Michelle and Tau) must have serious chips on their shoulders about no longer being the future. We really must cast aside these megalomaniacs and put this type of extremely capable Gen X & Y's in charge now..

Yes I have to agree Kate - as a BB myself I found the attitude of the two embarressing. There were good points from both sides, things are never black and white, but the infantile approach from those two was at best very disappointing.

Cheers, being a BBer too I was hoping others of my generation would be equally as embarrassed and appalled.

Kate... Trouble is... Very few people understand , in regards to 1st principles, the real underlying causes of unaffordable real Estate.... not just in NZ, but in most Global western Cities.
Shamubeel Eaqub may be an economist , and he may talk with the confidence that suggests he knows something, but in my view it is mostly intellectual puffery.

Where is the debate about NZs' postion in the Global World of globalization, where we open ourselves to the deflationary forces of emerging economies on Wage rates and at the same time are open to the Global inflationary ( asset prices) forces of extreme credit growth....(Central bank folly over the last 40 yrs that started with the death of Bretton Woods... )
The biggest transfer of wealth has been as a result of a debasement of Money....
NZ M3 was $85 billion in 1985... now it is over $270 billion..

This might sound arrogant..... BUT.... it wasn't until I truely understood the nature of our current monetary systems , that I got an understanding of economic cycles... and sure, I've made the most the that knowledge.... which is a great way to know the efficacy of it.
Most of my understanding has come from the fringes.... from economists like Steve Keen and Michael Hudson and mostly from people who make their living in the Markets, such as Ray Dalio, Gary Shilling, and also some investigative journalists... Shamubeel Eaqub does not even come close to these guys .
In regards to an understanding of ist principle economics ,Real Estate and its cycles. ( there are definable cycles that exist as a result of the captured economic rent of land and the nature of endogenous Money Supply, ) ........check this book out.... http://www.ethicaleconomics.org.uk/2010/03/boom-bust/

(AND.... throw on top of all that the views expressed by the likes of Kumbel and Waymad about Councils in regards to supply side constraints, and extracting income from the building process. )

It will take a crisis to get any kind of structural reform....
this is all.... just my own point of view.... of course..

You're probably right on the detail, but you must watch the debate. It isn't about Eaqub's theory - it is simply about the reality facing our youth today.

The olds mentioned just deny any difference between the way the world works now and how it worked when they were younger. The differences, regardless the cause, are just so massive it's tragic. Take tertiary education - I had no debt whatsoever on finishing uni at 21 - the jobs were so plentiful that if I needed more money or wanted a new challenge, I just changed jobs. It was that easy. Put the deposit on our first house at 23 - moved into it with two cars and the boat - started the family and took the kids with us on holiday overseas every other year. All on one only full time income (a bachelors degree in those days gave you a significant salary premium and exciting choices) - and given we bought and sold houses regularly, we had all those tax free gains which rapidly increased our equity. But most importantly, we started our young married life with no debt - interest free these days or not, debt is debt and the govt automatically deducts 12% of your gross pay as soon as you enter the workforce. It is a huge impediment to the start line when it comes to their futures.

Yeah, cringeworthy alright

However, another reaction might have been (should you think about it)

That was a carefully stage-managed sensational tabloid reality TV show

Nothing more. Designed to elicit a response - and got it - in a gotcha kind of way
Bet you didn't learn anything you didn't already know - so what was the point of the show?

Could think of any number of meaty questions that they didn't go anywhere near

I would be more impressed if they balanced that with getting some local reps of some of these foreign property high-rollers, money-launderers, and real-estate-agents and some of the landlords referenced in an article in todays NZherald along and put some really pointed questions to them

But, no, not much show of that is there?

I hear what you're saying but actually thought that Michelle and Tau simply let their utter arrogance really show through - only because the intellect and calm frankness of the younger ones got their heckles up. They then turned to such utter rubbish (like live out of a garage) as a means to counter/defend.

I don't think the producers (in their wildest of dreams) ever thought they would get such "raw" reality TV from the boomer-side :-)!

You originate from America don't you?

let me tell you that that was what a lot of young people did in those days, but you need to understand that what Tau was referring to was, you bought a section first, then put a garage up and lived in it until your house was built, which is somewhat different to the connotation of todays "living in a garage" - arrogant? no - he set himself up for that and walked right into it, leading with his chin - the fool

Two things with the living in a garage while house being built
1) sections are so miniscule now that there is no room for a house and detached garage, all need to built together with attached garage at the front to fit it on.
2) covenants

Don't get me started on covenants. The most exclusionary concept I've ever seen in planning. They should be outlawed.

Boag was full of bull. Living in a garage while saving for a house!!! She just stopped short of a full Mony Python sketch of ‘Shoe box in middle o’ road.’

And since a garage is not part of the ‘living area’ of a house, it is also illegal to use it as such.

Kate, I think you are being overly sensitive about covenants. All they are more personalized zoning.

Personalized zoning - well that's a nice obfuscation :-)! They aren't zoning per se (i.e., a regulatory/planner derived rule), but rather they are developer/sub-divider rules - and I can't think of any other underlying reason for having them other than to attempt to first inflate and then retain land (and subsequently house and land) values in a particular neighbourhood.

They are the principle reason why we are unable to build affordable homes in any large degree here.

Historically covenants came before zoning and then with the incorporation of communities the elected officials took over the administration of the covenants. Another way to look at it is zoning is publicly enforced covenants.
Owners of any house would like to think that at least they can protect the value of their property from falling, and the only reason house prices can escalate to the heights they have today is if supply of further housing is not allowed.
I agree that many developers haven’t a clue how to apply covenants, and neither do councils with zoning.

It seems to me that residential "sub-zone" and "precinct" definitions (by councils) have taken off recently as a response to lobbying from existing homeowners in residential areas that never had any covenants when the neighbourhoods were established. So hence, to "protect" (as you say), the value of their house/land holdings from falling - they have lobbied planners to make all these sub-classifications (RES 1, 1A, 2B and so on and so forth). It's like the planners took a leaf out of the developers book in that respect.

And what I see in terms of sub-divisions since these covenants become stock standard - is an inability for neighbourhoods to grow organically. We have dehumanised, sterilised and monocultured all our new neighbourhoods. It's awful.

Agreed, with these sub zones. But the homeowners don’t need council to do that for them. They could do it individually, like farmers do with Queen’s covenants, or could get to together and collectively put covenants across all their properties.

For example, many owners of historic Franklin Rd in Akl want council to stop redevelopment of sites into medium/high density, yet they could achieve the same effect by agreeing to put their own covenants on.

And the reason they don’t do this is because they only want the benefit of the historic neighbourhood while they are living there, but when it comes to sell at some future date, they want to be able to sell at the value of the historic house, or its redevelopment potential, which is ever the higher. Nimbyism at its worse.

Covenants and zonings, should be able to be changed by the owners by a majority vote, say 75% like a Body Corporate, or they stay as is. This would allow them to slowly (organically) change over time where the owners decided the change of use added a higher amenity value.

This might mean that the value of historic housing is worth keeping.

"Owners of any house would like to think that at least they can protect the value of their property from falling"

I think there was a time way back when, when home owners weren't so concerned with the "value" of their house falling. It was primarily a home and they were likely to stay in it for at least a decade, make a modest gain on sale and modestly trade up into a newly built dream home. Cue the 90's and financialisation and homes became an investment and traded every couple of years. The vendors expected gains that normally took a decade to accrue. Multiply that with every sale and we have what we have now. Covenants to "retain" value are only a consequence of the short sighted profit model we have allowed.

Only reason for Michelle Boag to have been booked for the gig is if they wanted somebody who'd be dependably loathsome and offensive. Same with Henare.

I didn't watch it, so was probably spared the worst, but read the transcript, and it was clear that they hadn't bothered to prep or research anything, and were just relying on arrogance and bluster. No thought or substance at all.

You have to keep getting the next generation to buy into the system, or else the system will fail. Are we getting closer to that?

It won't fail as long as financially secure foreigners are buying up property wholesale across the country. However it doesn't solve the problem of making low cost housing available for young people and neither does Eaqub.

From a Coase top-down economics or legal view it doesn't matter. This generation or next, it's irrelevant, the people are fungibles. It matters nothing if there's 10,000 local workers, or 10,000 cheap foreign workers* that's still 10,000 FTE. In fact the 10,000 foreign looks better in the sociopathic numbers game because that's 10,000 additional units to tax and sell things to and contribute to rates.

* again not "having a go" because they're "not real kiwi's" it's about impact of external supply while not dealing with the future of the local population (whomever the locals are).

A comparison would be a shopkeeper minding their stock.
Like a good government, the shop keeper wants every item of inventory to reach it's optimum purpose, and will arrange shelves and isles to see that each is to their best individual and group advantage.
But current government accepts "bribes"...sorry promotional advances...to display or shelve stuff they don't want and can't use or is not good for the customer. It gets looks of top end stock and sits it on the shelves just so they can claim to be a top-end dealer. Or tries to succeed by buying things as cheaply as possible and running a dirty cross-contaminated el cheapo store and neglecting the staff and maintenance requirements.
Or with the import of extra people when we can't adequately pay our own then its a case of push the old stock to the back and just keep cramming in more. More stock sells, so just pile on more. If it looks ugly shovel it out of sight into the "sickness" or "invalid" back rooms and ignore it. After all the only thing that matters is the bosses can chinwag down the golf club.

I absolutely agree with this stp. It seems like a million years ago when David Lange was in power fighting the world on the nuclear issue. Where's our moral back bone today? We are being governed by men in slick suits and shiny shoes doing dodgy deals with corrupt foreign business men. The NZ I grew up in is gone.

Bit of self interest on his part. Not too different to the traders who talk the mark up so they can make a profit. This guy wants property prices to drop so he can buy himself.