a 20% deposit put down on a house today is, in effect, a 100% mortgage in two years time when prices are down 20%.

rent to mortgage ratio is not as important at the crest of a slow, gradual, and lengthy fall.

Hey! Heres hoping rental income will drop in line with house purchase costs and continue the property price freefall!

"C Says:
April 12th, 2009 at 12:58 am

No-one is going to buy an asset that is going to decrease in value so quickly. If equity lost is taken into account then mortgage repayments would need to be near zero to make it worth buying a house now."

That is what should be the case but at the moment the opposite is happening. People are diving back into the market as the latest stats show.

Bernard,
looks like you wrote this in a rush. When you get to update4 is there any possibility you could include some recommendations on whether to fix the loan? And how long to fix for? And what that does to the affordability / unaffordability calculations?

What is not clear in your article is the interest rate you have used. Was it floating? Fixed? If so for how long?

There does not appear to be a mention of whether you allowed for a deposit. And, if so, what was the deposit size.

There is no mention of the total mortgage taken out. was it 100%,, 80%.? Did that influence the affordability of the loan?

At this stage, reads more like a draft.

Yes a very encouraging sign....Stats are just that, indicators....notice you still do not say "it is time for 1st home buyers to buy" and add the appropriate qualifications as why not..rates, maintenance, continued reduction in value of the asset

Now lets wait and see who starts to mis quote, take things out of context....
A well balanced article Bernard...for those who actually read the full 'opinion'

"excludes the opportunity cost of interest earnt on a deposit that has been sunk into a property".

Not to mentioned, the opportunity cost on future equity paid into the house. This element of home ownership is ALWAYS overlooked by people who argue that renting equates to "wasted money".

Home ownership should be an emotional investment, not a financial one.

And this also talks of the surge of expats heading home http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1056...

Richard,

Something like 80% of net wealth has been historically generated through property

Your numbers may be correct, but I think you forgot to mention that the wealth accrues to those providing the credit to finance the property and not to the property owner.

Lara,

And this also talks of the surge of expats heading home

Your statement is not supported by the link you provide:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1056...

PeterR try this link 10,000 predicted to come home http://tvnz.co.nz/national-news/kiwis-returning-home-oe-dreams-turn-sour...

More New Zealanders are turning their back on the great OE, as the tradition becomes one of the casualties of the recession. Up to 10,000 expatriates are expected to come home this year because they are struggling to find jobs and make ends meet overseas.

This should put pressure on rents and property prices as the ex pats pour back into NZ

Lara
Economists have been expecting a surge of expats since spring last year, where are they all? net migration figures show a gain of only 9600 since spring with the majority of them coming from Asia. This is chicken feed when compared to 2002 when the gain was 40,000+

You must be having a great Easter chuckle to yourself, Bernard! You've provided the alternative arguement that you felt was needed by the masses to balance your views. Journalism at its best.
Good luck to all those who want to become rich without actually working for it. I hope it works for you. Pork belly futures are making a come back, I hear......

Kate - your link through to the Consumer Institute Calculator is most helpful.

There is just one point I have difficulty with - in how it incorporates a 3% annual lift in property values going forward. Take this out of the picture - and the rent buyer option changes quite dramatically.

Readers will need to assess in their own minds - whether or not more affordable new housing stock will be coming on the market going forward. The days of strangled and grossly inflated new supply - are coming to a close in my view.

Mario - regarding Bernard - its likely not the drinking - just the Irish coming out in him - so its in the genes.

Did you hear about the Irish immigrant arriving in this country - asking the first guy he met on the dock -

"Is there are Government in this country?"

To which the Kiwi on the dock said there was - and the Irishman said (likely one of Bernards forebears) -

"Well Im agin it".

It's all in the last paragraph which should have been at the start of the article.
Once you take account of the true state of this economy and the rest of the world, only a fool would risk their savings on a sure bet they will lose it. The banks are telling us all they see a 20% fall in property and that's why they demand the 20% deposits.

This is a time to be in cash and to be able to move it quickly offshore before Mr Bollard sets about destroying the value of the Kiwi$.

Property is in decline and will be so for a decade minimum. There will be no escape from the worst of the depression. There will be no wave of wealth immigrating here to pork the property market. The rich have an abundance of options elsewhere.

The triple deficits are here for the duration, especially the fiscal deficit which looks set to explode in size and bring about the demise of the Kiwi$ if the RBNZ fails to achieve it. The 180 plus billion household mountain of debt is a legacy of greed that will never go away.

I suspect this story was written solely for the NZ Herald, because it fails to mention that the writer believes that housing will drop by 30% from it's 2007 peak. This means that what the writer has writen, contradicts with what he has previously written, as buying now will mean that the writer believes that they will actuallly end up owing more than they paid for the house when the property prices have dropped further.
Perhaps the sponsors want some good news stories to written, as ASB makes money from selling mortgages. I normally enjoy Bernards articles, but I thought this was was very unbalanced.

I see that Tony Alexander believes a year-end total of 15,000 to 30,000 new immigrants is an "easy call", meaning there will be more buyers in the market.

Tony Alexander, who has pointed to three fundamental indicators of the housing market migration, housing construction and interest rates. All were pointing towards the right time to buy.

Could a bank economist be wrong in his thinking

Lara,

Could a bank economist be wrong in his thinking

Yes, and Tony Alexander as much as anyone.

jamess, I suspect the story was written.commissioned for the NZ herald. The NZ herald are in thh business of selling advertising, and a lot of that advertising revenue comes from property. Any story (including that misleading title of the NZ herald version) that could potentially create additional activity in the hosuing market, can only benefit teh NZ herald.

Rob,

i have no doubt it was written for the herald - I would just be interested to hear from bernard whether he had any say over the title as it is clearly at odds with his general views and certainly not implied by the article.

Hugh,

where is this boost in incomes and employment going to come from to get the bubble reinflating again?

Fundamentally, what are we going to produce and export to pay for imports to support our existing population let alone an increasing one? The alternative is a 20+% drop in our standard of living. That amounts to a depression, and in those circumstances you get the response you suggest - housing occupancy rates go up, holiday homes are sold, and the young stay at home longer.

There is no bubble inflating but ongoing deflation of asset values until they reflect productive values.

jamess, I agree with you - it's all guess work - and I'm not saying my numbers are right for everyone. Whether one can hold onto one's capital in residential housing and/or make a minor gain over the next 5 years depends on what you buy now and what price you pay now.

I'm an Options & Currency trader and I know from experience how dangerous it is to assume market bottoms. I follow closely the economic situation overseas, and this downwave is far from over. The conventional wisdom is that Keynesian theory, ie massive government spending and financial bailouts is going to work this time round. In a normal recession, yes, but this one is different. The loss of wealth globally has been catastropic, tens of trillions, leaving huge numbers of people shellshocked. And it's not over. There is another factor I rarely hear mentioned : the giant highly leveraged derivatives market, some nearly $700US trillion in size globally. It is almost completely unregulated where some very risky investments have been going on. Only a fraction needs to go bad and the global situation gets infinitely worse. I refer in particular to interest rates bets - this part of the market is enormous, far exceeding the credit default swaps of which there has been some publicity. It was Warren Buffet who in 2002 talked about derivatives as the financial weapons of mass destruction. Indeed.
Now a good time to buy property?
For me, certainly not.

Kate - I missed your post earlier in how you adjust the Consumer Institute Calculator - thank you for that. I admire your optimism!

As you will be aware from the last Demographia Survey - NZs major urban markets average Median Multiple was 5.7 - but 6.3 in the previous year Survey - where Australia still sits. These are well above those in the UK and Ireland - something expats in Ireland and the UK need to check carefully - prior to considering buying in Australia or New Zealand.

There is a saying in real estate (as with any asset class really) - that its only worth the income thats supporting it.

Jeff - as a currency & options trader - your comments are most helpful. People here in New Zealand simply have'nt grasped the significance of the bubble wealth wiped out globally. And most importantly - still to be wiped out.

Without getting in to the finance sector potential losses (outside my area of expertise) my view is that there is likely the equivilent of 2 to 4 times Gross World Product to say goodbye to in asset bubble values. I covered this within an article soon after Christmas.

Whats going on globally - is really Japan 1989 (a 16 plus years exercise) repeating itself - but on a global scale. They dug themselves in to a deeper hole with massive fiscal stimulus.

This most certainly isnt your usual garden variety recession.

I might have done Mr Alexander a disservice - sorry Tony ! - I think it might have been Westpac that were picking the NZ dollar to possibly get to US 40 cents
But those guys change their view quickly:

Check out their exchange rate forecasts in the two links below (only one week apart) to see how they went from predicting the NZ dollar to be US 46 cents in June 09
to US 52 cents in June 09:

http://www.westpac.co.nz/olcontent/olcontent.nsf/content/FM_Weekly_20090323/$FILE/NZWC2303.pdf?Open

http://www.westpac.co.nz/olcontent/olcontent.nsf/content/FM_Weekly_20090330/$FILE/NZWC3003.pdf?Open

Any way the point is economists do frequently get forecasts wrong

In Auckland buying in the lowest quartile will mean getting an ex state house in the middle of a suburb like Glen Innes
These sorts of areas often have very poor schooling and most median income households with young children that I know would still rather rent in a better area with better schools than buy in an area with crap schools
I guess it might be an option for a median income household to buy in an area like GI if they haven't had kids yet, but with capital gains likely to be minimal over the next 2-3 years in such areas surely it would be better to rent, save a bigger deposit then buy in a slightly better area with better schools?

Kate = good points
However realistically in Auckland a 25% price house will get you a house in a suburb like Glen Innes
I'm not saying that median income households should be looking to buy in remuera, Mission Bay etc - ie the perfect house in the perfect suburb - but surely middle income households must be able to aspire to a lower middle income suburb like Mt Roskill, Mt Albert, etc which have reasonable schools????
I think the fact that median income can only afford Glen Innes is very symptomatic of how out of whack things have got

Iain you say a loan at simple intrest, who do you think is going to do that Robin Hood or Rob Muldoon, this is the real world even the Govt owned Kiwi Bank likes to trade profitably, lets say that to raise capital costs between 4.5- 7.5% the simple loan needs to pay its way so has to be lent at say 6-9%, (a 1.5% Margin) and you reckon this makes it more affordable, yeah right, you suggest the Govt provide the loan, wake up they are getting the money off-shore at the rates I stated above, or do you think they should subsidise with tax payers money, most tax payers would tell you to get lost, so would the voters in respect to your socialist views at election time, wake up my friend this is the real world.
Renting is a great idea for those that can save more for a deposit, but if you want to buy now go for it, as property is still viewed as a safe investment, I wouldn't listen to what all the economists have to say as someone pointed out, none predicted when the property crash was going to happen let alone to what extent, so all their prevado as to its future is purely speculative, historically property is favourable, as the share market has dropped to the 1980's to 1990 level but property is at the 2006 level, so hello to all the experts. Happy property buying.

Ok Matt, here is an anecdote for you. Just for fun and just ONE true story- so I'm NOT saying it is indicative of any trend! We had supper last night with the visiting sister and bro-in-law of good Scottish expat friends of ours. When the sister of our friends heard that my husband was from NZ, she raved about how beautiful it was. Her husband, an Englishman from Yorkshire, agreed. We beamed. Then, apropos of nothing, the sister told us about some friends of theirs from Yorkshire who had gone to NZ on holiday. The wife fell in LOVE with NZ. When they returned to England, they immediately set about immigrating to NZ. They sold their house, packed up and took their 3 kids. Upon arrival, they settled in (the sister didn't know where) but after only 3 months became intensely homesick. They moved back to the UK before they even received all of their shipped goods!

M - yes I've heard of that sort of thing plus heard of a few immigrants who've come to NZ as a stepping stone to Australia (I believe thats quite common)

Also there's the story of Taiwanese and Korean immigrants who came here in the 90s essentially for their chidlren's education but then emmigrate back once their kids have finished school, because they don't have much english (they came here in the pre-English proficiency test days) and most of their families are back in Asia. A few of my workmates have parents like that and they say its quite common, and getting more common as the children who were say 4 or 5 in the mid 90s are now reaching university age.

As you say though not necessarily indicative of a trend. Of course there are plenty of immigrants who come here and live here happily for ever.

M - yep good observations there. I've too noticed it tends to be the wealthier Koreans and Taiwanese who do that. It also seems quite common that the mother will be here with the kids through their school days ,the father stays in Asia to run his business, and doesn't come down to NZ much
not sure if we'll see a surge of these people returning to Asia, more likely to be dribs and drabs here and there
interesting social phenomenon though!!!!!

Matt in Auck,

Agree re the so called ex pat impact. I think the other thing to consider is that those who return because of the recession will actually have a COMPARATIVE deflating impact on the market compared to similar returnees over the past 10 years.

WHY?? because most kiwis in the end do return home and have been returning home over the past 10 years. I think the impact of these high earners returning to our shores has probably already been largely priced in. I know cos I returned from teh UK in 2001 and at that point it was easy to find great paying contract work in the city of london and many were caning it relative to NZ salaries. Many of my friends were in the uk for 4-6 years and returned with anything from 100,000 to 1,000,000. ALL except 2 have returned to NZ (from a group of about 20 I mixed with over there). When I returned property seemed easy to afford for most returning, but increasingly less so as prices rose.

So fast forward to today. I believe we need a continuing supply of returning ex pats who have been overseas 4-6 years to MAINTAIN (not grow) the "ex pat" premium currently built into NZ prices. If less are going overseas AND more are cutting the OE short because London is no longer a gravvy train then surely the "ex pat" premium is reduced enormously because the bottom line is that over the next 5 years we will see less and less pounds brought into NZ.

Some anecdotal evidence. My younger sister, moved to london a year ago. She is a fully qualified accountant, has a job but not in the city (dried up) and not earning the big money that my accountant friends were earning 4-8 years ago. Likewise her boyfriend a graphic designer has been out of work for 8 months and is likely to retun home. I know for a fact that their collective impact on the NZ market will be far less than my friends when they returned. Just one example, but probably indicative of many.

Matt in Auck - re the 25-29 year old couple - she's a teacher; he's an engineer. I assume, as a teacher - she will earn the same dollars whether living in Auckland or living in a provincial city where rents (and houses) are much cheaper. As for the engineer - again work prospects are likely good in many provincial cities, perhaps not quite so much money, but a company like Fonterra will pay very good salaries to engineers in many of their provincially located processing plants. Then there are local and regional councils all over the country looking for water/wastewater engineering skills.

If I were young, recently qualified and still with student debt - I'd get out of Auckland as it's just the most expensive place in the country to live. And you'd be amazed at how much more relaxed life is without the traffic/population.

Kieran - congratulations on your efforts in putting that excellent graph together.

IIs worth bearing in mind too - that through the 1950's and 1960's - it was rare for the wife / partner to get outside employment once the children arrived on the scene.

So once this factor is taken in to account - this illustrates that the housing situation is even worse than the "household income' basis would suggest.

In fact - through that era - if a guy wasnt seen to be financially supporting his wife and children - he was seen as a bit of a loser by the rest in the community. Its changed today of course - where the working mother is financially supporting the children and too often the infantile husband as well !!!

Some see this as "social progress" no doubt - particularly the infantile blokes.

You might like to read the "Levitt story" and Dr Barbara Kelly's book on these issues.

The sad reality today is that most overworked mothers are really "bank slaves" - because of the exorbident house prices.

Yet - the rather remarkable thing is that we havent heard a "peep" out of the professionall do gooders like the Churches and social agencies, to these very serious issues.

The reason for that is because these outfits are now so dependent on State Welfare themselves - housing issues are a "taboo subject" as it could put at risk the taxpayer welfare they are reliant on from their political owners.

That is a very scary graph Kieran, very interesting.

Kieran - thanks for the graph, a great resource!

Kate you are right life is so much better (and more afordable) in the provinces, I have got no idea why people want to stay in Auckland. I live in Wanganui (without the h) My wife 2 daughters and 2 dogs and I rent a tidy 3 bedroom villa within walking distance to the city centre for only $250/week. Our house is currently worth around $210,000 so a 80% mortgage at that price would be $370 + rates etc $420. It also means our landlord is only getting 5% yeild which is effectivly wiped out by falling house prices. While I get to put my money in a business earning 20% return on equity and enabling me to be my own boss and choose my own hours. Although we would still much rather own our own house again we are not silly enough to buy at the peak of the biggest assett bubble in history.

Kieran - thanks. Please excuse me if I came across in rather harsh terms with regard to the social agencies and the Churches - but it is a topic that needs to be discussed within these organisations and outside of them.

I am aware of instances within Church organisations where members with a genuine concern about these issues and a desire to speak out on them, have been told by those in authority to "shut up".

This (shall we call it) "political apprehension" was a real concern and one I can understand, prior to the election. But there should be no reason for concern now - and I do hope the Churches and social agency people, now start participating effectively assisting in restoring housing affordabillity in this country.

And clarifying one other point - if women with children wish to work one or ten jobs - good luck to them. But if they are forced to - simply because of exorbident house prices and mortgages..........thats an entirely different matter.

I was a tad angry when I put through the last comment.......but there is such a thing as justifiable anger.

Hugh
I dare say Churches are in a quandary. Half the congregation wants cheap houses, the other half risk having all their equity wiped out by falling house values.

Matt in Auck - the likable maverick (with PhilBest no doubt) is hugely heartened as you are inching over our way.....quietly!

# Andrewj Says:
April 13th, 2009 at 2:27 pm

"Hugh
I dare say Churches are in a quandary. Half the congregation wants cheap houses, the other half risk having all their equity wiped out by falling house values."

AndrewJ, you SAID it, but that goes for most of NZ, not just the church-goers.

My solution, though Hugh doesn't like 2); is for the National government to announce:

1) that they are going to bring property prices down by abolishing urban limits and getting land onto the housing development market at the price it is worth for farming (not 30 times as much)
and various other measures that Hugh has recommended to get $140,000 new homes onto the market.

and 2) existing property owners will be shielded from the impact of this by simple, blunt, tax rebates on their repayments of mortgage principal. Complexity might bring fairer results in theory but administrative costs would kill it.

I think that Hugh is underestimating the negativity of opinion that will come from the undermining of existing property owners positions. But if 1) can be sold to the public without 2), fine. I also think Hugh is underestimating the predictability of our mainstream news media's reaction - I sincerely wish him all the best with getting them on board, they are crucial. NZ political history is littered with the ruin of good ideas that have been shot down in flames by the media, at appalling cost to the whole country and its economy.

Hugh Pavletich Says:
IIs worth bearing in mind too - that through the 1950's and 1960's - it was rare for the wife / partner to get outside employment once the children arrived on the scene."

I just about choked on that!!! That is a huge load of rubbish....The concept went out the window early 1900s.
Sure we are given to believe such things of the 'perfect society' back then but the reality was totally different...keep in mind there where th days where female workers where limited to what type of job they had...female wages where about 40% of male, newspapers had separate sections for female and male job seakers...and advertised the hourly rates... hey they even had the 37 1/2 hr week for office/retail workers because they where all female and had to get home for children etc...And a huge proportion worked 'under the table' in local dairys, haberdasheries, tomato picking.
And do not forget, to get a mortgage back then, the female income, legal or not, was not included as part of the family income to qualify.
Dont believe what is protrayed in Amerrican movies TV programs...they are not respentive nor real

re the expats returning issue I know/know of people:

Leaving for the uk now- they are recent grad's and can't get jobs in nz

People coming back from OE as they've lost their job - not sure what jobs they'll get here

People that are in the UK in secure jobs - they're your teachers/nurses police - in demand everywhere

I don't think we'll see the rush some economists are talking about until there is massive riots, huge unemployment etc. etc. Which is of course a possibility, but none of the people i've mentioned can afford a house anyway.

Hugh- Im an expat working for a residential builder in oz, i think the fhog is the only thing stopping the bubble bursting in oz. It is due decrease in june, i think the aussie budget is in may and already deficits are being talked about, im not sure if the government can afford to extend the bonus with all the money they've been handing out lately.

Hugh / Danielle - I totally agree re: the fhog
I hope they never introduce it here, the best thing for first home buyers is for the market to correct itself!!!!!

As part of the demographic that will supposedly be rushing back from London to NZ this year to buy houses and prop up the property market I thought I'd share my 2 cents worth.

I'm an early thirties lawyer working in a top end commercial law firm in London. There are about 8 other Kiwis and aussies in my team. Recently our firm decided to make approximately 100 lawyers redundant and asked everyone if they were interested in voluntary redundancy. Once you take into account the tax free portion the package was worth about 9 months gross UK salary (more than I could earn in 1 year in NZ working in the best law firm in Auckland). And for doing nothing more than signing a bit of paper and walking away from my job.

A number of English lawyers took the voluntary offer to try other careers. But not one of the kiwis or aussies did. And the reason for this is that there are no quality legal jobs at home. Not in Auckland, Wellington, Sydney or Melbourne. We're all monitoring the situation out of prudence. But there are hiring freezes everywhere. So while it does interest me I can't come home and further my career right now.

Even if I could get a new job in NZ in the next 3 to 6 months the move poses a number of risks in the current global climate:

- Many of those who own property here cannot liquidate their investment without making a loss in the current UK property market. And if they can't liquidate they can't buy at home. I personally don't know too many expats over here who have built up material savings over the past few years that are not invested in property or equities.
Those in banking/trading have seen their stock options wiped out and their bonuses substantially linked to toxic assets or substantial share price recovery of their employer.

- Contrary to a number of uninformed postings the £ has slumped against the NZD in recent weeks and is currently trading near its one-year low meaning less dollars for my pound.

- Firms are saying that that the medium term transaction pipeline is either non-existant or highly contingent

- In my present job I can save more NZD in the bank than the p.a. gross salary I would receive in a top NZ firm. If I move to an NZ firm now for substantially lower pay, I believe I would also be at greater risk of redundancy as 'last in the door' given NZ's slowing economy.

- In the UK house prices have fallen further in absolute and relative terms than in NZ. In London the rental market is much stronger than in Auckland. The mortgage interest rates are lower. And London is further through the property deflation cycle than at home (and not at bottom yet). Unless buying for non-financial reasons, such as having a "home" Auckland doesn't stack up as a relative investment proposition.

If I had a young family and had lined up a good job in NZ through a contact it would have been an option to take the voluntary redundancy handout as a windfall payment, return home and either buy a place at a price that builds in future falls in property value, or rent till the falls happen anyway. And there will be people in this position. As well as a few who cashed out between 2005 and 2007. But I believe these people will be the lucky minority.

My friends in law, banking and trading are, for the most part, now intending the ride the recession out. The feeling is that the door closed to new jobs about 6 to 9 months ago. And that means that our cash is staying put.

I will be interested to see if those increased viewing stats on the internet property sites lead to sustained growth in property prices. I doubt it.

Holiday on the mortgage holiday;

http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=1056...

Kiwi Expat in London - Your comments are most helpful.

As I see it - the focus of the New Zealand Government must be on dealing head on with the "growth blockers" across the board - so that increasingly, New Zealand is seen as offering better opportunities than its competitors.

According to Statistics New Zealand, there are approximately 600,000 Kiwis living overseas - near 477,000 of them in Australia, 58,000 of them in the UK and 23,000 in the United States.

There is a lot more to this than just "numbers" - in that its often the ones prepared to travel and live in other countries that are the go getters. My understanding is that the highest income earning group in Australia for example are Kiwis.

As this country is increasingly seen as offering better opportunities going forward - and attracting say 100,000 to 200,000 of these people back to these shores - their skills and entreprenurial ability will be a massive boost to the New Zealand economy.

The greatest resourse we have is our people.

Kate : if our wages were to line up with the rest of the world, we would have to accept a 75 % slash in our pay. The GDP of India is a tick over $US 1000 per person, per year. In China the figure is $US 3000. Here in Godzone, we the chosen few, luxuriate in a figure of $US 20 000 per head each year.

We in the "West" have had it so good for so many years. As we've gotten complacent and over-regulated, the Emerginig Markets countries have closed the distance on us. Unless we stop whining and piffling on about trivalities, and get on with actual production, these newbie tiger economies will steam-roll us within a generation.

Kate - thank you for the points you raise. its interesting to get a lawyers perspective on these matters.

May I suggest you google search an excellent article by Professor Ed Glaeser of Harvard in the NYT "Houston; New York has a problem" - where Ed compares the costs of living in New York to Houston.

Then you might like to check out real estate prices in Houston at the Houston Association of Realtors website www.har.com - and click through "Finding a Home" to the latest Monthly Report on the right side. I note too - the Houston Chronicle has superb detailed statistic information on house price trends within the Houston market of 5.8 million people. Well worth reading that closely as well.

Following that - I would suggest you go check out the Texas Medical Center in Houston - which comprises as I recall eleven hospitals / research institutes with a staff of around 140,000. It is the biggest hospital system in the world - and a global leader in cancer research.

I have yet to hear "complaints" about how they are unable to attract medical staff to Houston (its population growth is in excess of 2% a year) - even though no doubt they pay higher wages in New York. But due to the higher housing / other costs in New York - people are likely to have a better standard of living in Houston with its substantially lower housing / living costs.

So there is a lot more to all this than just the wages paid.

The most important way to assist in solving these staffing shortages - is by restoring housing affordability and from that stimulating lower living costs in New Zealand. You will find then that by focusing on these issues - "miraculously" the sort of problems you are alluding to will be solved to a significant degree.

It needs to be borne in mind that New Zealand has a lot going for it. Its really just a matter for Governments at all levels to deal head on with the "growth blockers" and structural issues.

What will help us significantly in the comparative sense - is that Obama US, Brown UK, Cowan Ireland and Rudd in Australia in avoiding the real srtructural issues and throwing money around the place like there is no tomorrow - are creating massive short / medium term problems for themselves.

Our PM John Key spelt it out clearly within the recent Wall Strett Journal article the direction this country is heading.

Hugh - so opening up fringe land will sort out everything!

Well, that's a relief.

Kate - you are just being provocative!

Up to November 8 last year - those Kiwis girls made my life "a living hell" (borrowing what Michael Joseph Savage on his deathbed said about John A Lee) - and now.....as a Kiwi male.......with John and the guys "saving us".....I feel liberated.

"My God Almighty - we are free at last!'

I do hope you are spending a very pleasant evening wading your way through all that reading material I have "inflicted" on you. With the current downturn - lawyers should have oodles of time to immerse themselves in urban economics.

If you dont come up to speed pretty quickly Kate - you too could be sent in to exile in New York as well - or offered a jobon the NZ Post Board.

You have been warned!

Matt in Auck - that's exactly what John Key told us he was proposing to do in pre-election promises. However, if you have a look at the Government jobs vacancy website - you'll see that the job type "Policy and Analysis" presently accounts for 25/292 jobs - around 10% of all jobs, and "Administration" accounts for 33/292 - slightly more than 10% of all jobs.

Check out "Science and Environment" - 5 jobs, yes 5.... and believe it or not, they need the same number of "Chief Executives and General Managers" (yes another 5 head honchos) plus another 6 "Communications, media and marketing" types!

Oh and by the way, they don't need any "Primary industry, trade and marketing" types.

Read it and weep.

electric hoist
chain hoist
chain block
snatch block
Lever Block
Lifting Clamp
Manual Trolley
Hand Winch
Steel Pulley
Rigging Hardware
Permanent Magnetic Lifters
G-80 Hook
JIB Crane
Rack Jack