Fifty 'countries' with virtually no limits of movement between them, (and almost everyone larger than New Zealand), makes the US an interesting place to test some economic ideas.
Harvard professor, Edward L. Glaeser, has been trying to understand the population movements from the higher-income coastal regions of the Atlantic and Pacific to the lower-income centre and south. He argues, it can't be "the weather" - temperate California has a much better climate than Texas.
These migrational flows are important - and have a strong political impact. They represent a shift from liberal to conservative regions. Coupled with a relatively high birth rate, an ethnic shift away from WASP domination, and strong immigration flows, the US population will stay young for the next century, and it looks like it will become more conservative.
Glaeser has an idea about why this is happening - and it has a lot to do with affordable housing.
He concludes that "housing policies, determined often at the very micro level, are shaping the future of America."
"Perhaps, those ... enemies of local growth might recognize that their policies have consequences, including reducing housing affordability and encouraging the flow of population to places like Texas."
In New Zealand, we don't have such a relief valve - all local authorities here have similar tight restrictions - so the only option Kiwis have is to leave the country. Perhaps they are not going for 'higher pay'. Maybe they are going to get access to the prospect of more affordable housing?
You can read the Glaeser opinion here >>
Your view?
48 Comments
Wow,beat Woll!We came to NZ 5yrs ago,due to a recruitment drive in the UK.But,we are still renting,as we could see the telltale signs-sales in shops starting-builders looking for work(as labourers)-units closing-empty shops-RE agents telling us never a better time to buy!Houses never go down!!And this was all before the GFC.
Having suffered 2 recessions in the UK,the writings on the wall.
So,we came for the lifestyle-maybe realistic house in the future,we can wait.As the great oracle once said "If you have no pactience,property investing will not work for you,you have to learn to sit on your hands!-O.N."
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The can be easy shifted from Southland to Northland or opposite from AU to NZ.
I'm expecting Australia to 'wise up' to the lure of affordable housing before we do...
This has implications.
Ours will be some naff obligation placed upon a McMansion developer - to provide x number of 'affordable' houses. Not a wholesale revision aimed at ensuring that the mortgage is sorted e.g. in ten years, and actually you quite like the house you're in!
Still think this is the best drawcard a country could have.
"In New Zealand, we don't have such a relief valve - all local authorities here have similar tight restrictions - so the only option Kiwis have is to leave the country"
Have you not seen prices and land availability in the regions?
You can get a section in South Invercargill for $10,000 and that's for a flat quarter acre (you can probably find one for a $1 if you look hard enough). In Dunedin you can get a cheap hill site for under $20,000, again you can probably get one for nearly free if you look hard enough.
So why is there no significant migration to Southland, Otago or other areas? And why is there a large migration to Sydney, Melbourne etc where the average house is double an expensive NZ house?
Is the theory wrong, or are lifestyle, location and income actually more important.
Not possible Hugh. CCC charge around $25,000 per site in levies (aka "taxes"). Services plus roads and actual subdivision costs (assuming no expensive RMA issues) are $30,000 plus per site depending on the standard of development and the type of site - typically $40,000 would be the minimum for a flat development done to today's standards.
The raw land cost is actually quite minimal - perhaps as little as $30,000 per site on the fringes of ChCh in the current (very depressed) market.
Add these all together plus sales and marketing fees and a plethera of other costs and throw in a developer's margin and sections at today's prices look very cheap.
Around fringe ChCh, $99,000 for 3000m2 in a fully serviced lifestyle subdivision in Amberley, $115,000 for 1700m2 in Rolleston. Subdivisions in Linwood, Kaiapoi and Rangiora from $120,000. Premium 1500m2 Sumner sites with 270 degree views and gently sloping (old Richmond Hill golf course) from $230,000.
All cheap compared to the original pricing intentions of the developers. On all of these sites the land value would only make up 20 to 35% of the finished cost of a house.
It's really the build cost that would need to come down - but how can you do that. Labour and material costs are what they are.
Here's one for Hugh anyway - places where land is free.
We desperately need to move quickly on this one to reduce our overall cost of living and to enhance our international competiveness.Our policies to date have been just plan dumb. The cost of housing in this country is insane the associated debt burden is a huge unproductive drag on our economic prospects and attractiveness to quality migrants. Furthermore the underlying social cost of inflated housing prices is huge.
Nobody lives in this country relatively speaking we have land galore especially in the Sth Island.
Radical thinking is required as to attract smart people here. Many countries overall quality of life is beginning to deteriorate. Widespread social unrest will become the norm as debt crippled governments are forced to reduce services and entitlements. Policy makers need to realise and accept that a strong economic rebound is not going to happen in fact the out look is to the contrary
"need to move quickly"....true enough colin...not a chance in hell mate....reality is you need to look after number one because govt couldn't give a stuff about you. Govt is all about protecting the banking sector control by porking credit demand. The last bloody thing they will allow is a trend to thrift, prudence and total saving, to become the social and economic norm.
Colin....I hate to rain on your party mate but out of any "rubble" will emerge a copy of what we have today. The message is clear...look after yourself. Avoid the bank debt. Learn to be thrifty and prudent in money matters. Produce what you can and trade any surplus.
The Glaeser opinion demonstrated for me the reason why economists are regarded in such low light. He presents a number of graphs which to all intents and purposes show random distributions of points. He sees trends where there clearly aren't any (Remove a couple of outliers in graphs 2 and 3 for example). So the whole of his argument is then undermined and rendered worthless. As for the Chaston opinion then extrapolating this result to a totally different country with different drivers, migration factors etc the whole thing becomes laughable and worthy of interest.co.nz Oh yes ...
Why would a developer sell a section on outer CHC or AKL for $40k when they know they will get buyers at $180k. The only way you will ever get cheap affordable housing is if government steps in...and they aint got any money.....Here in CHC for example anywhere on outer city within 15-20 minutes city center are some of the most expensive areas in CHC..can not see any sections going there for $40k anytime soon.
Well Hugh I acutally live in the real world..you will never never never get a section on the outer skirts CHC AKL fro $40k..that is the real world, you can write as much Fiction as you like but reality is people still earn good incomes and can afford to pay the price $180k for a section. The world will never be a level playing field.i.e some people will never be able to afford a house, and yes that is wrong, given the available land, but travel around places in Africa and India etc and you see millions in this situation, the haves and have nots..perhapes the western world is just moving in this direction and people, dont like it.
Hi Hugh, it was a light hearted however true comment/observation.
I have a office in Houston, links with the university of Texas at Austin and do business/ consulting work for oil/property/utility companies in Houston and several NZ businesses who have set up sale and diustribution centers in the city. It is growing because of these being industries being concentrated in Houston.
However it is a funny place. I have meet no one todate that lives/lived there or visited that really likes the place however it is a place of economic opportunity. Can't think of anywhere else where that applies...
As a serious social scientist, I'm surprises you would make a simplist assumption that a place is growing that necessarily means it is liked.
I'm aware of you documentation, publications and the unconvential economist, Texas has a lot going for it however has so many places in the US. I think you response assumes way too much.
Hi Phil, with regards to you comment " Love" is a great mystery to me and whether we "like" certain cities or not, is subjective and beside the point" You will find that good design will obtain an 80% consensus if the right question is asked.
To find out more I can only recommend again the work of Christopher Alexander.
Both "A Timeless Way of Building" and its second volume "A Pattern Language".
No developer should be in business without these works to hand.
I did enjoy the link you posted on Houston and on the face of it the city looks good, but as SK says I think that perhaps it isn't the full story.
And this isn't small stuff. The total lack of community in the modern world pays a large part in people being able to govern us without accountability. Alexanders seminal work helps us understand why.
We migrated from UK about 40 years ago. At that stage we were wanting to buy a bigger house in SE England for growing family. This was the era of gazumping. First house in NZ was half the price of UK house we sold and twice the size. Housing was a big part of quality of life which was the core reason for our migration.
exactly Muzza...there are some very cheap areas about 30-45 mins from chc, and no one buys there....why...people do not like to travel to far from where the work is....and perhapes some cities are very popular because...people like the environment. Go and ask a 20-30 yr old would you rather live in Melbourne or Palmerston North
Just back from a trek around the Bavarian real estate websites , as one does , and found a splendid 3 split-level home of 140 sq metres , 4 bedrooms , 790 sq m site , for 165 000 Euros ( $NZ 282 000 ) ................ When it's cheaper to buy in Europe than it is in NZ , then we really are up shit creek , aren't we !
GBH that would be the one in a small village about 100km away from nearest town Regensburg...www.realenz.co.nz has plenty four bedroom houses between 100-150K NZ ,came up with 10 pages of them. Guess what ..they are also in small towns or villages away from the main cities.
NZ house and apartment prices are a complete joke.
My old 2bdm apartment in Berlin sold in 2009 for Euro 108,000 (180K NZD). 80sqm, french doors, balcony, view of shared garden, double glazing, wooden parquet floors.
Price for a comparable 2bm apartment in Wellington is double that. Think 350K or so. For this get cheap shabby carpets, single glazed aluminum window frames more fit for a garden shed than a house, bad 90s decor, road noise, and a view of your neighbour's rubbish bins.
It's not just Germany.
Average house price in UK: £163,435 ($335K NZ). Average in NZ: $397K. With the dollar the way it is nowadays, New Zealand property is dearer than UK property.
FCM : Only 764 m sq section ! Silly me . And the town is Eging am See , Passau . About 3900 citizens ............ Checked their own website : They got open countryside , forests , hills , rivers to swim in , cycleways , walkways , it snows in winter ............ You're so right , buddy , who'd be daft enough to leave NZ to go and live there .
And beware of cheaper fringe location places when the price of oil goes up with a bang.
FCM, you seem to have a dim view of Palmy, but agree many would find Melbourne more exciting, and that's the reason they go, certainly not because of the cost of housing = that was my point!
I can think of numerous reasons that I would prefer Australia to NZ. The fact that their housing is even more expensive than ours is probably keeping the migration lower than it would otherwise be. If you think there are a lot of people migrating now, how high could it go if their housing was cheaper than ours as well as all the other advantages?
Smart behavior when migrating into a country that has a bubble, is to rent until it bursts. People who are smart enough to migrate, are also smart enough to work this out. I keep meeting more and more Kiwis who have returned from abroad, who are renting. I wouldn't be surprised if many of the Kiwis who go to Aussie are renting too.
One of the reasons that Houston and Dallas are population magnets within the USA while Invercargill is not within NZ, is simply the difference in the EXISTING level of development. If Wellington or Christchurch had sorted their crap out and had housing half the price of Auckland, they'd be NZ's Houston.
I suggest it would be possible over the long term, though, for Invercargill to develop the critical mass, if the rest of the country keeps up the strangulatory approach and Invercargill does not fall for it or have it imposed by a semi- totalitarian central government. (Like Oregon has). The papers of Paul Cheshire of the LSE show what 50 years of this stuff has done to Britain. They, not California, are the real "worst in the world".
The crowning insult to the people groaning under debt, forced into tiny homes, and afflicted by social pathologies (because so many young people cannot dream of affording a home and a family); is that there are NOT "benefits" to balance with these costs at all. The efficiency of urban economies is LOWER, not higher; commutes are longer on average; carbon footprints are higher, not lower. This is because inflated land prices are a serious obstacle to efficient location decisions by households and businesses; and urban "churn" and redevelopment is reduced. Also, the debt tied up in "land", has been diverted from productive uses; and household discretionary spending has been gutted.
Britain's house price bubbles have been running at approximately one order of magnitude of volatility ahead of California. Their next crash will total their economy. Watch. Guess what: Britain is 12% urbanised, AND have 13% of their land in "Green belts". If they moved to 17% urbanised and 8% Green belts, they could eliminate their problems. Oh, by the way, almost no-one in London except the very wealthiest, have regular close encounters with grass, trees, and gardens, in the vicinity of their homes.
Cheshire and his colleagues also calculate that these high land prices are a more powerful force for "inequality" in society, than INCOME disparities themselves as they stand.
NZ and Australia are about 1.2% urbanised and 0.8% urbanised. How about a big "DOH" to our city planners, for engineering British-style problems in the midst of abundance?
"Oh, by the way, almost no-one in London except the very wealthiest, have regular close encounters with grass, trees, and gardens, in the vicinity of their homes"
You're pullin' me plonker here Phil - parks, canal walks, allotments even.... silly thing to say.
All empty on the bank holidays...August especially.
OK, perhaps it's a matter of perception and "what you're used to". Having grown up in suburban NZ, I think a large proportion of Londoners ARE condemned to "concrete jungle" hell. (and masonry and grime). I find it ironical that in the name of "Green" politics, most people are deprived their own property with lawn, garden, and shrubs.
Compare London and Atlanta on Google Earth. "Sprawl" is closer to "back to nature" living than it is to "concrete jungle hell".
Taken to its logical conclusion, currently fashionable "Green" politics would have ALL 6 billion humans living on Tasmania, at Hong Kong population densities (it's possible), just so the rest of the planet could be returned to nature apart from intense food production in Australia, NZ and SE Asia, and the odd mine and so on scattered around the rest of the world.
"Green" politics WAS once about "back to nature" living. It got hijacked by social engineering, Marxist "planning" types. Unfortunately, none of the alleged "gains" of arbitrarily restrained urban form are true anyway. This is "lose - lose". Higher costs, and a net welfare LOSS to show for it. Have you been following my posts on the academic research that proves this?
A brief stay at the Yokota base in Tokyo demonstrated that to me , too . Americans show a level of respect and politeness that puts us Kiwis to shame ........ I was humbled by their manners . Way above what I'd expected ............ Light-years ahead of my capabilities .
............ Kiwis spend alotta time jerking themselves off about our warmth and friendliness to foreigners/tourists/visitors in our fair land . ........... We need to travel more widely , before being so smug and self-congratulatory about ourselves .
@ muzza
That's right, muzza they do. So if you're ever in Texas you'd better be real careful and be on your best behaviour or else a Texan member of the public with a licence to carry a concealed weapon anywhere and at any time (and lots of them do, but you don't know which ones) might up and put a bullet in your head.
http://www.txdps.state.tx.us/administration/crime_records/chl/genInfo.htm
Always on my best behavoiur David. Back in 1980's when I was a youngster I had a contract working in Washington DC. Was based at a motel on the site of the Catholic University. First day going to car, parked right outside motel, a couple of guys very politely asked me and a colleague to hand everything over and they pulled a gun( which wasn't so polite).Having said that, I agree Gummy that the hospitality of many Americans is very good. We like to get to America about every 7 or so years. Have a brother-in-law in North Carolina and he often refers to 'those genuine Texan Red Necks' Say, where is George Bush from?
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