Bernard Hickey says the Govt's storing up an enormous social and financial liability by allowing Auckland's housing supply crisis to remain unsolved; says Bill English should apply the actuaries in his social investment programme to Auckland housing

Bernard Hickey says the Govt's storing up an enormous social and financial liability by allowing Auckland's housing supply crisis to remain unsolved; says Bill English should apply the actuaries in his social investment programme to Auckland housing

By Bernard Hickey

It's easy to assess the value of an asset in a liquid and rising market, but the future liabilities are not so easy to see. This week's figures from the Real Estate Institute showed just how easy and just how high those asset values can go when there is too much demand and not enough supply. The future liabilities have gone unseen.

Auckland's stratified median house price, which strips out the noise from an unusual number of sales in high or low price brackets, rose 3.4% in the month of March to NZ$937,100. Despite the urgent attempts by the Government and the Reserve Bank to dampen demand in October and November, Auckland's cooling off period lasted just five months.

Auckland's housing market is back on the track of runaway inflation where demand from record high net migration, solid jobs growth, strong real income growth and falling interest rates is slamming straight into utterly inadequate supply.

A net 3,890 people migrated to Auckland in February and Auckland's natural population is currently growing at a rate of around 1,200 a month, which means Auckland needed to build 1,700 houses at a rate of three people per house to keep up with the population growth. Auckland consented 787 new dwellings in February, less than half that number.

Even accounting for February being a naturally slower month, the trend for new consents in recent months has been around 800 a month and falling. That's well below the 1,100 seen as needed to cope with ongoing regular population growth, let alone eat into the existing shortage of at least 25,000 houses.

The Government's Crown land for houses sale programme has barely got off the ground. Auckland Council voted at the end of February to withdraw its proposal for more intense development of many of its central suburbs after a backlash from ratepayers who don't want more affordable houses built near them. A plan to build 1,500 homes in the old Three Kings quarry is being fought tooth and nail through the Environment Court by residents and local politicians. The much vaunted Special Housing Areas in Auckland have yet to deliver the immediate housing supply surge that many hoped for.

The immediate outlook for some sort of correction is not bright. The trend for housing consents has actually been falling since October and mortgage interest rates are widely expected to fall another 0.5% to well under 4% by the end of this year. Migration is showing few signs of easing back from its current 100-year highs and the current Auckland Council looks set to block any proposal for a Unitary Plan from the Independent Hearings Panel that allows significant and sufficient new housing supply. That Unitary Plan vote is expected in September in the middle of the Council elections. Councillors who want to avoid being turkeys voting for Christmas can safely ignore the young and the poor and the brown who don't own property and don't vote. That means Generation Rent's aspirations for home ownership and fears of unaffordable rents can be happily ignored by the people making the decisions about housing supply.

So Auckland and New Zealand is left with the prospect of yet more years of double digit house price rises leading to rents growing faster than inflation and the incomes of the working poor. Those Auckland children who don't have parents who already own property can be sure they are not part of the new landed gentry, at least in this city. Employers hoping to find workers easily and cheaply should plan for years of problems because their staff won't be able to afford to live anywhere near where they work.

Politically, this Auckland housing crisis or jamboree (depending on your point of view) seems not to have hurt the Government one little bit in the polls and it was notable the latest REINZ figures were actually welcomed as a sign of success by Prime Minister John Key and Finance Minister Bill English.

"It's good to have the problem of a lot of demand," English said. "We've got a lot of migration with Kiwis coming home and economic opportunity in Auckland, so it's good to see the demand," he said.

The not so dirty little secret of the politics of rampant house price inflation is it makes voters richer and happier. They have more equity to reinvest in more rental properties, they can use the equity to build and run businesses and they can use their houses as ATMs for the odd holiday or two. Renters don't vote at nearly the same rate as property owners so politicians can easily preach that they are doing something about housing and safely do very little to stop the inflation. Secretly, it suits them.

Or does it? This Government's driving force in the social policy area has been a big idea of Bill English's - the social investment approach. This is where the Government can justify spending large amounts up-front on mentors and education for teen mums or rebuilding Child Youth and Family because the long term costs of doing nothing are enormous. This approach uses the tools of actuaries to estimate the the long-term costs of social problems, which means big chunks of money spent early can save much more over the long term. It's clever economics, clever politics and it's at least a new approach to solving increasingly entrenched problems.

So why not apply this actuarial approach to the Auckland housing problem? English already talks a lot about the fiscal risk to the Government from high rent inflation in Auckland ramping up the NZ$2 billion annual cost for accommodation supplements and income related rent subsidies. The Government now has to subsidise 60% of all rental properties. The research is clear that home-owning families are much more stable, their kids are better educated and eventually much more productive. Even Bill English has warned of the social costs of housing inequality and poverty.

To avoid hundreds of billions of actual and opportunity cost from entrenching a generation in housing poverty for decades, the Government would have few problems justifying spending a few billion now on the housing and infrastructure needed to turn that around.

If the Government was serious about its investment-led approach to addressing New Zealand's problems with child poverty, the first thing it should do is estimate the long term social liability of allowing Auckland's housing supply crisis to stagger on unsolved.

A version of this article was also published in the Herald on Sunday. It is here with permission.

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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Direct trains between Hamilton and Auckland would be nice, limited stops

and fast trains , with limited stops

Hamilton, Huntly, Pokeno, Manukau, Britomart.

Now that is a great idea, especially a Japanese or Chinese bullet train. To do the trip in twenty minutes or so would be great and would open up the Waikato nicely.

Bernard is right, Key and Co have to pull finger and actually do something with an ounce of vision. Seems to me Auckland's biggest restriction is the gridlocked traffic. It needs a subway system urgently, to fully support dense apartments close to the nodes. If London could install a subway 150 years ago, surely NZ's biggest city could do so now? I recommend giving the construction contract to the Chinese lock, stock and barrel and allow them to pay imported staff Chinese labour rates - otherwise it will take fifty years to complete and far too much to pay. That's what I mean about having vision, real vision.

You cant drill subways tunnels through solid volcanic rock (50 extinct volcanoes) and a population of 1.5m users wouldn't justify the cost if it was clay (like London). An elevated light rail should be explored. However Im sure all the NIMBY's that dont want people to subdivide or build up will start moaning about sunlight and noise. Then the council will cave in to them and we are stuck back at gridlocked traffic.

"a population of 1.5m users wouldn't justify the cost if it was clay (like London)."

Really?... explain how Lausanne (population 420k), Bilbao (950k), Helsinki (1.4m), Oslo (1.7m), Copenhagen (2.0m), Prague (2.1m), Lyon (2.2m), Stockholm (2.2m) and Panama City (2.5m) have justified theirs?

A simple one like Glasgow (pop 1.2m for wide area) has would suit

Is it the Govts responsibility to provide affordable housing?
Can't people plan ahead, move to affordable towns, use their ingenuity to leave Auckland to become the bigger mess than it is already?
You can't stop NZs and the worlds money pouring into the only 'safe' asset class.
The coming GFC2 may adjust prices down a bit.

in short yes, otherwise they will end up paying more for social services, health and law and order.


Yes MB. It is government responsibility. They are there to make the system work best for all citizens and families. Not there to oil the wheels for the few who benefit from this great economic fiasco.

Western Governments have handed over most of their responsibility to the corporate sector.
Govts can no longer do anything to change economic conditions such as the 'housing market'.
That was my point.
Yes, they should take responsibility, but they are a minor influence now.

I agree. The problem though lies with us the people. We have allowed this to happen through our own ignorance, greed and selfishness. We have allowed ourselves to be led into this position.

Question is, how do we get out of it? We have become enslaved to money and "wealth" and the institutions that control it.

old proverb - a stitch in time save nine

The government has had choices - many times over - but, it has chosen not act to stem the causes - and the smart money is proving that government will end up paying a much greater price many times over (9 times over?) in social costs and welfare - watch Bill English's upcoming May Budget wherein he has flagged his concern over the ever-increasing cost of accommodation supplements - $2 billion and rising

Of course, as the percentage of Auckland housing stock being converted into rentals increases it is inevitable that the amount of money going into Accommodation Supplements will rise, but over time the unit cost must also rise, and, obviously the numbers of people falling into the welfare net must also rise


Band on Bernard ! Great article. The tax payer will be picking up the cheque in the long run. That's the problem when you have a ex trader running the country. Short term bonus mentality and little regard for the future losses. As long as they meet short term KPIS such as gdp etc (forgetting that gdp per capita is going backwards) who cares. Make our houses our homes again.


correct this government is kicking a LOT of cans down the road. in 10+ years the country will have to either drastically cut services or increase taxes to pay for many services and the debt mountain they have built up.
kiwibank sale coming your way

And in spite of this National continue to be miles ahead of any other party in the polls. It's been proved in the past that this government will roll with popular opinion. Before things change National will need to take a hit in the polls, or a large group of people will need to make it clear that this situation is neither welcome nor sustainable. This is not looking likely and the lack of a holistic approach to resolving the underlying problems will continue.

There's a reason National are so far ahead in the polls - there's no credible alternative at this time.

Don't get me wrong - I'm nowhere near happy with some of the decisions this government is making but there's just nothing else in the political landscape that looks even vaguely competent to run the country, and no sign of that changing anytime soon.

While I tend to agree, I am following Andrew Little and I have gone from un-impressed to say Neutral. My biggest concern and I think why the left are going no where is the swing voter doesnt want a loony left Government spending billions at the drop of a hat. So its not that JK
s mob re Ok, its just that the alternative is indeed looking worse. All eyes on Little I believe, well and WP, he's going to decide the next election outcome I think.


Very true Joe Public. As long as JKs govt meets its nominal, vote winning, sales targets each year who cares about the metrics that really matter over the long term. Let's face it, Auckland property going forever skywards is crucial for the current govt to remain popular.


I think the goverment should dial back the immigration and stop investers buying our existing housing stock by restricting sales to owner occupiers only.

A thought on renters and votes.
Because of multiple ownership the renter vote potentially will well exceed the landlord vote.

and when it does there will be policys put in place to favour renters over landlords, same as they have in Europe like Germany, long term leases where rents can not be raised without a good reason or people can not be moved out.
or as in parts of the USA rent controls.
for every action there is a reaction so by letting it get out of balance and favouring investors over owner occupancy they will get a blacklash

But you don't exceed the home owner vote and most people like house prices going up if they own one.

If the Govt slows immigration then the reported GDP will drop.
If the Govt stops or slows International students, NZs universities and Techs will go bankrupt.
If the Govt stops overseas purchasers then there will be retaliation for exporters etc.
if the RB hikes interest rates, the SME sector will retrench.
If the building products sectors is opened up to true competition, the Govt will face fierce attacks from the current Duopoly/cartel.
If the Govt forces more sections to be developed in Auckland, then the backlash from the Greens etc..
It's an impossible problem, caused by policy, and global fear.


And you forgot one MB. Landlord speculators might have to get a real job.

Oh yes, one more:
If the Govt/RB blocks landlords from buying, then another 50,000+ ghost houses will appear having been bought by overseas owners not NZ investors, and renters will miss out.

How about accommodation benefit for rental is phased out over five years. Instead the 2 billion dollars could go only to people with a mortgage living in their own home.
Lot of horsepower in that 2 billion.

How about the government build and manage social housing for anyone who wants to rent. The taxpayer could pay for that.

The accomodation supplement is already paid to mortgages holders .... It ain't just rent based.

Correct Rastus. But if the large proportion of accommodation subsidy that goes to rental was wound down, there is still a lot freed up for paying to mortgage holders. And you could target. Say, only for the house you owned and only if you did not own a rental, and only for your first house, and only for the first 5 years, and only for citizens.
It's about incentives. Why subsidise rentals - when we are getting the long term liabilities that Bernard describes. And why subside more in Auckland because the rent paid is more. Wrong signal on two counts.
Stepping out of rental subsidies by eliminating them over five years is a strong signal.
Two Billion would go a long way to turning the thing around for quite a lot of folks. We need to bring up the rate of home ownership, not drive it down.

As above the accommodation supplement already applies to mortgage payments.

In fact, it is massively in favor of home owners, because the value of equity in the house doesn't apply to the means tested asset count w.r.t. eligibility. So as a renter I can't have more than $5,000 (from memory) in any assets before being ineligible, but as a home owner I could in principle own $1M in equity and so long as my income is low enough on paper, still be eligible for assistance making the payments on the remaining mortgage.

This is actually a nice little encapsulated example of how f*** the NZ system is, how home owners are privileged and renters have the system stacked hugely against them.

The trick is to set it up to help people to step from one to the other. Perhaps the way is to only make it available to people making that step. ie. Stepping away from being a renter. Two billion a year would help a power of people do that.

You are indeed correct, $8,100 in assets as a single person, no accom support. Million dollar home and mortgage, you can get it. Totally unfair. Even sillier is tha accom support encourages higher mortgages...the more you borrow (though there is a max) the greater the state subsidies. seems the govt wil stop at nothing to keep the housing bubble pumping

Yes. Accommodation supplement goes up with the more rent too. I never got it why there is that incentive. Effectively you get more money for choosing to live in Auckland.
The nation needs to make home ownership a goal. Or please, just make it possible.

Why wait five years, as a landlord I hate the accommodation supplement allowing wasters to move in next door to my working tenants. Scrap all accommodation supplements and send the unemployed and low skilled to Kaitaia or Invercargill where they can pay for low cost accommodation from their benefits.

Save tax dollars and keeps all the undesirables in one place.

I would have thought whoever rents the house next door to one that you rent out to someone else is none of your business.

When their tenants impact on the value of my property and the rent I can charge due to them being thieving scumbags, it is my business.

.... ha ah.. a landlord. The very people that turn nice streets into rental dominated run down gardenless, under maintained properties....the ones that promote intinerant neighbours that become socially disengaged and bitter as a result. Pot calling kettle black.

As if giving a house to such savages would solve the problem. There will always be scum and shitty neighborhoods. The trick is to not reward their scumbag behavior by paying them and giving them a house in a neighborhood where decent people live.


if the RB hikes interest rates, the SME sector will retrench.

Banks are no longer very interested in credit-worthiness, or in establishing the sustainability of small business’s cash flow. They just want the security of the entrepreneur’s house. Read more

The ideal shareholder for Kiwibank would invest heavily in growth and capture income later. To do so, it would have to be an ambitious, strategic and permanent investor.

Typically, that could be the government. But this one is selling down. Read more

The stark reality of credibility issues are swamping this government and exposing it's incapacity to act.on our behalf. Governments captured by forces not acting in concert with the needs of the nation that elected them are globally endemic.

Interesting article SH
And, by the way, the upward pressure on values from banks has probably contributed to the over-pricing of Australian real estate."

So, I rest my case.
Astronomical house prices in popular Western cities = impossible to fix

The money will flow out at some time in the future (who knows when) as other asset classes recover and become more profitable. It might be a while though.


Great article Bernard. It could be said we are getting economic success by accepting social disaster. Trouble is the economic success is not a success, but we do have the liabilities.
A small section of the population pleased about the unexpected value of their house is not an economic success in my view.

The collision with reality has been painfully slow up to this point but is now coming far faster than most people can imagine.

In less than 35 years all the low-lying areas of Auckland will be under water, the current motorway system and rail system will be unusable, and the portion of the North Island north of Otahuhu will be well on its way to becoming separated from the rest of the North Island by a navigable strait. .

'Davidson said recent data that has been collected but has yet to be made official indicates sea levels could rise by roughly 3 meters or 9 feet by 2050-2060, far higher and quicker than current projections'

The Davidson narrative flagging 3 metres of sea level rise is actually a 'don't scare the horses' narrative because the rate of planetary meltdown is accelerating dramatically.

When you are sitting on an exponential curve with self-reinforcing feedbacks it is difficult to make accurate forecasts, and the 'under water within 35 years' forecast could actually be highly optimistic.

We will have a lot better idea by the end of this year; the surge in overheating will either have levelled-off or will have accelerated. Record-high atmospheric CO2 with the biggest-ever annual difference values suggest the latter.

Ignorance, complacency and denial reign supreme for the moment but they are unlikely to reign supreme for much longer.

Nice metaphor: "Under water".
Financially, perhaps!

I cannot believe it that nobody seems to care that Tamaki Drive and the Northern Motorway near Northcote was under water last year when there was a Nor-Easter, high tide and a storm surge.
I would have thought that a prudent road building/maintaining company would be increasing its height right now.

The money has been diveted to the western bypass...waterview i think they call it.
The big vision of our goverment is as the rest of the country is worth very little, The Auckland CBD can become like the City of London and the rest of Auckland can become like....Camden Town.


Hell will freeze over before National lift a finger over the housing bubble.

Nothing is going to change until you and and the people you know decide enough is enough and vote them out.

A few more years of double digit price rises on top of the current insanity is going to be a ticking bomb.

True and I will vote for another party. But I am not convinced that Labour will manage the situation any better. I cannot believe that they do not have a policy to discourage property investment. I wish someone ( or someone could do some investigation into what % of politicians own investment properties. Or do we know that already?

Most. Check it out:
Even MPs know where the safest investments are.

I wonder how many of these own property in their partners, or children's names?

Auckland is the third best city to live in as seen from international media and we are proud of it, because it attracts more people from outside with heaps of money to come and live here..

More native Aucklanders will go to provinces and more rich migrants will take their places with houses they can buy. Social stability long term in place...
(Sarcasm much).

What a horrible thought, so if your born in Auckland now when you grow up off to the provinces for you we don't want you here

Why waste the largest city in the country by having people live there, raise families, and do jobs and stuff? What's the point of that when you can just drive them all out and trade empty houses back and forth?

If people absolutely must have an insane speculative mania over something which is completely unshackled from any real inherent value, then how about carving up the surface of Mars into square metre chunks and selling those? Then the participants can have a wonderful time boasting about how they're super investing geniuses because their crater-view patch with fashionable red sand has gone up 300% while the ones in the big flat rocky area have only gone up %10, and meanwhile back on Earth people who just want somewhere to live and keep the furniture can get on with it in peace.

It has always been that Ak prices were high.
And if the job you do in any non-Ak city, pays the same as in Ak, you could save heaps.
Why do people expect this be different now?
My suggestion is to go to another city, save heaps and then come back to Ak if you have to/ want to.

I've got a friend who did that but couldn't get work in Tauranga.. Is now back renting in Auckland, renting out their house in Tauranga. Their landlord is horrible, they are living in a bad area but their family is in Auckland and they can get enough work here. Its all very well saying 'move out' but it doesn't always work.

That is what happens,
Look at the Sydney experience.
The inner residential ring ( Bondi etc ) had high capital value but the retired couldnt afford the rates.
They sometimes moved to the Northern Beaches but they didnt know anybody.

I have it in good authority the Waiouru military camp is being closed and will form the basis of a new Auckland suburb. It's central location, accessibility to ski fields, fishing, international sized military airport and on the main truck line make this a non brainer. The Central Plateau is also seen as excellent dairy conversion country with ample water available for irrigation. Jerry Brownle is to keen to retain the expertise of CERA as they wind down in Christchurch, moving the team north to oversee the construction. The Choi brothers, backed by several large Chinese infrastructure firms will be the main inestors. John Key sees it as a win win and believes many kiwis will be queuing up when sections are released next winter.

Zach Smith yesterday was promoting 'estates' with 'microhouses' (read rabbit hutches) You could spread this alongside the desert road for kilometers and kilometers.

That was an atrocious comment. How could you live in one of those places and stay sane? My flat in New York was 250s/f and I hated it. Those mirco houses are just coffins with sinks.

Auckland is awesome for sitting in traffic 6 hours a day.


It's not in his trader mindset to act against house prices in the short run no mater the long term consequences. He wanted to leave a legacy and it looks like he may well do that after all. It won't be a flag but a generation of working poor kiwis struggling to pay their landlords rent whilst trying to save 200k for a deposit.


The deposit is just the tip of the iceberg. You then get to pay off nightmare level debt with variable interest rates on low salaries and hoping all the time you haven't been sucked into the top of a giant pump and dump.

Welcome to your brighter future.


Since bank deposits accrue almost no interest these days, any 'working poor kiwis' saving the deposit for a house in Auckland (or any other 'exploding' location) would be going backwards at a horrendous rate.

Welcome to 'Planet Key' otherwise known as Planet Ponzi.

Its true that saving money through term deposits now is a long slow process. It used to be that you could get 9% interest and back then inflation was still only about 2% or so.


Read and consider Peter Neilson's article on how to deflate the housing bubble by choking off interest deductions for tax and other measures.
IMHO. The secret is a combination of several factors this Gummint has no guts to do
Cut immigration
Cut overseas based ownership including incentives to make existing ones sell up.
Tax empty property subject to local demand factors.
Make all overseas student courses 'real'
Carry out a rebalancing of investor and owner-occupier competition. Why not do a cut in tax deduction of interest and use the revenue to assist ownership in a fiscally neutral way.

I read Peter Neilsons excellent article

It explained some of the origins of the Lange-Douglas government's reasons at the time and why regulations need to be modified to meet changing demands

But, one has to ask why it took him 8 years to open his mouth - a bit late - why so silent

I read Peter's article and his first point made little to no sense in todays climate of low inflation.

"One, allowing only the real component of interest to be deducted on new rental housing investments and phasing out the deduction of nominal interest for existing investors over 3 years so that only the real part of interest becomes deductible."

Plus realistically it is never going to fly as who wants to have to consider inflation rates while trying to calculate their tax returns. Seems fairly complex with little to no gain in the current environment of very low inflation. After that point the rest of the article lost any impact it may have had. Seriously has he seen the inflation rates at the moment ?

But what is the cause of the current low inflation in New Zealand. From Bloomberg article

Non-tradable inflation, a core measure of prices not influenced by the currency and fuel, rose 0.5 percent from the third quarter led by rents and the cost of building new homes.
From a year ago, non-tradables prices gained 1.8 percent
Tradables prices, which are influenced by currency movements, slumped 1.8 percent from the third quarter led by gasoline and vegetables.
From a year ago, tradables prices fell 2.1 percent.

If the tradables is taken out of the equation there is still inflation in the economy. Eventually the drop in oil prices will leave the equation and inflation will rise. I've said it before and I will say it again - the devil is in the detail. It is naive to think that current low inflation environment will last for the long term - economic conditions change and can change very quickly ( made worse by today's connected society ). Unfortunately New Zealanders only think in terms of the short term - to the next pay packet, rather than the long term - ten to twenty years from now.


I'm hoping the flurry of articles and public opinions having the spotlight over the past few days is a sign. This isn't a joke anymore, I firmly believe this is a disaster waiting to happen. I don't want it to be of course but the deafening silence from anyone who could ease the pressure is terrifying. It sounds to me like others are starting to open their mouths and speak the truth. I and many others have refrained for fear of being told we are 'whingeing' or 'just move away'. It's gone past that point now I think, we're done going backwards and done busting a gut and not really living a life because we're worried and stressed about either a massive mortgage or saving a massive deposit. I won't stop entering into this debate, I just wonder what it will take for others like me to start really opening up.

Write to your local MP, Bill English, the PM, the media and tell them your story and the effect it has had on you. Be brutally honest. If enough people do it in quantity they will have to listen. Let them know how angry you are. There are millions like you in NZ who feel the same.

Just commented below without seeing this. Been writing to them for the past year. I'm sick of this.
Here's my blog if you are interested in my situation. Cheers for also seeing what I'm seeing X

Thanks for sharing your blog Hardworker. Hang in there and I hope you are rewarded with your hard work soon.

until we elect those MPs without a vested interest in keeping it going, we will not get change its like having foxes looking after the hens.
there a plenty from all parties with dirty hands the interesting ones have rental houses in super schemes, why would they change the rules when they want GC


"The not so dirty little secret of the politics of rampant house price inflation is it makes voters richer and happier. They have more equity to reinvest in more rental properties, they can use the equity to build and run businesses and they can use their houses as ATMs for the odd holiday or two."

How many are using equity to build and run businesses? The question needs to be asked is why are so many are reinvesting in rental properties? Supply and demand does need to be addressed but it also begs the question - does massive supply really address the root cause of the problem?

At the heart of the matter is our economic, capitalist system and the institutions and corporations controlling it. It has become parasitic. At the heart of the matter is that many continuously need more money just to keep up with the cost of living, the cost of increasing "living standards". At the heart of the matter is our belief in "wealth" measured in dollars, assets and possessions.

Many rental investors (the average kiwi family) don't care about being landlords. Their goal is to provide for their retirement and ever increasing values is easy money. When do we address the fact that the average job no longer provides enough to live and provide for retirement?

What new businesses are really going to achieve anything for the owner when we are already saturated with retail and food service options? These people will still need to invest in rental properties.

I would suggest that most bigger landlords, those with a large property portfolios also don't care about being landlords. Their goal is wealth and the accompanying status (Zachary, doublegz) and they have taken advantage of the system to achieve this.

Add foreign money looking for a safe place and all we end up with is people fighting/competing for an ever dwindling slice of the pie.

Houses are no longer homes and have become first and foremost "investments". Why is this? Because productive investment no longer works?

Addressing the supply side with $800,000+ houses will not fix the problem.

We are stuck between a rock and a hard place and it is we the people, humanity itself that is at fault and we are our own worse enemy. Anyone with any common sense, wisdom and even logic can see that our money system, our financial and economic system is flawed yet ultimately it is how we as society use the system that is the problem.

The housing problem is just a symptom of a much wider issue.

Cut out the dodgy foreign money and introduce immigration quotas as they have in Switzerland. It's not rocket science. The Government have the heads in the sand..again.

In London the young MP's can't get onto the housing ladder. The problem is house price inflation has stopped western economies slipping into a deflationary state however it is approaching a point where the music will have to stop and we will all have to face up to reality.


Does anyone sense real anger simmering away among the population? Like proper anger? I was talking to someone today who is predicting riots! I don't know if that will be the case but I know that anger, fear and worry is bubbling away beneath the surface of a whole generation (and among older generations) and will erupt in some way unless the government at least hint that they are going to do something about this. I am at least going to start writing to my local MP, the government, the media and I suggest that anyone here who feels angry should do the same. We don't want to hear empty promises to build more houses as we know they will just end up in the hands of investors anyway. I mean changing the taxation system for investors in a major way, discourage foreign ownership of empty ghost houses, only FHBs to buy new affordable houses. We want answers and we want them now.


Yes!!! I'm so glad you said this. I thought it was just me. I also can feel actually it's more like fury now. I'm doing the same I have written countless emails to MPs and I'm about to start with the media. Thank you for this comment, I don't feel so alone now :)

You go for it! The Herald seem to have woken up to it at least - which I thought they would never do.

'I am at least going to start writing to my local MP, the government, the media and I suggest that anyone here who feels angry should do the same.'

I started doing that about 20 years ago, and gave up about 10 years ago. It's a complete waste of time and energy:

"Thank you for your letter. Your concerns are noted."

(I am going to carry on with my agenda, regardless of what you think or say.)

It's when politicians feel threatened by people's anger that they do anything. Don't you think it could be getting to that point?

This is very true. Disenfranchising an entire generation/s is just bringing about the biggest backlash this country will ever see. The self awareness of this situation and its causes are not lost on many. They know damn well their hopes and dreams are being destroyed and sold off.

buzby, no need to riot, just organise an Auckland wide rent strike. It's how the Unions used to achieve things when gummit wouldnt listen. Do it for say a fortnight and then start paying again...Tribunal could do zilch as they would be inundated. The landlords would then realis they havent got a risk free investment after all. Get organised on social media and get it rolliing.

Very high Auckland house prices - seen as proof of tremendous success by the Prime Minister.
Auckland - sought after, magnet for immigrants, magnet for international students, perfect lifestyle for the wealthy, nearly 2 million consumers on tap for businesses.
The rest of NZ is just some kind of hinterland.
Auckland = NZ.
Outside Auckland are kind of colonies, producing old fashioned raw commodities etc (nice/quaint, but the real good life is in Auckland, just for the wealthy class).

Whew...makes me feel better that Aucklanders are so happy in their environment that they will avoid the hinterland !

This is JKs intriguing promise coming true before our eyes: "We're on the cusp of something really special"

Don't you think Labour have a real opportunity here when the level of feeling is so high? They are chosen to be silent over changing the rules for investors. They could attract a whole generation of voters as I can't imagine millennials locked out of buying voting for John Key. I know that people say that owners vote more than renters, but if people are angry enough they will vote.

Agreed. I have been writing to labour to tell them just this. Silence. Deafening silence.

The problem is that there is no real outlet for people to express themselves in a collective way. The media seem to be on the side of real estate agents, National is just protecting the rich, Labour are being useless. I think it is only the Greens, isnt it, who have spoken out against owning multiple homes? If people can't channel their feelings in a productive way then it comes out in a disruptive and negative manner - or people will just leave the country.

check the register a lot of Labour MPs own rental properties or super schemes with them in, even there last PM owned a rental property.
the only two parties that stay away from them are the greens (got embarrassed some time ago for running a super scheme of rental houses)
and NZ first
until the major two parties outlaw their MPs from undertaking in private property investments the tax laws and incentives will not be changed

Maybe someone should keep an eye on when the National Party politicians start selling their rentals. That may be a for-warning of rules coming in to cut back on the bias to this sort of "investment".

Remember how their cgt idea went down last election? That's the reason for the silence, they won't say anything unless they are 100% sure it won't take them lower in the polls. Ideas are great, but useless without the power to implement. They know damn well they are facing a forth term in opposition


Here is a THREE PHASE SOLUTION and so simple we barely need a law change

1) Treat LANDBANKERS as speculators ( like share-traders) for tax purposes ( Vacant land with zero income is NOT an investment , its purely a speculative activity )
2) Double rates and taxes on undeveloped sections , LOCAL AUTHORITIES SHOULD ALLOW 3 YEARS AFER SUBDIVINING TO BUILD or be taxed double rates , backdated to date of subdivision.
3) FOREIGN BUYERS should ONLY be allowed to invest in new builds with 20 % deposit and a NON-RESIDENT Stamp duty AT 15% , buying second-hand houses is not foreign investment, its speculating . Australia does this already.


And boatman. Any rental property that does not make a profit. ie negative taxflow Is also a just a speculative activity. Tax it and certainly don't one go past without extracting capital gain tax at exit.

Very reasonable ideas Boatman that would help dampen demand and encourage land use.
Now just need to find a pollie with no hands in the cookie jar...

Totally agree with you Boatman and Randomman! Time to tax the money launderers.

And yes we and this site has to start asking questions and get some real answers as to WHO is purchasing the high end property and by how much?? Time is disclose those IRD figures and let us see the real impact of external to NZ property investors!!!!???

All this left wing hand wringing is missing the mark.
Investor landlords are doing a great community service by investing in accommodation for those who would otherwise be on the street.
We need investors ( as seperate from speculators) as they have the courage needed where others fail.
What's driving investors is the pathetic returns from other forms of investment, most of which are very risky.
But above all investors are trying to set long term goals to provide income as they reach retirement.
The retirement pension is farcical at around $200 per week. If people could retire on two thirds or even half their working life incomes then 50 percent of potential investors wouldn't bother with real estate.
What should have been done years ago was to increase the pension for every year a person defers their right to have a pension. So when someone finally goes on the pension at say age 70 they would get something much more substantial by return, thus removing much of the urgency that drives the market today.

"Investor landlords are doing a great community service by investing in accommodation for those who would otherwise be on the street"
that's where we differ, why should the government pay my taxes in the form of accommodation supplements and tax rebates to private enterprise to provide adequate low cost housing for its citizens.
I would prefer that money was spent on a building programme to get some in there own houses and to house the ones that can not.

A building program would be ideal but far too slow.
You can build all the houses you like but the supply of infrastructure must go with them.
Roads, power supply, sewage, water supply, schools, shops, transport etc cannot be provided out of thin air
You could build 10,000 houses inside 12 months but the infrastructure would take at least five years more.

What BS,
One one of our houses in the far north is sitting among hundreds of empty sections.
Its obviously easy to subdivide and provide services, only a small number of developers have gone bust in this area.
I remembr growing up in the hutt with a septic tank and later they dug up the road and provided sewerage.
But hey, we had water and electricity...and garbage men..and a railway line...

I'd suspect investor landlords are part of the problem, if only due to their having deeper pockets than many FHBs, families intending to occupy etc.

That's not to say there isn't a place for rentals - there will always be people who for one reason or another cannot (or choose not to) buy and need a roof over their head, but claiming community service is a bit of a long bow sorry.

Look big daddy. I am a property owner, but not a speculator. And yes that will make significant improvement to my old age. Amongst considerable efforts in other activity.
But spare us the hand wringing please. Enough of the story of the poor landlord compelled to own houses to provide for his (and her) old age. Pathos. Driven to this activity as the only way to starve off penury in their old age. Nobody pays them an adequate pension. Tears. Spare us please.
If we are going to get tearful, then let it be about the renters who fall off the income cliff at retirement. The figures there are horrific.
If we are to avoid the social disaster Bernard sees, we have to get the rate of home ownership up. And sadly for you apparently, that means the percentage of renters down.

I too would like to see home ownership go up but there is reality and there are dreams.
Punishing investors to achieve a social goal will never work.
From some of the responses my post has received you can see that sensible discussion is neigh on impossible. Hence the problem of housing will never be solved while the inmates are in charge of the asylum.

There you go .
Downunda typifies why the housing problem will never be solved.
He and others like him think that insults are the cure.
Histrionics and abuse solve nothing.
Even if I am one sided I don't stoop to insults but merely question.
There are no stupid questions only stupid answers.

Come on,
The Hutt was built in a decade i guess, a mix of public and private ownership.
We should learn from it.

There you go .
Downunda typifies why the housing problem will never be solved.
He and others like him think that insults are the cure.
Histrionics and abuse solve nothing.
Even if I am one sided I don't stoop to insults but merely question.
There are no stupid questions only stupid answers.

Agreed - I get a lot of value from the comment threads on this site (including your view BD) but I'd far sooner read well argued positions than ad hominem venting.

That said, when you feel disenfranchised and powerless the frustration and anger that comes from this is inevitable, perhaps these comments should be seen in that context? I've been there, been that FHB watching the market with dismay, not that long ago that the memory has faded.

We won't have to wait long for the double whammy of a falling currency and significant rise in mortgage rates to finally kill the economy....

Look around the world:
South America in DEPRESSION.
China, Australia, Japan, Korea, USA, Europe Russia, UK all in recession or entering one
Baltic dry index falling off a cliff
Italian banks near collapse
Us banks hurting due to oil loans non-performing
And at home dairy industry bankruptcies due to escalate this year.
Continued OCR cuts will force down NZD but very little of ithe cuts will flow through to mortgage rates.

Asset bubbles are around the world.
Buckle your seatbelts boys and girls, your property values are about to collapse. The mortgagee sale nation by 2017 election. Thank our economic mystro prime minister for preparing us and implementing all those preventative policies "under his watch". Hawaii there he goes. Thanks for the nine years. Grin grin.

Interest rates will never rise again. In our lifetime.

unless there's a crisis.

I thought that we are already in a crisis, and that ZIRP is a response to the current global crisis.

Well, another bigger crisis? That would have to be out of control .....

Not if you are an over indebted commodity producer - hang on to your hat

The central bank’s Monetary Policy Committee on Wednesday kept the benchmark Selic rate at 14.25 per cent, disappointing most economists who had expected either a 25 or 50 basis point increase. Read more

How far away is NZ from this EM nonsense. And let's not forget I worked in dealing room that forced Banque de France to hike it's O/N rate to 1000% - it can easily be done with the right derivative/liquidity resources.

It's also making Brazil very competitive in the Ag export markets due to it's low currency.

Why would a crisis increase rates? Did that happen post 2008 in those countries? Did it happen 2001? How about 1987?

Yes, you're right. Interest rates dropped after those crisis events.
Maybe this time liquidity dries up. But then the RBs everywhere would NIRP and QE5 til collapse?

but can they create demand?

Are you 'aving a laff???

But, NZ is the best place in the world for lots of reasons, and is getting more popular every day. I think we may not get affected much at all by all the economic doom and gloom, refugee crisis etc in Europe. Recall 911, that had a positive effect on us, quite different from the US and Europe. NZ's isolation is its greatest asset, amplified now by low fuel prices and consequent plunging airfares. And, we know that none of the ongoing nightmare of the Fukushima radiation has made its way here, unlike the US West Coast and Canada - almost all nuclear pollution from all sources circulates in the northern hemisphere and does not cross the equator.

It's true. Everybody in the northern hemisphere is cowering in fear of "the radiation".

Interesting way to get rentals onto the market, increasing supply. A couple in Dunedin had their rental used as a meth lab. $100,000 cleanup required and putting their two rentals on the market to avoid future similar hassles.. Someone could start a service infesting MPs rentals.

...sensible discussion is neigh on impossible..... the inmates are in charge of the asylum. - BigDaddy

It is too late, they have listened to the siren song of Hardworker-doesntmatter.


It's the ol' oh-noes-my-unearned-privilege-is-being-challenged-by-people-with-scary-valid-arguments-and-data-quick-pretend-to-be-a-victim-help-help-I'm-being-oppressed derail gambit. Same old, same old.

Let me explain...young house buyers are like ancient heroes on a quest to find a golden fleece (CG). Sirens are but one of many hazards on a classic hero's long journey. The sirens are beautiful maidens that sing enchanting yet sad songs but they are dangerous (sinister). I was struck by the idea when I visited your blog called sinisterdisco and saw, presumably, your photo with disturbing graphic art. The young hero needs to stop his ears and keep rowing to his destination lest he be wrecked on the rocks and eaten. Downunda and Buzby have heard the singing and have lost all reason. BigDaddy sails on wondering why he cannot have a rational discussion. DGZ has already jumped ship. It's a compliment really.

Mortgage belt - I think time will prove you wrong. The actual truth of the matter is current interest rates are manipulated by QE/NIRP/ZIRP. Current interest rates do not reflect the actual risk. These policies in themselves foster higher risk taking to achieve higher returns in the current environment. That in itself creates higher probably of bad investments and associated wealth destruction. One major event is all it takes offshore to substantially increase bank funding costs. Those funding costs form a significant portion of interest rates.

Look at Brazil. Their currency has fallen 24% in 12months against the US dollar. Their liquidity depends on offshore funding in US dollars. The interest costs have ballooned due to the Brazilian real collapse. Prior to the 2014 oil price collapse Brazil was an economic powerhouse. Since then oil has collapsed and so has China's commodity imports from Brazil.

We in nz are also dependant on commodity prices. As is Australia. Australia and China take the majority of our exports.

Look at world trade. A month or two ago, there was not one single cargo ship in the Atlantic transporting goods between USA and Europe. That is a historical first. It outlines the degree to which world trade is coming to a halt.

You can research all this on the internet as I have done. Nz will not come out of this unscathed. Watch the dairy foreclosures mount this year. They are already happening to a degree. Dairy will not recover if world trade falls off a cliff.

GDP will fall if world trade falls off a cliff. Imagine how that will impact the 162% household debt to GDP ratio if a) household debt continues to rise and b) nominal GDP falls. It could push it past 200%.

And then you have government debt and a risk of a credit downgrade probabilities which further increase the upside risk to interest rates. The last GFC created an 18billion hole in govt revenue and we were running a surplus of 7billion which turned into a 10billion deficit. This event could be much worse and this time around we are barely in surplus and we have accumulated over $60billion govt debt since the last GFC which hasn't been repaid. Hence a double notch credit downgrade could eventuate which in itself will add 1% to mortgage rates notwithstanding any other impacts.

Well, my first mortgage was 20.5%, so we survived.
That scenario may be a little more problematical with 700k Auckland mortgages!

Tra la la,
Based on the Hutt development lets charge Lands and Survey with making supplies of subdivided serviced sections avaiilable in the Auckland area.
No houses, just the serviced sections..

Stamp duty 15% on BOTH local and foreign investors on existing housing. New build properties are exempt.

FBH are exempt. Investors buy over 40% of the properties so let us have that money flowing to new builds and not existing homes. Then the investors can truly say that they are providing a service buy encouraging/paying for new supply. It is no service when they are added thousands of dollars on FHB mortgages buy buying existing stock and pushing prices up.

FHB will then not need to compete with sophisticated investors at auctions etc. Take away that demand and prices will slow down significantly and possibly reverse.

The stamp duty can be used to cover infrastructure.

This is what LABOUR should be encouraging. Developers sitting on land should be taxed if they don't utilise that land.

We need to make it expensive for investors to buy current housing stock and move them to fixing the supply issue that the ex trader keeps talking about.

The interesting thing about the govts 80billion debt is that 60billion of that debt is borrowed overseas. Hence interests costs will rise dramatically with a fall in the nz dollar.

The National govt has acted irresponsibly by borrowing this money offshore. Politically it's an astute thing to do but it increases our sovereign debt risk to external influence.

Futhermore, if the National govt had borrowed the majority of debt from within new Zealand, this would have the following effects:
a) interest rates would be higher
b) house prices would be lower
c) less sovereign risk
d) savers would receive higher interest particularly benefiting retirees
e) more govt revenue from withholding tax
f) economic growth would be lower
g) financial stability would be more sound due to lower house prices caused by higher interest rates
h) rbnz would have more room to move rates to respond to a crisis
I) nz dollar would be higher
J) export reciepts would be lower
K) import costs would be lower
L) inflation would be lower

Looking at this list, I think it's better to borrow onshore rather than offshore

I was at a house warming today. Lots of people are in disbelief that the OCR is being cut right now, and reckon the RBNZ is blowing a bubble.

The only mandate the rbnz has is to keep inflation between 1-3%. Forecasts indicate -1% inflation by the end of 2016. Refer tradingeconomics website. But if a fall in NZD ocurrs we will import inflation. At some point thisust occur with continued OCR cuts as it will damper the NZD carry trade

$780k for a do-up, competitively bid up by 2 apparently recent immigrant families.
TV1 - $99k profit.
Auckland housing market still buyable.
TV entertainment on houses/property/renovations still very popular.

Does anyone remember what happened last year after the show. I am sure there was an issue about them paying/not paying tax on the profit.

I watched the show last year and this year. I think from memory the families were happy to pay the tax on the profits made but not entirely sure. Also I thought the house went for an okay price last night although I'm unsure about the suburb and in particular Henderson Valley Rd. Nice TV programme to watch though, quite entertaining I must say.

Agreed mortgage belt.

The idea is fostered by mainstream media. That's part of the hype. But no mention that under ird rules if you intend to make a profit then its taxable profit. I wonder how many have tried and failed.

Theres no TV show dealing with dealing with how to manage personal finances and various traps people get themselves into. Nothing on basic car maintenance. Nothing on healthy cheap eating and general shopping around for the specials. And nothing on dealing with personal relationship or work relationship problems. All this life experience - most people simply learn from their mistakes!

quality guy I see a future for you as a TV producer.

Isn't that show Kiwi living ?

The facts tell the story. Median (800k+) /Average (900k+) and lower quartile prices (600k+) are all excessive in Auckland relative to incomes.

The media is just reporting that and trying to encourage the government to get something done about it.

No amount of budgeting shows is going to prevent the prices going up another 50-100k in the next year.

Lets get investors providing a service again. Lets get them building/buying new homes and charge them 15% stamp duty if they want to buy existing houses. That will sort out supply !. If it doesn't least it will help FHB buy removing the Investors and generate a large amount of stamp duty.

Average Auckland home 900k * 15% =135k. Perhaps that money can go to building new homes and infrastructure to support those homes and the city.

Even 10% would do the trick as it would remove any incentive for investors to flip properties.

The rental yields in dorkland are so ridiculously poor the only thing needed to stop the speculators in their tracks is to go nuclear on the expections of capital gains.

I'm running the numbers on an 850k house with 50% deposit and the projected rental income will still only break even if lucky. Auckland is batshit insane.

In twenty years it will hardly matter where you live so buy up large anywhere other than New York, London Paris Munich...everybody talking about pop music... even better...

There is no housing bubble. There is an immigration bubble. It could be fixed within weeks, but Hickey and his "brown people" (huh?) would not want to see that happening and are advocating further mass immigration from backward countries dilutung social progress and productivity and pricing young Kiwis out of homes in their (!) own country.

Although I suspect that deep down someone here regrets having sold his house in Auckland at the worst possible time in the past decade - despite regarding himself as one of the country's foremost economic thinkers. Ironic.

Yes, the liberal enlightened new western philosophy encourages immigration, multiculturalism and diversity - which is fine as we can respect all people & cultures.
However, to flood one's country with high immigration and open property purchasing rights, from people in some cases with restrictive political backgrounds, caste value systems, and higher risk of anti-western mindsets for the sake of a superficial propping up of an economy and pumping the housing market is really counter productive. But any opinions expressed on this issue is immediately shut down.

Yawn, I prefer looking at the amazing auction catalog of old masters ( than at mugshots of New Zealand dumps. Investing in art is an interesting alternative, btw. But already a bit pricey now - as everything else.

Sadly Labour are poor at present. Lack direction and leadership.
I can only see the Nats getting into trouble in the next 5 years if housing crashes.

What chance that?
It really feels like a bubble that could burst. But really who knows.

I know a few quite knowledgeable people who think it's getting towards bubble bursting point. All we need is a bit of a wild building spree and get a touch of panic short term oversupply.

In my view several things should be done:

Introduce a cgt on properties beyond family home. Won't necessarily help slow down speculation too much but the revenue could be put in to providing more affordable housing.

Reduce immigration.

Put greater restriction on foreign investment on existing housing.

Keep freeing up planning restrictions.

Reduce gst on new housing.

Btw reduce immigration for me equals somewhere halfway between zero and where we are now. I still see good things with immigration it is just the quantum is way over the top. Obviously needs to be monitored though.
Here's a thought though - maybe some point soon the appeal of nz will wear off for migrants. I think it happened a bit for poms when, due to the exchange rate changing and nz house prices rising massively nz became a bit less appealing.

The March figures with quite an increase in prices for houses in the Auckland area show a spectacular endorsement of Auckland as a place to live in New Zealand. National are right when they remark upon this. If Auckland was undesirable then prices would not go up.

I have just done a search of TradeMe for two bedroom, one bathroom places in Manukau city and have found many that can be bought for 450k or less. There are currently places you can buy that yield 6% or more. There are places for under 400k - that is only $315 a week in interest. So places can be bought and cost someone less than rent. Their deposits will be earning them a tax free yield of 8% at least or if Westpac are correct and houses go up 11.5% as well then that could be a return of over 20% on your deposit.

But there is a problem. Gordon's beloved people who cannot be raised up. No one wants these people as neighbours and they suppress property prices. The FTB is fearful of buying into the 'poorer' areas. Yet we need to raise these areas up, make Auckland even more desirable. High property prices will encourage owners to look after and enhance their investments. The spirit of the central suburbs of Auckland will spread out into the outlying areas. As an example you see this has happened already in Te Atatu North Peninsular. When I was young this place was rough but not anymore. It is more expensive but it is better now.

Alternatively it might just be a spectacular endorsement of Auckland as a great place to launder money.

Do you really think that you can reform the entrenched dysfunctional sections of the community? Or else where do you want to send them? To Hamilton, all of them?

I think that gentrification of up to now hopeless areas would be a good thing to happen, but you can hardly expect decent people to move there like missionaries or such. You would have to upgrade schools there, attract good teachers etc. You would also have to wean a lot of people off govt handouts. In other words, you would need a government with a well considered policy for that, but it is nowhere in sight.

I commend your optimism, however. I find a lot of people here too negative about the wrong things. NZ's geopolitical advantage being an island of relative stability and security in a failing world is an important asset. It's true, even if John Key says it. But we need to protect it, e.g. through a moratorium on Muslim immigration and we need to rethink how we can get more quality jobs created in NZ. What we are currently doing is not working in terms of developing competitive long-term advantage.

I sense you are a fellow traveller PeterPen. I concluded that massive immigration has thrown a huge spanner in the works and we have to work within the new paradigm. There is no place for the socialism of yesterday and the new super-cities will be defined by economic class zones and a drive toward excellence as a motivating principle. The last thing we need are affordable housing areas that will turn into ethnic ghettos as we see currently forming in Europe.

Edit: Ha, economic circumstances are forcing people to become missionaries. And migrants are the new pioneers.

Who are my beloved people Zach? Who are these people no one wants as neighbours?

Anyone who can't or who refuses to raise themselves up.
Did you watch that Herald video about first home buyers? The French lady who didn't want to buy in South Auckland who said something like, "I just don't like it. Every week I hear of problems" and she had experience of living in these areas.
Perhaps certain people are handy for keeping property prices lower, like the gentleman who, probably jokingly, wrote he put out old mattresses when rent review came around.
You are a champagne socialist Gordon, you know that right? As are most of the commenters like downunda and the like. Dinosaurs from another time. The poor people would probably prefer me. I know the immigrants do.

I take it you live in South Auckland Zach. How does someone on the minimum wage get on the ladder in Auckland? And don't say they should better themselves. Remember not everyone is born equal intelligence wise. The economy is struggling and people are not getting wage rises that are keeping up with house inflation. How are they expected to keep up with what is currently going in.

I live in a dream like world. I like to refer to it as Elysium. I am a superior human being who deserves all of the riches in the world. Those plebs on minimum wages just need to have a better attitude to get onto the housing market, that's all I did (well that and trolling a bit on the side on internet sites like this). But I'm tired of listening to this moaning by second class citizens that they can't afford to buy houses. If they would only help themselves out for once. Just be like me and all of the riches will come to you.

Houses and property in general are not the only investment asset class. There are financial instruments that can be invested in, and most do with their kiwisaver account. People could instead invest, either the investment would grow to the size of a house deposit, or people will discover after paying all their bills there's no money left to save.

Lifestyle inflation is one problem but not in all cases.

It's quite scary to think that the bottom end of the market equates to $315pwk in interest costs. Considering the true risk of housing is not priced in mortgage rates, you could end up paying double the interest cost with a 2nd GFC. Or even triple. Staggering also to see banks have circa $115billion in overseas debt directly related to funding mortgages.

Crashers on here talk about the Next Great depression or GFC like its around the corner. Ill tell you this for free. It wont happen in your lifetime of you're over 30. Yes, we will get recessions as per normal but the days of loose lending are over. Lenders make you jump though hoops now. Trust me, Ive seen both ends of this and today is vastly different to the self cert, no deposit, 125% mortgage days of 2003.

Yeah, you keep telling yourself that. I give it 2 years and I'm on record with 2018. The global fundamentals are so whacked that it's inevitable. The next one will make 2008 look like a recession. Some of you just don't get. 2008 was.......the destruction of our global banking system. Take the bail outs away and we all would be living very different lives right now. What's happening in NZ is in fact a symptom of that event on going.

I get it alright, I work in finance! The days of no expense spared - party on with unlimited no questions asked actions and expenses are over. Have you tried getting a mortgage lately? Or are you waiting for a 50-70% drop? In 2018 Auckland house prices will be 20% higher, RBNZ rates will be lower and there may be a recession. But it wont be like 2008 (or worse). If the Auckland housing market needs a crystal ball look at London from 2010 - 2014. We are halfway there now.

There's always a probability of a crash, it's not certain. However saying there won't be a crash reminds me of the run up to 1987. For me that just means I'm more defensive in my investing. Those approaching retirement age right now have a lot more problems.

It's good to hear that banks are sticking to the regulations and aren't partying to excess.

You just scored your own goal. You point out how hard it is to get a mortgage then highlight the fact that rates are at record lows and will need to go lower to keep it all going. There in lies the break point. Bank must continue lending to bottom feed the pyramid. I don't work in finance so I have no vested interest in selling loans or insurance or whatever the hell it is you are selling.

It's quite scary to think that the bottom end of the market equates to $315pwk in interest costs.

You are supposed to have saved up a significant deposit. A deposit that will reward the owner handsomely as I explained above. It's like you guys will grasp at any straw to be negative. If you have no deposit you cannot buy a house.

many many people on here said these would happen, like any disease if you don't get it under control it will spread. now the FHB in the regions will get shut out as well.

Maybe regional home owners are kind of cheering this phenomenon, given zero valuation increases since 2008.

and National will get in again on the back of it.

If you read the whole article you will see locals like all my family and friends are p ssed off about jaffas buying up, there comments to me normally have extra fs and Cs when talking about it.
As usual the only happy ones will be the bankers RE agents mortgage brokers and long term investors that can sell up

If you read the whole article you will see locals like all my family and friends are p ssed off about jaffas buying up, there comments to me normally have extra fs and Cs when talking about it.
As usual the only happy ones will be the bankers RE agents mortgage brokers and long term investors that can sell up

Not a bad effort but minimal comment on two massive drivers. Firstly your statistics exclude overseas "yellow money" which have been stalled pending IRD processing but I am led to believe that the backlog of overseas applications has been massive. Secondly every "investment home", which are now approaching 50% of all Auckland sales, means that there is one less property available to potential owner-occupiers. All up I strongly believe that whilst the demand for homes remains rampent, the actual supply of homes is actually reducing! And this is before the migration numbers wuotes are added to the equation...

Except rents aren't increasing and the IRD backlog myth has been thoughly debunked.

The governments mantra on the supply side conveniently ignores the demand side. Their measures up to now are necessary but insufficient. They have also passed on fiscal measures to the reserve bank. Dropping foreign student numbers and immigration drastically would improve the situation. The former would lead to a secondary and tertiary education financial crisis and so won't be done by any of the political parties. Tackling other immigration is not on the current governments agenda or Labours (except for a few ethnic chefs) and is a talking point for NZ First without any likelihood of being implemented. Both Labour and the current government knows that NZ relies on residential housing as a large economic factor and so will continue with policies that appear to be solving the problem but are just frittering around the edges. If proper measures, more on the demand side were introduced, then there would be unemployment in the building sector leading to economic decline. There is also a degree of self interest in quite a number of politicians have a few feet in the Auckland housing market.

The inaction of the Government and local body council equates to nothing less than legal corruption.
The rhetoric focuses too much on debating whether it is a supply or demand side issue. However, it transcends this to be a more fundamental economic concept of incentivisation.
What's the incentive to change the status quo? I doubt National could win another election if they addressed the issues of at the root of under supply and excess demand. It is this single fact that explains the inaction.

There is no bubble. There is no bubble. Anyone who believes that is asking for trouble.

This is a great idea! Looking online, in Europe cost of building a fast train is 25 - 39M per km. So Auckland - Hamilton would cost 2.5 - 3.9 billion. This is less than a cost of the Auckland transport City Rail Link.

Dreams are cheap but trains arent.
Would you settle for electrifing the line to Helensville and providing a more modest service?

Dont need a train need a wall to keep the plebs out :)

The National Govt benefits greatly from highly indebted individuals because they will only vote for a Govt that keeps taxes and negative price impacts low. For those that have purchased a vote for Labour or Greens will lead to higher taxes /reduced income to pay their loans as well as reduction house prices.

The problem is we have an over-supply of investors. The non-Chinese, you know who you are, are laughing at the Chinese distraction but of course, no one like to blame their own ilk. But emperors new clothes people, it's people that look like you causing the damage. Sort it out

Higher interest rates, lower immigration (for a few years at least), and a broader tax system. Only when at least 2/3 of those are solved will house prices correct enough to be more generally affordable.

And when they do, those who were late to the party will get their clock cleaned! It's just a matter of how much pain gets taken now, and who it happens to. Status quo just makes the endgame worst.

I haven't seen one economist predicting rising interest rates in the next 3-5yrs. Given that they never get anything right it might be a good time to wager against them. Given that interest rates are at multi-century lows they are due for an uptick...what goes up must come down and vice versa. A measly 2-3% increase in rates will test all the $100k income households with$700k mortgages. The housing "shortage" would be solved overnight all thanks to the market.

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