A devil advocates buying property

Property

Opinion: Bernard Hickey plays devil's advocate and says now is the time to borrow heavily to buy property. Your view?

5th Dec 11, 7:38am by Bernard Hickey

Maybe the debt complex underpinning New Zealand's property market is Too Big To Fail and will never be allowed to fall by the government and the Reserve Bank. It's the Kiwi Property Put.

By Devil S Advocate

There's never been a better time to borrow up to the hilt and buy property.

It's almost too good to be true, but it's true. Let me show you why.

Interest rates are at record lows and they're about to go lower. This European turmoil is brilliant because it will force central banks to cut interest rates. That means we can all afford to borrow more and pay higher prices.

Banks are desperate to lend again, even offering 95% loans and discounts on legal fees and building reports.

National has just won a second term, partly because the electorate vetoed Labour's idea for a capital gains tax.

Prime Minister John Key will never do anything to hurt property owners. He has said as much. All through the last three years he argued against anything that would have a drastic affect on land or property prices. He is particularly reluctant to force the banks into fire sales of houses and farms in case it drives prices lower.

He's also doing very little to improve the supply of land and property onto the market. This has the effect of pushing up the prices of existing houses, which creates tax free capital gains. National and the councils could push to open up new land supplies, but show no intentions of doing so. They know what's good for them and the property developers who support the National Party. There's nothing better than a land bank you can sit on and drip feed out properties while making tax free capital gains along the way.

Did I mention the capital gains are tax free? They are and will remain that way forever because politicians know what's good for them.

Any government serious about improving housing supply would simply use government land and cheap government money to build a bunch of houses, but that's never going to happen under National. Sweet.

Reserve Bank Governor Alan Bollard also knows what is good for the economy. His first instinct is to keep interest rates low to keep the economy growing. Underlying inflation has actually edged up about a percent to near the top of his target range of 1-3% on his watch.

He cut interest rates in March to 'emergency' low levels after the Christchurch earthquake and despite warning he would put it back up, he hasn't, and now the markets are predicting a cut over the next year. Even if the banks threaten to put up interest rates because of the higher cost of funding their foreign borrowing, Alan will save us by cutting the Official Cash Rate.

Rental property owners win in many different ways. The value of their properties rise because of a shortage of property, and the rents are rising, particularly in Auckland. Department of Building and Housing figures show the rent for a three bedroom house has risen from NZ$400 a week to NZ$490 a week over the last four years. The average two year fixed mortgage rate, meanwhile, has dropped from 9.4% for 5.9%.

Also, in Auckland at least, prices are booming again, particularly for anything that is not leaky and can house a family. Barfoot and Thompson figures for the average sale price of properties in the Eastern Suburbs area of Auckland show they have risen 16% to NZ$817,993 in the year to October.

Check out this combo. Rents up 22.5% in the last four years. House prices up 16% in the last year. Interest rates at record lows. Housing supply constrained.

And there's no sign we're going to lose our jobs. The Chinese will keep bailing everyone out. And the government will never let the banks fail so even if we're behind on our loans we'll never be kicked out.

The Europeans will bail their banks out with printed money. If we're really lucky it will all create inflation, which will also push up property prices. And if it all goes really pear shaped overseas all the investment bankers from New York and London and the property developers in China will be rushing to New Zealand to spend their US dollars on good, safe, warm New Zealand land.

Mate. You can't lose with property.

Ever.

Fill your boots now while the bank manager is offering.

cheers

Devil S Advocate

No chart with that title exists.

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134 Comments

by Justice | 5th Dec 11, 7:45am 1323024315

Jezz Bernard, sometimes it's like you read my mind! This piece is spot on

by avowkind2 | 5th Dec 11, 7:56am 1323024975

ha ha ha ha ha.

So Bernard, are you buying or renting?

As a matter of interest, are there any stats that show when in the lifetime of a mortgage it is most likely to fail? first five years - or later?

Andrew

by Bernard Hickey | 5th Dec 11, 9:23am 1323030227

Andrew

My wife and I own the property we live in with our two kids. That's it. We want to live in a particular area where we can send our kids to a good school and know we're not going to be evicted by some grumpy, nosey parker landlord.

It's not an investment decision.

I invest my 'surpluses' (time/forgone income) in this business, which is doing well. We employ 11 people now and last month became NZ's number 1 business and finance site, surpassing NBR. And we're profitable and growing.

Good fun.

Good question on when mortgages are likely to fail. I don't have a quick answer, but will hunt around.

cheers

Bernard

by skudiv | 5th Dec 11, 1:01pm 1323043293

Good answer.

by PhilBest | 5th Dec 11, 3:14pm 1323051274

I know a couple who did their sums and worked out that it was cheaper, instead of buying a home in the zone of a good school, to buy a home in a lower socio-economic suburb and send their two children to private schools.

by avowkind2 | 5th Dec 11, 7:04pm 1323065090

Thanks for the reply, we certainly think this site is the best (if not only) non-deluded economics site in nz.

I sold out in '08 due to personal circumstances rather than any investment decision but have been renting since and don't expect to be able to buy back in until income/price ratios return closer to the long term averages.

Andrew

by Wolly | 5th Dec 11, 7:55am 1323024953

Yes sad but true....saving it at the parasite is not wise with the OBR promise that you will take the number one haircut when the parasite dies. Better to buy land / property whatever as long as it's quality and not price inflated by the sprookers and BS brigade.

Nationals concept of the Labour handout pork offerings for votes, happens to be the capital gains on land and property...fully supported by the RBNZ...who else !

Accept it as part of the greater economic slush that is shoved down your throat as quality govt.

Now let's get back to keeping that debasement clock ticking shall we...musn't let a debt go by you know.

by PhilBest | 5th Dec 11, 3:18pm 1323051515

Why did the media beat up a few TranzRail shares owned by an MP, but has never bothered to look into which MP's (at all times in the last decade) own investment properties, and hence have a vested interest NOT to enact the reforms that every honest inquiry into housing affordability, says is needed?

by Kate | 5th Dec 11, 3:42pm 1323052920

Was reported on here;

http://www.stuff.co.nz/national/politics/5019866/How-many-properties-do-MPs-need

by PhilBest | 8th Dec 11, 12:09pm 1323299366

Then why have they let the issue go?

Or more correctly, why have they not worked out what is the REAL solution that MP's are resisting? All the fluff about CGT's and tax policies and so on, really is no danger to their investments, but reforming the urban fringe development racket sure would be.

by Bernard Hickey | 5th Dec 11, 3:42pm 1323052975

Good Question Phil Best.

Check out this piece Alex Tarrant did for us from our parliamentary office in May this year... ;)

http://www.interest.co.nz/property/53490/two-thirds-mps-have-interests-trusts-58-have-interests-more-one-property-register-sho

cheers

Bernard

by Les Rudd | 5th Dec 11, 3:55pm 1323053746

I wonder what Alex might find if he extended the work to cover others of influence and control, that is, mid- to high ranking government officials and mid-range and above MSM types?

by PhilBest | 8th Dec 11, 12:10pm 1323299434

Excellent, Bernard, sorry I missed that, or have forgotten you did it.

Keep the pressure up by every means you can.

by Bernard Hickey | 5th Dec 11, 8:08am 1323025715

FYI from a reader:

Hello Mr Hickey

I notice massive tracks of land on the north and east of Auckland that have not being developed which i suppose may be some of the land area you say is not being released. Does the council charge these areas rates based on what they are really worth ie as housing or are they rated rurally even though its an obvious land bank- as being a farmer i dont see the land being especially productive. Im sure if they were rated as urban the developers would not be taking the easy loss by running pukekos and freisian steers.

Thank you

Michael

by Bernard Hickey | 5th Dec 11, 8:09am 1323025740

Michael,

Many thanks. We have a metropolitan urban limit which stops that rural land from being developed.

cheers

Bernard

by PhilBest | 5th Dec 11, 3:39pm 1323052784

And that, of course, is the problem. I presume you expected someone to point this out.

This is all about a racket that delivers obscene, lotto win type capital gains to the owners of land favoured by "the plan". This feeds through to inflated prices of ALL housing, hence a constituency formed against reform. The young are just prey for the fiscal child abusers that their parents generation has become.

The whole point of what someone like Hugh Pavletich has been lobbying about for years now, is that it IS possible for land to be converted from rural use to urban use with MINIMAL "planning gain", and for NO incumbent owner of farmland to expect to sell for MUCH more than the going RURAL values. The opponents of this, probably corrupt, use propaganda garbage imagery of the countryside being developed all over, when this is simply impossible given that there is literally dozens of times as much rural land as urban in both NZ and the world; and urban areas annual growth is something like 0.00001% of the total available rural land.

The fact that rural land CAN be developed does not mean it WILL be, it merely acts to limit the expectations for capital gain, on the part of the sellers of the land. If they want too much, the buyers will simply look elsewhere where someone else IS selling a farm for a "farm" price. The biggest irony of all, I realised recently when I read a paper on the subject, is that in cities where land at the fringe is kept this cheap, land throughout the urban area is also cheap and this leads to a HIGHER rate of "infill" development than what occurs in markets with inflated land prices where the number of people who can afford "location" premiums is reduced. The shifts in supply curves lead to equilibriums at higher prices and lower quantities, and this effect is more and more marked, the higher the price due to location, goes.

by Basel Brush III | 5th Dec 11, 8:12am 1323025920

C'mon, Bernard.

Get the last few into the property investment loop before we clobber the lot of' them with some nasty taxes.

The when the crunch comes the Gumint can up its deficit to bail out those silly banks that lent out at 95%.

by Bernard Hickey | 5th Dec 11, 9:25am 1323030315

Basel,

I don't see those property taxes coming for a long, long time.

Labour just got hammered for suggesting them.

We'll only get them when the IMF demands them...

cheers

Bernard

by Troy | 5th Dec 11, 8:20am 1323026415

I hope this is tongue-in-cheek because this is the sort of thinking that got the entire sub-prime mess started in the US.

Tell them to buy as much house as possible since housing prices never fall
Lower the lending standards
Sit back and watch the entre mess implode….

by Bernard Hickey | 5th Dec 11, 9:47am 1323031636

Tongue firmly in cheek, hence the Devil S Advocate byline.

But I'm sort of not kidding about the Too Big To Fail moral hazard aspect.

There is a temptation to think you might be able to get in and hope to get out before the rush to the exits.

Picking bottoms can be a messy business though...

cheers

Bernard

by PhilBest | 5th Dec 11, 3:55pm 1323053741

I have never seen a satisfactory explanation of what the banks are SUPPOSED to do when urban land prices start to ramp up as the result of rationing by planners. Collude to withhold credit? Without getting prosecuted?

Even if they DID restrain credit, why would the prices of rationed urban land not go up faster than the MOST people can save the money required to buy in to the market? What happened in South Korea in the 1980's is very instructive - their house price bubble was accompanied by RISING NATIONAL SAVINGS - that's right, not debt - as young people saved frantically towards a rising target that was always out of reach of most of them. Median multiples hit something like 16.0 - higher than they have gone in "easy credit" California and Ireland.

Marriage and birth rates dropped significantly too.

Why? New "green belts" policies enacted in the 1970's. And very tough mortgage traditions, where young people save most of the purchase price of their first home. Quite possible when you don't run a racket in land for urban development.

by BigDaddy | 5th Dec 11, 8:41am 1323027681

BH cannot get over the fact that Olly Newland has been 100% right all along.

Olly said the revival of the market will start in the "leafy suburbs" of Auckland but not in the c**p areas. The revival will then slowly spread out from there.

Several property "gurus" have gone down in flames in the past few weeks who pushed the line that the poorer areas are the best areas e.g. Dean Letfus (bankrupt), Don Ha ( huge losses) Keiren Trass ( now domiciled in a tent at a "we are the 99" sit in) etc.

In the todays' Herald ( BH's same article was already in Saturdays edition) we have this:

"Property prices surge in areas west of CBD

By Michael Dickison

A cluster of suburbs west of the Auckland CBD has surged ahead of an otherwise stagnating Auckland housing market.

New Windsor, Green Bay, Waterview, Avondale, Glendene and Blockhouse Bay swept most of the top 10 Quotable Value average price rises in the latest quarter, as reported in the Property Report liftout in today's Herald.

QV spokeswoman Glenda Whitehead said there were areas, some with strong demand not matched by listings, creating "fierce competition".

"Typically, these are suburbs close to the CBD. Activity in many of the outer suburbs remains flat."

link:

http://www.nzherald.co.nz/residential-property/news/article.cfm?c_id=76&objectid=10770972 <http://www.nzherald.co.nz/residential-property/news/article.cfm?c_id=76&objectid=10770972>

Whose been right all along, BH or Olly?

by Wolly | 5th Dec 11, 8:53am 1323028410

Both are partly right..or partly wrong...right!

by skudiv | 5th Dec 11, 1:11pm 1323043897

So you keep on saying Big Daddy. Does Olly forecast a good time to sell, or are house prices going up for eternity?

by PhilBest | 5th Dec 11, 4:24pm 1323055484

Olly Newland simply cannot be right forever. Inflated urban land prices are themselves a force for slowing the economy down.

The OECD has observed that property cycles have become de-linked from the main economic cycle, in numerous markets around the world, for the first time in economic history. What the OECD has failed to observe, is that this de-linking has always occurred when a nation or a region first enacts a de facto racket in land for urban development, leading to inflated "planning gains" and a hitherto-unprecedented price bubble. At some stage during this first phase, the main economic cycle takes a "down" but the property cycle, or at least property PRICES, keep right on going UP. Eventually, the inflated prices themselves have distorted the economy so much, that a messy crash occurs.

But the historic norm for housing affordability never returns under these conditions. The "trend" remains upwards in property prices, with the "troughs" of the price cycle lifting along with the "peaks". Each "supply" response to each demand shock, gets weaker, while the "price" response gets stronger. The construction industry, and employment in it, steadily shrinks. Actual shortages of housing get greater and greater, with less and less floor space per person, falling household formation, rising age of first home buyers, and falling birth rates (except among the feckless classes).

I am talking about Britain. Britain's economy is now at the point where it is terminally stuffed after 6 decades of this. Thatcher failed to reform this. Her reforms led to all the pain of the economic distortions in land markets, landing on "the workforce". But repudiating Thatcher and failing to address the land racket/wealth transfer is no answer. Olly Newland and Co need to realise that their racket "creates" NO new "wealth", it merely transfers it. It is merely successful rent-seeking surrounding market distortions.

Britain has been propped up by the fact that London is a major centre of international capital going back centuries. The rest of the country has been terminally stuffed in the regional economies, for 30 years already. I pick that NZ simply cannot sustain a "Len Brown - Ollie Newland" classic Baptists and Bootleggers racket in urban land for long - we do not have a London and we are not 60 million people. (The Baptists are the enviro religionists and the Bootleggers are of course the property speculators).

by Anarkist | 5th Dec 11, 5:08pm 1323058133

Nicely said PhilBest, though I'd hardly consider Len Brown a "enviro-religionist". The majority of New Zealanders have incorporated a respect for environment values into their world views, right across the political spectrum. Not just us lentil quaffing, hemp wearing hippies (I mean those like me).

by PhilBest | 8th Dec 11, 12:23pm 1323300236

My point is, though, that there is a line where "respect for environmental values" crosses into religiously-based unreason, and Len Brown is well over that line. Unfortunately, most NZ-ers are simply too poorly informed to realise, they are in a similar position as the people under medieval theocracies, that keep them ignorant so they will observe religious mantras. The media is very culpable in all this, they SHOULD be giving people like Len Brown and other mayors and Green politicians the sort of roasting that I would if I was the media interviewer/ reporter.

"Respect for environmental values" are best served by large lot, low-priced-land urban form. The enviro religionists create a high density urban horror, and then have the chutzpah to use THIS image in their propaganda to represent what would happen to nature IF humanity was allowed to spread out.......!

The large lot suburbs of "auto dependent" US cities are simply the most naturally beautiful places in the world to live, short of lifestly block living. Trees in abundance, squirrels, birds in abundance, streams running through backyards, massive parks everywhere, playgrounds, sports fields, schools with huge playgrounds, huge building setbacks from the street.....

And some people call this "exclusionary", when the reality is that every city with urban growth constraints has a HIGHER median housing price, for SMALLER properties. The trade off of space NEVER keeps pace with the inflation in land prices.

by bleep | 5th Dec 11, 8:52am 1323028358

Ha, love it Bernard.

What could go wrong?

by Mark Hubbard | 5th Dec 11, 8:54am 1323028443

I think our wise political masters should take some wisdom from the Chinese and enact a One House policy. All kiwi families are only allowed to own one house; unmarried individuals aren't allowed to own because they've not contributed a child to stimulate the economy yet. All families that own more than one house on the enactment of this law have to forfeit, at half - we're trying to be fair here - government valuation, the balance of their houses, and such houses shall be nationalised into the State House stock so that the greedy are forced to feel the immense satisfaction from giving to the needy who've not quite planned their lives sensibly (or at all). Some might say this would take the incentive to work hard to buy, say, holiday homes, but we're just talking about greedy people, the parasites of society, so they don't count: all we want from them is their money to build the fair society, or they can bugger off, right?.

This would achieve Bernard's major aims regarding stopping property speculation and building a better future for all Kiwis - except the ones currently paying for all Kiwis - including even the layabouts. Civilisations are judged on how they treat their layabouts.

by Kate | 5th Dec 11, 9:14am 1323029686

... houses shall be nationalised into the State House stock ...

Frankly, the majority of rented accommodation already is in effect nationalised via welfare transfer payments.

One of our kids, a single income family of four, are renting. I calculated that I could buy them alternate rental accommodation, saving them $40.00 per week on their rent costs and $60.00 per week on their work travel (petrol) costs.

Turns out they'd actually save nothing - as these additional costs are presently made up for via WFF and accommodation supplement. If their actual living costs are lowered, so are the corresponding transfer payments.

This clearly illustrates the point Gareth Morgan makes in terms of current welfare transfer payments - the way they are structured discourages self-help strategies by those in receipt of transfer payments. Where family can and are willing to help - the government has seen to it that there is no need!!!

Crazy.

by Bernard Hickey | 5th Dec 11, 9:38am 1323031104

You make a really good point about the accomodation supplement.

Currently around a third of a million New Zealanders are on the accomodation supplement, which cost NZ$1.2 billion in the 2010/11 fiscal year and is forecast to rise to NZ$1.3 billion over the next three years.

This is a subsidy for high rents and helps support property prices.

http://www.treasury.govt.nz/downloads/pdfs/prefu11-pt7of10.pdf

cheers

Bernard

by scarfie | 5th Dec 11, 11:29am 1323037744

Actually I would not be so sure about the rise Bernard. There was a subtle change to benefits when National got in, well I think it was then.

The accomodation supplement was only part of the assistance given to beneficiaries, but because it was generally inadequate there was also a benefit called the 'Special Allowance'. This probably doubled the assistance given. That has now been replaced by what is termed 'Temporary Additional Assistance', which supposed to be for a finite three months.

The theory goes that is someones financial circumstances take a turn for the worse then the temporary assistance helps them through a period of adjustment, after which they are expected to have sorted out their budget.

But people who get mortgage assistance in this way will be finding out just how illiquid housing is as an investment or asset.

This is why I come down on spruikers talking up property like they can not lose, it is irresponsible to promote property with out highlighting the risks.

by rastus1 | 5th Dec 11, 11:50am 1323039058

.......I would add that this accomodation subisdy thingy is also assest tested. $16,200 for a couple and you don't qualify for anything.

So any poor sod trying to get off the rental ladder is very quickly going to loose a great dollop of weekly assistance.

How does this promote saving and looking after oneself I wonder?

by Kakapo | 5th Dec 11, 12:09pm 1323040155

It's a worryingly high number of people with sod-all in the way of savings or assets. Which makes me wonder if kiwisaver is exempt from the calculation. If not, that's a bunch of people who will be surprised to find themselves suddently disqualified from accommodation supplement when they hit that threshhold on their balance. One way to eliminate the landlord subsidy by stealth, I suppose.

by rastus1 | 5th Dec 11, 12:38pm 1323041895

Kiwisaver is exempt.

by PhilBest | 5th Dec 11, 4:42pm 1323056558

Going by Britain's experience, we can expect to see rising pressures on social housing and the cost of it, as our urban land racket pushes prices forever higher. Other commenters here have also referred to the perverse incentives of taxpayer assistance that is lost when the recipient starts to help themselves. In Britain the cost of "market" housing is so unfair that many people deliberately stay unemployed to get "social housing". The cost of housing itself is a steep "marginal tax" on getting into the workforce if it means losing the social housing and having to enter the REAL market.

by Anarkist | 5th Dec 11, 5:04pm 1323057875

Thats why people like you and Hugh Pavletich, need to have your voices heard in arenas that aren't confined to preaching to the choir. For example, housing affordability was a core concern raised by the Child Poverty Action Group in its report released back in 2008, because it has signifant harmful impacts on New Zealand's most vulnerable residents.

"The most obvious trend in housing since 2000 has been rising costs. Housing affordability continues to decline, with the median priced house now well beyond the means of the average income earner (Figure 28). While house prices are now increasingly out of reach for middle-income wage and salary earners, low-income earners have been shut out of home ownership for some years."

http://www.cpag.org.nz/assets/Publications/LB.pdf

by Mark Hubbard | 5th Dec 11, 12:42pm 1323042154

My post is satire, Mist ... we do know this, don't we?

by skudiv | 5th Dec 11, 1:17pm 1323044249

So is a property speculator a worker or a layabout? I don't get it. They pay no tax, do no work, and expect to make a whole lot of money from it, income directly earned from taxes and workers.

by Mark Hubbard | 5th Dec 11, 1:47pm 1323046044

I couldn't care less. A free and prosperous country wouldn't tax income, period.

by skudiv | 5th Dec 11, 2:08pm 1323047339

How would they pay their politicians?

by Mark Hubbard | 5th Dec 11, 2:40pm 1323049222

In a free (Libertarian) society your individual rights and freedoms are constitutionally placed beyond the vote, your life is not subject to the tyranny of the (thieving) majority .... so there are no politicians (as you would think of them now).

In a Libertarian minarchy all the state runs is police, army and criminal and civil justice systems to ensure rule of law and contract can be enforced, and the functions are funded only by voluntary tax.

(And why would I pay tax - which would be miniscule compared to now - voluntarily? For exactly the reason I now pay my insurances voluntarily.

But wait, you say, there'll be people dying in the streets? No there won't. Firstly, there won't be a welfare state procreating the nouvelle poor, and for those unfortunate cases who 'fall through the net', including the net of the extended family (which the welfare state has also destroyed), then private charity fills the gap.)

by Anarkist | 5th Dec 11, 2:59pm 1323050393

Would Corporations feature in your proposed minarchy Tribelss? And would they have all the same rights and priviledges as real people? If not, New Zealand would rapidly find itself in the same position that the United State was in back in 1909.

"On September 17, 1909, the director of the U.S. Geological Survey reported to the secretary of the interior that companies acting under the General Mining Law were claiming the petroleum deposits of the public lands in California at such a rate that it would "be impossible for the people of the United States to continue ownership of oil lands for more than a few months. After that, the Government will be obliged to repurchase the very oil that it has practically given away."

http://www.enotes.com/major-acts-congress/mineral-leasing-act

by Mark Hubbard | 5th Dec 11, 4:14pm 1323054840

Why wouldn't corporations be included Anarkist?

by Anarkist | 5th Dec 11, 4:49pm 1323056980

Read the link I sent above Tribeless. Why should corporations owned by absentee shareholders be allowed to claim vast areas of land, and have their property claim enforced by the Minarchist State? They then would be able to capture tremendous economic value from anyone wishing to buy any of the commodities they control. Why would that be just?

by Ms de Meanour | 5th Dec 11, 5:12pm 1323058321

Well, your link referred to the law as it applied in a different country over a hundred years ago, whereas Tribeless is talking about how a libertarian society would work here today; I don't see anything in his description to suggest that corporations would be able to claim vast areas of land and have their property claim enforced.

by Mark Hubbard | 5th Dec 11, 5:13pm 1323058420

I had a very quick look at that link but I WORK so had and have no time to read it. 'Property claim'? ... obviously the Libertarian minarchy is capitalist so I suggest there would have to be a purchase, rather than a claim. But does freedom sometimes have a price: yes, however, I'm prepared to pay it because the Statist way is so very much worse.

Though I really don't understand the problem you have with this example. The miniarchist state would not have the power to grant a claim, and all property is privately owned. So this corporation with it's absentee shareholders would have to have taken on risk and bought their claim. And do I see a problem with shareholders outside of where I live in Freeland investing their hard earned money to extract commodities that I will be free to buy from them in some form: no, of course I have no problem with that, just like I have no problem with the Chinese government weakening their currency so that country can produce and sell me 'stuff' far cheaper than I could if they were manufactured in New Zealand. My standard of living is increased.

by Mark Hubbard | 5th Dec 11, 5:23pm 1323059014

By the way, why do you call yourself an anarchist? You don't seem to believe in the voluntary transactions of a laissez faire market?

by Mark Hubbard | 5th Dec 11, 5:28pm 1323059305

And with that last post I'm gone for a bit. I'm in the lovely Mahau Sound on 3G, and I'm about at my limit for a while (save work email).

by Anarkist | 5th Dec 11, 5:37pm 1323059864

Tribeless, the land claimed by the corporations in 1909 was empty, so there was nobody to buy from. Because all the Natives had either died from exotic diseases or killed by white settlers. In your hypothetical minarchist state, don't you think that poor workers and tenants would begrudge paying the "voluntary" taxes to protect the property claims of corporations who are responsible for price gouging them on oil sales and property rent, due to monopoly control of oil reserves and land? I don't think I'd be very happy living in a society where wealthy corporate shareholders are free to pay their private police force to entrench such a fundamentally unjust social order.

Yes but your China example only shows how you profit from their manipulation, not accounting for how others lose their jobs, because their companies can't compete against unfair trade practices. A decidely narrow, if not selfish view to take.

by Ms de Meanour | 5th Dec 11, 5:45pm 1323060354

You still haven't established that corporations in a 21st-century libertarian New Zealand would be able to claim ownerless land in the way that corporations in 20th-century America could. Your argument fails unless you can show that.

by Anarkist | 5th Dec 11, 5:54pm 1323060857

Its not my libertarian New Zealand Ms de Meanour, which is why I was seeking to clarify from Tribeless whether Corporations have the same rights and priviledges as hypothetical citizens. I would assume that should we transition into a totally new political order there would be a total reset, that since arguably contracts made between citizens and the old government would be considered illegitimate and therefore rendered nul and void. Why should the new regime continue to uphold the contracts that it wasn't party to?

by Ms de Meanour | 6th Dec 11, 1:22pm 1323130937

Right. Your critique is based on an assumption about the way in which the transition from here to a libertarian society would be managed. That is an assumption for which I can find no evidence in Tribeless's comments.

Why should there be a total reset? Even today it's not all about contracts made between citizens and the old government. Most private property, even in our non-liberartarian society, is the result of an exchange between citizens, one of whom was willing to sell (labour, land, an idea) for the agreed price, and the other of whom was willing to buy same for the agreed price. I see no reason to assume that a new libertarian order would want to nullify the outcome of such an exchange.

Where a citizen holds property as a result of acquiring it from a previous Government, I see no reason to assume that a new libertarian order would want to repossess it.

What would happen to property currently owned by Government on behalf of all of us - I would imagine it would be sold to the highest bidder and the proceeds divided among all of us. Yes, that would be likely to be a corporation; and they would expect that their ownership of the property they had paid for would be upheld by the law. So?

by Mark Hubbard | 5th Dec 11, 11:01pm 1323079293

You're completely misrepresenting yourself with that handle, Anarchist, you're something to the left of a Socialist. I have a certain amount in common with an Anarchist, nothing with a collectivist Statist.

And as a typical cynical leftie you misrepresent the Libertarian position by assuming laws must be made to curb the avarice that only Lefties see in humanity: it's the true sick irony about the Left. Monopolies exist through crony capitalism; corporations game playing government regulation, the best example of that, Enron.

Capitalism is about voluntary transactions among consenting adults. It is not a zero sum game, both parties to a capitalist transaction gain value. It's not about winners and losers. With a properly set constitution, such as the already linked Constitution of New Freeland, with is strict separation of powers, a police force can't become in thraw of corrupt corporates.

Repeat, anarchists I can respect have a vision based on the voluntarism of laissez faire, and tower above the cynical fetid breath of Left politicians and advocates who presumably see only their own baseness in man. Though a Libertarian minarchy ‘fixes’ that view by being based on the non-initiation of force principle.

And Ms De Meanor is correct about your example: it is not on all fours with a current libertarian society, not even relevant. But off you go, making law upon law upon law upon regulation to stop the greed you see in your own soul; but don't you attribute that to noble men who want their freedom from the gutter of man made need you live in.

Finally, you say:

Yes but your China example only shows how you profit from their manipulation, not accounting for how others lose their jobs, because their companies can't compete against unfair trade practices.

Answer me this: why is the job of a Kiwi more important than than the job of a Chinese man which can lift a family from abject poverty? Is a Chinese life worth less than a Kiwi one? Freedom knows no such idiot and cruel arbitrary boundaries. Chris Trotter does the same nationalistic equation - whatever happened to Communism Internationale?

by Anarkist | 6th Dec 11, 10:28am 1323120501

"And as a typical cynical leftie you misrepresent the Libertarian position by assuming laws must be made to curb the avarice that only Lefties see in humanity: it's the true sick irony about the Left. Monopolies exist through crony capitalism; corporations game playing government regulation, the best example of that, Enron."

If you don't see avarice in humanity, obviously we're not living in the same world Tribeless, avarice has existed in the world far longer than there have been "Socialist" or the "Left".

" With a properly set constitution, such as the already linked Constitution of New Freeland, with is strict separation of powers, a police force can't become in thraw of corrupt corporates."

A Constitutions is just a bit of paper, a piece of paper can't stop a police force becoming in thraw to corrupt corporates, lol. Especially if its the corrupt corporates who are paying their wages through "voluntary taxation", since only the corporates will have the means to pay them.

I, like the majority of anarchists recognise that as long as there is a State, any State, whether it be "Minarchist" or not, will become corrupted and used to favour the already wealthy and powerful in society. A State is defined as a political body with the absolute monopoly of force within a society. Against the State a mere individual has no recourse against victimization. Only ascribing to majority opinion in a democracy does the concern of an individual carry any weight. This is why I'm an anarchist, duh! Because I realize how self-centred and delusional the majority opinion generally is. Why do you think we have so much of a problem with housing affordability and the banking system in our society?

Its not just a matter of offering the most reasonable and well researched policy platform and then have it compete fairly based on its merits in the domain of public opinion. Instead you have to cater to the whims and entitlements of the majority. Why do you think the likes of John Key and Helen Clark are so successful in politics? Because they tell the populace what they want to hear. I'm as likely to get my anarchist utopia, as you are of getting your Republic of New Freeland, because nobody else wants it. They all are accustomed to having their free lunches and don't want to be told they can no longer have them. I guess its easy for me to say. I'm still young and relatively healthy, so I don't have to be worried about having an illness that under a Minarchist State or Anarchist Utopia, would be unaffordable to treat. Sometimes a free lunch isn't so bad after all.

by Mark Hubbard | 6th Dec 11, 12:31pm 1323127877

Sometimes a free lunch isn't so bad after all.

Why do you believe you couldn't afford decent medical care: a laissez faire system would be more prosperous than the failing centrally planned economies we have now: for a start you'd have all your tax money, imagine the health insurance policy you could afford with that. Plus there would be a far better medical system.

Clive James, one of my humanist heroes, has a great phrase: in the Soviet Union they thought they had free health care, but it ended up costing them everything they had.

Direct your worthy anger at the enemy Anarchist: and that's not me, it's Statists like Bernard.

by PhilBest | 8th Dec 11, 12:27pm 1323300464

What a fabulous quote from Clive James, thanks heaps for that.

by Mark Hubbard | 5th Dec 11, 4:16pm 1323055017

Mist, every issue you have mentioned - as far as I can understand your post - is dealt with by written constitution: that's why it's so important - it's a constitutional minarchy (republic). And that constitution already exists: a Constitution for New Freeland.

Note particularly the clauses pertaining to separation of powers.

by Ms de Meanour | 5th Dec 11, 3:06pm 1323050819

So if you didn't pay tax, you wouldn't get the protection of the police, army and criminal and civil justice systems?

by Mark Hubbard | 5th Dec 11, 4:20pm 1323055237

No Ms. The police would be voluntarily funded, but, would work as now: their duty would be to keep the rule of law. They would not be corruptible, as is the gist of your question, as the Constitution of New Freeland - see link above - has strick separation of powers.

by Ms de Meanour | 5th Dec 11, 4:29pm 1323055776

I wasn't concerned about corruption so much as the possibility that the only people who would think it in their interests to contribute voluntarily to the funding of the police etc, would be the weak and poor - so the police would be weak and poorly funded.

by skudiv | 5th Dec 11, 6:12pm 1323061936

In theory I agree totally, I just see too much evidence in the real world that this model will benefit a small minority of people who will use their power to extort everyone else. While I prefer a small government, and incentives for effort, and disincentives for sloth, I personally doubt I would be any better off.

http://www.reuters.com/article/2011/10/21/us-commodities-houses-idUSTRE79K49320111021?irpc=932

Glencore in 2010 controlled 55 percent of the world's traded zinc market, and 36 percent of that for copper.

The trading houses' talent and deep pockets translate into incredible power. "Most commodity buyers in the world are price takers. The top trading firms are price makers," said Chris Hinde, editor of London-based Mining Journal. "It puts them in a tremendous position."

by scarfie | 5th Dec 11, 9:53am 1323032029

Yes a fantastic time to join the criminal ranks.

Lets not beat around the bush, if you borrow fraudulent money willingly then you undertake a criminal course of action.

The money is fraudulent by virtue of the fact it is not what it appears to be. Not only fiat currency backed by peoples imagination, but leveraged to buggery as well (Fractional Reserve Banking).

The most evil bastards are those that have known these details about our money a lot longer than me, but continue to prey on the rest of society through their property investment activities. We should lock them all up, and one day if their is the traction then maybe we will. Maybe a few good public floggings also.

By the way Bernard you article gives a good reason for why buying four years ago would have been good. You know the old past performance is not a good indicator rah de rah....

PS. If you don't agree with my description of fraudulent, I challenge you to go ask 100 people on the street for their understanding of money.

by scarfie | 5th Dec 11, 1:15pm 1323044116

Figures that out when I was fifteen, way before most do. Most of course never figure it out.

Here is an interesting video of which the two hour full version was taken down over the weekend.

http://www.youtube.com/watch?v=OibqdwHyZxk

You might enjoy this also.

http://www.youtube.com/watch?v=A3LUD53q_Pg&feature=email

I haven't watched them in full due to bandwidth requirements, but what I have seen would be mind boggling for most.

"And they will certainly build houses and have occupancy, and they will certainly plant vineyards and eat their fruitage. They will not build and someone else have occupancy; they will not plant and some else do the eating." Isaiah 65:21&22

by scarfie | 5th Dec 11, 7:32pm 1323066739

I must admit that I switch off when I see reference to UFO's:)

by skudiv | 5th Dec 11, 1:22pm 1323044537

Spoke to a neighbour this morning, his words "that can't be right."

by scarfie | 5th Dec 11, 1:29pm 1323044942

Time to sharpen up, not much time left to make plans now.

by skudiv | 5th Dec 11, 1:46pm 1323045973

Got a plan, a big deal lined up. $1 million property, zero dollars down, interest only for twenty years mwahahahahahahahahahahha!

by Roger Witherspoon | 5th Dec 11, 10:42am 1323034957

I think you are right to point out that this a political issue.

Bill English did point out that they could have crashed the housing market if they had tightened fiscal policy rapidly following the 2008 US crash.

As I see it National saw that people don't want a house price crash and any party responsible for one would spend ten years in opposition. In that respect they are just bowing to the will of the people.

Len Brown would seem to be doing the same by persuing policies designed to restrict housing supply and encourage us all to use public transport.

The teenager theory seems to be doing the rounds - people will choose the easiest option until those are used up. Then they will choose the least unpleasant option until that ceases to work. Then they will finally face the problem.

What to do? The teenager approach is far from the best one but it seems kind of ineviteable.

by skudiv | 5th Dec 11, 1:23pm 1323044620

Thats how a democracy works, keep people ignorant, and promise them a better future.

by steven | 5th Dec 11, 1:33pm 1323045203

I agree with BE, National could have crashed us if they had made ppl run out of housing...hence why when ppl say National was timid etc I disagree.....they moved closer to the cliff edge except they didnt/dont know where that edge is or how far the drop is.....they probably did the most safe to do.....

Bowing to the will of the ppl, who would want a house price crash? or maybe I would say who sane would want it. Those selling short to make a "killing" would, yes but thats a different matter.....(hence when ppl say markets are rational or laissez faire is best simply ignore that such behaviour is rational for the individual but disasterious for the Nation / Globe).

More of us will be using public transport in the future, get used to it.....inside 10 years I think cars will be for those as it was pre ww2....certianly 2 decades.

teenage problem, well that sums up how we have consumed oil...took the easiest first....public transport will be what's left.

regards

by steven | 5th Dec 11, 7:56pm 1323068168

Yes, wind etc is all built using "cheap" fossil fuels. Concrete making etc, is energy intensive, so yes as fossil fuel gets more expensive so will the alternatives, the key thing is the rate of change, beating chasing your tail. So energy return on energy invested, will be key hence I think solar power for instance is firmly in the too fossil impacted renewables section and with a low eroei and being complex to make probably makes no sense to manufacture IMHO....wind and tide on the other hand are pretty non-complex and have a higher eroei......I think its something like 15 for wind v 10 or less for solar.....so wind and tide will be it, ditto geothermal.

regards

by PhilBest | 5th Dec 11, 4:54pm 1323057251

Public Transport is NOT so much more efficient than private cars that it is "the solution" to your alleged crisis. Any private car with an engine of less than about 1.6 litres, or any private car with 2 or more people in it, is already more efficient than public transport - and I am going by US data where there are a lot more actual numbers of people using public transport than NZ has.

Furthermore, when the oil "runs out" as you allege it will, the JOBS and trips purposes to which people travel on public transport, WON'T EXIST. I find it ludicrous that peak oil doomsayers somehow presume that the post oil economy will comprise all the wealth-consuming jobs like public sector ones (bureaucracy, teaching, health, welfare etc) and coffee shops and hairdressers; and none of the wealth creating, resource consuming ones that public transport has NEVER been a good fit with.

It shows how economically ignorant they are.

At least that Kunstler guy is bright enough to be advocating lifestyle blocks and "grow your own" as "the solution", but he is a rarity among the resource runout doomsayers, most of whom are privately commenting to each other that "we need to collapse that evil system, global capitalism, before it outwits us again with technological solutions to the crises we are using as pretexts for our politics of envy". They know they are lying, and I know they know they are lying.

by Anarkist | 5th Dec 11, 5:23pm 1323058986

PhilBest,

I'm one of those resource doomsayers, though I'm convinced that Capitalism will prove suprisingly adaptable and will enable humanity to muddle its way through Peak Oil, before finally crashing, but not before we've decisively wrecked the Earth with the development of fossil fuel resources such as the Tar Sands in Canada, the United States, and Russia.

I also practice a lifestyle which you show Howard Kunstler advocating, though it pisses me off no end to see the likes of Al Gore, leading his lavish lifestyle, whilst pontificating in public forums that we all must make sacrifices in the interest of saving the planet. It truly galls me.

by steven | 5th Dec 11, 8:13pm 1323069206

To start with I didnt say when oil runs out, and I never have. I said peak oil which is the peak production figure. Oil will still be around in 2050 but not at the 85mbpd we have today let alone the 130mbpd projected needs....the likely drops suggest 20mbpd......a 110mbpd shortfall.....plus thats probably all going to be used internally by saudi etc so there is none to export......or not at what "I" and billions of ppl (I will use I here as you must be so rich you wont care) can afford.....mostly I suspect it will be limited biofuels, NZ is lucky in that respect.....lots of land and not many ppl....

Look at your qualifications, commuting is typically single user and bigger than 1.6litres and thats on current petrol prices even if I accept your words, which i odnt particualry (URL?)...public transport will be it in the future....and one thing is for sure things will be greatly different than they are today.....I can quite accept that I am greatly unsure what the future holds but I know one thing it will not be our present energy intensive lifestyle that 5 other billion would like to share...it cant happen.....so jobs etc will be a lot different......

and you claim Im economically ignorant.....yeah right....

So a car will not be an option for most families....those that can afford one will be very well off and it will be a MiEV/Prius or equiv.....on that sort of production run its out of my price bracket today let alone 20 years from now by a long way.....now battery powered scooters possible, I might be able to do one of those...$6k v $60k in today's prices.

Maybe you should read Kunstler more closely....and sure I think we will see the return of the WW2 allotment system and ppl growing their own, Im starting to do that plus a few other things....it will be a shock too many.

The rest is your usual blinkered ignorant drivel.....

regards

by David B | 5th Dec 11, 9:13pm 1323072818

Still lecturing everyone on your make-believe world of peak oil, Steven, I see. It must feel so good so rewarding being so green. I would imagine that that must motivate you to not only lecture the rest of the world about their shortcomings, but to also make many changes to your own lifestyle. So tell me, how's that SUV working out for you?

by PhilBest | 8th Dec 11, 12:31pm 1323300662

Fine, I stand by what I said, and I'll let readers judge who is right. One of us is indeed talking their "usual drivel", and one of us simply never learns anything even when he ventures outside the echo chamber sources of information he relies on.

by midgetkiwi | 5th Dec 11, 4:47pm 1323056828

There is no escape from the teenager theory ;) politicians will reflect the "will" of the majority, so they get voted in. The "majority" will vote for whoever gives the most chupa-chups, whatever the long-term outcome or implication... no escape when everyone is looking out for his/her own interests ;)

Only 2 ways (that i can see, probably more) out of the spiral down to a massive crash:

1. Political leader who would sacrifice future gain for long-term benefit of the country (ie: sacrifice himself), by implementing difficult but necessary changes to change the direction of debt, signing his own political death warrant.

2. Stealth campaign, similar to the abolition of slavery: eg. convincing enough people that the country would do better if politicians' pay was reduced and capped, leading to ?maybe? politicians who want to improve a nation rather than increase the numbers in their bank account?

by JMGoods | 5th Dec 11, 10:56am 1323035779

A huge problem with the property industry today is that the media and the blogosphere are dominated by the one-percent. They control everything, the news we read and watch, the "truth" that they drip fed to the unthinking masses, to the 99 percent.

It was recently revealed that the real estate industry actually pays spruikers and shills to post positive spin on forums and blogs (yes even blogs like this one) to talk up the market, to post as if they're just one of the 99 percent, a normal person, when in fact they are part of the corrupt 1% feeding us their lies and propaganda.

Read the blog below and watch the included video for evidence:

http://www.differenthere.com/2011/08/on-internet-nobody-knows-youre-dog…

On the Internet, nobody knows you're a dog, or a paid property spruiker

The public needs to open their eyes. To stop believing what they you read and watch in the mainstream press. The problem is the 99 percent don't read forums like this. They don't find out the truth. So pass this on, pass the message on to everyone. Tell your friends what's happening. Make them read this blog. Make then watch the video. Above all, remember, the 99 percent are fed lies by the 1 percent and this is a huge obstacle we must overcome. But in time, the truth must come out. It always does. We are the 99 percent.

by skudiv | 5th Dec 11, 1:24pm 1323044679

^^^^ Looks for Big Daddy ^^^^

by steven | 5th Dec 11, 1:35pm 1323045326

the public dont want to open their eyes....they dont want to hear...try talking to them and they think you are a drooling idiot.....I tyhink ppl have to experience/educate themselves.....there are some hard lessons coming.

regards

by Wolly | 5th Dec 11, 1:43pm 1323045826

What crisis....where?.....who said that?...the Earth is flat see...now stop ruining my day with all that blather about a planet stuffed with debt....Mr English said we was ok so we is ok...ok!

by skudiv | 5th Dec 11, 2:05pm 1323047104

We will be fine Wolly, Central banks will "print," property will go up forever, inflation will only happen to your debts, your savings will grow, and the government will even start saving as well, wages will rise, the economy will boom. The doomsayers will never be right, no such thing as a rainy day. 200 trillion of debt is chump change, the world can borrow far more then that, your money is safe in the bank, and even safer in houses.

by Bernard Hickey | 5th Dec 11, 3:57pm 1323053829

We monitor commenters pretty closely.

We'd know if there was a paid poster.

They may be active in US and China, but I haven't seen any here.

cheers

Bernard

by PhilBest | 5th Dec 11, 5:15pm 1323058545

Macrobusiness Australia seems to have this problem but they seem to be able to pick them and block them. I am surprised you haven't had the same problem. I guess there is enough open spruiking on this forum already from people like Ollie Newland.

JMGoods seems to be new here, I like the couple of posts I have seen so far. My recommendation to him is to explore Hugh Pavletich's "Performance Urban Planning" Web site for a real eye opener on an aspect of the property racket that he might be unfamiliar with as yet. As he says, there is a lot the MSM does not tell you.

by Alex13 | 5th Dec 11, 11:15am 1323036939

So, after all the arguments going on this site for years, the facts-based conclusion appears to be simple: investment in a quality property that is located in a good area, with a moderate / manageable debt level is a good investment and worthwhile part of an investment portfolio.

by steven | 5th Dec 11, 2:05pm 1323047131

In your opinion, but not if its a facts based conclusion you want, no, IMHO.

Facts that increase the risk of loss and a severe loss coming about from a Global depression are,

1) Property is in a huge bubble....houses by any metric ive seen say 100% over-valued, so the fall will be big.

2) The huge debt that is only payable with outstanding growth ie 5%+ . Growth means we that uses 2.5 to 3% more CHEAP fossil fuel per annum for at least a decade to do so....and it has to be cheap, $50US a barrel sort of price and not $80US+ and certianly not $100USD, which is where its going to be............so growth is dead, RIP.

3) It gets worse of course....Peak oil will mean not just no increase in production but a decline of 4%+ per year is expected, so thats a depression sized effect on global GDP, that ensures we cant grow for the next decade and in fact will shrink, so debt cant be paid off, so its default time, sometime...which means bankruptcy....coming to your doorstep.

regards

by Alex13 | 5th Dec 11, 2:51pm 1323049869

I said facts-based, not gloomy predictions based.

The facts are: a worsening supply-demand situation and, as a consequence, increasing prices.

Gloomy predictions are: “big fall”, “dead growth”, “bankruptcy” – we’ve heard it all for too long…

(There’s also the hyperinflation believers’ camp, which also belongs to predictions rather than facts realm, but under that prediction house prices will increase even faster…)

by PhilBest | 5th Dec 11, 5:25pm 1323059121

AAAHHH, someone else is sick of the eco-propaganda too.

Most of these people are terminally ignorant on economics and make utterly incoherent arguments (like public transport is the solution, not LOW density, lifestyle blocks and "grow it yourself") that anyone with half a brain can see through.

I believe they are people with a certain kind of politics, who work backwards to use any pretext possible to advance their agenda, but often fail to see how stupid their own argument is. They hate freedom, cars and roads; hence public transport is good, hence we like propaganda that says that we will run out of resources to run cars - ignoring that public transport uses resources too and is barely any more efficient than private cars, as a "system".

Instead of comparing the energy per passenger km of a full bus and a car with a driver, here is the CORRECT way of looking at it: imagine 50 low income earners living off public transport routes (most low income earners can't afford to live on public transport routes). What would be cheaper: giving them each a car, or creating new public transport routes, buying the buses, hiring the drivers, etc; to provide a 30-minute-interval service 16 hours a day, between those people's homes, and their jobs and other destinations?

Besides this, MOST jobs will cease to exist anyway if resources really were so scarce we couldn't run cars any more, no matter how small and economical. ESPECIALLY the kind of jobs to which public transport has the slightest relevance i.e. jobs concentrated in tall buildings.

by steven | 5th Dec 11, 8:18pm 1323069501

"ESPECIALLY the kind of jobs to which public transport has the slightest relevance i.e. jobs concentrated in tall buildings."

Ah maybe you can think....and yes like I said I think life will be greatly different, a lot less complex, very little centraalised govn (you may yet be happy)....something along the lines of the Amish....hopefully missing the religious zeal bit.

regards

by PhilBest | 8th Dec 11, 12:36pm 1323300986

HUH?

I actually agree with the Amish bit IF that is really what you believe. That IS my whole point.

Defending urban growth constraint and a focus on public transport, is actually totally uncompatible with the position of resource doomsaying. Resource doomsayers SHOULD be advocating Amish style living, and THAT means, forget inner city living, high density urban form, and mass public transport. Read Eric Morris, "From Horse Power to Horsepower", on what cities were like before cars. The alarm then was not about CO2, it was that humanity would be 20 feet deep in horse shit by the year 2000.

by steven | 5th Dec 11, 8:15pm 1323069323

Well we will get to see pretty soon....

regards

by Chairman Moa | 5th Dec 11, 11:44am 1323038666

Simple question BH:

If you are concerned about this housing boom situation. So why when I am entering interest.co.nz, the first thing I see is the National Bank banner for cheap mortgages. Then others like BNZ Total Money (another mortgage product) poped up here and there, Roost Mortgage Brokeris also quite prominent. To me it's like having a website promoting vegeterian healthy life style and the having McDonald, KFC, Burger King doing the advertising on it..

I guess you have to earn a living somewhere

by rastus1 | 5th Dec 11, 11:56am 1323039367

You miss the point Chairman....let them advertise and thus pay for this great site. Those who are regular readers, like yourself, are being empowered to make up their own minds.

by steven | 5th Dec 11, 2:22pm 1323048136

I wouldnt say its the same thing....the products are not un-healthy taken in moderation.....unlike say KFC where even eating that crap a few times a week is too much...let alone every day.

For instance if you took out a cheaper mortgage and used the savings to pay down debt faster which is what I do, its clearly healthier....

regards

by Bernard Hickey | 5th Dec 11, 4:01pm 1323054117

Chairman Moa

Cheers. We're proud of our editorial independence and have a robust Chinese wall between our advertising and editorial. Happily for us our advertisers like it than we have a big, growing and engaged audience.

;)

But I do like a nice salad from McDonalds every now and then. BurgerKing and KFC I can't vouch for...

cheers

Bernard

by skudiv | 5th Dec 11, 6:22pm 1323062572

Burgers are way better at BK, salads are crap whomever makes it (JMO), kids like happy meals though.

by ngakonui gold | 5th Dec 11, 11:58am 1323039492

My house is not an investment but somewhere to live for my family.If it should rise in value then so be it but my financial future is not tied to house prices but working harder and smarter and putting my savings into growth areas eg forestry and kids education

by Kate | 5th Dec 11, 12:35pm 1323041714

If it should rise in value then so be it ...

But what if it should fall in value?

And what if it should fall in value below what you paid for it?

And what if it should fall in value below what you owe on it?

These are the big questions many FHB are asking before diving into home ownership these days.

by skudiv | 5th Dec 11, 12:58pm 1323043120

Just like paper gains, paper losses are only that unless you sell. When you buy a home to live in, you have a home, and to me that is the bigger issue then paper profits or losses. If you want to make money then you need to ask those questions, and there are pleanty of more robust ways then speculating.

by steven | 5th Dec 11, 2:26pm 1323048367

Not totally true....for instance you invest money in a mortgage assuming you will be the proud owner in 25 years and the house will be worth more than you paid for it incl interest..that makes good financial sense. If however you buy a house and in 25 years its worth 50% less than what you paid for it let alone the interest, well thats a disaster, you would have been better off renting. Now if you took out an endowment policy say which were all the rage some yeasr back.....you would be donald ducked....

regards

by PhilBest | 5th Dec 11, 5:27pm 1323059259

Hey, I agree with Steven on something. Renting is a good idea when there is a house price bubble. It has been calculated to save six figures in 10 years under current conditions.

by Chairman Moa | 5th Dec 11, 1:22pm 1323044546

Ahem.. Election is already over - You should move onto something a bit more productive! We are turning into a country of old whingers.. If you want to advance NZ and really believe we can do it, you'd be better off lobbying for something like more R&D funds or start digging for those valuable stuffs.. not chanting around 'cos you dislike somebody!

by skudiv | 5th Dec 11, 1:27pm 1323044874

Any advice for crashing NZ? I believe we can do that.

by Chairman Moa | 5th Dec 11, 1:31pm 1323045070

Start digging... ! Australia started their digging program back in the 90s! Look what they got out of it, despite all the neg comments about slowing in China - come over to QLD and you'll see.

by PhilBest | 5th Dec 11, 5:29pm 1323059396

Read the McKinsey Institute's "Driving Productivity and Growth in the UK Economy" (1996).

The "real price" urban land that Hugh has devoted thousands of hours to lobbying for, is definitely worth more for an economy than R and D subsidies.

by gavini | 5th Dec 11, 1:41pm 1323045669

Bernard - The problem I have with taking you seriously is that continually assert that the market is skewed in favour of property and that we need new rules/taxes to ensure that money is invested in "productive" enterprises. You then go on to pat yourself on the back by saying that you employ 11 people etc etc - Problem is it's not one of the productive enterprises you talk about - i.e. recycled information and opinion dressed up as fact and/or alalysis is not a productive enterprise.

That said I don't care how you earn your money as long as it's legal but you really are in no position to criticise others who choose to keep their savings in property rather than finance companies or banks

by Chairman Moa | 5th Dec 11, 1:47pm 1323046039

shhh..! not so long ago Hanover Finance, Geneva were recommended in this website to invest money.

by skudiv | 5th Dec 11, 1:54pm 1323046477

Productive: Economics Of or involved in the creation of goods and services to produce wealth or value

http://www.thefreedictionary.com/productive

Speculate: (Economics, Accounting & Finance / Stock Exchange) (intr) to buy or sell securities, property, etc., in the hope of deriving capital gains

http://www.thefreedictionary.com/speculating

by steven | 5th Dec 11, 2:30pm 1323048650

On an individual basis, yes.....its perfectly rational to screw up the Nation to line your pocket......we can see that ppl are doing that.

Is what BH is doing anything along those lines? is he working for a day to day profit or booking a tax loss hoping for a tax free gain at the end? the former is a business, the latter is gambling.

The problem I have with property is, when there is a huge collapse, I the voter will be forced to bail out the banks because they lent stupidly to ppl who bought stupidly.....and then crash and burned.

regards

by Bernard Hickey | 5th Dec 11, 4:09pm 1323054578

Gavini

Many thanks. You make an interesting claim about the media not being a productive enterprise.

Your opinion.

And that's the point.

We have an awful lot of information, news, tools, charts, calculators and debate on this site (and I welcome your challenges to the accuracy or usefulness of all of this (apart from the debate of course ;))

I hope we're providing a useful service.

The advertising and media industries in New Zealand are worth around NZ$3.5 billion. There must be something of value happening in there somewhere.

The other point I'd make is that some of the advertising that once went to local newspapers, magazines and radio is now migrating online to foreign owned companies such as Facebook and Google. We're competing hard to keep that money here in NZ.

On the issue of me criticising property owners. Everyone is entitled to their opinion on this site, as long as it is expressed without being abusive or defamatory. Your comment was good example of just such an opinion that was expressed, clearly, without venom and designed to challenge an existing point of view.

We welcome you on this site. Which free for you to use... ;)

cheers

Bernard

by Ghost Dog | 5th Dec 11, 9:28pm 1323073734

Well, You guys have my vote!

The 'Charts' section alone is worth the entrance fee. :)

by gavini | 5th Dec 11, 2:03pm 1323047014

Skudiv - thanks I do not feel so bad now - I have a rental property so I provide a service - Bernard had (almost) convinced me that I was a greedy, selfish person preventing others from buying their first house because my purchase contributed to pushing property prices up.

by bob | 5th Dec 11, 2:11pm 1323047470

If you bought a rental you probably didn't push property prices up - biggest price rises have been where there are no rentals.

by Chairman Moa | 5th Dec 11, 2:17pm 1323047847

me too.. I will shortly be selling my central Auckland property, now that I have decided to stay in Aus a bit longer. I will be condemed for all the sins; pushing up house prices in Central Auckland, making a good capital gain and mass migration to Aus..

by scarfie | 5th Dec 11, 3:00pm 1323050434

A capital gain? It might be a gain, but how can it be a capital when it came from a debt based monetary system?

by Chairman Moa | 5th Dec 11, 3:10pm 1323051029

Whatever stuff you are smoking - I want some!

by scarfie | 5th Dec 11, 3:27pm 1323052034

What ever personality disorder you suffer from, I don't want it.

by Gummy Bear Hero | 5th Dec 11, 3:39pm 1323052777

.... it could be worse , you guys could be Michael Buble fans ..... oh yucky poo .....

Bernard's getting the Christmas album on CD , apparently ..... " You're a falling star , you're the get away car ........ you're the line in the sand when I go too far " ...... ahhhh geeeez !!!!

by Bernard Hickey | 5th Dec 11, 4:11pm 1323054682

Note to self: Be sure to buy the Michael Buble album for Gummy's Christmas stocking....

by Elley | 5th Dec 11, 4:18pm 1323055090

And since you get called "chicken Hickey" by some, here's one for you to cheer you up when you feel gloomy... http://www.youtube.com/watch?v=vdFIXsrjkXI (yes, my sister, cousins and I were made to dance to this every Christmas...obviously it's had long-lasting effects on me. Here's another link for the lyrics in various languages, not English though http://www.youtube.com/watch?v=uNZbMobnxlw).

by Gummy Bear Hero | 5th Dec 11, 4:26pm 1323055575

Sometimes you go too far , Bernard !

..... hey , correct me if I'm wrong , but if Don Brash had let Rodney Hide stand for ACT in Epsom ..... then both Rodney Hide and Don Brash would now be in parliament , cuppa latte with Jolly Kid and Wild Bill .....no need to bother with Banksie's tea fetish ...

Don Brash really is politically inept , isn't he .

by Chairman Moa | 5th Dec 11, 3:48pm 1323053297

It's a zero summed game boys, if I gain some someone else lose some. Fortunately, at this time I am at a better end. Anything other that it's just sour grapes!

As for personality disorder .. haven't we all? Otherwise we wouldn't be here

by scarfie | 5th Dec 11, 3:53pm 1323053585

Can't argue with that. Will leave you with the Michael Buble album.

Where they hell did that one come from Gummy, you been tortured recently.

by Gummy Bear Hero | 5th Dec 11, 4:24pm 1323055449

Know what to do when your dinner guests don't get the hint that it's time to go home .....

.... load the Michael Buble album , crank up the volume , leave them to it .....

by scarfie | 5th Dec 11, 4:00pm 1323054011

Getting rid of the sheeple is the topic of one of those You Tube videos above.

Goes something along the lines of they need the sheeple to extract all the resources and make all the infrastructure, then they exterminate them all off so they are not in the way. The Nazi experiment has continued to this day. Remember the painted apple moth spraying over west Auckland? Apparently a sterilisation technique.

Our own FEMA camp in Wellington http://www.youtube.com/watch?v=Bqi123hBw2A

Bring out your tin foil hats haha. But there is probably something in it.

I didn't immunize my kids, and am glad I didn't.

by Les Rudd | 5th Dec 11, 3:16pm 1323051410

Here's an idea:

http://www.stuff.co.nz/the-press/news/christchurch-earthquake-2011/6084620/Trust-plans-to-reduce-section-costs

And note the suggestion in the comments about forming same for FHBs.

Could it be done elsewhere?

With the positive (err, I mean negative) impact on property prices maybe Dr B could keep the OCR lower for much longer; maybe even cut it.

"Property developer and trustee Grant MacKinnon said selling all the sections before developing the land would cut out the developer's margin and sales and marketing costs, which could account for up to 40 per cent of a section's value.

Livingstone said the sections could be sold for between $90,000 and $120,000, depending on their location."

No wonder Hugh has a spring in his step today.

by Les Rudd | 5th Dec 11, 3:51pm 1323053479

OCR lower and use ratios. Cheers, Les.

by philthy | 5th Dec 11, 11:49pm 1323082188

Exactly right, Key is like a little lamb that's fightened out of his head that house prices could go down, or even not keep going up.

I can't believe why any young people in this country planning to buy a house in the future would have voted for him, he's out to make it as unaffordable as possible.

by DC | 6th Dec 11, 12:26am 1323084414

Great article. Shame that so many kiwi's have to sign them selves up to huge mortgages to get a family home due to the massivley overpriced houses which the government hasn't allowed to go through a correction.

by PJK | 6th Dec 11, 12:50am 1323085821

If you want to live in Epsom, or Roseneath, or some other suburb that's the "right address" and close to a big city centre then yes - you will have to pay a premium for the close access - and as populations increase then those prices will rise. It's supply and demand and scarcity causes higher prices ... but that's surely no surprise ... location costs extra.

It's true that New Zealand house prices have risen by more than the rate of inflation, and by more than the median income - but that's primarily because those two statistics don't actually reflect the changing nature of the housing stock being built now.

NZ houses are bigger, they are better insulated, they have double glazing as a rule, and the fitout of kitchens and bathroom are positively lavish when compared to houses built in the 60's, 70's and 80s.

You want an affordable house? GO to a dormatory suburb, and price a 100m2 house with single glazing, no garage and minimal insulation. That's what my parents bought into as a first home. Compare that with today's home buyer needs - they are palaces by comparision.

Overall - if you go outside the desirable inner-city suburbs - then you'll find housing is currently priced at less than replacement value. Take a trip outside Auckland and Wellington and you'll find good housing available for under $200K.

We sold up in Wellington a 2 years ago - and bought a place up the coast - a big place - with acreage - for less than half the price of the fancy adddress in Wellington.

by jimmy squirrell | 6th Dec 11, 2:35pm 1323135327

PJK,

we all expect to pay a premium for nice places, I guess the question is how much? Demand is probably more a function of price than want/need. And dont forget demand/supply is also affected by

- perception (how much speculation do the nice suburbs get based on an erroneous belief that you cant lose?)

- int rates, employment, ease of credit, govt policy changes, etc etc etc.

There are no guarantees. Least of all during a property bubble.

by davidsalisbury | 14th Mar 12, 5:40pm 1331700038

Would this be a signal for overseas investors that New Zealand is becoming an attractive place to invest in property? With interest rates so low, and people keep borrowing to buy property, this may lead to a property bubble. And we all know that low interest rates will not last, and so this bubble may not last as well.

by gardenerderek | 6th Sep 12, 4:00pm 1346904050

I would never advice anyone to borrow out of their means to repay, no matter how good the calculated risk is. Huge companies are able to borrow, but the common people have nothing to fall back on if their property investment fails.