Building consents granted for 13,662 new dwellings in 2011, lowest level in 46 year series history, Stats NZ figures show

Building consents granted for 13,662 new dwellings in 2011, lowest level in 46 year series history, Stats NZ figures show

There were fewer building consents granted for new dwellings in 2011 than in any calendar year in 46 years, figures released by Statistics New Zealand show.

There were building consents granted for 13,662 new dwellings in the 12 months to December 31, down 12.4% on the the year to December 2010, and the lowest for a December year since the series began in 1965, Stats NZ said.

That included 1,156 consents for apartment units, which was up 23% from 2010. Excluding apartments there were 12,506 building consents granted for dwellings through 2011, down 14.7% from the year before.

Stats NZ said there was NZ$4.925 billion worth of residential building work in 2011, down 12% from 2010 to its lowest level for a calendar year in 10 years.

Up in December

Figures showed building consents issued in the December 2011 month were up 13% to 1,127.

"However, the number remains at a low level. Figures for December 2010 were the lowest recorded for a December month in the 46-year history of the series," Stats NZ said.

"After seasonal fluctuations are removed, the number of approved new dwellings, including apartments, shows a rise of 2.1 percent in December 2011. Excluding apartments, there was a small decrease of 0.2 percent. These movements follow several months of volatility," Stats NZ said.

"Trend numbers for dwelling approvals, both including and excluding apartments, show a rise for the nine months to December 2011, but the rate of increase is easing. Trend figures, particularly for the latest months, may be revised whenever an additional month is added to the series," it said.

The 13 percent national increase in dwelling approval numbers, for the December 2011 month compared with December 2010, was concentrated in Auckland, Wellington, and Canterbury, Stats NZ said. Numbers fell in most of the other 13 regions. The main changes in regional dwelling approval numbers, compared with December 2010, were:

  • Auckland, up 99 (51 percent) to 292
  • Wellington, up 58 (45 percent) to 188
  • Canterbury, up 32 (19 percent) to 199
  • Bay of Plenty, down 15 (25 percent) to 44
  • Manawatu-Wanganui, down 14 (29 percent) to 34.

Auckland and Wellington had the largest regional increases, and Canterbury is yet to begin the bulk of its earthquake-related rebuild. As a result, the North Island contributed most to the increase in national dwelling approvals, Stats NZ said:

  • North Island, up 105 (15 percent) to 786
  • South Island, up 28 (9 percent) to 341.

Year ended December 2011

For 2011 compared with 2010, nationally, there was an overall decrease of 1,940 new dwelling approvals. Canterbury had the largest regional decrease, down 426 new dwellings to 2,395, while Auckland had the largest regional increase, up 169 new dwellings to 3,772, Stats NZ said.

Remains weak

ASB economist Jane Turner said residential building consent issuance remained weak, with seasonally-adjusted dwelling consents lifting just 2.1% over December, failing to recover the previous month’s 6.2% decline.

"It remains too soon to see an increase in consents on the back of earthquake reconstruction activity. We currently expect to see this lift come through around the second half of 2012, although continued seismic activity inCanterbury could further delay rebuilding," Turner said.

"Meanwhile, we expect underlying demand for construction throughout the rest of the country to increase as the housing market remains tight, particularly inAuckland.  Over the third quarter of 2011, we had started to see tentative signs of improving construction demand.  However, the weakness in consent issuance over the past two months suggests this momentum may be fading," she said.

Non-residential consents

There continued to be a gradual pick-up in private non-residential investment. Encouragingly, consent issuance for office buildings continued to improve in December, Turner said.

"While consent issuance for retail outlets and restaurants declined, this followed a strong result over the previous month. Nonetheless, the waning in commercial construction intentions in recent business confidence surveys suggests a degree of caution remains amongst businesses," she said.

"The majority of earthquake-related consents in December were for non-residential buildings, which totalled NZ$23 million. Of the remaining earthquake-related consents, NZ$5 million was for residential work and NZ$1 million was for non-building construction."

OCR on hold to end of 2012 at least

"Consent issuance remains weak and continues to point to a very weak construction outlook.  The RBNZ now expects that earthquake reconstruction activity will not pick up in earnest until 2013.  Given the ongoing delays to the reconstruction process, continued uncertainty from offshore and very subdued inflation pressures there is very little urgency to increase the OCR," Turner said.

"We continue to expect the RBNZ will leave the OCR on hold until at least the end of this year," she said.

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Lowest Construction in 46 years.
Lowest interest rates ever.
Herald reports rental crisis in central auckland - spreading to outer suburbs.
Looks like Tony and Olly were on the money.

They knew National could be relied upon to feed the landlords the gotta hand it to Key and Co...they sure have worked hard to prop up the banking property bubbles with taxpayer dosh...and such a sneaky way too...killed two birds with one supplement...the landlords are joining the Party in their droves....
Across the rest of the country in the region it's a great time for farmers with lazy balance sheets...not many of them...they are the ones who locked the gate on the banks BS about borrowing....but they too are not building...why would they....these are the farmers who knew a thing or two about recessions and lying govt, about easy credit and bubble misery...

Can't see rents going down anytime soon... I guess that's now the first unintented consequence of scaring off property investors by removing depreciation and Goff threatening a CGT or land tax or whatever... next they will be complaining that the tax take is below what they expected... no wait - they already did that...

Inflating the price of urban land by rationing it (urban planning) leads to slowdown of everything in an economy.
The economy does better with urban land at as LOW a price as possible. The productivity of the urban land is no different whether a piece of it cost someone $50,000 to buy or $500,000. If $500,000 instead of $50,000, that is $450,000 excess debt (thus lower discretionary spending for decades) and $450,000 investment money NOT utilised on productivity-improving capital.
This is why the British economy is terminally stuffed. Thatcher failed to reform the urban planning system, so everything else she reformed came to nothing. Britain's supply of new housing has steadily dropped since the 1950's, in spite of increased price volatility and actual shortage of homes.
This is why the economies of Southern and Bible belt USA "own" the future of civilisation right now. When you read about manufacturing rebounding "in the USA" or "going back to the USA"; it is actually going to the PARTS of the USA with low, stable urban land prices, minimal restrictive planning, low regulations, low local taxes, and workplace law that is not punitively anti-employer.
I don't know how much evidence and experience it is going to take before NZ wakes up.

Too right PHil, and lower house prices mean residents have more money to spend in restaurants, bars, cafes, live theatre and music etc. The ignorant often label Texas as an uncultured backwater. In fact cities like Dallas and Houston have burgeoning arts and culinary scenes. The kind of things the urban planners want but actually ironically legislate against

Exactly, Matt.
Houston's boosters (like Tory Gattis' "Houston Strategies" site) have a LOT of substantial stuff to go on. Like Houston having the world's highest number of orchestras per head of population.
Meanwhile it is the "planned" allegedly "vibrant" cities where all the cultural vibrancy is monopolised by a small elite but people who live in the real world of honest jobs and family raising are being screwed and slums and social exclusion are becoming epidemic.

So does Auckland have a "rent crisis" at this time of year annually? Feb 7 last year -

"We expect...but it may be fading"...blah blah blah...
Congratulations to Bill English and John Key...never in the history of NZ has so little thinking caused such a collapse in a key economic sector...well done the pair of tell us again why you thought increasing GST theft to 15% was such a brilliant idea....!

You can't lose with property! MAAAAAAAAAAAAAAAAATTTE

Not iffin you is a landlord for jam...other people's money too....hahaha

I am a landlord by chance and you're 120% right Muppet King, you can't lose... 

"Consent issuance remains weak and continues to point to a very weak construction outlook."
Which means weakness throughout the materials supply chain...unemployment and lower tax returns...deeper fiscal deficit....doh
Listen...."Bonggggggg.....Bongggggggggg".......that's the sound you get banging two heads together....John's and Bill's...."Bongggggggg"
The great Cabinet discussion back when the GST rise was dreamed up...stuffed with "yes" men....nobody had the guts to say "hang on a bit...if we raise GST it might pass the trigger point where people abandon all hope of ever owning a new house...and the downside could be a deeper fiscal deficit" was all "yes yes yes"

Yet Fletcher's shares have gone up about 13% over the last month. Go figure. Either there are a lot of dreamers out there, or some are expecting Fletcher's to seriously rake in the dough. On those figures, can't see it myself, with or without Christchurch’s rebuild. 

Fletcher's half-year financial results due out on Feb 22. Will be worth a look.

Yes indeed it will be. And if it turns out that their earnings aren't as bad as they had feared, (and those numbers are being compiled by all and sundry as we speak) then this latest spurt in their share price will for me at least, firm up something that I have long suspected about Fletcher's volatile share price - insider trading by individuals taking positions long before the market finds out.  It's for that reason alone why I will not own shares in Fletcher Challenge. Its changing share price never makes any sense to me based on the information that is already out there in the market, and those changes always seem to happen in the weeks before announcements are made. I may well be wrong, and may be just be paranoid, although this is the only stock I feel that way about.

In 2011 directors of Fletcher Building made a total of 7 purchases of the company's stock  , and only one sale ..... 7 to 1 is a bullish sign ...... directors are using their own money to buy FBU on the NZX ......
...... I reckon that's an endorsement of the stock , by people who should know best , the insiders running the company .

It's not the Directors I'm worried about.

I'd be worrying more if I was a shareholder in Mainfreight , 0 - 7 ! ... No one buying , directors have made 7 sells of their own stock on the open market , in the past 12 months ..
.. now what do they know , that the rest of us don't ?

Well I don't own any shares in Mainfreight either, although not for that reason. But I am aware that their share price has come off the boil a bit over the last 6 months or so. But that comes off the back of a bull run that lasted for several years. Even so, over the last 6 months the price is only back 9-10% from its peak. Fletcher's has had greater volatility than that in a single month! I'm not keen on large New Zealand listed companies when the price is like that. Too manic depresssive.

No ..... I hold Fletchers shares , quite happily ...... no intention of selling them . I don't currently have any Mainfreight .......

"Meanwhile, we expect underlying demand for construction throughout the rest of the country to increase as the housing market remains tight, particularly inAuckland.  Over the third quarter of 2011, we had started to see tentative signs of improving construction demand.  However, the weakness in consent issuance over the past two months suggests this momentum may be fading," she said.
She has no idea. It doesn't matter how much demand is building, its generally just too expensive to build new housing. Until more land is freed up, until GST on new housing is reduced, until the housing sector gets more competitive, nothing is going to change. And don't hold your breath on any of those 3 things happening!
So in the mean time building will remain sickly and housing won't get any cheaper! Great!

Matt, we need more enlightened people like you.

Doesn't it just show what an abject failure our leadership is.... especially in Auckland City.
We have a growing city... upwards price pressure on housing...  and a looming shortage.
Where is our visionary leadership.????   Will they keep doing what they are doing or will they actually anticipate and preempt a probable housing shortage..???
Will they keep expropriating income from the building consent process..??.... oh yeah.!
Cheers  Roelof

Roelof - there are far more important issues, but don’t worry J.Key and his “Front Bench Buddies” don’t make it – even until end of 2012.

Opps - and here the latest news:
Maori Party co-leader Tariana Turia says the party will consider walking out of its relationship with the National Party if a Treaty clause is not extended to those state owned enterprises tagged for partial sale.

This is about building activites not about Maori Party... you are barking at the wrong tree again!

It's time the local authorities woke up and reviewed their astronomical charges. Maybe when a few more start losing their jobs they will wake up. Housing in Auckland will continue to rise as long as they continue to push high rise as many simply don't want to live in them.

Mismanaged businesses are mostly charging inappropriate high charges – the last straw before bankruptcy. 15% GST  - huhhhh.
J. Key hasn’t got a clue about economics. Where is the stimulus for decent NZjobs - NZemployment in the real NZproduction sector ?

Auckland council don't "push high rises where many don't want to live".  They as good as banned high rises with PM2 and extra tax in 2006 hence not a single CBD apartment built since. 

I want to build but after spending two seconds doing the math it doesn't make sense. GST / building costs, price of land are all killers. So we sit stagnant as I'm sure many others do in a similar situtation. This whilst the nation needs ecomomic stimulous. And our governments, local bodies persist with laying more bitumen over our already crapy keep a few people in jobs in an ever desperate means of trying to stave off more layoffs, and unemployment. All this stimulous to artificially keep NZ Inc. from imploding and our house prices from plunging. Our esteemed leaders are nothing more than pawns of the banking fraternity. Frankly at some point a correction in house prices is required so that we can all get on with it!  

Wise move Kane02...renting is in mate...let the govt go on destroying the economy with the rent supplement landlord subsidy farce...while you accumulate capital...just make sure you hide it somewhere safe...that can vary from gold to good farmland...and hey if you have enough why not be a landlord...the govts friend.
The last thing to be doing is feeding them the 15% on a new build and on all the fees and charges that go with it...

my understanding is if someone subdivides a section then builds a house, if they are selling the section and new house for $600K then they need to add 15% to that price (ie. its not just GST on the house build but the combined selling price of the section and house) . So the final selling price is $690K. Have I got that right?
If so, an extra 90K is a lot of money. If you halved GST on new houses to 7.5% (45K in this case), then along with cuts to Council fees, and contributions etc. you would think that that would start to make a bit of difference to how many houses get built

Yes Matt cutting GST is in this instance stimulatory...or to be more accurate it is a case of removing a barrier that should never have been built by fools dreaming of votes on the back of promised paye reductions, that in reality disappear with rising prices and continual debasement of the currency.
The fools failed to think. Drive the nail in a little deeper and people give up trying to pull the thing out. Demand for building and reno work has crashed...leaving a sickening hole in the retail trade...smashing into the trades....and landing the fool with a deeper fiscal hole.
Now anyone with half a brain would see the error of their ways and slash the GST to 5% on house building or reno work..not difficult to manage at all...but this lot are more inclined to put GST up to 17.5% and claim they got it right.

The subdivision bit you lead with is subject to all sorts of case specific tax rules.
Just dealing with a straight bulld and sale to joe public, the sale and purchase agreement won't show a sale price plus gst as gst is exempt on the supply of private dwellings.  However, the builder has paid gst on the cost of materials/section etc so of course recovers this by adding it into the price he asks. 
As it is not visible on joe's S&P, joe don't get to see just how much gst has been paid.  The perfect system to hide a tax!

Hell most Kiwi couldn't tell you what the GST in on something priced at $100 ex gst.

Houses are getting more and more expensive to build. Wolly is right about the GST but I suspect that is actually a fairly minor part of the problem. I understand the new building act which takes effect soon will add more costs again which is why anyone who thinks they might build in the next year or so is getting their consent applications in now.
If we are building 12,000 houses a year we are probably not actually adding to the housing stock at all given that houses burn down, fall down or are knocked down at a fair old rate anyway. There is going to be a fearful housing shortage soon unless people keep on shifting to Aussie in droves or there is some rapid construction on a much lower cost basis than we are seeing now.
It would make sense for Housing NZ to sell out of as many of their more valuable properties as possible and get some architects to design some high volume, modest size but decent quality housing in areas where it is needed and possibly on currently unused crown or council owned land. Private developers  cant do it any more because they cant get finance.

Farmland is under $10,000 per acre.
Even with infrastructure levies and GST and building mandates, by far the major part of housing unaffordability is "planning gain". That $10,000 per acre RAW LAND cost ends up over $1,000,000 per acre. For NOTHING, except capital gains for land bankers. Who often are NOT the "developer" - developers are often the meat in the sandwich, grossly inflated land costs are hurting them too.
There are plenty of US cities that show how to do development with NO "planning gain".

It would make sense for Housing NZ to sell out of as many of their more valuable properties as possible and get some architects to design some high volume, modest size but decent quality housing in areas where it is needed and possibly on currently unused crown or council owned land. Private developers  cant do it any more because they cant get finance.
Good idea. I thought "Mr No Action" Phil Heatley was talking about a similar idea early in National's first term?
More radical, urgent things need to be done otherwise NZ's construction sector and associated professions / industries (architects, surveyors, suppliers, urban planners, valuers etc) are going to shrivel up and die . Unfortunately smile and wave Key just seems happy to let things evolve and be dictated to by the market  

Is this story a repeat from last year due to the impending start of the university calander, and student all busting a gut to live centrally?
Consent costs and building costs are a real issue.

yeah as Gareth says above the issue is heightened every year at this time of the year.
But that doesn't mean a rental shortage is not building - it is. And whilst property investors might be rubbing their hands at that thought, much of the greater economy will suffer. In particular, increasing rents will reduce disposable income, so expect to see retail, hospitality etc. to struggle even more. Also makes it hard for Auckland to attract teachers, nurses etc.   

Greater economy?? The housing market pretty much IS the NZ economy, at least to our dear leaders. You're right about Auckland attracting workers, my partner (a doctor) and I could never afford to live there, and we're on pretty good money. Frankly, I don't know how people survive there day to day.

Adam Smith said in "The Wealth of Nations", 1776, that "dwelling places" are merely a necessary expense like clothing - they just take longer to wear out than clothing.

"........The general stock of any country or society is the same with that of all its inhabitants or members, and therefore naturally divides itself into the same three portions, each of which has a distinct function or office.

The first is that portion which is reserved for immediate consumption, and of which the characteristic is, that it affords no revenue or profit. It consists in the stock of food, clothes, household furniture, etc., which have been purchased by their proper consumers, but which are not yet entirely consumed. The whole stock of mere dwelling-houses too, subsisting at any one time in the country, make a part of this first portion. The stock that is laid out in a house, if it is to be the dwellinghouse of the proprietor, ceases from that moment to serve in the function of a capital, or to afford any revenue to its owner. A dwellinghouse, as such, contributes nothing to the revenue of its inhabitant; and though it is, no doubt, extremely useful to him, it is as his clothes and household furniture are useful to him, which, however, makes a part of his expense, and not of his revenue. If it is to be let to a tenant for rent, as the house itself can produce nothing, the tenant must always pay the rent out of some other revenue which he derives either from labour, or stock, or land. Though a house, therefore, may yield a revenue to its proprietor, and thereby serve in the function of a capital to him, it cannot yield any to the public, nor serve in the function of a capital to it, and the revenue of the whole body of the people can never be in the smallest degree increased by it. Clothes, and household furniture, in the same manner, sometimes yield a revenue, and thereby serve in the function of a capital to particular persons. In countries where masquerades are common, it is a trade to let out masquerade dresses for a night. Upholsterers frequently let furniture by the month or by the year. Undertakers let the furniture of funerals by the day and by the week. Many people let furnished houses, and get a rent, not only for the use of the house, but for that of the furniture. The revenue, however, which is derived from such things must always be ultimately drawn from some other source of revenue. Of all parts of the stock, either of an individual, or of a society, reserved for immediate consumption, what is laid out in houses is most slowly consumed. A stock of clothes may last several years: a stock of furniture half a century or a century: but a stock of houses, well built and properly taken care of, may last many centuries. Though the period of their total consumption, however, is more distant, they are still as really a stock reserved for immediate consumption as either clothes or household furniture.

The second of the three portions into which the general stock of the society divides itself, is the fixed capital, of which the characteristic is, that it affords a revenue or profit without circulating or changing masters. It consists chiefly of the four following articles:

First, of all useful machines and instruments of trade which facilitate and abridge labour:

Secondly, of all those profitable buildings which are the means of procuring a revenue, not only to their proprietor who lets them for a rent, but to the person who possesses them and pays that rent for them; such as shops, warehouses, workhouses, farmhouses, with all their necessary buildings; stables, granaries, etc. These are very different from mere dwelling houses. They are a sort of instruments of trade, and may be considered in the same light:

Thirdly, of the improvements of land, of what has been profitably laid out in clearing, draining, enclosing, manuring, and reducing it into the condition most proper for tillage and culture. An improved farm may very justly be regarded in the same light as those useful machines which facilitate and abridge labour, and by means of which an equal circulating capital can afford a much greater revenue to its employer. An improved farm is equally advantageous and more durable than any of those machines, frequently requiring no other repairs than the most profitable application of the farmer's capital employed in cultivating it:

Fourthly, of the acquired and useful abilities of all the inhabitants or members of the society. The acquisition of such talents, by the maintenance of the acquirer during his education, study, or apprenticeship, always costs a real expense, which is a capital fixed and realized, as it were, in his person. Those talents, as they make a part of his fortune, so do they likewise of that of the society to which he belongs. The improved dexterity of a workman may be considered in the same light as a machine or instrument of trade which facilitates and abridges labour, and which, though it costs a certain expense, repays that expense with a profit.

The third and last of the three portions into which the general stock of the society naturally divides itself, is the circulating capital; of which the characteristic is, that it affords a revenue only by circulating or changing masters. It is composed likewise of four parts:

First, of the money by means of which all the other three are circulated and distributed to their proper consumers:

Secondly, of the stock of provisions which are in the possession of the butcher, the grazier, the farmer, the corn-merchant, the brewer, etc., and from the sale of which they expect to derive a profit:

Thirdly, of the materials, whether altogether rude, or more or less manufactured, of clothes, furniture, and building, which are not yet made up into any of those three shapes, but which remain in the hands of the growers, the manufacturers, the mercers and drapers, the timber merchants, the carpenters and joiners, the brickmakers, etc.

Fourthly, and lastly, of the work which is made up and completed, but which is still in the hands of the merchant or manufacturer, and not yet disposed of or distributed to the proper consumers; such as the finished work which we frequently find ready-made in the shops of the smith, the cabinet-maker, the goldsmith, the jeweller, the china-merchant, etc. The circulating capital consists in this manner, of the provisions, materials, and finished work of all kinds that are in the hands of their respective dealers, and of the money that is necessary for circulating and distributing them to those who are finally to use or to consume them.

Of these four parts, three- provisions, materials, and finished work- are, either annually, or in a longer or shorter period, regularly withdrawn from it, and placed either in the fixed capital or in the stock reserved for immediate consumption.

Every fixed capital is both originally derived from, and requires to be continually supported by a circulating capital. All useful machines and instruments of trade are originally derived from a circulating capital, which furnishes the materials of which they are made, and the maintenance of the workmen who make them. They require, too, a capital of the same kind to keep them in constant repair.

No fixed capital can yield any revenue but by means of a circulating capital. The most useful machines and instruments of trade will produce nothing without the circulating capital which affords the materials they are employed upon, and the maintenance of the workmen who employ them. Land, however improved, will yield no revenue without a circulating capital, which maintains the labourers who cultivate and collect its produce.

To maintain and augment the stock which may be reserved for immediate consumption is the sole end and purpose both of the fixed and circulating capitals. It is this stock which feeds, clothes, and lodges the people. Their riches or poverty depends upon the abundant or sparing supplies which those two capitals can afford to the stock reserved for immediate consumption.

So great a part of the circulating capital being continually withdrawn from it, in order to be placed in the other two branches of the general stock of the society; it must in its turn require continual supplies, without which it would soon cease to exist. These supplies are principally drawn from three sources, the produce of land, of mines, and of fisheries. These afford continual supplies of provisions and materials, of which part is afterwards wrought up into finished work, and by which are replaced the provisions, materials, and finished work continually withdrawn from the circulating capital. From mines, too, is drawn what is necessary for maintaining and augmenting that part of it which consists in money. For though, in the ordinary course of business, this part is not, like the other three, necessarily withdrawn from it, in order to be placed in the other two branches of the general stock of the society, it must, however, like all other things, be wasted and worn out at last, and sometimes, too, be either lost or sent abroad, and must, therefore, require continual, though, no doubt, much smaller supplies.

Land, mines, and fisheries, require all both a fixed and a circulating capital to cultivate them; and their produce replaces with a profit, not only those capitals, but all the others in the society. Thus the farmer annually replaces to the manufacturer the provisions which he had consumed and the materials which be had wrought up the year before; and the manufacturer replaces to the farmer the finished work which he had wasted and worn out in the same time. This is the real exchange that is annually made between those two orders of people, though it seldom happens that the rude produce of the one and the manufactured produce of the other, are directly bartered for one another; because it seldom happens that the farmer sells his corn and his cattle, his flax and his wool, to the very same person of whom he chooses to purchase the clothes, furniture, and instruments of trade which he wants. He sells, therefore, his rude produce for money, with which he can purchase, wherever it is to be had, the manufactured produce he has occasion for. Land even replaces, in part at least, the capitals with which fisheries and mines are cultivated. It is the produce of land which draws the fish from the waters; and it is the produce of the surface of the earth which extracts the minerals from its bowels.

The produce of land, mines, and fisheries, when their natural fertility is equal, is in proportion to the extent and proper application of the capitals employed about them. When the capitals are equal and equally well applied, it is in proportion to their natural fertility.

In all countries where there is tolerable security, every man of common understanding will endeavour to employ whatever stock he can command in procuring either present enjoyment or future profit. If it is employed in procuring present enjoyment, it is a stock reserved for immediate consumption. If it is employed in procuring future profit, it must procure this profit either staying with him, or by going from him. In the one case it is fixed, in the other it is a circulating capital. A man must be perfectly crazy who, where there is tolerable security, does not employ all the stock which he commands, whether be his own or borrowed of other people, in some one or other of those three ways......"



So there we go. Adam Smith had it worked out in 1776. Houses are NOT "wealth", PRODUCTIVE CAPITAL IS WEALTH.
What the ....... have OUR so-called "experts" LEARNED in all those fandangled degree courses they've spent years in?

Pretty enlightened reading, and very true and applicable today

Mark - the whole point is that it is no longer applicable.
Smith describes a never-endingly-growing system, and absolutely links it to things physical (mines, land etc).
Such a system (I trust you understand about doubling-time) is in trouble when the first essential, non-substitutable, ingredient, peaks. Let me make that plainer: Economists are wrong, in the same way PB is wrong, in that they assume unlimited supplies at a certain 'price', or they expect a substitue. On that shaky basis, they expect growth to continue doubling forever. Can't happen, unless they disconnected from things physical, and the current simultanoeus pushes by the Nats have one common denominator - they're physical. Nobody has pulled that disconnect off.
Also, you're not in trouble when things physical/essential  'run out', you're in trouble when they 'peak' in supply rate (typically half-way through the available resource, which coincides with only having one doubling-time  - or is that an 'equalling-time - left anyway),
The linchpin irreplaceable-in-kind resource is compact energy. Oil peaked in 2005, coal will about 2027, gas a little later but if it is used to displace the other two, that bet is off.
Just because you've staved off a prediction by throwing exponentially-increasing amounts of energy at it, doesn't make the prediction wrong. It just delays it until the point where you fail to continue those exponential increases. It was easy to pick.
Folk like PB like to waffle on that predictions have 'not happened'. Have a look at this graph: (2nd one down)
What has 'happened' there yet, pray tell?
Someone should have asked Smith what happens when the mines were worked out. He'd have worked it out. He wasn't stupid, though he'd probably have thought that folk who hung on his words this much later, as if it were gospel, are.

Oiss off and leave the finance and economics discussions to people who have two finance and economics brain cells to rub together, Powerdowngoebbels.
For the zillionth time, resilience to resource runout is NOT enhanced by anticipating free market price increases with Eco Taleban "indulgences" charged to young people who simply had the temerity to be BORN.

Meanwhile, just as with the medieval papal indulgences, there is a class that benefits handsomely from this non-reason religious based racket.

I suspect that you have a land bank waiting for the urban growth boundary to be extended, and you are desperately thrashing around making every religious-based bullshit excuse under the sun to protect the fact capital gains you have got lined up. Just like the medieval papal high priesthood with the rackets they ran.

"Adam Smith said in "The Wealth of Nations", 1776, that "dwelling places" are merely a necessary expense like clothing - they just take longer to wear out than clothing.",  
Philbest - With all due respect to your earnest arguments toward affordable housing (bouquets), dwelling places are as comparable to clothing as diamonds are to perspex.  A dwelling can be a Tūrangawaewae , a place to stand, to be cherished and enjoyed by the current generations and the mokopuna of mokopuna. When they feed me to the worms I will give thanks that kaumatua made me fervently aware of this many years ago.  I stand in awe at the ability and awareness of younger ones securing their place to stand while its still available. 

I generally think the market tends to be right and Governments almost always wrong , however well intentioned.The law of unintended consequences gets them every time.
It may be the govt dont want to stimulate the building industry because they are worried that the CHCH rebuild will overheat the sector. It is now looking as though there wont be any real volume of work in Christchurch until the ground stops shaking . Meantime a housing shortage is developing and the poor old tradies are starving or emigrating.
In a situation where circumstances have ganged up to subvert the market ( I am thinking about the demise of the property finance sector and the additional costs being added to building through compliance and Wolly's GST )  there probably is a case for the Government to build some more houses if they can do it more cheaply. 
If they can fund it through sale of existing housing stock it does seem to be a good thing to do.

FYI from the sawmill workers union:
"Building work needs to pick up to keep workers in employment and ensure local sawmills stay in business, a union for wood processing workers said today.
Building consents data for the 2011 calendar year out this morning shows a decline in residential and non residential building consents from the previous year, despite a small pick up in December.
It was also announced today that after cutting staff numbers from 53 to 5, NZ Sawn Products’ sawmill in Fielding is now up for sale.
“Today’s news is bad for both workers and wood processors,” said Robert Reid, General Secretary of FIRST Union (formerly NDU).
“A healthy construction industry helps keep workers in construction jobs and ensures that New Zealand’s wood processing industry has a market for its goods, in addition to its exported products.”
“We are still not reassured that New Zealand has enough wood processing capacity to fill the demand which will come from the Canterbury rebuild over the next few years.”
“It would be a travesty if Canterbury were to be rebuilt using Chilean and Canadian timber, while local sawmills lay off workers and downsize.”
“We need stronger leadership from the government to ensure the survival of the wood processing industry, including a more strategic approach to procurement for the Canterbury rebuild and looking at a lower domestic log price to enable wood processors to manufacture in New Zealand.”
FIRST Union represents 28,000 workers including 1,600 in wood processing.

....... so Ollie Newland is still 100 % right ?
Bugger , bugger , bugger ....... bloody well makes you wanna  spit your jolt-head galvanised nails , doesn't it , Bernard !

As I've outlined above and as you have reinforced here, the lull in construction is having far reaching consequences across the domestic economy. If the opposition were smart they could really seize on this issue 

Rodney Dickens produced analysis a year ago that showed that building construction led the economic cycle, not the other way around.
Fred Foldvary has been writing stuff like that for decades, in the USA.

What is Olly right on GBH?
Its too early to say that house prices are booming again (as Olly predicted). Auckland has nudged up but most of the country is flattish 
And we need to wait till end of 2013 to see if his prediction of rents doubling is right (highly unlikely)

I do not recall Ollie predicting a " boom " ........ but I do remember him saying that house prices in selected high demand areas ( particular suburbs of Auckland ) would continue to rise , albeit at a slower pace than the boom of the early-mid 2000's ........
....... however , I'll leave a rebuttal of your points to BigDaddy , should he show up ......
Personally , I don't like residential houses as an " investment " .

The policy recipe is so easy to see...all the fools need to do is a midnight flop on gst to just 5% on new homes and reno work as supported by council consent paperwork...the council wasters would love the move as 'trade' would pick up and they could return to the dreamtime splurging behaviour....
But no...they will let the industry wither and die...the skills depart for aus and the fiscal hole will grow larger and worries right...just borrow more money...
About the very best you can expect from this govt is the setting up of.....A Working investigate the ramifications and consequences for the fiscal accounts of a GST adjustment on various items and services...doh....with AB nominated to lead the study and a planned reporting date of late 014....

Yes perfectly set up for a working group.... the kind of thing key lambasted labour for when he was in opposition (he also blamed them for the exodus to aus too... ha ha)
my gut feeling is cutting gst to 5-7. 5 on new housing would be close to fiscally neutral, as new housing should double. Could they have a gst holiday for a coupleof years?? That would surely see a mad rush of building activity providing a
lot of job growth and economic development. This is not rocket science!!!

What is in fact thriving the Auckland property market – local/ foreign investors/ speculators and/or local/ foreign immigration ? I personally think the boom isn’t over for richer people to pick New Zealand.and particularly bigger cities.

My friends place recently sold for a lot more than he thought he was going to get for it. North Shore of Auckland. The bulls are out! Great news for anyone wanting to sell up, I bet the new buyers were leveraged to the hilt haha, this is exactly the behavoiur we saw in 2007, great if you're wanting to get out

"by Muppet King | 31 Jan 12, 12:47pm
You can't lose with property! MAAAAAAAAAAAAAAAAATTTE"

Homeowners across the mighty US of A : -
" You can lose with property ! FOOOOOOOOOOOOOOOOOL "

And in the great majority of cities in the USA, where there always was "freedom to build", they never had any irrational expectations of "wins" from housing speculation, prices did not bubble, and did not collapse either. The "US" economy has these stable regions pulling it out of recession. Nations whose entire urban property market was bubble material, are ALL "Ireland". That includes NZ. We are stuffed for years yet. Deleveraging 100% Ponzi capital gains on your entire housing stock doesn't happen overnight and is NOT pain-free.

My friends place recently sold for a lot more than he thought he was going to get for it. North Shore of Auckland. The bulls are out! Great news for anyone wanting to sell up, I bet the new buyers were leveraged to the hilt haha, this is exactly the behavoiur we saw in 2007, great if you're wanting to get out

I'd say a lot of it is people leaving the shaking of least anacdotaly.Its lifting the property sales in other areas.

10 years form now, Kiwi's will be telling their grandchildren never to invest in property, I reckon. 
If what is happening in America is any indicator (i think it is), then this is only the beginning of a worsening decline.  I could care less what's happening in Auckland, because they're next!  This coming from a country where a 30 year fixed mortgage is now under 4%, like they are almost paying you to borrow money
This indicates to me only 2 things, both of them bad for real estate here:
1.  Inflation accelerates with money printing- interest rates rise, making mortgage payments more expensive- so prices go down, as payments become unaffordable, and wage increases can't keep pace
2.  interest rates go down because nobody is borrowing, and people are afraid of taking on more debt, especially in a weak jobs market.
Or both. Either way, real estate not going up in any meaningful way, and if it does, it will not keep pace with inflation of things like food.
When the average sale price represents the average mortgage mortgage amount, and then drops slightly below it, a deluge of property (forced sales) hits the market, and takes it down.  Buyers disappear.  I think this is where we are now. 
Either way, real estate, as a capital gain vehicle, is screwed, for probably some years to come. Debt is a mill-stone.  If our Kiwi dollar keep strengthening, that will be very bad for people paying a mortgage.
Auckland?  Just like Vancouver or Sydney, is a temporary anomaly, but it too will revert to the mean, eventually.  What's propping it up?  Asian immigrants?  What happens when they go away? 
America buys China buys Aussie buys NZ.  Weakness in that chain spreads to the others.  America is going into another recession, which means same for China, which means less raw goods bought from Aussie, and we have Aussie banks.  Are they connected?  Methinks yes.
Baltic dry index near 2008 lows- infact is in freefall= hello recession = anyone taking on more debt right now should have their head examined.
2 scenes from i robot come to mind- I'm allergic to BS
And I told you so doesn't quite say it
I'm surprised at just how few people actually watch what's happening in other western nations, and somehow don't believe it will spread here.  Building consents have flatlined in America for 4 years now, and stayed there.  "Record low building building consents" was the siren call of America starting 3 years ago, in case anybody noticed.  It's a symptom of a very sick market, one that i am afraid the patient may never recover. 
Food for thought- record low new home sales- a great time to buy?  Do you really want to call the bottom in this market?  Bet your life savings doing so?
housing priced in gold cheaper than it's ever been- in America, anyway- coming soon to NZ? That would mean house prices go down, or gold goes way up.  methinks both may happen
Who will be your greater fool when it comes time for you to sell?  Are you going to babysit the bank's property all those years until then?  That's exactly what you are doing if you hold a mortgage, and make payments on a property worth less than a fool will pay for it.
The construction quality of your average Kiwi hosue is absolute garbage, and most of them torn down, to build to more modern standards.  The new building code is a step in the right direction, yet the average build quality is "tear down." 
If you put lipstick on a pig, you still have a pig... a pig on overpriced land.  As bare land values crash, they take surrounding land values down with it (yours included).  That means the land under your house, for which you hold half or more of your mortgage secured.  It becomes cheaper to buy bare land and build new, than to buy your neighbor's pig, or leaky cracker box (excuse me "character home") called a "house."  Again, when land values drop for bare land, it takes built land with it, and I thnk this is exactly what we are seeing now..  The market doesn't care if you have a house built on it.  Land is land. 
If i can buy land down the street from you, and build a new house cheaper than buying your 50 year old, uninsulated, single pane "character home"- so what makes your house so special? or what else justify's your price?  It must be the Kiwi religion dump all of their net worth into one asset.  I think I'll wait....a while. 
Will a Qualified Valuator buy your character home if he is wrong?  How about the Rates Valuator?  Is he or she buying?
Kiwi's have the highest percentage of their personal net worth (75%!!!) tied up in property, IN ALL OF THE WESTERN WORLD!  Oh yes, this will surely end well!
My prediction remains- we will start seeing "strategic default" in Aussie and here very soon, if not now, continued weakness in property for some years to come, and getting worse in the near term before getting better, possibly a lot worse, especially if we have a war. 
b..b..bbbut i can't sell without a capital gain!!!!!  Yes, you can, it's called "mortgagee sale." 
Even Olly can't save you from this market.  you'll be broke, and he'll crawl back into his shell. 
I saw 2 mortgagee sales on bare land go up this week, within a 2 block radius of where I live, a nice area.  I think we will see more of this, as landbuyers change their minds to build a house, or circumstances change, or market conditions continue to make it a bad idea to own bare land

Good luck with all that Happy Renter, but have you considered low term low interest rates making it very much more attractive to own property?
Prices rise for reasons other than just speculation.
Look at construction costs.  I recently heard of a phenomenal price of $6000/m2 being estimated for the replacement cost of a stone built house (full replacement insurance of course). 
The reality is that many properties could not be replaced for anything like their market value (as ChCh residents and insurers are all too aware).
Whatever price it is today, in hindsight things invariably look cheap.
Buying a house for $400,000 with a 6% mortgage that you would need to pay $450pw to rent looks like a fair deal when you consider what someone may pay for a car or tv with an end value of zero.
Look at it this way, if the $400k house is only worth $400k in 10 years, add up the rent you would have paid, then deduct the mortgage interest paid and any interest from savings not earned and other costs then you will likely find you've made a surplus.
(In fact with 2.5% annual inflation, a $100k deposit, 6% mortgage rates over the next 10 years and 4.5% savings rates, you would be $110,000 better off after 10 years by owning (incl all costs) even if house prices remained stagnant (ie fell 22% in real terms)).  So owning the house on average saved you about $30 a day for 10 years.
Now look at someone who buys a $40,000 new car every 5 years.  At year 5 it's worth $12,000.   They then buy another which with inflation is a $45,000 car which is worth $13,000 in another 5 years.  Assuming no unexpected maintenance and no running costs how much has that cost with interest?
$115,000 over 10 years!  Over $31 a day!  And all you own now is a $13,000 car!
That is: you lost almost as much money owning a comfortable car than you saved by owning the comfortable house assuming a 22% fall in house prices.
It's little wonder that people are prepared to pay a bit to own their own home!   If buying a sensible house (even if prices fall hugely) makes you money, then unless you're a miser driving a $500 car with a K9 tv in the lounge and a 50 year old sofa, you should be owning your own home.

Inflating the price of urban land by rationing it (urban planning) leads to slowdown of everything in an economy.
The economy does better with urban land at as LOW a price as possible. The productivity of the urban land is no different whether a piece of it cost someone $50,000 to buy or $500,000. If $500,000 instead of $50,000, that is $450,000 excess debt (thus lower discretionary spending for decades) and $450,000 investment money NOT utilised on productivity-improving capital.
This is why the British economy is terminally stuffed. Thatcher failed to reform the urban planning system, so everything else she reformed came to nothing. Britain's supply of new housing has steadily dropped since the 1950's, in spite of increased price volatility and actual shortage of homes.
This is why the economies of Southern and Bible belt USA "own" the future of civilisation right now. When you read about manufacturing rebounding "in the USA" or "going back to the USA"; it is actually going to the PARTS of the USA with low, stable urban land prices, minimal restrictive planning, low regulations, low local taxes, and workplace law that is not punitively anti-employer.
I don't know how much evidence and experience it is going to take before NZ wakes up.

Nah you miss the point Pbest....the name of the game is not to wake NZ up but to morph it into something incapable of anything but doing what it's told is good for it.

Yup , that is the problem in NZ , Phil . It suits both National & Labour politicians ( and all the empowered local governments ) to keep the citizens stupid & dependent ......
...... the plebs won't rock the boat , when they're so reliant  on Nanny State for some of the myriad of welfare benefits which have built up over the years ......
But I take your point about low density cities in the US . Auckland is being pushed toward the UK model instead ...... Sadly !

Lemme see now, the gospel again, according to the strictures:
Land is infinite - therefore if everyone in my road got out of my way, it should be infinitely cheap.
Yea verily, though I walk throught the va.......hang on.....there's restrictions either side. Lord! WTF? You said....

What happens to land values if by some fluke of nature an Earthlike rock is identified just one light year away....would they tell us?.....I doubt it.....does this explain the rush to get the super heated plasma ion drive heap of junk up and going....First ones there can claim the lot....Terra Nullis and all that....

The occupants turn out to have strange things between their arms and their hands.
They're Terra Wrists.

Powerdowngoebbels at it again.
For the zillionth time, IF the world was "running out of land" you hysterical lunatic, farmland would not be under $10,000 an acre and I would not be fingering the racket that YOUR type - the Eco Taleban -  are enabling, along with the urban planners, to RIP OFF every young person who buys their first home. To the tune of "raw land" price component inflation, of the order of several hundred percent.  One tenth of an acre costing $150,000 raw land component (instead of $1,000), plus cost of development, plus an infrastructure levy that is also a racket to transfer wealth from the young to ratepayers.
If you are too bone headed to grasp the basic economics underlying this, you should not be wasting the time of everybody else on serious economics and finance blogs.

what underwrites money, again?
If yoiu start with flawed 'thinking', you quickly go from bad to worse, eh.
It's a funny thing, PB; everything folk like me have predicted - from a physical perspective - has come to pass, and it's not a pretty pass either.
The financial types, meantime - are surprised, bewildered, out of ideas, and lost.
I find that quite amusing, or would it it wasn't wasting precious time we could be getting organised to meet the future.
Good luck with your wee multickle thingy.
You should listen to the nine-to-noon Rod McDowall interview - the last half has the guts of it. We've got to produce as much food as has been produced in total in the last 8000 years, in the next 40. Off that land you think of as 'cheap'. That's not a lot of seasons, and it gets to a no-oil situation well before that. Meanoing it will never actually happen.
But hey, that won't affect your wee multiple, now, will it? Thats set in concrete.

I refuse to believe that you are sincere. You are not even "slippery", you simply trot out arguments on a different subject altogether, allegedly to justify the corrupt racket that is being run at the expense of first home buyers.
I now presume that you are a charlatan desperately defending with any bullshit you can dream up, your expectations for your land banks netting you massive capital gains with the next shift of the urban growth boundary.
Here is how your logic works. Because the world is running out of resources, the price of land will escalate. Therefore, regulations that escalate the price of land are blameless.
So why excuse the regulations? We don't need them, the rising price of energy for travel and the rising prices of land will force us to consume less anyway. But no, the Eco Gaia high priesthood wants the young people who had the temerity to be BORN, to pay "indulgences" to mortgage lenders, land bankers and, incidentally, everyone else who is lucky enough to have property to dispose of or rent out. This is just as corrupt and destructive as the wealth-raking indulged in by the medieval papal high priesthood.
And the fact that more and more people will grow up with nil disposable income after paying out the mortgage lenders and land bankers and incumbent property owners - how does this help "future proof" our society, how does this enable anyone to buy a more efficient modern car, buy solar panels, instal insulation, buy modern efficient appliances, etc? What makes the Gaia high priesthood most gets its rocks off, is "starving out" humanity to as EARLY a demise as possible by adding the burdens of "indulgences" to the cost of the "sin" of using resources.
The Nazis were into paganism, eugenics, "living space", and propaganda lies too. (For a propaganda lie, try "we are running out of land", and check this out on Google Earth for yourself). It is beyond me why so few people see the obvious Nazi connection with modern, human-hating deep greens.

You need to wipe the foam off your mouth....
You dont get it at all, or wont admit that thought.  Its really simple we eat fossil fuels, as those decline the food production will drop below the production per acre before we started to fertilize (before WW2) because the underlying soil is now bereft of neutriants....but our population is significantly bigger.....
We will also want biofuels to keep driving and still have an fertile land area is going to be in demand.....

This is nothing to do with urban growth boundaries and land rackets that reduce our reslience to future resource shocks, not enhance it. As I said, you guys change the subject so vociferously that one suspects you are land bankers yourselves.
This is not the forum to argue about human population levels and the ways of reducing them. You need to go to an ethics forum for that, stop wasting our time on
It is odd that the problems you agonise over are self balancing anyway, humans will run out of resources to produce food, humans will die. Therefore we need urban growth boundaries and we need to screw our young people with housing costs so those who want to have kids can't afford it. Is that it?
Why don't you concentrate on the low-lifes first? They seem to be breeding quite prolifically; in fact "Housing NZ" is building 7 bedroom homes for some of its "clients". Is this not just a trifle hypocritical - of course the political Left are a bunch of hypocrites - decent citizens should not be allowed to afford to have kids, but parasites can have as many as they want, with the taxpayer being sent the bill.
Where is the dramatic rises in price of food, and of land for growing food? The prices of both have been dropping relative to incomes for decades. This is a sign that things are heading the opposite way to what you are saying - but you just don't "get" basic economics, do you?

Here's an interesting picture of how much land would be taken up if everyone lived in a single city of various densities...
and here's a picture of how the area between Whangarei and Hamilton could look if the only thing that mattered was making houses as cheap as possible and there was endless cheap petrol...

Yes, I have read before that at Hong Kong densities, all of humanity could fit on Tasmania.
But even at Houston densities, there is a LOT of planet left over for farming and resource extraction, isn't there - about 95% of it, in fact. That is useful, rational evidence.
What would be wrong with AKL spreading a bit wider and looking like THIS?
And have you not been following the debate about THIS?

There are encouraging signs from Auckland. The "NZ Herald" has done something already:


"......The Birkenhead/Northcote area was one of 14 studied and one image showed blocks lining the picturesque historic waterfront, an image which left Nick Kearney, deputy chairman of the Kaipatiki Local Board which represents the Birkenhead area, seeing both sides of the debate:


"In one sense, it's predictable because if we're going to have this compact city and one million more people to house, then really what alternative do they have? That's what you're going to have to expect. On the other hand, being a locally elected representative it will go down like a bucket of cold sick in my area......."" 

Nope.  I disagree completely.  Most of the planet is not arable land -  - so if everyone lived at Houstan density taking up 4,500,000 sqkm and total arable land is 13,800,000 sqkm (Wikipedia)  it doesn't work.
Even in NZ your "there's plenty of land to sprawl over" arguement doesn't hold water.  Lifestyle blocks (which you would see turned into sprawl and more) already take out 10% of high class land.  It's disingeneous to count the southern alps, national parks, desert etc. as land that can be farmed once the good stuff is covered in sprawl.
Your Woodlands example is exactly what we don't need any more of - look at it on google maps, not just the website.  We've already had exactly this development for years and it doesn't work.  The Woodlands is Manukau City - large carparks surrounding malls with every house totally dependant on cars for every trip and a 30km commute from the centre of town "For those who commute by car, I-45 and the Hardy Toll Road provide excellent access into downtown." just like the southern motorway does.  This is just 60's retro planning from the days when oil was cheap and endless.
As for those "independant report" supposedly scaremongering images of Birkenhead (which looks like the north side of Sydney harbour - some of the most desirable real estate in the world) of course there will NIMBY resistance to any zoning changes - what do you expect?  Also the "independant report" is by a failed sprawl developer and Jasmax (sprawl mall architects - Sylvia Park, St Lukes) so of course is going to be negative about not sprawl.

HOW MUCH land in the world/ each region/ each country, is “urban”? The following data is from the Lincoln Institute’s “Atlas of Global Urban Land Consumption”.
Worldwide: 0.47%. Sub-Saharan Africa: 0.12%.
Between 1% and 2%: USA, India, Bangladesh
Between 0.5% and 1%: China, Indonesia, Pakistan
As a percentage of ARABLE land:
Worldwide: 4%. Sub-Saharan Africa: 1.5%
Between 4% and 8%: USA, Egypt, France
Between 2% and 4%: China, Russia, Spain, Mexico
Between 1% and 2%: India, Bangadesh, Canada, Vietnam, Ethiopia
Less than 1%: Afghanistan, Sudan
For the UK, their figure is 5.73% of total land, and 23.39% of arable land. For the Netherlands, the figures are 10.68% and 38.34%.

Wow - more arable land is urbanised than I'd have guessed - and you want to see the amount 4, 5, 6x as much lost to urbanisation.

What do you mean, 4,5,6 X as much? Those figures are "IT". That IS the current level of urbanisation.
You want to read a good solid book on this subject, like Robin Best, "Land Use and Living Space". Environmentalism is a set of religious beliefs and propaganda myths.
At least Judeo-christian faith involves "the unseen". Modern P.C. expects everyone to believe stuff they can see with their own eyes, is not so. (eg on Google Earth). The medieval papal hierarchy expected people to believe stuff that a clever person like Galileo could work out was "not so". But today, you don't have to be a Galileo - any idiot can see for themself that the planet is not running out of land. If the majority chooses not to do so, all that shows is that we haven't come very far in centuries - we have just swapped one irrational theocracy for another.

And NEW ZEALAND is "running out of land"?
What a raving religious Gaia nutter.
What percentage of our primary production do we consume ourselves? And what percentage of it do we ship overseas as helpless price takers, when ALL the real new wealth in the world economy for the last 60 years has been created in URBAN economies.
Britain is 8% urbanised and can still feed themselves. NZ is about 0.4% urbanised and feeds itself with less than 10% of its arable land, exporting the rest of its produce at close to break-even. If that, for a lot of the last few decades when subsidies and cross subsidies to the farming sector is factored in.
"Preserving farmland" under these conditions is post-rational lunacy. So much for "enlightenment" values.

And furthermore, Bob, you are still stuck back in some mythical past where everyone worked in the CBD.
US cities beat us hands down, game, set and match, for jobs-housing balance. Especially Houston. Read "Decentralisation and the Stability of Travel Time" by Alex Anas.
Suburban malls are simply "the decentralisation of retail". A brilliant idea. Planning to keep everything in the CBD like our cities planners are, is just more inequitable, counter productive and economically destructive lunacy. This is nothing more than a racket to benefit CBD property owners at the expense of everyone else.
Read Patrick Troy, "The Perils of Urban Consolidation", on the possibilities for environmentally friendly LOW density development. How do you do the following in high density living conditions: use solar panels and passive solar; use natural ventilation; dry clothes outside; recycle grey water; grow your own vegetables and fruit; keep fowls; burn “biomass” for heating; erect a wind turbine; have abundant trees as your personal CO2 sink……
As for your last paragraph, you are a typical utopian planning maniac who is sad to see his mates rotten little racket coming to an end, not before time. Thank God Rodney Hide wrote into the Akl Super Council constitution that "plans" had to be EVIDENCE BASED. For your information, your urban growth containment racket has delivered untold misery everywhere it has been practiced for long.
Look at all those blighted cities in Britain with third-generation underclasses, 3 decade entrenched unemployment, AND severely unaffordable housing. Detroit without the redeeming low property prices, large sections, and green space.
Your ideas are the most rotten kind of elitism. The "desirable" parts of Sydney and Vancouver and other cities your kind buffs over, are "non millionaires need not apply" de facto gated communities. Meanwhile out in the real "rest of the city" where honest battlers try and make ends meet, even fixer upper dump homes in slums are ball-busting prices. Check out the site "Crack Shack or Mansion" to get an eyefull.

Thanks Phil, you are right on about Sydney. I lived on the North Shore for two years until a year ago - in heavily subsidised accomodation as part of my job. I was earning much more than in NZ despite being a low wage earner by OZ standards. When the job finished I had to leave - there is no way the average person even with a substantial deposit can realistically afford to live there. And as for this - beyond ridiculous.

D'yer have to install a codicil , a special clause in your house & contents insurance , to cover for asteroid strikes , Wolly ?

No worries Gummy....if one of those sods hits my place I will own the bugger and they sell for heaps especially if they smash into property....have to move fast though because the thieving govt would say it belonged to them....

reducing GST on productive areas of the ecomomy would be stimulatory and overall raise the GST take.  Having GST tiers is a no brainer however JK and BE have ruled that one out. Smart move. Not

It's too complex for the fat between Bill's ears to comprehend kane02.

The USA has tried "stimulating" by reducing tax and it has not worked in fact they are in a worse state. Also what is the productive sector? can you imagine the quangos and winks going on in the back rooms to make sure "their" industry got tax relief? The UK for one has tiered VAT (GST) cant see too many signs of that making any positive difference.
What it comes down to is arguing about which bit and how big a bit you get handed by the govn....that is just cronism....instead of going out and lets keep the GST simple, one rate on everything, simple.

If we can't work out what "the productive sector" is and reduce its burdens versus the wealth-transferring, rent seeking finance, land owning, and public sectors, there is absolutely no hope for our civilisation. Steven's comment epitomises everything that is wrong with slope-browed, rabble-rousing socialist politics.
By the way I am a strong advocate of land taxes and Tobin taxes. Both company taxes and taxes on interest should be abolished. Taxes on incomes and consumption should both be kept as low as possible.
By the way, company profits are no-one's income until they are "distributed" to the owners/shareholders. That is the point at which to "tax". Taxing profits re-invested in the company, is the ultimate "spite tax". It is a tax on economic growth, period.

I don't see how the prices can stay where they are if the jobs can't sustain the mortgage payments. 
It's a reversion to the mean- a return to affordability, just like in America.  3 times average NZ salary for an average house is the mean.  Today's numbers are a factor of 6.  Either wages go up, or prices come down, but you can't have both, at least not today. 
To get close to the 3 factor, you have to go to the wop-wops.  But then you are in the wop wops. For that I say "rent!"  ...and live where you want to live, and let the landlord take the risk on defaulting, and pay the cost of fixing your toilet, or heat pump. 
Is the risk higher of missing out on a 10% increase in value, or of 10% decrease in value?  The anemic job market should tell you everything you need to know. 
I interview people on the street all the time.  People are scared.  (except real estate salespeople- infinite liars they are)
As the bottom half goes down, it drags on the top half.  Auckland, i'm talking to you. 
As bare land values go down, it drags the houses down with it.  Housing construction going down, says buyers have disappeared.  Soon we will run out of fresh suckers, and the market takes another level down.   
Low interest rates make your payments more afordable, yes, but it is not guarantee that you win the war, or increase demand for your shack, when your neighbor just lost his to the bank.  Interest rates are below 4% in America, and prices are still going down, and record low housing starts, so interest rates are a non-starter- they are not what drives the market- JOBS drive the market. 
Shouldn't low interest rates jump start the real estate economy?  It hasn't worked in America.  Now it's come here. 
Where have all the buyers gone?  Well, if you can't find a job, you tend to not buy houses, or take on more debt.  That's what we are witnessing.  It will be years to unwind, if not a generation. 
As i told a friend a couple years ago, who was keen to buy land in Taupo, "why buy now when you can buy it for the same price 10 years from now...less the holding costs?"  He showed me around a great property for sale in kinloch, with a great view, but in my eyes, way overpriced.   They bought something else, but i just saw that property recently for sale in Kinloch...mortgagee sale, of course. 
Loss of new home construction means less demand for older, existing homes.  It drags on the sales of older homes.  You can't have one without the other. 
I don't want to hear your arguments of "housing shortgages."  We won't have a housing shortage until there are 2 families in every home, and the population has doubled.  Until then, we have more space per person than we have ever had, and can get by with much less.  100 years ago, an average family was quite comfortable with 70 sq m, and no heat pump. 

You're using your faculties, Happy Renter.
The whole point of healthy markets with median multiples of around 3, is that "3" is the MIDDLE of the distribution. You don't have to go out into the wops to get it - out in the wops, or in low-class suburbs (often quite near CBD's) it is 2.0 or 1.5.
The most pain caused by restrictive planning, is caused at the BOTTOM of society. If our markets had a median multiple of 3 or below, the "fixer upper" homes in low class areas would be $100,000 or less, instead of $200,000 or more.
Anyone who has been around for long enough will be able to remember FAIR PRICE fixer upper homes in low class areas - this was always an option for the young battler prepared to put in a bit of sweat equity. The shutting off of this option is bad for society in every way.
You are absolutely right about the inability of super low interest rates to jump-start those PARTS of the US economy that had a massive house price bubble. Follow "DrHousingBubble" blog for a while to see what is happening in California.
But about 200 of 260 US cities with populations over 500,000 never had a price bubble at all, thanks to "freedom to build". These cities are doing fine. The irony is that the low interest rates in these areas lead to construction booms and increases in home ownership, not house price rises. The lower interest rates just mean that the average time needed to pay off the mortgage drops from 11 years to 7 - or the size of monthly payment relative to income drops from 30% to 25%.
And because of US mortgage finance laws, every time interest rates are cut, everyone with a mortgage refinances at the lower rate. This leads to even further increases in disposable income in those States where house prices will NOT inflate. But in States with price overhangs and equity wipeouts, all people can do is "de-leverage" or walk away.
And check out "Texanomics" blog. Texas is the "anti California". When you read commentary about "US manufacturing" recovering and "manufacturing moving back to the USA"; this is missing the point that it is Southern and Bible belt USA where this is happening, not in the "liberal", eco-loony, or Unionised States.

Well put....I agree.
I think more than a few ppl have foolishly over-paid out in the countryside if not in town....hanging on as Interest rates are will be interesting to watch this unfold....

Great post

Perhaps the industry has not recovered from the recent earthquakes, and less people have confidence with building construction yet. The country is also facing huge debts because of the reconstruction efforts that cost them hundreds of billions in damages, and material costs are high. Those could be some of the underlying reasons for this trend.