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Government releases response to Productivity Commission's housing affordability report

Government releases response to Productivity Commission's housing affordability report

By Alex Tarrant

It will be another six to nine months before the real details of the government's efforts to address housing affordability will be known.

And past experience dictates it may then take another three years for any changes to residential planning processes to come on-line, Finance Minister Bill English says.

The government on Monday afternoon released its long-awaited response to the Productivity Commission's report on addressing unaffordable housing in New Zealand.

While Environment Minister Amy Adams re-announced a six-month time limit for medium-sized Resource Management Act (RMA) applications, most of the government's responses to the Commission's recommendations were 'agreements in principal', or recognition that government wanted local authorities to change their approach to development rules and planning processes.

For example, the government said it supported greater supply of different types of housing both outside and inside existing city limits.

But it left any commitments for action to the local authorities already in charge enforcing planning restrictions.

At least, that was until "ongoing resource management reforms may provide an important opportunity to deliver long-term improvements to the planning system and to planning practice."

That ongoing work programme focussed on RMA and Local Government Act (LGA) amendments, including work on the standardisation of building consent processes across the country.

It was also possible the government would investigate the make-up of the building supplies industry. English noted any investigation into that industry would have to look at the near-monopoly held by Fletchers.

Nine months for details, three years for changes

Speaking after Cabinet on Monday afternoon, English said the RMA and LGA work programme should be completed within six to nine months.

“But just to give you a sense of the scale, most major district plans took ten years to become operative, and a lot of the changes take three to five years. The one plan for Auckland, we’ve made a decision that that’ll all be done in three years," English said.

“So it could be...two to three years before the significant changes in the planning processes. We do always have the option of some legislative change from Parliament, but we would want to be careful about cutting across the mandate and the knowledge of local councils.

"We’d prefer to work with them," English said.

He issued a threat to local authorities that they needed a greater focus on the supply of more affordable housing, and said those authorities had hopefully realised the government was serious about the issue.

The policy placing a six-month time limit on medium-sized Resource Management Act applications should affect subdivisions with more than 20-30 houses, English said. The policy was part of the National Party's an Election 2011 re-election platform.

What about releasing land 'immediately'?

The headline recommendation from the Commission when it reported to the government in March was for the immediate release of residential-zoned land on the outskirts of Auckland and Christchurch to address high section prices for new house building.

The Commission also called on central and local government to address roadblocks to more 'brownfields' development - densification within existing city limits.

While the government said it "supported increasing housing supply in both new and existing urban areas, at a range of densities and housing types, for example, stand-alone family homes or medium-density terraced housing," it said:

"Making suitable land accessible to the market and delivering land-use rules and infrastructure investment that increases housing supply and diversity are roles for local government under the jurisdiction of the suite of planning statutes the Resource Management Act 1991, the Local Government Act 2002 and the Local Transport Management Act 2003.

"Such initiatives require a commitment from individual local authorities and, ultimately, a mandate from local communities as well as enabling changes in legislation," the government said in its response to the recommendation.

"Central government needs to ensure that the planning framework supports local authority efforts and that the right tools and guidance are available. The ongoing resource management reforms provide an important opportunity to deliver long-term improvements to the planning system and to planning practice," the government said.

More soon.

Read the government's responses here.

Read the Productivity Commission's report here. The government received the report in March, and released it publicly in April this year.

See the initial release from the government below:

The Government agrees with the Productivity Commission that housing can be made more affordable, and has embarked on a wide-ranging programme to make that happen, Finance Minister Bill English says.

The Government today issued its response to the Productivity Commission’s report on housing affordability.

“High house prices matter because many New Zealanders spend a large portion of their incomes on housing and that has helped fuel household debt and contribute to damaging imbalances in the economy,” Mr English says.

“In particular, high housing debt diverts money from more productive investments, contributes to New Zealand’s significant overall level of indebtedness and exposes taxpayers to growing demands for State assistance with housing costs. 

“Those factors make it vital that housing becomes more affordable. In addition, projections suggest that many more homes will be required in coming years than are being built.”

Mr English warns that there will be no quick fixes and instead, work is needed in a number of complex areas and across multiple government, local government and private sector agencies to tackle issues that are deeply embedded.

Having carefully considered the Productivity Commission’s recommendations, the Government is today responding with a comprehensive work programme with four key aims:

·         Increasing land supply - this will include more greenfields and brownfields developments and allow further densification of cities, where appropriate.

·         Reducing delays and costs of RMA processes associated with housing - this includes introducing a six-month time limit on council processing of medium-sized consents.

·         Improving the timely provision of infrastructure to support new housing - this will include considering new ways to co-ordinate and manage infrastructure for subdivisions.

·         Improving productivity in the construction sector – this includes an evaluation of the Productivity Partnership’s progress in achieving a 20 per cent increase in productivity by 2020.

“Decisions made by local councils not only affect their local communities, but have wider effects on the economy and the Government’s books. 

“Many of the changes that will make a difference lie with councils and the Government expects them to share the commitment to improving housing affordability,” Mr English says.

Some of the programme is already well advanced, with work under way in the Building and Construction, Environment and Local Government portfolios.

Other recommendations from the Productivity Commission require more detailed exploration and the Government has asked for more work to be done on specific policy proposals including:

·         Whether Building Consent Authorities can be consolidated in a regional or national hub.

·         The possible establishment of a competitor agency for resource consents/plan changes.

In addition, the Ministry for Business, Innovation and Employment will undertake a market-level inquiry into the construction sector to identify barriers to improving housing affordability.

More work will also be commissioned on the specific problems of the Auckland and Christchurch housing markets.

Mr English says the current economic climate, as well as projections of housing need, make it more important than ever for the housing market to function efficiently.

“Our response to the commission’s report also reinforces our existing programme aimed at reducing New Zealand’s vulnerability to foreign lenders, and removing economic imbalances caused by a disproportionate investment in housing.

“If implemented fully, today’s announcements on housing affordability will reduce housing stress and enable the housing market to better meet the needs of middle and low income New Zealanders,” he says.

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.


A fail.
No addressing of the main issue.

Agreed. Lots of emphasis on the supply side, and nothing to say about demand. The noughties housing bubble experienced worldwide was a credit problem not a supply problem. NZ is no different. Banks are still creating vast amounts of debt for anyone who walks into a branch with a pulse and yet the govt does nothing about it.

 Dominated by greed and corruption !
Don’t forget people we have a government lead by a former FX trader, who regularly lies and brought over the years ethical and democratic standards down.
 It seems too many politicians/ policymakers are just working for an elite class of our population and don’t care about the majority of the public anymore.

we need to vote these bums out...utterly hopeless. Wrecking the country for our young people.

I presume you can back up these lies with proof?

"I have no recollection of any spy meeting...."
".... no wait, something is coming back now..."
just a simple trivial example. Are you in the national party keriwin? just wondering :)

We will not increase GST.  

Trust us, just bend over...

putting young people in the dire poisition of having to borrow enormous amounts of money if they want the basic human right of having their own house...that's not a lie keriwin...the housing issues are simple to fix...National are window dressing rather than fixing the problems and need to be voted out for the sake of the country. 

1) Owning your own home is not a basic human right.  Having the right to shelter is a societal function, that can be provided by renting with Govn subsidy if needbe.
2) There will always be some ppl who cnnot afford to buy, pure and simple...otherwise we get down to the NINJA loans scenario...
I find it interesting that the right/libertarians scream "no nanny state" yet here in effect are sreaming lets have the nanny state take money off others to provide new homes for others but pay the developers and land owners fat nmargins in the process.
Sure the land prices can be fixed and simply....just take the 2 or 4km of surrounding land off the land owners at fair agricultural prices, sub-divide and rezone to residential and let it go enmass.  Anyone can buy but no more than 1 plot per person and they have to start building inside 1 year and finish in 5. That just removes one huge rip off there. Otherwise nothing will change in prices you will just be sanctioning a state monopoly to land owners and developers who will make a mint at the expense of those first time buyers.
Of course hosue prices will tumble and we'll go into self-inpsed economic depression...

".....Owning your own home is not a basic human right. Having the right to shelter is a societal function, that can be provided by renting with Govn subsidy if needbe....."

That kind of comment merely tells us everything about the politics of the person making it.

We can't have this dreadful independence-promoting property-owning democracy stuff here in pinko soft socialist nanny state paradise, now can we?

".....Owning your own home is not a basic human right. Having the right to shelter is a societal function, that can be provided by renting with Govn subsidy if needbe....."
That kind of comment merely tells us everything about the politics of the person making it. We can't have this dreadful independence-promoting property-owning democracy stuff here in pinko soft socialist nanny state paradise, now can we?

i disagree with you there steven - i think it is a fundamental right, to have your own home. I'm not a lefty though and agree with market-based solutions as you suggest.  Strangling land supply while pump priming immigration is crazy stuff. I struggle to believe it, how surreal and downright mean the councils and government are to young people in NZ. 

....just take the 2 or 4km of surrounding land off the land owners at fair agricultural prices, sub-divide and rezone to residential and let it go enmass.
Sounds very much like what the settlers did where Maori were concerned. And if there was no willingness by Maori to sell at what the settlers deemed "fair prices" - they shot them or chased them away before they got shot.  But heck, I suppose its the way we settled Auckland in the first place.

"....just take the 2 or 4km of surrounding land off the land owners at fair agricultural prices, sub-divide and rezone to residential and let it go enmass...."
I should have given steven credit for at least displaying that much understanding of where the problem is. I think my patient explanations in the past helped. The Netherlands actually does something very like what he is suggesting. Germany and Japan have less severe systems that still help to minimise "planning gain".
I often argue that the fact that the growth-containment advocates do NOT ever suggest ways to ameliorate the "planning gain" effect, suggests that they are either corrupt and should be prosecuted, or they are so incompetent that they should be sacked.

No PLAN, just kick the can down the road a little longer....
More money for Reports,,,no money for Timber and Tin.
An incredible amount of effort went into the Productivity Commission Document, a lot of people gave up their what be ignored.
9200 Tradies have left for Overseas over the past 2 years, mostly to Australia to build houses for the incoming Kiwis......
Why not take the GST off a new Home,,,,oh thats right they cant take the GST of a Banana,,thank goodness we dont want a space programme...
No 1st home owners grant, no builders building Affordable Homes...
Good luck with the RMA Bill E.........
Neglect of an Industry comes to mind....

Yup, and it's pretty difficult to have affordable housing when it costs so much more to build a home in NZ than pretty well anywhere else in the world, even before you add on another 30% for all the rubber-stamping you need to have done by a council inspector who wouldn't know what a leaky home looked like even if it fell on him.

Do you reckon John Key has a permanent dent on his arse from sitting on the fence for so long?

Haha SGV - if John and Billy sit on the fence much longer they'll have piles !

From what I can see they're pretty much leaving it all up to the local authorities who already control the processes

Did you all really expect something substantial rom this smile and wave goverment ??
There is always good intentions expressed for the voters, but real intention is something goverment never does as it offends too many voters in their current you really believe goverments will willingly generate policies to cause massive devalueation of the most expensive assets of their voters?? 

Kin - absolutely correct and if property prices decreased at all then the banks are going to start squealing at those who have too much debt. It's a viscious circle and the lack of any action tells me NZ's economy is very unstable.

Point is - there are things they could do to stave off the ongoing inflation of property assets without 'crashing' the market.  But, they are clueless.

Did they release something Hugh?
All I saw was a lot of fluff (of the let's make it sound like we know what we are doing variety).
Perhaps during the next election National should run a "No" campaign:
... No ideas, No solutions, No progress ...
or maybe ... No houses, No jobs, No growth ...
Three "No's" for National

Thanks Hugh for your unflagging attempts to solve this problem. A critical issue in making housing affordable is who and how we pay for the infrastructure needed for the new housing. I know you are a big fan of Houston and they use some sort of municipal Bond? to pay for this infrastructure. Can you explain this and show how this would work in the NZ context?

Someone has to pay at some the municipal bond just shoves the risk and cost of services onto existing ratepayers plus interest...rather than the developer and new home owner who are the ones who want the good.
Sorry but I dont see that as right.

Steven, there was a time when I thought that, unlike your pal PDK, you had seen the light about the two alternatives here. You dislike the cost and risk of infrastructure provision falling on ratepayers, yet I thought I had convinced you that the alternative results in costs many times as great landing on young and poor non-home owners, rather than lesser costs being spread across society?
Even your own preferred proposal, subsidies to rent to for the poor and the young, would be far more expensive to society than the infrastructure costs you are decrying. I think you need to adjust your moral compass, you've got a cheek to be claiming that "this isn't right" when the alternative you are advocating is far more costly and massively inequitable with it.
You also have forgotten the point I have made to you over and over again, that the price of new houses affects the price of used ones. Socking new home owners for infrastructure might make you feel good, but the amount "socked" turns into a windfall capital gain for all existing property owners, and a new cost for all non home owners.
LEARN, Steven, LEARN. Stop wasting everyone's time on this serious finance and economics blog with your ignorance and obfuscation.
I have suggested before that you are not what you say, you are either a property investor yourself or a stooge for them, making excuse after excuse for the policies that protect your filthy racket "greatest intergenerational wealth transfer in history".

About $75 billion dollars of it, borrowed off shore, with profits
Just a thought about this comment in Hugh's analysis. I am not going to argue about the amount , but I do wonder if our Australian owned trading banks actually borrowed 75billion dollars offshore. Where would they get it from, who on earth would have 75 billion New zealand dollars. I think that most/all of it was actually borrowed into existance in New Zealand when we took out loans.

They would be better of working out how to lift the average wage in NZ that hasnt kept up with inflation over the last 20 years. Getting rid of the excessive red tape and compliance costs would also be a good start.   

Can't fault that statement Grumpy. When you were reading the report did you notice how many Government Agencies are involved in building/housing? That is one enormous Bureaucratic pot and Billy has to coordinate the lot of them and tell them what information he wants collected and collated.

A guess I should be happy I own lots of land!!!!! Go the bureaucrats...........

As far as I can make out this = status quo reigns.
Auckland house prices to double in the next few years.

At least, that's until "ongoing resource management reforms may provide an important opportunity to deliver long-term improvements to the planning system and to planning practice."
The RMA needs repeal and rewrite.  That reform started mid 1980s by the reformist Labour government and the act was brought into force by a National government in 1991.  It has never dealt with the urban environment at all well - which is why we see things like structure planning and 'smart growth' being mooted and 'tacked on' to District Plans/planning.
It is also why we keep seeing various means by government to circumvent public participation.
In other words the basic premise of a neoliberal policy inspired "effects based" land management regime is found wanting.  Time to stop with the patches and start with a new approach - recognising that NZ is a very different place to what it was in the 80s.

Spot on Kate, from what I can read from this, as it is pretty average, the Govt. are looking for more time to sort out the RMA and LGA but in the meantime have pointed the way for council to take the lead ie jump before you are pushed. To get from where we are to the other side of affordable housing is quite a chasm to jump across. And like crossing most chasms one big leap is better than two small ones. National are hoping that that will be able to get to the other side easier once the hole is filled by the two leap councils.
Yes and that word 'effects' and its equally open to interpretation sidekick "wellbeings'. And they don't even have to interpret it now. The following is from the CHCH sustainability policy:
Precaution. Deal cautiously with risk and irreversible effects.
The less you know about potential consequences the more cautious you should be. (read – Ignorance is bliss, in fact the more ignorant I choose to remain by not allowing ratepayers to participate with alternate views, the more I can err on the side of caution (as I define it)).
Scientific uncertainty is not used as an excuse for preventing harm (read – I do not need any evidence to prevent you from harming myself interests).
Definitely time for an over haul.

The government says it supports greater supply of different types of housing both outside and inside existing city limits, but is leaving any commitments for action to the local authorities already in charge of planning restrictions.

Yeah, because that's worked well so far...

Labour knew about the housing issue and sat on its arse for whole 9 years doing squat.. 
Now the Nat govt is doing something about it and some are still complaining .. it’s a case of damned if they do, damned if they don’t

Labour did do some things by way of working the wages end of the problem.
Repeal of the ECA and replacement with the ERA, the introduction of WFF tax credits, the introduction of Kiwisaver (with the cash out for first home deposit) .. etc.  Not saying these policies worked better than other things but they were all aimed at trying to lift the prospects of those locked out of home ownership.
In fact interestingly enough - they initially announced the "closing the gaps" (not the gap with Aus - which is what the Nats came in with, but rather closing the growing domestic inequality gap) policy in their first term and very much withdrew and re-branded that in their second term - instead moving toward the "Third Way" approach - which allowed for the continuance of neoliberal prescriptions/directions.  WFF I think actually was born of an OECD report/recommendation on restructure of the NZ economy - given our quite dramatic slide down the OECD ranks in terms of the Gini coefficient (inequality measure).

umm.. not sure if thing like WFF will directly ease the housing issue - families would spend those tax credits on living expenses (or that extra large LCD TVs and used SUV).  I am not an expert in property but here’s my take:  I am in Brisbane, while looking to buy, we can have our own section get a new house built in 20 weeks from end to end, at a rough cost of $1100/sq meters incl landscaping.  But we took an option of buying a old Queenslander house and add extra living space.  That extra 62 sq meter space is being drawn and getting a permit will take approximately 2 weeks at a cost of $1500, builder can start two weeks after that.
 Not so long ago in Auckland, we had a plan to re build a 24sq garage – The consent fees alone was $7500 + inspection fees and process time for permit would be about 7-8 weeks. So we gave up and live with the old garage!  
Question: why does it have to be that expensive and complex to build???

Yeah, I'm not promoting WFF as solving anything - just pointing out that was one of Labour's attempts at improving the lot for low/middle income NZers.
Totally agree on the ridiculous issue in building a garage.  It's why we need a new urban planning act.  A garage replacment should need no resource consent whatsoever.  In fact most new garages of 24sq should need no resource consent provided you meet height to boundary and building standard requirements and a builder should be able to sign off that such requirements are met, as opposed to a needing a planner. 

And at the same time it was regulating what shower head you were allowed to install ... face in Labour did nothing about the problem. Middle class welfare is essentially just a mortgage subsidy, ie more (taxpayer) money to push up the demand side.

Yup, Helen and Michael really showed the Nats how to spend to "grow" and the Nats are showing us that they're actually better at it (the spending side, that is);

I don't believe WFF had anything to do with improving the lot for low/middle income NZers.  It was pure vote buying and the ignorant fell for it.  If they wanted to improve anything they would've addressed the causes, not increased welfare dependancy and the Nats are no better.

It's allowed one of our children to manage on a single income so that the other can stay at home with the young ones.  Some people would see social benefit in that - others would probably think all kids ought to be in daycare.  But then they subsidise daycare - so why not subsidise parents?  It's a crazy world, I agree.

Given the way house prices went crazy in the early / mid 2000s, I don't have a big problem with WFF. I really don't know how many households could survive without it, unfortunately 
But the fact remains that if Labour had actually acted on the housing issue, then they either would not have needed the costly WFF, or at least could have had payments at much lower  levels. 
And no one can say it was an issue that happened in the 2000s and caught the pollies unawares. The late Owen McShane was writing about all this in the mid 90s, and rpedicted a housing cirsis. The pollies and policy makers were just totally asleep at the wheel  
I think its really only starting to dawn on some people that NZ's appalling housing and planning policy, not to mention immigration policy, is having dire consequences across a whole range of social and economic issues

However all these did was give ppl more $ to push up the market...simply the problem was approached from the wrong angle.
For instance the much quoted Texas/Houston model limits LVR to 80%...we see lots of its the costs we see no comments on this piece of legislation.
So to compare areas/states that didnt have such a rule and we find that they look to be even more over-blown, and had even bigger collapses.

Look at South Korea, Steven.
The government tweaks mortgage loan-to-value requirement ratios from 50% to 60% and back, according to boom/bust conditions, and they STILL have volatile property price trends…..
In earlier phases (eg the 1980's), they had even tougher mortgage credit than that, and they still had a massive spike in house prices. In fact the government then loosened mortgage credit requirements to try and help young people.
I have been over this with you before, and over it and over it. I have clearly been wasting my time, Hugh has been wasting his, the vested interests and the irrationality are just too deeply entrenched in NZ.

Labour made it worse by allowing development contributions to be charged in the current form.  Labour also made it worse allowing Councils to rate properties with multiple units as if they were individual homes (making the suppy of these types of properties decline as owners converted back to single homes or demolished).
National has done nothing to reverse any of those changes

Totally agree there. 
Development contributions were simply added onto the development costs - which is what I assume the intention was.  But it's not developers that pay it but new home purchasers.
What would be a good idea would be to rebate first time homeowners the development contribution proportion of the sale price after the sale (and while at it - why not rebate them the GST content as well).  That way first time homeowners would be more able to afford the properties - and it might also encourage developers to develop smaller home sizes on their subdivided section + house packages.
Wider society then pays - not through increased rates, but rather through normal taxation.
And agree on the multiple unit property rating - again a major disincentive to both developers and purchasers.  A big attraction of our move to rural residential was the reduced rates bill.  There is very little rates advantage to living on a cross lease section these days - which stifles in fill (along with the RM costs of subdivision combined with the DC problem as above). 

Why rebate? if its a cost of putting in the services? I mean in effect you are saying that I as an existing rate payer fund other ppls homes, sorry I dont agree.
Why increase taxes? to cover a private deal betwen two adult parties? it makes no sense.
Some first time buyers are always not going to be able to afford nhomes, not unless we get to ninja style aka the USA.
and we can see the mess that caused.

Steven you just refuse to SEE, don't you?

YOU have benefited all YOUR life from the infrastructure "paid for by everybody", now you want everybody who has not yet got into their own home, to be slugged up front for this.

Kate's suggestion was actually not too bad, I thought. But the problem is that the price of new houses affects the price of old ones.

If new cars suddenly had 10 years of "road user fees" lumped into their price, the prices of used cars would jump too, to the benefit of everyone who already owned a car, and at the cost of everyone who did not, and at the cost of everyone being born and growing up and one day buying their own car.

What has happened to "housing" is like this. It is an extremely inequitable effect. Robert Bruegmann rightly called it "the greatest intergenerational wealth transfer in history". And the infrastructure fees were one part of the equation, the effect of the rationing of land was even more severe.

 But the problem is that the price of new houses affects the price of old ones.
True but as we have seen - neither the government, the banks or the existing homeowners want the price of old ones to deflate/crash - and likely for good reason.  Of course, as central government would effectively be paying via general taxation - they would need to spend less somewhere else.  Perhaps they could use their proceeds from selling our infrastructure assets to fund this - given they are effectively robbing future generations of ownership of said assets..
They have called those proceeds the "Future Infrastructure Fund" - so the expenditure fits.
PS come to think about it - they could also rebate old folks purchasing in retirement villages.  We're gonna need alotmore of these and one of the problems presently is that older folks in less desireable areas need more money to leave their second hand home than would buy one of these new units.  Incentive is needed to move them on which also frees up those homes at a potentially better price for the new home buyer of a second hand house (that new buyer not being able to claim a subsidy becuase such would be for new builds only).

the answer is simple - STOP FREAKING IMMIGRATION so we can catch up for Pete's sake. oops I forgot, immigration IS our economy and looks to be taking over from debt growth now households can take no more, best leave it to foreigners who can pay more.

MONEY MONEY MONEY MONEY MMMMMMMMMMMMM Nothing is more important than money and property

As a renter, I don't see this making any difference. Too little, too late. Someone on this forum quoted a statistic the other day that only 1 house is being built for every 7 new people. For 7 people, you need 3-4 houses. The "policies" outlined above will not quadruple the building rate which is what is required to keep us where we are now. To supply enough to claw back the current demand will need a higher building rate than this.
The house next door to us (note: already intensified as it was a back section townhouse, one of three on the original section) with a CV of $710k sold yesterday for $894k at auction to some baby boomers. At $710k, it would have been a stretch despite our above average incomes and six digit savings. At $894k, it's never gonna happen.
I don't agree with stopping immigration as, in a small labour market like ours, you need globally-skilled people to fill labour holes. The technology industry would cease to function without these skills.
But you won't need to stop immigration as a whole generation (probably including me) will be leaving for somewhere we can afford to house our families. Housing in London or New York is more affordable than Auckland (and much better quality).

Much like the JOB summit...........totally devoid of any logic or real outcomes. They completely miss the point and ON PURPOSE i might add. (what's BE's property portfolio again via the family trust he has no connection too? BS) 
Until they deal with the ridiculous "speculation" issue pushed along by all the dodgy banks and RE institutes nothing will change. 
We MUST tax SPECULATION! and...... I mean nail that sucker on the head!


Stop the foreigners from buying residential unless they can prove they occupy the property full time.
Force the ones who already have bought to either sell or be granted full citizenship within three years.
Impossible? It is worth a try.

All fluff and talk, not a single action item or measurable target given.

Updated following press conference:
It will be another six to nine months before the real details of the government's efforts to address housing affordability will be known.
And past experience dictated it could then take another three years for any changes to come on-line, Finance Minister Bill English says

Meanwhile Rome burns.

In other words - okay, okay - so we accept the big announcement was void of any "real" policy - so we will get to the "real" policy sometime in the future and if you just give us another term we'll sort it out.   YEAH RIGHT,

As I replied to you in your earlier post - that's how I read it so no surprises there, but still disappointed all the same.

Kate can you please not leave so many blank lines after your posts? it forces all the other comments further down the page.


The new policy placing a six-month time limit on medium-sized Resource Management Act applications should affect subdivisions with more than 20-30 houses, English said.
Doesn't make sense, Alex.  I'm assuming that perhaps what you/he meant to say was that subdivisions of less than "x" number would fall under the new 6 month rule?

Hi Kate.
English said the parameters of what 'medium-sized' were a bit blury but would include subdivisions with a min. of 20-30 houses.
I guess an effort to encourage development of subdivisions of more than 20 homes.
It was one of their election policies

Hmm.  Can't imagine how they write that into the RMA legislation - sounds like if you want to subdivide your 800m2 into two sections - then you don't get a 'fast track'?
But the point is - the length of time to get consent is more aligned with the nature of the rules associated with the particular zone you are in.  If land is zoned residential - then subdivision should just be a permitted activity and consent should be easy / straight forward and low cost.   As I understood it - this: mandate the re-zoning of fringe land to residential - was the PCs recommendation.  Indeed future forecasting decades out based on growth forecasts (which are revised if such growth doesn't materialise) is how many European planning systems do it.  That way everyone knows the where's and the when's of speculative land plays.  A landholder in these jurisdictions cannot apply to put residential sections on anything other than residentially zoned land.
Where our system can take time presently is when you want to subdivide in a rural, rural residential or industrial zone - where you're proposed section size or activity (i.e. residential) doesn't fit the rules associated with that zone.   So if they are saying that a council has to process a consent in these non-complying zones within a 6 month timeframe - that could be fraught with poor/rushed decision-making (might also require a boost in the number of planners doing consents processing) and possibly an even greater number of appeals to the Environment Court.  And they can't impose time constraints on the EC anyway (altho' they can move to limit appeals, but of course a great deal of appeals these days are taken by the developers where a consent has been refused by the local Hearings Committee and/or where the developer doesn't agree with the conditions that might have been put on the consent).
The problem is this Government wants planners to plan without doing any planning - meaning they want to leave this ideologically 'permissive' do-anything-anywhere-anytime legislation in place.  They need to either grow up or become better informed.  I have trouble understand which one is the problem.   

What a load of _______. English tinkering....housing is unaffordable for many because prices were driven into the clouds by speculation fully supported by banks free to create as much credit as they wished to stoke the fire....while Bollard sat and looked at the view out his office window.
And since the banks control the economy and no way will they give up their grip on the throat of the economy, English is forced to spout rubbish.
'Working group' of rubber stampers will be formed from the ranks of the double help out the puppet from Dipton.

Houses down here in Blenheim are not to pricey?

I'd say they were well over the top...

all you complaining sad sacks looking for the govt to fix things,they ARE the problem always have been always will be because all you complainers go running for them to make your life better and never realise as slowly they want to control us.

Response from the Green Party:
Building more suburbs in rural areas far from city centres will not make housing more affordable or New Zealand’s cities more liveable, Green Party housing spokesperson Holly Walker said today.
Ms Walker was commenting on the National Government’s response to the Productivity Commission’s Housing Affordability Report. The National Government identifies “increasing land supply” as its first priority.
“Sprawl costs ratepayers more, leads to less liveable cities, and doesn’t result in cheaper houses,” said Ms Walker.
“Research shows that the infrastructure and transport costs of building beyond city limits are more than twice as high as building within existing urban areas.
“The land may be cheaper but only because building and living there is more expensive. The ‘saving’ of building on cheap, rural land is more than wiped out by long-term costs.
“Without transport, local amenities, and local employment opportunities, outer suburbs can become poverty traps for families reliant on cars and who face higher petrol costs and costs of living,” said Ms Walker.
“Households in the distant suburbs that National favours are very dependent on cars for transport and often have large mortgages to service. This makes them extraordinarily vulnerable to shocks such as petrol price rises and unemployment in economic downturns.
“Recent research shows that mortgagee sales during the financial crisis have been concentrated on outlying suburbs with poor transport and infrastructure connections.
“National’s plan does nothing to address the over-investment in house price speculation that is fuelled by the tax-free returns that landlords can make, which is one of the biggest drivers of rising house prices. A capital gains tax (excluding the family home) would help to get New Zealand off the housing bubble cycle and increase investment in more productive areas.

“Medium-density, small dwellings centred around existing community amenities with good transport and recreational services is a better model for helping the average first home buyer get a foot on the property ladder.

“We also need greater government commitment to affordable housing and assisting people into their first homes.
“The government should lead the way with the construction of new state and social housing; not push desperate home-owners and renters out to the fringes and create even greater inequality in our cities,” said Ms Walker.
Assessing the Costs of Alternative Development Paths in Australian Cities
NZ mortgagee sales during the financial crisis have been concentrated on outlying suburbs with poor transport and infrastructure connections:

Building more suburbs in rural areas far from city centres will not make housing more affordable.
Probably true - did you see the 600m2  $180,000 sections in Pokeno on TVOne tonight?  I mean really ...  

Actually if you are living in new greenfield subdivisions in Pukekohe then driving to work in Manukau then that is not very far at all.
People need to get their heads around the decentralised nature of most modern western cities like Auckland, rather than churning out the same old ill informed, intermediate school geography lesson simplistic clap trap
I think its only something like 20% of Auckland workers actually work in the CBD

But at $180,000 for a 600m2 section in Pokeno doesn't necessarily make for an affordable home!

Well, we should easily be seeing 160K 500-600 sq m sections in Pukekohe, plus a proportion (say 20%) of greenfield subdivisions with 300 sq m sections carrying 120 sq m 3 bedroom single storey cottages plus single garage. this smaller section / cottage option is becoming very popular across Aus in greenfield subdivisions. If this was being done in Auckland then you'd be getting starter housing for about 320K. And if you live in such a property in Pukekohe then you are not necessarily spending a fortune to commute to Manukau. Same goes on the other side of the city if you could live in say Dairy Flat and work in Albany / Takapuna. 
Hugh points to Houston, Aus is a lot closer to home to see what sort of things can be done
It's not rocket science!!!!

Exactly Matt, Cities are becoming more decentralized, and going back to more work from home businesses etc. CHCH is a classic example, the city is getting on fine without a CBD, it’s like it was never needed. But of course they are going to rebuild there anyway and force people to go back into the center of the hub which by design is naturally congested.

Are the Greens, not to mention their pals in local government, incompetent, corrupt, or a post-rational new religion?
LIE number ONE from the Greens:
"......Building more suburbs in rural areas far from city centres will not make housing more affordable...."
US cities with no fringe constraints have house price median multiples of around 3, regardless of how much larger section and house sizes creep over the years.
LIE number TWO from the Greens:
".......or New Zealand’s cities more liveable......."
The UK's cities, where growth constraint has been the policy for 60 years, have worse traffic congestion, longer commute times, and worse local pollution than the US's unconstrained ones. They also have older, more dilapidated, unrenewed housing stock, greater social exclusion, greater welfare dependence, and lower "social sustainability". There are studies that find an inverse correlation between density and social sustainability; lead authors being Glen Bramley and Sinead Power.
LIE number THREE from the Greens:
"........Research shows that the infrastructure and transport costs of building beyond city limits are more than twice as high as building within existing urban areas........"
What research?  Some biased, flawed pieces of Greenie advocacy somewhere, I suppose. The Productivity Commission Report on Housing Affordability had an appendix of research on this that unanimously showed the exact opposite. And I have even more references that they did not list.
LIE number FOUR from the Greens:
“.........Without transport, local amenities, and local employment opportunities, outer suburbs can become poverty traps for families reliant on cars and who face higher petrol costs and costs of living.........”
The inhabitants of the UK's high density cities are far worse off for all attributes of housing, at all income levels except the very top one, than the inhabitants of the USA's affordable, low density cities. It is an iron law of urban economics that it is always cheaper to "travel" by car, than to pay a whole lot more for land at a more efficient location, and this effect is WORSENED, not improved, as the cost of urban land is forced up. Studies that purport to prove otherwise, all contain disgraceful breaches of objective scientific method and logic. 
LIE number FIVE from the Greens:
“........Households in the distant suburbs that National favours are very dependent on cars for transport and often have large mortgages to service. This makes them extraordinarily vulnerable to shocks such as petrol price rises and unemployment in economic downturns......."
These households in the very distant suburbs would have even LARGER mortgages and be even more vulnerable to shocks, if they lived in more efficient locations, even with considerable trade-offs of living space. In fact, it is unlikely they could have afforded to buy a home at all, or obtain finance, for such a home. "Drive to qualify" (i.e. for a mortgage loan) is a common term in the Real Estate industry.
HALF-TRUTH from the Greens:
“..........Recent research shows that mortgagee sales during the financial crisis have been concentrated on outlying suburbs with poor transport and infrastructure connections......"
BECAUSE inflated housing prices in "planned" cities forced first home buyers into remote locations where the prices were j-u-u-u-u-st manageable, of couse these luckless young people were under the maximum stress of anybody. Of course foreclosure rates were lower in more mature areas, precisely because these areas are inhabited by people who got onto the home ownership ladder long since, and are carrying debt levels related to, say, 1990 or 1980 house prices, or even earlier.
LIE number SIX from the Greens:
"........A capital gains tax (excluding the family home) would help to get New Zealand off the housing bubble cycle and increase investment in more productive areas....."
There is NIL evidence that nations or States with CGT's have had quantifiably less volatile house price bubbles than those that do not, when the conditions of supply inelasticity are present.
LIE number SEVEN from the Greens:
“........Medium-density, small dwellings centred around existing community amenities with good transport and recreational services is a better model for helping the average first home buyer get a foot on the property ladder......"
There is NOWHERE in the world that this "works" when the supply of land is constrained (and note that median multiples are always high in such conditions). Such communities as the Greens describe above are invariably expensive boutique communities for wealthy Yuppies only. It is affordable-fringe cities like Houston and Atlanta, that actually also have affordable "Transit Oriented Developments" and affordable prices at mature, well-serviced locations. The reality that is constantly denied and not faced by the Greens and local government, is that it is impossible to constrain land supply and make fringe development punitively costly, without the unintended consequence of making ALL locations and forms of housing, at least as inflated in price. This is why Akl has SCANDALOUSLY expensive CBD apartments, as expensive as Manhattan or Hong Kong even though the locals do not earn anywhere NEAR as much as those cities residents.
Google "Shoebox Living and What You get for Your Rent", in the TVNZ archives. This show should have had people storming the Akl Council with pitchforks and molotov cocktails. 22 square metre "apartments" for over $200 per WEEK? This is fiscal child abuse.
“......The government should lead the way with the construction of new state and social housing; not push desperate home-owners and renters out to the fringes and create even greater inequality in our cities..........”
How has that worked out in the UK? Do Kiwis like the idea of their city being turned into a Liverpool, Newcastle or Manchester over the next few decades? In fact in the UK, the effective marginal tax from getting off a benefit and becoming employed, and losing your "social" housing, is well over 100% in many cases. So of course, people quite logically stay on welfare. Way to go, Greens. Not to mention that the cost of all this is one of the things bankrupting the once world-leading UK economy. NZ does not have the scale or the accumulated capital to squander, that the UK once had.
The Trubka, Newman and Bilsborough paper reference by the Greens is a classic example of the breaches of scientific method and logic that I referred to above. It uses cross-sectional "snapshot" analysis of the status quo rather than time series analysis of the effects of a given policy. Honest Australian academics such as Ray Brindle and Patrick Troy have been fighting this nonsense and fraud for years; but of course the "research" that suits the bureaucratic empire builders will win plaudits and funding grants every time while the honest and objective academics will remain in obscurity.
To explain further: comparing existing households at given locations, for actual living costs, resource consumption and emissions, says NOTHING about WHO can AFFORD to live at location A instead of B, at CURRENT (or indeed future) market prices. Cross-sectional studies are guaranteed to give results that favour mature urban areas, but are completely invalid as a basis of policy that imposes impossible demands on NEW entrants to the market. It is like saying that because poorer people cannot afford health insurance, the answer is to make the purchase of it compulsory (oh, wait, the Obama Administration just did exactly that).

And we eagerly await the Greens reply – but not holding our breath.

In answer to your question Phil, YES, all of the above. Their understanding of cities is in a nineteenth century time warp. Never forget the Greens, while concerned about the poor, don't actually want the poor living anywhere near them.

yers, chardonnay socialists.
I remember crininging when Keith Locke opposed that large scale high density rezoning near ORakei Basin. Perfect opportunity for transit orientated high density living near the city, you would think would fit the green manifesto, but oh no found some sort of fairly trivial environmental / coastal reason to oppose it

Response from ACT party:
ACT Leader John Banks today welcomed the Government’s response to the Productivity Commission’s report on housing affordability, saying it is now time to get on with implementing the policy suggestions.  
“Current policies have created a tenant generation who cannot afford to buy their own homes,” Mr Banks said.  
“According to the most comprehensive international housing affordability report, ‘Demographia’, it is now more expensive to buy a house in New Zealand than in the UK.  Once upon a time people came here from the UK in the hope of buying their own place.  Under current policies they would be better off going back.
“Council restraints on the supply of land for residential homes have had a big impact, pushing land prices up and with it the average price of a modest home.   This has seen the proportion of 35-44 year olds renting double from 20 to 40 per cent since the mid 1990’s.  
“ACT has long called for an increase in the supply of buildable land as a solution to the problem of housing affordability, and it is good that the Government has finally agreed to facilitate more greenfield and brownfield developments.       
“Expensive and time wasting RMA processes have also added to the cost of housing, so today’s announcement for a six month time limit for all council processing of medium sized consents is a step in the right direction, but in reality this is still far too long.
“ACT believes more work on the RMA is required to reduce this time frame and in the long term the Government must accept that major RMA reform is necessary if it is truly committed to improving housing affordability.   
“ACT believes the housing affordability crisis we face today is not a result of market failure, but of poorly drafted legislation and government interference.   We are pleased that steps are finally being made to reverse this trend,” Mr Banks said.  

Alex - good to see you providing wider political coverage on this issue.  Mr Banks has made a very accurate analysis of the situtation.

Response from Labour Party:
The Kiwi dream of home ownership and affordable housing for New Zealanders is dying and hope for resuscitation by government looks bleak, says Labour’s Housing spokesperson Annette King.
“National’s response to the housing affordability crisis, signed off by Cabinet today, will not give Kiwis the relief they deserve, and were expecting after the build-up to the announcement.
“Families know that there is a shortage of good quality, lower-priced housing. Bill English has admitted as much. But nothing in his work programme today guarantees change in the medium or long term.
“After seven months in the making, New Zealanders have a right to feel let down. This is a weak response to a comprehensive report. It’s a combination of; ‘considering new ways’, ‘undertaking more enquiries’, ‘doing more work’ and ‘undertaking evaluations’.
“John Key wants us to believe we are a ‘property-owning democracy’ but opportunities for young families almost non-existent. National’s business as usual approach, which addresses the supply-side of the crisis rather than the obvious demand, is not going to pave an affordable way forward for families.
“Weakening the RMA and lowering industry standards will do nothing to get Kiwis into homes. And even if the land is made available there is no guarantee it’s going to be cheap.
“The Government’s suggested partnership approach sounds ominous for councils. They seem to be expected to ‘share the commitment’ of addressing housing affordability at the very same time that government is placing constraints on their core services.
“The Government doesn’t look to be offering any revenue sharing to pay for its policy. Ratepayers will again be picking up the bill.
“There is nothing in National’s response today that will make housing more affordable. It will do nothing to put the missing rung of the housing ladder in place and give people a leg up to it.
“The Government is in denial and is condemning the housing sector to a path of decline,” Annette King said.

Come on Annete King what a load of BS. Labour knows this whole housing affordabiity issue is about the legilasative process of which they mostly implemented within their 9 years of economic sculduggery. 
Instead of Labour addressing the issues of the RMA and LGA you introduced WFF. This whole housing fiasco was initiated by Labour and then you ensured it would remain entrenched by extensive legislative barriers. Labour knew exactly what the Councils were doing and how the legislation was being applied within Councils and failed to take any action.  Legislation has been tied in knots and most of it no longer serves the people or the country but your own self-serving agendas. If Labour thinks it can smugly sit back in the benches of opposition and froth off at the mouth then maybe they should remember that people voted for change when the majority of voters realised what was happening.
Who the heck influenced all the best-practices guidelines? Best practice is a controlling mechanism when applied in its negative form as it doesn't allow for ingenuity, innovation and necessitation of reforms as it requires adherence to a paritcular set of paradigms.

Video of English in there now

SO glad I'm in Aus, I love NZ but the country is turning to shite, thanks to the incompetence of its leadership
Really ,the people should be on the streets
NZ sure does have a good future as a dairy farm, retirement village, property investor's paradise and not much else
Hugh, time for you to give up mate. You are wasting your time and energy
I voted for Key 5 years ago becuase he promised action on this issue!!!!! (personally and publicly)
the worst govt in living memory, even worse than the last Labour govt 

WOW you're not in a good mood today Matt

ha ha
yeah, I wasn't as angry as my email would suggest, just gotta let the pollies have it!!!!
I've moved on long ago, knowing this bunch of incompetents and most likely whoever follow them haven't go the balls and/or competence to address the issue

Matt, You are not just realizing that MP's can't be trusted surely? Never vote for "hope". It's a mugs game and that's NZder's biggest problem! They just don't get it.
Vote for ACTION! And if you don't get it? do as Greece. Hunt them down like dogs. Fear can be a great motivator, hence every Government uses this technique to get the citizens to conform. Good enough for the goose.............Do kiwis have the stomach like many did back in the early 80's? nah.......all gone soft thanks to the great 'nannystate' of state dependence. 2020 will be so dire for so many that about that time we may have an awakening. Ever watch an early Sam Hunt, Ian Mune movie (1977) called 'Sleeping Dogs'?
Terrible acting but..........had some close to truth outcomes

yes, I learnt Justice. I didn't vote in the last election

Thanks Hugh for your unflagging attempts to solve this problem. A critical issue in making housing affordable is who and how we pay for the infrastructure needed for the new housing. I know you are a big fan of Houston and they use some sort of municipal Bond? to pay for this infrastructure. Can you explain this and show how this would work in the NZ context?

Hi Brendon
Hugh has asked me to reply as I have had direct experience working in Texas and using MUDs for developing subdivisions.
Municipal Utility Districts (MUDs) have a number of simply parts that allow affordable housing to be developed. See the links to these articles and . Bond funding of infrastructure is one such mechanism. In short, once the developer has completed the subdivision, Govt. Bonds are issued and the developer is paid out. Benefit for the developer is he does not need as much capital to develop subdivision if he was borrowing privately, and what money he has borrowed is turned around quicker. This results is a more affordable section. There is a ready market for the Bonds as they are seen as low risk due to their ability to recover payment (tax) from the subdivision owners to repay Bonds. This is no difference to councils being able to charge us rates to pay for their schemes. The big difference is who owns the infrastructure being paid for by the home owner. In a MUD it is the homeowner who owns and pays for the infrastructure, in NZ the council owns it by making the developer vest it to them, but you as the ratepayer have to pay for it (either paid cash or through your mortgage). We do have a couple of versions of MUDs (NZ style) in NZ, and also gated communities and other complexes with common areas are a type of ownership of infrastructure models, but none using Bonds that I am aware of. The two main advantages Bonds offer in Texas are 1. the interest rate is lower than a comparable mortgage rate so in far more affordable and 2. As it is separate from the purchase price, it is tax deductible in Texas. These are two advantages we do not have in NZ, yet.
MUDs allow section owners to own and manage their own subdivisions. Evidence shows, including in NZ, that this results in more community cohesion and pride. Ownerships costs are lower than if councils where in charge.
In effect MUDs are self-contained communities and provide development and management of the subdivision independent of council involvement and has you can imagine this is far quicker and less costly to develop and run because of very little council bureaucratic involvement. The developer and owners are still bound to the same state-wide environmental requirements etc. as anyone else.
And as you will have already concluded none of this will be possible in NZ while council are in control of this process.
Let me know if you want any more info.

Except of course the bonds,
a) Carry interest as well as capital which the rate payer is liable for.
b) The rate payer carries the risk.
c) The ratepayer gets no benefit.
I see no advantage to existing ratepayers when in fact the new owner should pay upfront.

a) of course but as the capital cost of infrastructure is less, as is the bond interest rate, the amount the rate payer is liable for is less also.
b) all present rate payers carry the risk, MUD's are less risky. In fact one of the conditions of a MUD in Texas is that a city that over time expands out to encompass the MUD, is allowed to annex the MUD into its jurisdiction. The reason they want to do this is that MUDs provide a good stable revenue base with low costs.
c) Ratepayers get even less benefit at present when they have to vest local infrastructure to council.  At present you pay for it, hand it over to council, it goes from being your asset (but you still have to pay for it) to being the councils, which they can borrow against to spend on whatever they like, whether it is of any benefit to that ratepayer or not. MUDs assets are paid for and owned locally, homeowner involvement and pride is greater, it’s a far more transparent and democratic system than we have at present. We used to have more community involvement in NZ, but as costs (through waste) have gone up, everyone it working more and have less time to be involved with family, let alone their community. MUDs reduce costs and unite communities.
But bonds are a moot point anyway in NZ, this is the last aspect of making housing more affordable that the Govt. will do, if ever.
And finally, yes we could all pay upfront for everthing, no borrowed funds at all, what's your point?

Steven, there was a time when I thought that, unlike your pal PDK, you had seen the light about the two alternatives here. You dislike the cost and risk of infrastructure provision falling on ratepayers, yet I thought I had convinced you that the alternative results in costs many times as great landing on young and poor non-home owners, rather than lesser costs being spread across society.

Even your own preferred proposal, subsidies to rent to for the poor and the young, would be far more expensive to society than the infrastructure costs you are decrying. I think you need to adjust your moral compass, you've got a cheek to be claiming that "this isn't right" when the alternative you are advocating is far more costly and massively inequitable with it.

You also have forgotten the point I have made to you over and over again, that the price of new houses affects the price of used ones. Socking new home owners for infrastructure might make you feel good, but the amount "socked" turns into a windfall capital gain for all existing property owners, and a new cost for all non home owners.

Brendon – some more info. on infrastructure. Councils have a love/hate with infrastructure. The love is that it legalises their command and control involvement in our lives, and provides them revenue to replace ageing and out of date infrastructure. They use maths formulas that even they can’t understand or justify to charge development levies that few people(new section owner) pay for the benefit of many, include the support of council bureaucracy. What they hate about infrastructure, especially sewer, is timing of supply with demand, see Kaipara Sewerage scheme debt . But what they hate the most is that developers don’t need them at all for any of the infrastructure. The private sector can provide quicker, better and more affordable infrastructure. Once you cut council loose, they lose 80% of their revenue and 100% of the rational for charging it in the first place, plus the reason for ½ of middle and senior management to be employed.

Hey thanks Dale for the info on MUDs. I do like the idea. It introduces competition into the system for new housing developments, as each developer has an incentive to provide the best combination of high quality infrastructure (water, sewage, roading, geotech testing, land strengthening, parks etc) with lower prices.
It wouldn't be hard for central government to leglislate that property developers can opt out of council fee and application processes if they follow the MUD model. It could be trialled on a limited basis, say in Christchurch with its abundance of available land on its pheriphery and the obvious earthquake caused housing crisis. If it was successful then it could be adopted more widely throughout the country.

Hey Hugh this is not a reply to my post, it is a general rant (which I do not necessarily disagree with). But it is rude, because you did not acknowledge and attempt to respond to me. If you wanted a general rant you should have replied at the bottom. I know you replied late at night so mistakes are understandable but still not acceptable.
On a more general point, for better or worse you have become a media go to person re housing affordability. You will be more influential if you are less hysterical and stick to facts which you do have.

Apart from the first poster, and perhaps Kin, nobody is going near the problem.
Hughey's comments are invalidated re skewed base-lines, the Labour trolls miss the point.
Surprisingly, Holly Walker makes sense; how the Greens assimilate what she says with their 'anti-poverty' drive, remains to be answered.
Most Nat voters are unrequited asset-gatherers (it goes with the territory) so at a certain level of devaluation, it's outsKey. Most poor are wannabe asset-gatherers, which doesn't work until you curb both population, and per-head consumption.

PDK for you to assert that the Greens on housing, and Holly Walker's prognostications in particular, are in any way sensible is absurd. Urban sprawl (an emotive term) is anathema to them, even though countless Greens supporters  live on lifestyle blocks (another emotive term), as, I believe, you do also. Put bluntly, they don't want masses of people, the less well off in particular, invading their space. They would sooner put them in contained urban ghettos regardless of where they actually WANT to live. They can't outright DENY them this freedom, so they set up and support local planning laws that effectively deny it to all but the affluent.Try all you like to package their motivations as noble, but they (and you) don't fool me.
The whole housing affordability problem boils down to the rich creating and maintaining the rules to protect their advantage. Don't expect National, Labour OR the Greens to change this, all three when push comes to shove, will ultimately defend the interests of the rich against threats from the poor.Hone Harawira would probably be a better bet as he sees through the ideology.
I have read enough of your posts to realise that you use your concern for the future of humanity as an excuse to deny the current crop reasonable freedoms that earlier generations have enjoyed. For you, the end justifies the means. For me, freedom does not guarantee "good" outcomes for society, however, that is not a reason to take it away from people. Your arguments always have an elitist flavour, and down that path lurks tyranny.

Crooked Thumb - methinks you've got the cart before the horse, and suffer from linear thinking. 
Don't compare a time when there wewre 2-3 billion on the planet, with now. Don't compare the empty 1100 sq/ft cottages of your, with the consumption-packed 3-ensuite monstrosities of today - it's exponential extrapolation you've got to keep in the back of your head, when looking big picture.
Some of us saw it coming. Not surprisingly, we made the best moves we could personally, whilst trying to educate en route. I did a stint on a local Council, and am on record as warning of Peak Oil (coning 2000-10) back in the mid-80's. Don't blame the messenger, blame the denial; it's been absolute.
Personal 'freedoms' have to be curtailed if you keep doubling the population, and the per-head consumption on a finite planet, or within a finite geography. That's bigger math than the rich/poor argument. I've long argued that cities are unsustainable, and that the best model will be village/town clusters feeding the displacement of fossil fuels in agriculture. Until we cap population, though, nothing will work. I sent Turei a flea-in-her-ear email about her nonsense about 'poverty'. Told her she was John A Lee a century too late....
We are setting up a vehicle to share our land with youngsters who will never be able to buy. Many who moved like us (for the same reasons), are thinking likewise; we're not the kind to need to 'get ahead', nor the kind to compare our Beamers or whatever. There are more important things in life. Also, moving out and being self-sufficient, doesn't immunise one form what society-at-large is doing; notice the reportage of hurricane Sandy so far, is 100% lacking linkage to Climate Change - you can't immunise yourself by removal, which is why I bother being here.
Thx for your post, nothing like the occasional mirror     :)

I am not an advocate for population growth - ultimately, in a finite world, it is impossible, and, depending on your values, probably highly undesirable. The question is - how do you stop the world's population from growing? For me, draconian "solutions" such as China's one-child policy exact too high a price on the individual freedoms of the populace concerned. If you support such a policy, then you should be advocating it for NZ as well, to be consistent and show solidarity for your cause.Does the end justify the means - imposed from on high, you notice? It's like "I will take your freedom away for your own good/ for your descendants' good  because I know best."
The future of humanity is unlikely to be determined by the fate of the current Western civilisation - I think we both can see signs of its decline. Humanity will outlast it,barring a nuclear holocaust. You want to solve (or at least ameliorate) the problems you see looming on the horizon, whereas Hugh, Dale,Phil et al  prefer to focus on the here and now problems currently besetting the populace.

We should all be aware that population is peaking anyway, and even going into crisis level decline in many first world countries. One reason the EU is letting so many immigrants in, is to compensate for their own population declines. Check out a good chart of childbirth rates by country; you need a bit over 2 children per woman to sustain the population. Italy, Spain, Russia, Germany, are all well below this, and in fact only the USA, Australia and NZ are first world countries that are sustaining their populations, and even then only just.
And if it wasn't for certain immigrants who have larger families, even we would not be at "replacement" level. The European countries whose local cultures birth rates have collapsed, will all be Muslim-majority countries by about 2060 on current reproductive trends. The conservative columnist Mark Steyn predicts that gay bars will be a thing of the past in much of Europe within a decade or two as Muslim electoral weight begins to be reflected in "moral" legislation. Ironic that the repudiation of Christian fundamentalism eventually leads to this state of things, huh?

Absurd, LOL.  Countless, yeah right.  Only 10% of the adult popualtion vote green therefor they have been counted, ie about say 200,000 green voters and that isnt countless so obviously in-correct.
No what you describe are NIMBIES, the "affluent" and they usually vote National or ACT.
yada, yada, libertarian fruitcake...

You Greenie nutters have never worked out whose useful idiots you are, just like the Baptists during Prohibition never confronted that they were the Bootleggers and crime ring bosses most valuable allies. Read "Your Home" by Gary Allen, 1974. Certain Rockefellers were in on "land use planning" and "conservation" advocacy rackets up to their necks.
"Of course" the Rockefellers wouldn't have their own fat capital gains on their substantial property investments foremost in their minds, they really do love the environment and want it preserved, cough, cough, cough.
The same goes for all the fat capitalists funding Greenie movements and political parties all over the world - Greenpeace is bigger than the combined economies of the 4 smallest African nations. Greens do not lack funding, this is not at all a "grassroots" phenomenon, excepting that many of the "grassroots" foot soldiers are ideologically captured useful idiots. Give me 20 minutes with any of the youngsters going around doorknocking or touting on street corners and I can tell you most of them can be seriously shocked into reality at the way they are being brainwashed and exploited. They themselves are being harmed as regards their own prospects, without even realising it.
As for PDK; Crooked Thumb was quite right to spot the sheer hypocrisy of a guy who lives on a lifestyle block, spending almost his entire life in the blogosphere fighting for continued urban growth containment and planned high urban density. What a fine specimen of humanity; if he is at all sincere, he must be looking forward to the great urban collapse and mass starvation that will be worsened by higher urban density, when lower urban density would actually enable more people to survive. So he wants it worsened, he hates humanity so much under his neo-pagan belief system.
I don't actually think for a minute that he is right about "resources"; I have described the hyper-linear thinking that afflicts people like him; however an urban collapse and mass starvation is likely as a result of self-fulfilling-prophecy politics of exactly the kind espoused by people like him. And good luck to him if he thinks that he and his family won't end up murdered by starving people flocking out of the city and up the road to his glorious plot of self-sustaining alfalfa and bean sprouts.

"And good luck to him if he thinks that he and his family won't end up murdered by starving people flocking out of the city and up the road to his glorious plot of self-sustaining alfalfa and bean sprouts."
What a cheap, trashy, nasty-ass comment.
Haha, and you have the nerve to call other people nutters...
Why don't you get yourself a lemonade and walk outside, Phil.
It's sunny out there.

The_Duke, what you possibly don't realise, is that myself and others have been around and around and around this same debate, again and again and again, with this PDK guy, and he simply continues to troll his rubbish propaganda on here, a serious economics and finance site, wasting all of our time, no matter how often his inconsistencies and hypocrisies are pointed out. My comment was just a nastier version of something that has been said again and again and again and never "sinks in".
I have a life to live, I only hit the comments thread on this site on infrequent occasions, and every time without fail, there is PDK peddling the same rubbish propaganda without the slightest modification. I presume I am not just striking it unlucky, and that he is the resident troll on this site, on every thread on this site. But "steven" is almost as bad.
I have challenged them before, who is paying them to do this? Or what is his vested interest, does he have a land bank somewhere himself? Perhaps his own lifestyle block would be worth squillions one day provided "urban planning" remains the norm rather than freedom to develop.

By the way, I have tried to be nice and I have made something in the past of PDK's better ideas. I have said that I would greatly respect him if he was advocating for as many people as possible to live like he does, or advocating for whole new suburbs of "PDK houses" to be built beyond the fringes of ChCh. In fact I once even said I would regard him as a national hero if he got an idea like this actually happening.
But no, he is always onto these discussion threads SUPPORTING urban growth containment restrictions for everyone else's housing choices, supporting Len Brown et al....!!!
He's all right, Jack, he's got his lifestyle block and got his future mapped out. Stuff everybody else.

100% right. Something along the lines of Frank Lloyd Wright's idea of having lots of small lifestyle blocks sprawled acorss the countryside.
Like PDK, some of the very senior planning officers at Coucnils live on lifestyle blocks. Just like the nobility of olde, they proclaim where and how the masses shall live, even if they don't want to live like them
PhilBest, we are always hearing from PDK what he doesn't like, very seldom do we hear constructive, positive and achievable approaches
His philosophy, like many other greens, is very self centred. As I've said before, he's able to live the life he does on the back of an economy that he has benefitted from over his lifetime,   which he seems to despise
I'm not sure if he necessairly supports urban containment. I think his view (PDK can confirm) is that there should be no population growth, therefore no new housing - whether urban intensification or greenfield - will be required. I've never heard a convincing argument from him how we can achieve zero population growth. Even with no immigration, we'd have population growth with small average family sizes, say 1.8 children per family
I'd like to know if he has children, and again like his housing choice does he not think that the young adults of today and the future should be able to enjoy the great, unmeasurable benefit of having a family????  
If he doesn't have children then morally he can probably claim that people should be having far less children. If he does have say 2 or more children, I think morally he is in a very difficult / compromised position to advocate for 1 child policies, no population growth or whatever 

Apprently PDK (Murray) has a couple of kids:
So alright for him, but damn the young adults today and the future having a family
PDK, why did you have kids, if you knew back in the mid 80s about peak oil, climate change etc.
Sorry, can't give your views any moral credibility since you seem to have one rule for yourself, and another for others 

Matt no longer in Auckland - kindly get your facts right. You've had longer than most, and you aren't in the loony median multiple -chanting mob. oR are you?
We agonised over whether to have children, or not. Many of our circle, chose not to. The Jevons paradox is, of course, the same as forgoing fossil fuels; everyone has to do it. Individual abstinebce doesnt; do it, even though the move is the correct one - until everyone does it, someone else just takes up the slack. It's a global 'Tragedy of the Commons'.
Our choice was 0,1, or 2, but no more. For social reasons we avoided 1, for indulgent reasons we went for replacement. You have to realise that this was 25 years ago, and we were somewhat more hopeful that society would address the obviously pending problem(s).
By the comments here (note the screaming believer has returned from the dead, someone should tell him his erstwhile mate has recently admitted to having been a land-banker) that morph hasn't happened, and probably won't.
Doesn't make the truth any less the truth, though, Matt. Exponential growth on a finite planet was ALWAYS going to end, and the smarter folk were going to work out 'why', first.
It follows that those who haven't worked it out, must be less smart. Believe me, it's easy to spot.

Matt read what he said again:
 I've long argued that cities are unsustainable, and that the best model will be village/town clusters feeding the displacement of fossil fuels in agriculture. Until we cap population, though, nothing will work.
That is not advocating urban intensification - but rather more a FLW Broadacre concept.  And you can hardly argue that fossil fuels in agriculture (agrichemicals) will not someday need to be replaced with some other form of more organic/recycled type of sustainable method.  Nor is "capping" population necessarily a 1 child policy - if anything it's a two child policy - two adults with two replacements is a "capping" or zero growth type scenario.
NZ is a great place to live because it is likely under-populated based on the freshwater, land and the seas potential to sustain our existing numbers if we were a subsistance agricultural economy.  Who knows whether the world in 50 years time will be much different than today - or whether it will take 100 years, I won't be here for the hardship anyway, but it doesn't mean I don't think about the fact that my grandchildren and their children and a whole lot of others will be.  So, anyone who looks into the future and questions has to be good.
We certainly have produced more than what we need in this generation that I have lived in - at a cost to those yet unborn.  Why anyone would resent someone trying to get that point across .. well, I'll never understand.

I have agreed with PDK on the odd occasion he has actually said something like that, but he constantly leaps in in these arguments with off-topic assertions about resources etc that are nothing to do with the issue of "planning gain", which is my main point.
PDK seems to have no idea about the basic concept of planning gain and capital gains from quotas on supply of anything.
It is irrelevant what "form" he advocates, whether or not it will be affordable, relies on whether "planning gain" is present or not.
village/town clusters feeding the displacement of fossil fuels in agriculture
will all merely be unaffordable yuppievilles if our current crop of urban planners have anything to do with it. But if developers do them as a marketable proposition in a genuinely competitive market, they would be affordable as well as a good, saleable idea.
The "New Towns" concept in the UK, and similar developments in the Netherlands, often involved compulsory acquisition of the rural land by the government, and the passing on of the land to section  and home buyers with only a "fair" uplift in value. Ebenezer Howard, who is sometimes known as "the father of urban planning" actually had the elimination of "planning gain" as his primary goal for his entire lifetime. The "New Towns" were the closest his ideal ever came to being realised in the UK, and they were only ever a tiny fraction of the total market, and never brought "affordability" to the UK as a whole. The lucky buyers or renters in the very few "New Towns" that were ever built, were chosen by some kind of lottery.
But in the greater majority of cities in the USA, "planning gain" is largely eliminated by genuine competition in the land supply. This is the reason for $30,000 sections of a quarter of an acre. Most of the difference between this and much higher prices in other cities, is the "price of interference in the market" by urban planners.

Matt -can you do math?  Replacement is about 2.2 children per couple. Some pre-coitally fall off their bikes, that's the .2.
Even now, we are (globally) in serious overshoot, the horse has well and truly bolted.
I'm interested that you don't think you get 'anything positive' from me. Are you sure you aren't mixing up 'positive' with 'what Matt wants to hear'?
Any time you want to know how to live well, for almost nothing, in one of the most energy-efficient - and cheapest-built - houses in the country, without a power-bill, just call. Heck, come and stay. You folk don't, though. We get endless streams of folk through, asking and learning, but they are never a 'certain type'. We find it amusing; kind of denial in a way.

As much as it's fun to release some stress by tee-ing off at Wild Bill and the Gnats , Labour are equally culpable for the current housing shamozzle ( 1999-2008 ) , and their primary solution is to introduce a CGT ....
.... shame upon both of you , Gnats & Labour ...... equally lazy & incompetent ....

yes I agree with that. And if they had acted properly on housing then there wouldn't have been the need for the costly WFF

Correct, of course the cure is wildly disputed..
I think a variable by the RB but nominally a LVR of 80% and a CGT would have done a lot to cure the stupidity we now see.
Note Israel has brought in a LVR....someone it seems has taken on board that.
It will be interesting to wathc that work out.....of course the way around that is to have say a 30 year instead of 25 year mortgage....

9 months...3 years...
The economic policy of this government is DO NOTHING, except quietly make NZ an offshore tax haven. Not a bad policy (I mean, it will work) but it only helps a small number of NZers not the economy at large. By sheer coincidence it helps financial dealers like Mr John Key and his mates!
The competitive advantage of NZ is its' land...loads of it....but we're acting like we're Switzerland, or the Cayman Islands.
Housing and land in NZ needs to be cheaper, way cheaper, and QUICKLY before the SHTF.
Land reform is required. Old-fashioned, radical land reform. We will experience immigration. This is a good thing.

No, immigration is a bad thing on so many levels.


I am pro "standards" for immigration. Let them come, in any numbers, as long as they meet HIGH standards.

Why do we need a rapidly growing population via immigration? Where's the evidence that it improves either the economic or social fabric of a country? Isn't a common factor in all the high priced cities around the world large immigrant populations and foreign non resident property owners? There just seems to be an assumption that bigger is better and an ego driven competition between mayors and business leaders. Look at all the chest thumping when some magazine brings out city rankings

There are large immigrant populations in many of the affordable cities of Southern USA.
One of the things that is noticeable in many of the very high price cities (and this has been written about by experts on cities like Saskia Sassen and Richard Sennett) is that a high proportion of the population are immigrants living in appalling overcrowding in the lowest standard accomodation, that locally born people simply would not tolerate. These immigrants perform all the low paid tasks in the local economy.
So this is very much an elitist thing. The urban elites put up barriers to entry and force property prices up - but they still need supermarket shelf stackers and cleaners and so on, in the local economy. And if immigrants will lower themselves to living in crowded conditions in basements and garrets out of sight, this is all to the good of the functioning of the elitist community. London, NYC, Vancouver - all prominent examples of this effect.
Meanwhile, local born people live in some other town, on welfare benefits.
Local policy conditions very much determine what you are going to get out of immigration. Low housing costs maximise assimilation, inclusion and social stability.

What a statement, particularly considering that it comes from an immigrant!

I think National has a good plan for reform. The only problem is that they are about three years too late.
Labour seems to be on another planet...the Greens understand the issues but for them they suggest more State thankfully National are controlling this reform process.
One very good idea is the Competing Consenting Agency...let's do it.
After listening to English it's very clear how much the Councils are to blame for unaffordable housing, this is a big slap in the face for them.
If National do a good job of implementation, we could start to have a competitive advantage over Australia who are quite far behind us in addressing housing affordability.

your last comment is a joke right?
If not, its far from the truth

Matt in Auck...not joking my Australia there is no national debate about housing affordability like we have here...Gillard and Abbott are too busy scrapping in Parliament....Aus also has the extra layer of federal Govt to contend with...Rudd's response to expensive housing was crank up the grant for first home buyers which was more fuel to the fire...the major Aus cities don't have a Super Council like Auckland (except Brisbane), for example in Sydney they are building new libraries around the corner from each other because the Councils are so fragmented....we are ahead of Australia on this issue....I agree National could have started the reform process several years ago. but if they do a good job of implementation then it will be an advantage for us.

In all areas except Sydney large new greenfield land has been opened up for new housing, and developers are able to build more affordable housing options such as small cottages on smaller (250 - 300 sq m) sections.
This policy approach together with much lower building costs in Aus is seeing good quality starter housing being delivered for circa 320 - 350 K in the major cities other than Sydney.
I would suggest it is NZ that is well behind Aus, not the other way around as you suggest

Matt, you are a great guy, one of the best on this forum. But Aussie still has higher median multiples in their cities, than NZ does. It might take time for the initiatives you refer to, to filter through to price amelioration in Aussie, but they have a long way to fall before they actually are "affordable".
But there is a chilling, worse possibility. It is quite possible to have "releases of land" of quite substantial quantities, and still have inflated land prices. The crucial factor is that the supply has been a kind of "quota" system. The "supply" has still been the subject of bidding wars between developers and speculators, and is still inflated in price. There is a major difference between systems like those in Spain, Ireland, Arizona and Nevada that ended up causing significant "oversupply" of homes AND continued severe price inflation at the same time, and those in the 200-odd cities of the USA where there is market freedom to do "leapfrog" development virtually anywhere.
That is, if your opposition has cornered the entire supply of land within 5 kms of the existing city fringe, all you need to do is buy a farm 6 kms away from the existing city fringe (i.e. 1 km futher out) at farmland prices, and develop it. The cost of car travel is always lower than the extra cost of housing under conditions of distorted land supply. But in fact the ability to do this, means that nobody bothers to land-bank, because it is not worth it. The capital gains are simply not high enough to cover the holding costs of a "cornered" supply that is large enough to shut out all potential "Levittown" developers.
So I still actually fear the worst for our trans-Tasman cousins. They simply have not done the "freeing up of the market" to the extent necessary to actually bust up the racket in fringe land.
And in Ireland at least, the lesson has been totally mis-learned; the response has been "we must keep the restrictions on development super tight to prevent this from happening again". Any fool can see the consequences of super tight restrictions, in the UK economy. And any fool can also see the consequences of super loose absence of restrictions, in the 200 odd cities of the USA with affordable housing and very high economic cyclical stability.

Hugh - it may be heartening, but comments on here mean "jack" in terms of getting this critical issue resolved 

Willies "No Quick Fix" statement sums up Nationals short sighted policy towards affordable housing; The report well probably end up collecting dust on a shelf along with others.

The government are letting the problem get out of control on so many fronts that it would appear there is no real solution or conflict of interest?

There is no "quick fix" because English does not have the ability nor the will to throttle the control of the banks.
Having witnessed the uselessness of Labour during the bubble blowing period, we now see the hopelessness of a govt trapped in an economy utterly dependent on credit remaining cheap as chips for ever and a day.
Either this situation implodes for macro reasons driving property prices lower by default, or we will carry on with the great game of trapping Kiwi peasants into idiot level mortgages with the help of a compliant RB and stupid govt.
Meanwhile with another electoral farce approaching fast, English recognises the value from spouting forth on how his govt is ever so keen on reducing housing costs.....utter bollocks of course.

Between you and PDK lie the answers, the rest is just deck chairs. Did you see the quote from Tony Watkins I posted on Bernards thread from the weekend, went under everyone's radar.
The significant historical moment was when people began making money out of money. In architectural terms this was the moment when people began erecting buildings not because they needed them but to make a profit. Rather than satisfying a market you created a market.This was the moment when the egalitarian New Zealand society became an immense gulf between the rich and the poor. If money is not related to something you do or make then the world just goes berserk, which it has.

You  can add that in the 1970s the swap was to services from real goods because this used less energy to produce a "good" or a "real" really we have had an increasing absurdity for 40 odd years...its one huge ponzi scheme.  Meanwhile the developing worldhas compensated for the cost of energy with the price of cheaper and cheaper  labour.....
We are deluded IMHO.
NB what was a hosue worth in the 1970s?  I have a very nasty thought that when Nicole Foss says housing could drop by 90% that equates to 1970s prices....

Yep. The house prices will hold until our debtors realise we have no way of paying back the mortgages. Will be crazy when it hits and I don't think 90% is being overly dramatic.
The supply or demand question is an interesting one though isn't it, turns conventional thinking on its head.
I picked up Tony's book "The Human House" in the library by chance and the guy is certainly intelligent and insightful. I am going to meet him tomorrow and buy a copy of his book for my coffee table.

Scarfie - Well that statement actually contradicts itself so maybe you should read it again.
The market is everywhere !  Satisifying a market = supply and demand in equilibrium. An unsatisfied market will have price differentials based on whether there is shortfall or oversupply.

I don't think it contradicts itself at all, you have just changed the nature of the supply. Think of it in terms of our ponzi money scheme as supply and demand should also work for money. But interest bearing debt has captured the market, there is a monopoly.

Far too little far too late is what this is.  They are just spouting off at the mouth to try and appear that they are going to do something.  They know that what they are proposing means that nothing will change before the next election and therefore they keep their landlord supporters happy and get voted in one last time if they are lucky.  Meantime half of NZ works to pay for the other half to own property and support obscene foreign bank profits.  It makes me laugh when I hear Kiwis abroad boasting how NZ was formed based on doing away with the class system etc in the UK and how everyone gets a fair go in NZ, yeah right tell that to anyone under 30 who didn’t buy a house before 2005, o that’s right you can’t they have all left.
This property bubble will end at some stage, but not because of decisive and good leadership in NZ or any other internal factor.  No kiwis are too focused on their capital gains to think about what is good for the country.  It will be some external affect that will pop it and then there will be all the talk of why wasn’t action taken earlier.
Stupid, Stupid, Stupid is what NZ is we really are a country of sheep

Yes the two ways we can get prices to come down is with evidence based methodology, or as the Govt. are hoping some arms length GFC version 2 will come along first and do it for them.
Housing unaffordablility will become the defining issue at the next election.

Evidence? yet you ignore such things as the efects of a LVR, or a CGT, or ponzi, all you propose is really yet more extremist politisied clap trap that will bust NZ as bad or worse than the US.

I don’t ignore these other things. There have been very good points about LVR’s etc. made by commentators here on, and I duly note these.  There are a lot of pieces to this puzzle. And depending on how they are put together, depends on the outcome. The present puzzle is one that has allowed speculation, Ponzi schemes and NZ having some of the most unaffordable housing to income in the worldwide.
Also the USA should never be seen as one country, it’s really 50 countries that decided to cooperate (United) for their mutual benefit, although they have a large degree of autonomy to decide their own internal economic policies. So at present California housing is in the toilet with NZ because its restrictive housing policies, but Texas is booming because of its less restrictive policies that make it attractive for business, which in turn employ people, which in turn can afford the very affordable homes.

Yes, but it's not just Texas. It is around 200 out of 260 cities in the USA with populations over 500,000 that are included in the annual Demographia Reports. Focusing on Texas just gives the anti-growth hysteria crowd a chance to say it's the land taxes or the LVR policies that do it. These things probably help, but obviously are not the whole story, as States like New Jersey provide the counter-case that proves that it is the supply constraints that are the issue.
"The Unconventional Economist" is one of the best forums in the world that you can follow on all this stuff, he has done very helpful analyses of all these arguments. For example, the posting "A Housing Whodunit".

Slightly off topic but I would suspect plenty would disagree with you about the independence of the states. Just let one of them try and pull out and see how far they get. 1865 was the year of the change of believe but it isn't coming to me this morning.

I didn't say they were independent, I said they were united and it was in response to a post making generalizations about the US housing collapse as if the US was one market. My point was it's really 50 markets at least and that they are so large that they act like countries in their own right.
I think Texas is the only State as of right that can break away. That's why Texans have a swagger to how they do things, much to the annoyance of the other 49 states.

Evidence please, Steven, of comparisons between markets around the world and their policy settings, that indicate that there are policy factors other than land supply elasticity that actually do keep housing affordable and cyclical volatility low. I suggest from having read a few very solid books by authors such as Alan W. Evans, Alan Moran, Edwin S. Mills, Paul Cheshire and Steven Malpezzi, that you will not find such evidence for your shallow and false assumptions.

Waiting for the Govt to make changes so that housing is more affordable is akin to waiting for Lance to say he is a cheat.... It won't happen for a very long time...if ever.
I heard the PM on the radio yesterday he pretty much said you can't stop Auckland house prices booming....only slow them down a bit
My advice for FHBs- stop looking in the Auckland city property's fine to buy your first home out in the burbs

The thing is, even the suburbs are overpriced and out of reach of most first home buyers. You've got to go waaaaay out of the way to find sound houses that aren't in a cirme-ridden area (so not in Otara/Ranui/Manurewa) and be prepared for a 40km commute if you're a central city worker.
What NEEDS to happen (and could in a week in parlieament) is to ban foreign ownership of residential property. Only citizens and prermanent residents can own residential property here and permanent residents only while they're resident in NZ for the majority of the time.
Existing foreign landowners should be forced to sell within 5 years or have their property sold for a nominal sum at the end of that period. Would solve the issue overnight and bring NZ into line with most of its trading partners.
OVERNIGHT, this would knock the top off the property market and address the affordability problem... but the government doesn't want to do this because most Nats voters / members are homeowners or property investors themselves.
As the quote above says, it became a problem once property was allowed to cease just being a place to live and became an exploitable commodity to be speculated on and traded for profit.
Imagine if the same phenomenon was allowed to happen to our food supply, water supply or to the clothing market.
The RMA/compliance costs thing is secondary, and while it's important to address, I think it's a lesser issue than the amount of hot foreign cash that's inflating the market.

Exactly right about the commuting, Thames and country towns in Coromandel are "renewing" now with young people buying there and commuting to Auckland daily. Same thing as far as Paparoa in the other direction. Academic study after academic study has identified this effect as an "unintended consequence" of growth containment regulations that are alleged to be in the cause of "reducing commuting distances". Hayek, the famous economist who wrote about "unintended consequences" from economic illiterates like Bolsheviks and urban planners meddling with markets, would be hooting with laughter about this.
This is one of the points I slammed the "Green Party response" about, somewhere above. I would like to expand further on this point here, to say that not only do these regulations force young people into ULTRA long commutes from rural exurbs, they force unusually high density right at the urban fringe. This too tends to have the effect of INCREASING average commuting distances. The graph of "spatial distribution of density" in Portland Oregon, the celebrated "urban growth boundary" city, is a real hoot. Miles of low density suburbs surrounding the CBD, then a whole lot of high density just inside the UGB. You can actually see an effect like this in every city in NZ and Aussie, with your own eyes, if you look for it.
The "studies" relied on by crooked advocates of growth containment, all do the following, in very simplified terms. They take typical household "A" near the CBD, who bought their first house in 1972 for $10,000; they add their transport bill and their mortgage bill (which might well be nil); then they do the same for a household at the fringe, who bought last year for $480,000, add THEIR transport bill and housing bill, and say, "see, living in fringe suburban developments is a lose-lose situation, both housing and transport costs are higher". Every time some Greeny crook quotes a "study" that purports to prove the point I am describing, take a look at the study methodology - it will be along the lines I am saying. None of these "studies" favoured by Len Brown et al and the Greens, actually look at the choices facing first home buyers NOW, and the inevitable trends that result.

Ah yes, more land. They're making it all the time. Nobody is doing anything on it now, right?

Says the man who himself consumes several times the human average amount of land for his home for himself and his above-average size family.

Wee-wah! wee-wah! wee-wah! flash! flash! flash! hypocrisy alert!!!!!!!!!

Not to mention that this man, looking out his own living room window, can see tens of thousands of acres of spare land, and if he looks on Google Earth he will see that the amount of land that currently is not "urban", is hundreds if not thousands of times as much as what IS "urban".
Selfish, selfish, PDK. Take a good hard look at yourself.

They don't call him pdk land banker for nothing.


Based on statistics derived from LCDB 2, New Zealand's land cover is:

  • 50 per cent native forest, native vegetation and other native land cover
  • 39 per cent pasture (high-producing and low-producing grassland land-cover classes)
  • 9 per cent exotic forest and exotic shrubland
  • 1.6 per cent horticulture (horticultural, viticultural and cropping land-cover classes)
  • 0.8 per cent artificial surfaces such as urban and built up areas, landfills and transport infrastructure

BTW, There is 50% more lake and pond area (1.3%) than urban area.
Auckland will never strach to Hamilton unless its population reaches something similar to Tokyo-Yokohama (about 35 million) - the area we are talking about is huge.
Each 4Ha lifestyle block could house 88 people at current (non-intensified) level of Auckland population density.

Great, a new contribution that is evidence that there WAS an "Enlightenment" after all.

Some of these people paying 20-30% above C.V in the city centre must really want to live in the area to pay the extra cash so they must be in it for the long term to get their money back. what we need to remember is logic around the prices paid.  Some people may get burnt as the world is still in delverage mode. Even with housing shortages prices can still fall if world events turn for the worse or a combination of factors such as NZ being downgraded leading to higher borrowing costs.   

Good thread, in parts (curate's egg...)
One aspect that most of y'all have missed is that there is a clear move by the Government to pin a large brightly coloured target on the perspiring forehead of Local GumNut.  Because in large measure, that's who to blame for the montrous array of fees, levies, contributions and other taxes on both subdivision and housing.
A quote from (why, it's Me!):
The issue with Councils (I used to be a Treasurer of one back in the day - the title says it all) is quite simple to state, and very hard to fix.
They now have power over so much of the regulatory aspects of housing and building (a partial list:

  •  land prices (via zoning)
  •  land developmnent (via consents and taxes)
  •  housing design (via consents, design rules)
  •  housing build (via inspections, requirements)
  •  continuing use of house plus land (via Plans, consents and permitted uses)

that their ordinary operations, in puddling through all of the above, have a major economic impact on the lives, businesses and prospects of anyone enmeshed in their gears.
And yet, at the very same time, Councils are economically clueless.

  • they have no idea of, let alone penalty for causing monetary loss because of, the time value of money
  • they have no idea of the principles of monopoly (who else runs the sewers, roads, stormwater?) and take no precautions against the ancient abuses arising from this
  • they employ staff on salaries, who are completely disconnected from quantum or quality of output, and who thus experience precisely zip/zilch/nada of the consequences which would follow in the business world (termination, bankruptcy, or at the least, serious loss)
  • they are able to compulsorily demand fees for :
  • services (or no consent, buddy),
  • rates (or we'll sell the place from under you), and
  • levies (or no subdivision, you 'orrible greedy developer).

Thus they wander serenely about the landscape, causing economic havoc in their wake, and congratulating themselves on a job well done, because they Do carefully count the awards made by juries of their peers... But how to change this horrific combination of power and incompetence - aye, well there's the rub....
Moral of this:  don't hold yer breath waiting for Councils to change their spots.
But there's another angle too:  and the Government Is on the hook for this one - the combination of credit availability (the fuel for the fire) and the overall legislative framework under which Local GumNut operates:  planning, general poiwers of competence etc.
The disastrous LG Act 2002 was a gift to OPM-addicted Councils, because if there's one human activity yer cannae fit under 'Social, Cultural or Environmental' wellbeings, I haven't been apprised of it.  So a considerable chunk of the local taxes on development goes towards such essential gems as Community Development Advisors, Cultural Festivals, Convention Centres, Fireworks Displays (see yer rates go Up in Smoke!) and I could go on and on and on but yer get my drift.
Then (and BH has fingered this) there are the NIMBY crew, who detest densification, and who are empowered via the current planning frameworks, to fubar practically every sensible suggestion that might be made for brownfields development.
Who's to blame?  Everyone, in their own funny little way..

Waymad...good post

Do you have any data on total LG imposts for building a house
(a) today
(b) 15 years ago
(c) 20 years ago
When I built my first house, the only local council cost was a refundable footpath-crossing-deposit - which we got back.
So the big question is - what are the councils doing with all this extra money they are creaming?

Well a good place to start is the Long Term PLan for any given Council (Chch's is here) and then slog through the financials with a spreadsheet open and a G&T on hand.  Because you'll need it once you see what they spend it all on!
Just some raw figures:  Chch, 160K households and a rates take pre-earthquake of around $290M, was rorting $29M as DC's.  That's 10% of rates.
Post quake, IIRC, the DC's were down to $8-9M but of course that's the Planned income, not what has likely transpired....
It's always good to comment/submit to the LTP, because it is a great place to put on record the massive economic distortions they cause, and it's one of the few times in a year where one can speak directly to the assembled Council without being filtered by Minions with Clipboards.
For one major subdiv in Chch (and this is from one of the insiders) the CCC impost per section was $70K.
For another one (I know the developer personally), seven years and over $1m later in pure planning/consultants fees from the developers side (excludes land, development, levies, contributions, sales costs, interest on capital employed, and all other direct costs), the thing is finally getting off the ground.  With that sort of time lag the time value of money means that the interest component on the total developer costs will double all these early costs.
Councils are truly economically clueless.
And the rest of us pay, one way or another.

And tell me waymad - were you equally as economically clueless back in your Treasurer days?

I suspect Waymad is one of a generation of competent people who moved on/were pushed by the culture.

Look - I'm not one to normally defend councils - but I also understand the infrastructure asset management (poor records, poor forward planning, deferment and lack of maintenance/upgrade) that we are having to deal with now arising out of the economic management in local government of the 1970s - 1990s.   

Now that we are onto this subject, here is another further hidden reason for this growth containment racket; councils wanting to “double-dip” to pay for RENEWAL of infrastructure in existing areas, that they have failed to make fiscal provision for out of general revenue. They can’t “double-dip” on new fringe infrastructure; there is none there to start with, new infrastructure gets put in; developers pay for it; everyone knows where they stand.
But when infrastructure in existing built areas is overdue for renewal and is failing, and councils have failed provide for this in their long-term budgeting, a cunning ploy on their part is to “constrain urban growth”, then hit the developers of “infill” development with the costs of renewal of infrastructure, alleging that this is really for “capacity expansion” made necessary by the increased population density.
How often do we hear that urban growth constraint makes sense because there is “under-utilised” infrastructure in existing built areas? This is the absolute reverse of the truth; if it had any validity, councils would be welcoming infill development and not hitting any developer who is doing it, with the same fees or higher, as what they charge for fringe development. But they ARE hitting developers with fees in these situations, so the promotion by them, of "intensification" is being done in VERY BAD FAITH.
This is actually illegal in many cases under the enabling legislation (LGA 2002), but few developers want to incur the costly delays necessary for a legal battle, and just cave in to the impact fee shakedown. But if they see a good lawyer, like Russell Bartlett as a prime example, a Council applying steep development contributions to an "infill" project will almost certainly be forced to back down. Unfortunately, Councils well know how to play a tactical "go away money" game with their applicants. This is one more thing that central government should legislate a solution for. Councils should be hit with costs and requisite damages when they cause what ultimately turns out to be completely illegitimate delays in a developers project.

Right on the button again Phil plus here are a few more examples, In 1995 about 50% of the water pipes on Auckland’s North Shore were still asbestos, tree roots seeking water slowing destroying them, about 20% of water lost in leakage.  Some of house hold storm water was piped straight into sewer lines so in heavy down pours sewer man holes blow out over roads etc. Remember all the overhead lines.

Phil Best - very true and unfortunately most people are completely unaware of what Councils are getting up to.
Poor planning and budgeting has a significant impact.
Legislative interpretation by Councils is another area which increases every cost.
Many Councillors and Council staff are ignorant on the Legislative front and frequently haven't heard of Acts like the Interpretation Act. They then fail miserably to understand and hold the "purpose" of any piece of legislation at the forefront of their minds when interpreting sections and clauses of legislation.
Many Councillors are reliant on Council staff to provide advice and opinions rather than do their own due diligence.

John Key was quite explicit. They want affordable housing but don't want prices to drop because it would leave too many recent buyers in negative equity. Can't see how you can achieve both.

And this is the crux of the matter.
And it's typical of JK's National government. Talks a good omlette, doesn't want to crack no eggs.

It strikes me there is an obvious area which is ripe for investigation and that is the apparent much lower cost of actual construction in OZ as compared to what we see here, key to which may just be the OZ materials costs....This is based on my belief that we here in NZ are being severely "exploited" by a very small group of extremely powerful building materials suppliers- witness the complete nonsense surrounding the "solution" to the Leaky Homes fiasco ie - we are now required to use H3  treated timber as basic house framing rather than re introduce the correct techniques - like adequate flashings and eves, which worked perfectly all over the planet for hundreds of years ... can anyone guess who benefited most from that garbage decision ?....
The investigation may prove that it is very worthwhile looking to purchase complete house kitsets in "CKD" [Completely Knocked Down] form whereby a couple of 20' or maybe 40' containers, are shipped from Oz to NZ with absolutely everything included right down to nails and paint ....
This could provide a much bigger reduction in real housing costs/ affordability than anyone has yet realised  and if valid, it could be much  more rapidly implemented than any of the Pie In The Sky methods proposed so far  - Mind you I am 100% in favour of anything which requires Councils to reduce the gross distortions they impose on any local housing  developments....
Anyone care to comment ???

Hi Whodunnit  - This has been looked at by dozens of people over many decades.  Issues have included, exchange rate, cost of import, scale, financing, compliance, local material use issues, warranties etc.  Some are doing it, but on a very small scale. Have talked to a Canadian supplier who within 6 months of the Toyko disaster was shipping his first 500 homes to Japan.  The Japanese had decades ago sort out and approved the BC Canadian code as one of the best wooden building codes in the world so no issues, meanwhile the NZ importer was having to go through the painful process of convincing the compliance to NZBS to council every time he submitted a plan for consent. These houses by the way are completely weather tight, have twice the insulation value and three times the structural strength of a new NZ house for about the same price. Yes building costs should be cheaper, but the NZ version of this is to downsize and strip a new home back to below the minimum standard it should be (just because it complies 100% to the NZ building code does not make it 100% what we should accept). The biggest saving is to be had sorting out the cost of land, whether it be on the fringe or inner city. With that saving we then have the choice to go to the Casino, donate to save the Greens and Labour as an endangered species, invest in our family and a business, and/or spend a bit more on your house to make it more sustainable and cheaper to run. That is if this saving does not get high jacked by the councils and developers in the interim.

The best result NZ should hope for is stagnant house prices or very slow growth in house price growth so that over time inflation adjusted the house prices will become more affordable.  If we can keep the lid on house price growth over the next 5 years then prices will be more affordable than they are today. There is a good chance of this happening as the rest of the world is heading back into recession. The other option is if house price growth continues its upwards swing Wheeler can raise interest rates.  He may have to do this anyway if our borrowing cost goes up for being downgraded.  The other alternative if the economy tanks then Wheeler can drop interest rates and introduce a house price capping scheme of some sorts to prevent the prices going any higher. What ever happens it needs to be carefully controlled as if you get it wrong then negative equity could happened followed by a run on the banks.

Yes, exactly....

New Zealand could decide it needs a long term systematic way to control house price inflation. We could instruct the Reserve Bank to monitor house price inflation, if prices are going up because not enough land and infrastructure is being provided for housing to cater for new arrivals then the offending local bodies could be instructed to accelerate their urban development plans. If house prices are rising because of excessive borrowing then interest rates could be raised or alterative methods used, like raising the banks deposit requirements, reducing new loan terms (30years down to 25 or 20 years) etc.
This is not a sexy solution, it will take years of stagnant house prices, general inflation and wage growth to return New Zealand to housing affordabiltiy multiples of 3 times income, which is our long term average. But it would avoid the problems of negative equity while gradually unwinding the distortions that unaffordable housing is doing to our economy.

part of the problem is determining why house prices are going up. 
For instance pre-GFC US house prices were rising fast, post-GFC I think the collapse is 30 to 40%.  So the Q is if its principally population pressure what happend in 2007?  did the nazi's make a secret comeback and were gasing millions? uh no I think not.
Therefore you have to question what you think you are seeing otherwise all you do is feed into mad speculation and then see huge losses aka the USA.
Which frankly is even worse than what we have now IMHO....lots of first time buyers totally screwed for a decade or more, or bankrupt etc.

What is the difference between lots of first home buyers continuing to pay the excessive mortgage they have now, with the price of the house itself still high, or the price of the house and all other houses, back to a sensible level? Why is the former preferable to the latter? Either way, their debt is the same, but under the latter option there is a far greater chance that the economy and hence their incomes, will be growing.

Sure it needs to adjust but pricking the bubble will cause decades of misery for all as it will cause a depression, just take a look at Ireland.
The existing first time or indeed any buyer with a substantial mortage over 50% equity is going to be blown away by a housing price collapse, as is our economy.
The economy needs to be based on producing something, not producing more houses for us to sell to each other, that isnt a viable economy, but then I suspect we have not had one for 20 if not 40 years.

Japan has had 2 decades of misery with slowly-falling property prices (they are now typically cheaper than NZ). Time will tell whether the quick and painful adjustment, as in Ireland's case, was the better option. But unfortunately Ireland will incur a LOT of pain because of the absolute folly of "socialised" banking sector debt, to the tune of tens of thousands of dollars worth per head. They should have told the banking sector to get stuffed. This makes Ireland "not a fair comparison". I am in favour of a quick adjustment AND the banking sector being told to get lost; and a new start being made, with new banks and a new currency if necessary.

There is a saying there is no humanity in extremists, and you fit that bill very well.
The problem with telling the banking sector to get lost is,
1) They close their doors and no one can buy food and depositors such as OAPs lose all their savings....huge hardship.
2) The country goes into a depression which is usually self-perpetuating, huge un-empoyment....
3) New currency, just great lets wipe out the OAPs and indeed others cash holdings over-night.
Japan, well I guess that is relative....most japanese dont seem too badly off.  At the rate things are going we get to see which is worse, Japan or Ireland.  Ireland, well it isnt quick is it....4 years and they still look like a basket case and look like that for another decade....if not 2....kind of Japan length style.

I don't it see it as a population growth thing so much.
IMHO in the US it was simply a rent vs. ownership trade that started with lower rates after 9/11 and Bush/Greenspan telling everybody to go for it, which saw prices ramp accordingly, with help from the media and eventually the whole culture and economy of the country becoming dependent on the upward price action. Whether you are renting or own the house you live in, the net number of houses needed in this scenario does not really change.
Once it ran out of suckers, it simply started to reverse, with all the same media then telling everyone that renting is the way to go, which soon saw the whole cutlure of the country mirroring this and swearing off it forever. Again the net number of houses needed does not really change, just the ownership structure, but the prices fell hard back to the equilibrium (where they seem to be at now) which leaves owning now cheaper than renting again. Many of those who took the bait ended upside down with destroyed credit prohibiting them from taking advantage now, when it makes actually sense. Cruel.
Here in NZ, without a deep and functional treasury market, houses have become a safe place to store personal wealth, but only because there are enough in the same situation to feed an upward price spiral, and only while it is happening. Once this market tops out, if the US is anything to go by, there will be many who will want nothing more to do with owning houses.
If here in NZ, it becomes smarter to ditch ownership of an asset that has begun to fall in value, and rent it cheaper instead, then that's what will happen. The driver isn't pop or immigration growth, but the capital gains or losses incurred from owning. It's very much like that bond market in the US, where despite the yield continuing the shrink, people are still making cap gains by owning bonds. If this reverses, methinks housing will be too.

Amanda had an interesting piece on Bonds being ripe for a blood bath.
Population or immigration, I agree on the face of it I cant see it being the significant issue.  However I dont know what the pop movement effect from chch to auckland will be short term...lots of Qs not enough real data and answers....
Of course ditching a housing asset with a falling value which is illiquid means you can take a large loss, at least with bonds you get the capital back when it matures.
Kind of wondering just what will happen in the rural areas with housing values for the newer housing in the 500k range....I just wonder where the high paying jobs are to justify those prices...With low rates and little losses ppl are hanging on....a dip in the market could just carry on down....glad Im not in that game.

Spot on Waymad.

Steven it is not that hard, if you keep a record of population movements and house building. If more people are moving to a city than houses are being built, based on average occupancy, long term trends etc, then there is a shortage of houses causing house prices to rise. If house prices are rising because credit is cheap then stop making credit cheap.  
Also as Dale has said house prices in the US only fell in those areas with housing restrictions, not in places like Houston and Dallas. The problem in the US was easy credit combined with tight housing policies in some areas like California. This led to house to income multiples of up to 10 or more, while in other areas they remain at 2 to 3. This created an unstainable situation that led to a crash in 2008.
To Waymad and Dale, the Texas style MUD model would be a way to counter the local government monolpoly. Developers could opt out of the consent, aplication process if they provide the housing infrastructure and fund it with bonds that are repaid by taxes on the new subdivisions. Dale has some links that explain this well.
Long term it would be nice to have unrestricted house building like Dale and Hugh promote, but we need a transition plan to get there safely.

Actually it is very hard, witness we have no real data to determine this. For instance you say that population movements would be significant, indeed and that can partially at least explain the prices in Auckland as say ppl abandon Chch for instance, but we cannot quantify it.
I think you need to go check house prices in texas and the number of ppl in -ve equity there alone.  Also you have to rout out the amount of foreclosed or jinglemail properties the banks are not putting on the market for fear of seeing even bigger house price drops.
I also dont know where you get a multiple of 10 from, OZ is considered extremely high at 9....Ive neve seen 10 in the USA, got a URL? Also 2 and 3? Im not aware of anywhere of consquence in the USA where that is the case. URL?
In terms of local Govn monopoly yes sure it should be checked and certainly there is no reason I can fathom that some if not most of this work cannot be farmed out competitavely, Im all for it.  My huge concern here is that the cost and impact is moved to an innocent 3rd party and not wher eit belongs on the developers and new house buyers, so I odnt find that acceptable.
Stop cheap credit as a cause well again thats speculation at least to its degree.  In macro-economics terms its a method to stop us falling into a Greater depression, its by product is actually mad housing an extend.
I dont see we need un-restricted housing building, but probably less than we have now.
My concern with this frankly madness is its like the lets lend ppl more to get out of a debt lets build more houses to get out of a too many houses problem...
I could spend hours researching this but its moot due to peak oil.  Hugh is a dinosaur as are his ilk....the world needs to move on.  So from what I can see there is no real evidence to support hugh's contention and he and his brigade have not even addressed other probable contributing factors, they in fact get ignored....that sends off alram bells for me.
Safely is the key IMHO...the risk of a major depression in NZ triggered by a house price collapse doesnt bear thinking about....and here's Hugh etc wanting to make it worse....uh no thanks.

Steven it is clear New Zealand is short of houses, Christchurch has lost x number of exactly quantifiable houses from the earthquakes and it is well publicised that Auckland is only building 1 house for every 7  new residents. The links for the US situation I do not immediately have although I am confident of my facts. My wife will kill me for not doing the lawns if I spend all afternoon looking for them. Maybe someone else can help me out?
It is clear your world view is completely dominated by peak oil. Here is a few thoughts, it might be a long plateu, NZ has many renewable resources so we at least will find alternative sources of energy. Cities bigger than Auckland existed before oil, such as Tokyo and London. And why would expensive houses help us to adjust to the end of oil?

"....why would expensive houses help us to adjust to the end of oil?"

EX-freakin' ZACTLY, this is exactly what I have been saying to Steven over and over and over again for years.

As usual you make no sense....and you have simply rejected what I have been saying will be the outcome to house prices because of peak oil.  If this debt overhang doesnt get us first...which I'd say 99% it will.

It is ME making no sense?????
Rubbish, Brendon and I are the guys with clear minds on this. We understand this without even having to spell it out to each other; as I have patiently tried to do to you, again and again and again over probably 2 years now. So, "sigh"; let's try yet AGAIN.
Tell me; if you know that in a decade or 2, you are going to have to meet some massive new ongoing potentially costly change in your lifestyle, does it make sense to start paying your bankers NOW, sums of money equivalent to the cost you know you will get hit with in a decade or two? In return for absolutely NOTHING? This is "adaptation"?
How about keeping to your existing costs without totally pointless distortions in them, and using discretionary income to actually prepare to adapt, using new technology etc?
Suppose you knew you were going to go lame in 2 decades and you were going to have to get a car with a wheelchair hoist, get an electric wheelchair, get hoists and ramps installed in your home, etc. Would it make sense to start paying your bank NOW, the costs of those things, WITHOUT getting them, and being unable to afford them when the time comes that you do need them?
Do you GET IT YET???????????????????????????????????????????????????

I'm afraid he's right, PB.
You've never made sense. In trying to analyse why, I think it's because you don't deal with the truth. You're religious, aren't you?  Sure sign.
Id forgotten the great screaming rants, thought we'd moved on here.

We can look at fundimentals and exceptions. 
Chch is an exception, its a hopefully one off massive event that is highly disruptive.  Now in this circumstance I'd say move the city centre and or some suburbs.  Take agricultural land off the current owners at agricultural prices and rezone and sub-divide that way dis-advantaged home losers get a head start.  If we are sensible we plan that access around local centres and public transport in and out. That however is a huge task right there.
Fundimentally Im not convinced we have a significant shortage, my doubts are based on the US example.  There we had a crazt hosuing binge which went bust to the tune of 30 to one has yet explianed to me how if the prices were determined by shortage before there are now so many empty houses.
In terms of peak oil now you step into one of my pet subjects where I have researched quite a lot....
Houses wont be expensive after peak oil, they are only at the present level due to excess energy and massive debt injections.  Take a look at house prices up until the industrial revolution and how flat their prices were.  The worst case scenario ive seen written is Nicole Foss with a 90% loss suggested....more "sane" suggestions are 60%+ loss. So we are looking at a 1930s style Greater Depression...but you know do your own research, few want to contemplate what I say so I simply get on with acting on the info I think is valid and probable.
Alternative fuels, yes a NZ context we have 4million ppl and not like the UK with 70million..frankly I think they are screwed.  It is however going to be rough here for us and our children, but I think managable.
Long plateau, that depends on your term for long, if its 6 years well OK...for me long is 60 years and even that is short.  The thing is is very unlikely we will see 3 years let alone 6 and 10 seems massively unlikely, let alone 60.  Also take a look at the drop once we do drop, the longer that event takes to happen the bigger the drop will be and the ahrder to adjust to when it happens. If we get to say 2018 then I think we can expect huge drops in the 5 years after that...
Going circular then your lack of depth on peak oil looks to match your lack fo depth on housing....hence Im questioning it.

Even if you are right about peak oil, you don't have a b----y CLUE about the costs of adaptation and how they can best be prepared for. They cannot best be prepared for by setting up a bankers benefit fund into which income that we COULD have used one day to pay for adaptation, is paid in huge dollops in return for precisely NOTHING.

But how clear is it there is a shortage of houses Brendon? Taking the RBNZ figures for households and housing stock the ratio over the period Dec 1998-Jun 2012 fluctuates, but in a very small range.
In Dec 1998 its 105.24%, it peaks at 106.146% in Jun 2001 and then reaches its minimum of 105.127% in Jun 2012. We are literally talking about a 1% fluctuation in housing stock to households over that period. I think its perfectly reasonable to assume fluctuations in this ratio are not the primary driver of the housing market price. Obviously 105% means every household has one home (to occupy), and 1 in 20 have a holiday or second home.
The only place I would anticipate a shortage of stock is Christchurch, but across the rest of the country, I doubt it.
It should also be pointed out that this ratio was consistently growing at the beginning of this period, Dec 1998 - Jun 2001, and that did absolutely nothing to hold the housing price back over the same period. So I question if there is a physical shortage of houses at all, and strongly disagree that addressing can have any significant impact on the house price either.

Sorry I could not access those statistics from the link you provided. But you would need statistics on a city by city basis. I know Christchurch the best and there is clearly a shortage of houses here and it has caused both rentals and house prices to rise.
In my proposal it would be the job of the Reserve bank to determine if their was a supply shortfall in the property market, if there was they would instruct the offending councils to advance their urban development plans. I am indifferent on whether that is urban sprawl or increased urban densification. Maybe the Reserve Bank needs better statistics to track peoples movements and house building activity. But they have a pretty good idea of what is going on in the economy.

Well if you can't access them, you are going to have to take my word for it then.
They are off the household debt pages,
But any analysis needs to look at aggregations of the whole country, because house prices should not be the same across the whole country. If you just look at regions then it would be easy to mistakenly diagnose regional price differentials as supply shortages. I don't understand any way this could be assessed without doing some price based analysis, so you need to assume that prices are efficiently determined, so (since prices are not efficiently determined) you can't figure out diddly about supply shortages.
In brief I suggest if more people want to live in Auckland, then Auckland house prices should be more expensive. This doesn't provide any useful information about anything. Obviously nobody would contend that house prices should be uniform across the whole country.
Frankly anything which makes the council mostly or entirely responsible for house prices, doesn't sound very market driven to me.

Nic The NZer
Yes and that is why councils should not be involved in supply of land the way they are at present.
And supply of available sections is not always the best indicator of demand.  Because of high land prices and council bureaucratic waste developers have to rely on a cost plus basis for the retail price, which is hardly a market driven approach to selling anything. This can result, as it has and will continue to do in Christchurch as an example, with a flood of sections that in the most part are unaffordable for the majority of people who would like to buy a section. The demand is for more affordable sections, not just sections per se.  Of course many developers can afford to shut up shop if the market is not quite there for the price they are asking, in the expectation that the market with rise to meet them over time, and this rise is greater than their holding costs. This then allows the other developers who need to sell now, less competition and a better chance of selling at the price they have, if they have to lower their price, they only have to do slightly. There is no cartel operating to achieve this ability of squeezing the maximum price from the market irrespective of supply, but never the less an innate equilibrium is reached between developers to achieve this.
National have not signalled that well, that they want not just more land, but cheaper land to be released.   If the right strategy is used to make cheaper land available, land bankers may not be able to sit on their land bank anymore in anticipation of rising prices to of setting holding costs. And have given the councils the first go of the rope to get this happening, or if not hang themselves in the attempt and then State Govt. will step in to pick up the pieces.

Fundamentally, I was discussing with Brendon how we 'know' that there is a supply shortage, because I don't think there is one (except I assume in Christchurch). Obviously if there is a 'supply' shortage (not enough sections) then there is a reasponable argument that the council should make them available. If the supply shortage is 'not enough cheap sections' I really don't see why the council should accept lower prices for their input to development, as a way to subsidise the housing market. Especially as if there is not a rigid supply and demand relationship in the housing market, then why would this actually help anybody except those developers who take subsidy and make profit, effectively can kicking the bubble further down the road, and causing infrastructure problems to boot.
In addition you seem to think that the housing market has been in equilibrium recently. When? Maybe you point out a month in the previous data I referenced when house prices were not fluctuating significantly, I don't see any, what equilibrium are you talking about?

Hi Steven Go to this link
it has all the relavent info.

Brendon is correct, median multiples in some US cities did indeed go higher than 10 during their bubble. The source is the annual Demographia Reports, you need to do to the Demographia Main Page and scroll down for each years report, for the last 10 years or so, and open each one. I don't think there is a quicker way, but Steven will find we are correct if he takes the time to look.
In fact he might learn something, it sounds as though he is still unaware of what the Demographia Reports even contain. You would never think this, from the certainty with which he has been claiming expertise on this issue for years on this forum.

Ive never claimed expertese on housing. Ive claimed the right to question because the exterior info to your political clap trap suggests its highly suspect.
Not to mention your total lack of understanding of maths and physics. so anything you advocate is likely to be politically driven and drivel.

I have been prepared to engage with your area of expertise and say why I disagree with it. I actually am no mug on physics and resources and technological progress.
I have also made the argument that even if you are right, here are the realities that you need to confront to make a logical, coherent and morally consistent case for policy change.
But you have never shown the slightest sign that you have a CLUE about basic economics, zero-sum economic rent, vested interests, wealth transfers and so on. You show no evidence at all of bothering to read anything on these issues, you willfully remain ignorant and a stooge and a useful idiot for the worst kind of greedy and corrupt interests, enriching themselves at the expense of the poor and the young. All because you think that because you know a bit of physics, you know everything that is necessary to know about the whole world and how it works.

Thanks for your help PB and Dale. The annoying thing about Steve is he hijacks discussions where people are making genuine attempts to understand and solve the housing affordability problem. He only wants to talk about peak oil and is abusive of anyone who doesn't agree with his agenda.

Yep, I guess we are all better off getting housing market advice from the unvested interests of the housing developer community. If you want to only get the opinions of credible experts I suggest you go and discuss this somewhere else, though I think you are going to have quite a hard time getting your general narrative of 'the housing bubble is caused by bureaurocrats' past anybody credible and expert. All the non-experts here are fully able to see through the foolishness of this reasoning.

The numbers for Texas really don't seem that bad (admittedly from December 2011 so a little stale), as these three figures don't seem un-naturally large.

  • approx 10% of mortgage holders in Negative equity
  • 2.8% of mortgages 90 days past due
  • Foreclosure rate of 1.3% of all mortgages

Especially when one considers the situation of other states, and countries affected by similar housing bubble crashes.
I do agree with you somewhat regarding tracking internal migration, which while difficult enough to do normally is much harder due to the 'postponement' of the 2011 national census.

I think going forward if we have low house price appreciation and people can see this then over time housing affordability can come back if wages rise quickly for middle to low income workers.  The consumer is too highly leveraged at the moment on property which means their mortgages are taking up too much of disposably income for the actual economy to improve. People cannot afford to buy much in the retail sector or hospitality as their mortgages have taken up all the cash. Additionally rates, electricty, phone and internet have taken up the rest of the disposable income.  If you talk to people about their spending habbits most will be cuting back from last year so Christmas will suck for the retail Ho! Ho! Ho! kind of way.  If the government can crack down on councils resurfacing roads that were perfectly ok before hand we could save millions and not have rates going up every year. Sometimes you feel like someone from the Council lives down the road and wants his roads resurfaced every 6 months ! I'm tired of orange cones everywhere.

Hong Kong just slapped 15% tax on non residents buying property. Aimed mainly at hot money from Chinese mainland but also from QE in the US
Guess that will make Auckland even more attractive

WTF: dead right. Hong Kong property prices are said to be comparatively double auckland prices, so yes auckland has just become, economically, 30% more attractive. ps. Hong Kong Authorities have also slapped the same tax on short term transactions. So, step aside, the short-term property-flippers are on the way down. No mañana up there.

Are you sure HK apartments cost much different to rent per square foot, as Akl CBD apartments? Check out a few real estate sites, there ain't that much difference in it.
It is the easiest thing in the world to reproduce "world highest" real estate prices and rents, with a few strangulatory, racket-enabling regulations. Pity local incomes haven't got a dog's show of keeping up.

clever move, NZ should be doing the same rather than continuing to screw its young native born citizens

I fully support a large tax on non-resident purchases while our own people suffer.
Add an extra percentage unless occupied  directly by that owner

Hope Kiwis don't go getting ideas that we need to do that, firstly we're not a tax haven and a centre of global finance, we actually need to make and sell STUFF; secondly we actually haven't run out of land like HK. Nothing fractionally like it.

Phil, I agree with you on many things, but I actually think such a tax is justified. Excessive foreign housing investment can stoke the demand side of the housing equation too much. I think its a case where costs can often outweigh benefits, especially where housing is bought up by foreign interests and just sits empty / idle for speculative gain

Yes, wish we new what % of the Auckland market in particular is the "sits empty / idle for speculative gain"  Certainly if the comments on the amount fo illicit money leaking out of china are any indication then it mght be ugly when it moves on.

It is the speculative gain that is the problem, there is FAR LESS empty and idle buildings in a free market city like Houston, because in Houston, you build buildings for tenants who add to local economic activity and pay you rents, not for speculative gain that isn't forthcoming.
It is not the nationality of the speculators that is the underlying problem. I am all for property investors helping a free market economy along, building buildings for tenants who add to local economic activity and pay them rents, and I don't care where these property investors come from.

So in Auckland at least the elephant in the room is the cost of the land.
This aggravates the type of house that is economic (say 200sq M or more )
The subdividers are nothing short of greedy and they do have costs from council greed as well but also the carrying costs because of the time from buying through subdivision to the sale. Land bankers are often overseas investors who have seen they are on to a good thing particularly when they can finance at much lower overseas rates.
It seems the answer is partially in getting new land released conditionally on minimum profit because it would otherwise not qualify until a later date.
In regard to Council planning for higher density the Melbourne example seems appropriate where 4+ storey developments along and over commercial premises on corridor roads is incentivised. We can easily imagine a Dominion Rd or Manukau Rd with apartments along both sides while retaining ordinary housing immediately behind.

Looks like John Key has long forgotten how it was when not so rich and powerful. Good article Alex.

I'm a fair believer in market dynamics. All this talk of affordable housing - does my head in. Housing has always been unaffordable. Nothings changed. 25 years ago it was commonplace to have 2nd, 3rd and even 4th mortgages paying 19%. Sure there are issues now but these seem to relate primarily around overtly complex compliance, and limitations on land supply. I see bright spots on the horizon if councils and bureaucrats can take a cohesive and timely approach to the problems faced. That is the issue. There is huge opportunity for multilevel apartment development now around transport hubs. These could become mini cities in there own right. Nz just needs to think big and stop analyzing everything at a microlevel. The key is just get on with it and stop the endless consultation process which is complete BS. The other issue is allowing competition in, to maintain fair prices. Where is the monopolies commission?. How is it that all of our banks have been sold off to Oz? Thereby losing control.. Similarly why are our building materials supplied by a monopoly? This is what skews prices constraining supply, and impacts on the economic viability of our nation. Kiwis should be asking the State how this occurred, and what is being done to address it. ...someone clearly has been asleep at the wheel!

Shippy - good q's.
re 1 : there are two components; oil, and charge-out/profit.
All those services are supplied via the use of, and mostly composed of, oil. It was $30 a barrel less than 10 years ago, it's over $100 now. You can reasonably expect the cost of anything using or containing it, to have at least quadrupled.
Interestingly, if an attempt is made to 'grow' globally, that will icrease rapidly.
Re 2 ; Lots of ageing - and not so ageing - folk, saw their homes as their 'wealth', and cheered as it 'rose'.  Then they wanted that safeguarded - somebody (else) had to ensure their 'wealth' wasn't diminished. So we get the nonsense that is the building regs at the moment. Every one of those bullshit cavity walls - the first time in global history we haven't kept the rain out with one wall - can be traced to those folks wish to safeguard their imagined 'wealth'.
Profit margins?  There's some room to move there. I watched Mitre 10, stocking a local brand of 100mm pipe at circa $100/6m, bring in a load of Chinese ditto, at 30something dollars. Now the local product is back in residence, but at $55.
Neither supplier, of course, factors in the finite nature of the source material, nor the pollutive impacts. If they did so, oil-based material and work-done would be virtually unobtainable (by the time you sequestered the CO2 properly, for instance, there'd be stuff-all energy left over.
Bottom line, as always, is that we are a species living beyond our habitatial means. As always, you have to keep the sinking in mind when discussing a problem dackchair.

220 comments to date on this matter. This has to be a record even for property topics. It just shows how much stress is out there especially among those in Auckland who cannot get onto the property ladder. There is no easy solution I am afraid to say. We need more competiton in NZ among the retailers of housing materials to drive prices of those materials down. We need more land being made available for subdivision and faster than what is happening now. We need those who have already got more homes than they need to live in or rent out to say we have enough to retire comfortably on and so we will now stop buying for the sake of buying and let our children and grandchildren now buy them without us competing with them.

People are arguing endlessly about the causes of house price rises. Because there is so many causes, council fees, planning delays and zoning monopoly is one big cause. But their is also the lack of competition in the building supplies market. These are supply contraints. On the demand side their is speculative property buyers who want free capital gains, some of whom are foreigners cashed up with easy credit. And of course New Zealand's foreign owned banking system has made decades of profits from lending ever larger amounts to householders.
And our Reserve Bank job is to keep general inflation stable but on the housing front only includes rent in its target. So despite buying a house being the largest expense a household is ever likely to make there is no attempt at trying to keep house prices stable. I think this is wrong and unfair. It creates a division between those with housing assets and those without, that left unchecked will create some sort aristocratic elite that our ancestors tried to escape from.
I believe the simplest way to deal with this problem is that the Reserve Bank be given an explicit target of maintaining property price stability. They would have to tease out the causes of house prices rises, like they do for general price rises and respond according. They could instruct councils to advance their urban plans if they think that is the cause. They could raise interest rates if their is a general speculative bubble, they could use alternative methods like increasing mortgage deposit ratios or shortening terms if that was called for.
The big change this proposal would do is that expectations of ever increasing house price rises would end and all the different players -banks, speculators, councils etc, would change their behaviour. It was the change in expectations that ultimately stopped general inflation in the 80's and we need something similiar now.