'House prices 5.5 times higher than incomes'

Property

Demographia's 2013 survey shows all New Zealand housing markets are 'unaffordable'; big decline in affordability for Auckland

20th Jan 14, 8:31am by David Chaston

Today's release by Demographia of their 10th annual survey of 'median multiples' shows that New Zealand housing is 'severely unaffordable' when compared to international benchmarks.

The median multiple view relates household income to median house prices.

This Report is important because it is enables international benchmarking.

According to the survey "third quarter" 2013 New Zealand national median house prices were 5.5 times higher than "median household incomes".

The Report says this about New Zealand:

New Zealand's only major metropolitan market, Auckland, is severely unaffordable, with a Median Multiple of 8.0 (Table 11). Auckland ranks as the seventh most unaffordable among the 85 existing major markets.

Auckland, like Australia's five major metropolitan markets, has been rated severely unaffordable in all 10 Demographia International Housing Affordability Surveys.

Overall, housing in New Zealand was severely unaffordable, with a Median Multiple of 5.5.

23 Six of New Zealand's markets were severely unaffordable, while two markets were seriously unaffordable.

Outside of Auckland, Tauranga-Western Bay of Plenty was the most unaffordable, with a Median Multiple of 6.6.

The second and third largest markets were severely unaffordable, with Christchurch at 5.8, and Wellington at 5.4.

Two markets were seriously unaffordable, Palmerston North-Manawatu, at 4.5 and Hamilton-Waikato, at 4.8

Median multiple	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013

Auckland		6.6	6.9	6.9	6.4	6.7	6.4	6.4	6.7	8.0
Christchurch		5.9	6.0	6.6	6.1	6.1	6.0	6.3	6.6	5.8
Dunedin				5.3	5.5	5.6	5.0	5.2	5.1	5.2
Hamilton-Waikato				6.3	5.2	5.0	5.0	4.8	4.7	4.8
Napier-Hastings				5.7	5.2	5.0	4.7	4.8	4.5	5.4
Palm Nth/Manawatu					4.9	4.6	4.1	4.1	4.4	4.5
Tauranga/WBOP				7.5	6.6	6.8	6.5	5.9	5.9	6.6
Wellington		5.2	5.4	6.1	5.9	5.8	5.5	5.1	5.4	5.5

New Zealand		5.9	6.0	6.3	5.7	5.7	5.3	5.2	5.3	5.5

The definition of "household income" is an issue for this international survey. It is a mish-mash of every income source New Zealand families have for every range of age group. It includes wages, salaries, unemployment income, pension payments, dividends, interest, self employment income, and benefits.

And that income is 'gross' before tax. Over the period, we have had three tax cuts, and the effect of these is not included in the results.

Demographia 'income' measurements have jumped around a lot over the years, even indicating household incomes are falling at times.

Household income	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013
NZ$(000) per year
Auckland		57.8	57.5	65.0	67.3	68.5	69.6	70.5	75.2	70.6
Christchurch		46.5	48.4	49.4	51.1	52.1	55.6	55.9	54.2	66.5
Dunedin				44.0	45.5	45.8	49.9	47.9	49.8	51.1
Hamilton-Waikato				56.4	58.4	58.1	61.9	62.7	63.9	62.8
Napier-Hastings				49.7	52.7	52.4	57.5	55.2	57.1	54.2
Palm Nth/Manawatu					50.6	51.1	57.1	56.8	55.1	50.9
Tauranga/WBOP				48.8	52.1	51.9	54.6	56.6	59.6	55.0
Wellington		57.4	61.4	61.2	63.3	65.9	71.9	72.0	70.6	70.4

An alternative way to think about household income is to use the Statistics NZ LEEDS series, focus on the main house-buying age (30-34 yrs) and use take-home pay (after tax) for a two adult, one child family. We do that here and update monthly.

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150 Comments

by BigDaddy | 20th Jan 14, 9:00am 1390161643

All this "seriously unaffordable" stuff is unadulterated rubbish put out by left wing wannabes.

If it were true we would have armies of people living under bridges or rioting in the streets.

Instead we have a smoothly running market with thousands of houses being buillt, bought and sold every year, coupled with plenty of reasonably priced rentals and only a handful of mortgagee sales from time to time,.

The facts speak for themselves and show that Dempgraphia methodology is either seriously flawed with its calcuations or it has another agenda all together.

I suspect the latter.

by Andrewj | 20th Jan 14, 9:27am 1390163267

You think!

Try this

Government debt has reached $60 billion, having climbed $27 million a day since John Key became prime minister - and forecasts show it will rise for years to come.

Despite tax revenue being higher than expected and expenses lower in recent months, Treasury figures show net Crown debt reached the highest yet at $60,015,000,000 at the end of September.

It already equates to 28 per cent of New Zealand's economic output, is more than $13,000 for every person in New Zealand and is forecast to climb by another $10b by 2017.

http://www.stuff.co.nz/national/politics/9380846/Public-debt-climbs-by-27m-a-day

Wiki

The New Zealand economy has recently been perceived as successful. However, the generally positive outlook includes some challenges. New Zealand income levels, which used to be above much of Western Europe prior to the deep crisis of the 1970s, have never recovered in relative terms. For instance, the New Zealand nominal GDP per capita is about 80% that of the United States. Income inequality has increased greatly, implying that significant portions of the population have quite modest incomes. Further, New Zealand has a very large current account deficit of 8–9% of GDP. Despite this, its public debt stands at 33.7% (2011 est.)^[24] of the total GDP, which is small compared to many developed nations. However, between 1984 and 2006, net foreign debt increased 11-fold, to NZ$182 billion, NZ$45,000 for each person.^[12]

The combination of a modest public debt and a large net foreign debt reflects that most of the net foreign debt is held by the private sector. At 31 June 2012, gross foreign debt was NZ$256.4 billion, or 125.3% of GDP.^[25] At 31 March 2012, net foreign debt was NZ$141.65 billion or 104.4% of GDP.^[26]

New Zealand's persistent current-account deficits have two main causes. The first is that earnings from agricultural exports and tourism have failed to cover the imports of advanced manufactured goods and other imports (such as imported fuels) required to sustain the New Zealand economy. Secondly, there has been an investment income imbalance or net outflow for debt-servicing of external loans. The proportion of the current account deficit that is attributable to the investment income imbalance (a net outflow to the Australian-owned banking sector) grew from one third in 1997 to roughly 70% in 2008.^[27]

^Greece

Greece reduced its sovereign debt burden to €280.4 billion (136.5% of GDP) in the first quarter of 2012.^[45]

by MikeM | 20th Jan 14, 11:02am 1390168957

Thumbs up Andrewj.

by Andrewj | 20th Jan 14, 12:04pm 1390172673

Zany, Money used for CHCH still has to be paid back. Why should the value of money on deposit be reduced by money printing.

Who controls money printing, the government of the day? The end of financial discipline? You can have anything you want just give the printer 5 minutes to warm up.

by rjf | 20th Jan 14, 9:31am 1390163465

Take the blinkers off dad. Kiwi's aren't living under bridges as there are plenty of rentals available, provided by massively leveraged investors. Buyers are prepared to borrow huge amounts relative to income too.

This place is treasure island for the banks!

by PhilBest | 20th Jan 14, 10:25am 1390166716

Exactly, BigDaddy is setting up a straw man argument over whether housing is affordable or not.

According to him, there is no problem with housing affordability in the UK, which is the market that NZ is tracking a few decades behind:

'Sheds with beds' are London's modern day slums

http://www.bbc.co.uk/news/uk-17185294

Welcome to the Slums of Southall

http://www.dailymail.co.uk/news/article-2049676/Welcome-Slums-Southall-…

Container living: a home for under £50,000

http://www.telegraph.co.uk/property/9243318/Container-living-a-home-for…

Generation Rent and the Broken Housing Ladder

http://www.channel4.com/news/broken-ladder-generation-rent-microapartme…

Slough Borough Council's spy plane's thermal image camera

http://www.dailymail.co.uk/news/article-2381451/Slough-spy-plane-detect…

by rastus1 | 20th Jan 14, 9:50am 1390164645

yep...if you in your 50/60s, never had unemployment issues, got the free education, bought your first home when they were affordable, had the cheap petrol, had the spare cash to throw at rentals, extra $28k about to arrive at 65yr of age (super married rate), don't give a hoot about the younger generation....then yep...markets working great big daddy...

by SK | 20th Jan 14, 10:13am 1390166036

Hang on - let me dust off my Stradivarius

by PhilBest | 20th Jan 14, 10:26am 1390166786

Who for? A performance for retired boomers in their cushy retirement village's concert hall?

by Boatman | 20th Jan 14, 11:23am 1390170188

Lest we forget the NZ property market is the ONLY textbook example of a free market in New Zealand

Perfect information, no inforamtion assymetry
No barriers to entry
Known values based on comparative sales
No restrictions on buyers or sellers
Zero Government interferance
No taxes on legitimate gains
Open forum for sales( Auctions)
Stabe well regultated financial markets ( Banks and lenders)
Freedom of choice

There is no other NZ market which is so open and transparent and unregulated , none , not in Milk , Meat , Bread prices , Used cars , Food prices, the NZX , Petrol or Diesel ... not one example .

by two otherguys | 20th Jan 14, 11:34am 1390170879

Perfect information?

Where do they publish auction results?

by Boatman | 20th Jan 14, 11:43am 1390171411

You can go onto the property registry after settlement and see what the auction price was settled at .

by rjf | 20th Jan 14, 11:46am 1390171593

Ummm no.

A free market is a market where supply and demand are not controlled by the government. In a free market I could buy some land and drop a house on it.

by Boatman | 20th Jan 14, 12:37pm 1390174670

Ummm No ,,,, Supply and demand for secondhand houses is not controlled by the government in any way at all , but rather by something called WILLING BUYER- WILLING SELLER.

Auckland Land supply constraints are a seperate issue , and the supply of land is someting the free market has to contend with in arriving at a clearing price

by rjf | 20th Jan 14, 12:52pm 1390175572

If you're referring to second hand only, then most of New Zealand's markets are pretty darn free.

You should check out trademe!

I stand by my argument, the property market in New Zealand is not free as supply is controlled by the government.

by PhilBest | 20th Jan 14, 1:00pm 1390176031

Boatman: if there was rationed supply of wheat for bread makers, we would have a problem with bread prices too. Or perhaps if we rationed the supply of land for growing wheat to some quantity that planners said was "just right".

You are being disingenuous about land supply issues and the relationship with house prices. The real life evidence is undeniable and the economics profession and most important thinkers in NZ are no longer questioning this. The Productivity Commission got it pretty right.

by Boatman | 20th Jan 14, 1:07pm 1390176476

Okay , fair point , but who is responsible for keeping Auckland to within these artificail boundries causing supply constraints ?

I dont think its the Government in Wellington

by PhilBest | 20th Jan 14, 2:12pm 1390180345

No-one is saying it has to be central government's fault for the point to be valid. Local government is "government", not "the private sector" or "the free market". Perhaps we have been misunderstanding each other.

But I say central government should enact some mandates on local government to stop "council planners wrecking the macroeconomy" as Bill English so rightly puts it.

My suggestion: any council that wants to "constrain urban growth" is to do it via land taxes and compulsory acquisitions. Same with "integrated transport planning". Land for the Akl Rail Loop should be compulsorily acquired. UGB's should be illegal and no land owner should be allowed to make capital gains of any more than, say, 10% on top of the total inflation for the period for which they have owned the land when it is required for development under a Central Plan.

By gum, you bet the "support" for "save the planet from urban sprawl" would dry up pretty dam quick.......!!!

There is actually a very sound case for simply allowing sprawl, only pricing infrastructure and energy properly. There is plenty of "sustainable living" options that are compatible not with high density, but with LOW density.

http://stories.realgoods.com/ecovillages-across-the-usa/ http://content.usatoday.com/communities/greenhouse/post/2010/08/green-l…

by dh | 20th Jan 14, 9:45am 1390164341

I think BigDaddy must live in very unusual circumstances to think Hugh is a left wing wannabe. But if your criteria for severely unaffordable is armies living under bridges and rioting in the streets, the housing has only ever been unaffordable in major natural disasters, major wars, and Great depressions (oddly cash buyers can generally buy houses easily at those times).

More seriously, because demographia use a relatively simply metric, it is easy to make historic and international comparisons, and look at how much our economy differs from history. While Interest's attempt to build a more sensitive profile of house buyers is laudable, the price paid is the ability to look at long term change. Normal modeling practice would be to check the question "does the increased specificity let us predict things better" but at the moment no-one is really predicting things.

As an aside, was reading yesterday evening that in Miami (housing bubble) 90% of condo sales are to overseas money, but this is increasing being seen as due to it being a pathway to money launder drug profits.

by PhilBest | 20th Jan 14, 10:32am 1390167155

Exactly, this is a cross-partisan issue. I think if we had the Lange cabinet still around in the 2000's, they'd have nailed it far quicker than the Key govt let along the Clark one.

But economic libertarians tend to be clearer than lefties, who seem to be incapable of seeing that rationing the supply of something will lead to price volatility.

Interest.co.nz's efforts at building an index are laudable, as you say, but also, how do we do accurate comparisons across international markets to work out what policies are most effective?

It is all very well to argue that middle class welfare and tax cuts compensate for higher house prices, but in the affordable markets that Demographia praises, none of these things translate into higher house prices, any more than they translate into higher car prices or TV prices. All the demand-side boosts in the elastic-supply housing markets, translate into genuine increased construction and purchase of better housing, and increased discretionary income. Not zero-sum land value inflation leaving no-one any better off except the vendors and rentiers in land.

by Boatman | 20th Jan 14, 11:07am 1390169268

@Big Daddy , you are absolutely correct , and trust me buying your first home was always damn hard .

It involves hard work , commitment , a strong a disciplined saving ethos , sacrifices and , very importantly , careful spending to AFTER you have committed yourself to buying the first home .

These youngsters have no idea , we even had interest rates of over 20% to contend with.

Current mortgage rates are a joke.

30 years ago we could not get mortgages as easily as we can today .

Fundamentally though , nothing has changed in 35 years , its just as hard to own a home now as it ever was .

by rastus1 | 20th Jan 14, 11:54am 1390172070

@Big Daddy , you are absolutely correct , and trust me buying your first home was always damn hard .

It involves hard work , commitment , a strong a disciplined saving ethos , sacrifices and , very importantly

Yep i remmber paying 20%.. but i only lasted a few years at most and enabled me to buy a house at a decent price. I also did not have to compete against plane loads of wealthy migrants, money printing and negative geared p.i's pumping up values.

I supect you attitide would be different if you were starting off now.

by Boatman | 20th Jan 14, 12:14pm 1390173299

You make some valid points , but my kids are faced with the problem of starting out today , and its no different to our difficulty all those years ago .

We started with a modest pokey place next to some shops in a not-so-good area , and sold it three years later for a bigger place.

Home ownership has always been hard work requiring discipline and budgeting

by PhilBest | 20th Jan 14, 1:09pm 1390176591

You are wrong and you are giving your kids bad advice.

Back when interest rates were high and the mortgage principal was small, inflation was high as well. This meant that your income was rising. Back when interest rates were 20%, after about 8 years of wage rounds close to 20% per year, the size of the principal and the mortgage payment, had halved relative to your income.

This is NOT going to happen for the current generation.

Furthermore, inflation was beaten by government policy, interest rates came down, and you were left with a small mortgage principal AND a LOW interest rate.

This too is NOT going to happen for the current generation. There is every chance interest rates will RISE at some stage, and even if this is in ten years time, it will bankrupt many who buy a first home at 6+ times their annual income.

The vulnerability of a household over the lifetime of the mortgage matters very much. There are sicknesses and accidents to consider, and simple bad luck. Back in your "tough times" you were over the hump and away after the first 5 years or so. But young people taking on 6+ times annual income in mortgage debt now, will be on a treadmill of paying down principal for 20 years +, suffering from a lack of discretionary spending for 20 years +, and those who experience a misfortune of any kind will be bankrupt.

http://www.macrobusiness.com.au/2014/01/beware-the-illusion-of-housing-…

by Boatman | 20th Jan 14, 1:31pm 1390177892

You may think I am wrong , but I dont have any option but to give my kids the only advice and help I can based on our life exprerience

They need to save sensibly and be frugal if they want ot own their own home .

For my son and daughter , for every Dollar that they save for a deposit , I will match it up to $50,000 over 60 months (limited to $10,000 per year becasue thats pretty much all we can afford ).

And this is what they are doing , and in my daughters case has been saving since 2012 .

And so far its working , she will have a 20% deposit on a $500k home before she turns 25 .

Interestingly , at 25 we did not own our own home .

by PhilBest | 20th Jan 14, 2:22pm 1390180976

OK, you are a good, genuinely caring parent. But consider this.

Historically, it was never rational to rent instead of buy. Landlords had to make a profit on what a dwelling cost them, and this cost was logically similar to what you had to actually pay for a house if you bought it yourself.

We have been in a decade-long era now where this assumption does not hold. Investors are factoring expected capital gains into their calculations. Many are not even bothering with tenants at all.

This is just one of several classic evidences of a bubble that has to burst one day. I simply cannot understand why so many people shut their eyes and ears to the human tragedy stories that have poured out of California and Ireland. At least in California mortgages are non-recourse......!!

http://rt.com/news/mortgage-overdue-ireland-crisis-770/

But median multiples in Irish cities never got anywhere near as high as Auckland, and ranged from only 4 to 6.5, when their crash happened......! How much bigger will our crash be? I don't believe it possible to sustain the current position, urban land prices being so high is a factor that erodes the entire "rest of the economy". It has to be the means of its own destruction, like a cancer that kills the vital organs of the host.

by avatar99 | 20th Jan 14, 10:56pm 1390211815

Just because it was hard in your day doesn't mean it's not harder today. Look at any objective measure (this survey or other ) and you will see it's worse now.

by rjf | 20th Jan 14, 11:59am 1390172340

... and you had to walk to school uphill both ways.

You weren't contending with 8* income multiples, foreign investors and expensive builds with reems of red tape.

In the 70s and 80s builders were still putting together small entry level homes. Now they can only turn a profit with huge McMansions crammed into small sections.

I'd take the 20% interest any day - especially since it came with high inflation.

by Boatman | 20th Jan 14, 12:18pm 1390173508

No I had a secondhand Raleigh bicycle with a Sturmey Archer Three speed for those bloody hills

by frazz | 20th Jan 14, 9:24am 1390163047

Yes Bigdaddy its a conspiracy all right, the market is working well?. Me and all the other FTB are having a great time renting and saving hard! Hopefully in 2025 we might just have enough to get into the market but will put off having kids till we are 50! Some of the impatient ones have given up and moved to Tauranga and Gisborne....no patience at all.

by RamJett | 20th Jan 14, 10:34am 1390167250

Big Daddy you are classic.... As long as you are alright screw the rest.

We in NZ have been brainwashed into thinking that housing is something we must aspire to and work hard for and pay for with a lifetime of debt... what a system.

Who said things have to be like this. We live in a little backwater at the bottom of the pacific. We have land to spare and no great strain on our resources. The lure of NZ used to be that it was a largely classless society where one could have a good and comfortable life and raise a family in comfort. Housing should be about everybody having a roof over their heads and be able to have a little patch to call their own.. the kiwi dream.

Housing should not be about investing and making money off other people. It should not be about one group owning as much as they can at the expense of others. We are moving rapidly to a classed society where we have property owners and non property owners. Is this really what we want in Gods own? Lets not beat around the bush. Investors owning multiple properties absolutely makes it more expensive to both own and to rent a house, for everybody.

I am now in chch and renting and I see the greed going on in this city.....the banks and landlords must be laughing all the way to ..the bank.

People buy into the concept because they think there is no alternative and as long as investors are tying everything up I guess there isn't.

Good on you Big Daddy and hey Thanks !

by Zoltuger | 20th Jan 14, 10:42am 1390167725

Couldn't agree more. Housing is a basic human need, not a commodity for exploitation.

How absurd that prices have increased by 20% in the last year, for seemingly no particular reason. Now looking for a house worth $500,000 or less in Auckland is a depressing and sobering experience.

by PhilBest | 20th Jan 14, 1:29pm 1390177784

And the Demographia median multiple of 8 will be out of date already, it can't have that 20% built into it already.

by Boatman | 20th Jan 14, 10:54am 1390168486

Get real , this measure (prices to incomes) IS TOTALLY IRRELEVANT IN AUCKLAND , when many sales are :-

1) To wealthy migrants arriving with substantial deposits , or paying cash, or buying in pools ( syndicates) .

2) To babyboomers like my wife and I who basically dont have a mortgage , so when we downsize in a few years the price to income measure is not a factor.

3) To married young Auckland professionals whose joint income is likely to be over $150 k a year

4) To many Aucklanders who are on the right hand side of the midpoint of the income Bell Curve , for whom affordability is more of a nuisance than a barrier to entry .

AND you need to factor in the following:-

If you are a family on the minimum wage you are likely to live in a Housing New Zealand home with income support and Working For Families handouts

And if you are a family on the average wage you probably renting and could not get a mortgage anyway .

by rjf | 20th Jan 14, 12:10pm 1390173058

Is this a good thing for New Zealand?

by Boatman | 20th Jan 14, 12:26pm 1390173990

No , I did not suggest its a good thing at all .

This chest beating about house prices to income levels is emotive and a waste of time .

What I am saying is that it it what it is , and we need to recognise that only in a perfect world would everyne own a home and drive a Bently .

We must consider the fundamentals of property ownership patterns in our modern society .

Things have been skewed by migration , differeing income levels , and peoples choices over time .

Some people are simply better at managing their finances than others which also has a differnt effect over time .

by PhilBest | 20th Jan 14, 1:40pm 1390178415

It's not a Bentley, pal; it is a Kia at Bentley prices.

HERE is what you get for around "a million dollars" in a city with an HONEST housing market:

http://www.realtor.com/realestateandhomes-search/Houston_TX/type-single…

HERE is Dorkland:

http://www.realestate.co.nz/residential/search/districts/225/prices_max…

Most of those old bungalows would be less than $200,000 in the honest housing market. I am not kidding. This is what happens when you hike the land cost 2000%.

For all the obfuscation about alternative ways of measuring affordability, one give-away is when the dirt an old bungalow is sitting on is 95% of the total value, versus 20% in the honest housing market.

by SK | 20th Jan 14, 12:39pm 1390174742

Does everyone also have a problem with making profit from food and clothing?

As these are also basic necessities.

by scarfie | 20th Jan 14, 12:52pm 1390175543

What is so difficult to understand about "unearned income".

by Boatman | 20th Jan 14, 1:01pm 1390176089

There is no such thing as unearned income, except from theft or fraud .

Cite one example of legal unearned income , and I will be looking to get onto that gravy train immediately

by bob | 20th Jan 14, 1:30pm 1390177824

Apparently any income that does not assist the balance of trade is bad. So teachers and doctors salaries are an example of an income that just churns money around in NZ - just leeches suckling money out of the productive economy.

by PhilBest | 20th Jan 14, 1:43pm 1390178605

You talk as though you are already on that gravy train.

Try "getting a UGB enacted, making 2000% gain in a few years on unaltered land holdings".

At the expense of every first home buyer in the region.

Some people channel Gordon Gekko seemingly without even being conscious of it. It might be ignorance and it might actually be shameless greed and it might even be malice.

by Boatman | 20th Jan 14, 4:51pm 1390189890

Actually , I am not a property speculator as you suggest . I firmly believe residential property is a poor investment.

The negative gearing , the municipal rates and taxes , repairs , maintainance , insurance , upkeep , management costs and the rest make it a poor investment .

by two otherguys | 20th Jan 14, 2:44pm 1390182252

Remarkable. For someone who (frequently) professes considerable knowledge about the economic concepts of the forces of supply and demand you adopt a "I know-nuffink" "it doesnt exist" denialist position about a similarly common economic concept such as unearned income - how clever of you

http://en.wikipedia.org/wiki/Unearned_income

Unearned income is a term in economics that has different meanings and implications depending on the theoretical frame. To classical economists, with their emphasis on dynamic competition, income not subject to competition are “rents” or unearned income, such as incomes attributable to monopolization or land ownership. According to certain conceptions of the Labor Theory of Value, it may refer to all income that is not a direct result of labor. In a neoclassical frame, it may mean income not attributed to any factor of production. Generally it may be used to refer to windfall profits, such as when population growth increases the value of a plot of land.) (take particular note of that last bit all you lot)

by PhilBest | 20th Jan 14, 2:57pm 1390183025

"......such as when population growth increases the value of a plot of land....."

And that is fair enough "unearned income"; as is the spatial growth in a city that leads to property gaining "location advantage" premiums as the city fringe grows away from is. We actually need better terminology to distinguish between this, which is actually an "unearned share of income growth"; and an "unearned share of unaltered existing incomes", which is what regulatory distortions like UGB's create.

In fact UGB's tend to reduce income growth at the same time as delivering a bigger share of status quo incomes to "rentiers" (that is, people who capture the "unearned income").

by rjf | 20th Jan 14, 1:04pm 1390176276

Food and clothing supply aren't artificially constrained by the government like property.

by Boatman | 20th Jan 14, 1:11pm 1390176705

You cant blame Wellington for the Auckland mess .

Does the Government in Wellington decide on the size of Auckland City and its boundries?

Or has that decision been left to that idiot who cant keep his zipper closed , Len Brown ?

by rjf | 20th Jan 14, 1:23pm 1390177390

I'm not referring to any particular arm of the government.

The Beehive could intervene I have no doubt, but I suspect the current arrangement is quite comfortable for most of our leaders - a good portion of them are heavily invested in property. Also, as long as the ignorant masses continue to believe that high house prices are a good thing - why act?

by two otherguys | 20th Jan 14, 1:59pm 1390179596

wasnt there some controversy about a year ago where the "authorities" were going to prohibit you from growing your own vegetables?

by PhilBest | 20th Jan 14, 2:29pm 1390181341

There is "consumer surplus" in food and clothing as well as "profit", thanks to "the free market".

There CAN be consumer surplus in housing: just as other stuff gets better and better without costing any more in real terms, this is what happens in all those affordable US cities without growth constraints. Houses get bigger and better for the same proportion of your income. The real price of land per square foot falls and falls.

Eliminate "consumer surplus" and introduce "economic rent" instead, and the process reverses. The real price of land per square foot rises and rises, and households have to sacrifice space, amenity, quality and condition, location, etc etc just to keep up. This used to be basic economics but we have taken these things for granted for decades and almost no-one understands now what is happening when you let urban planners mess with free markets that were working well.

by Crazy Horse | 20th Jan 14, 1:22pm 1390177320

I want to see a "level" playing field ... NZers have been "brainwashed" by the banks over the years, that our interest rates are "low" ....BS they are !! compared with other western countries around the world. That's just a myth by the banks to sell more mortgages !!

NZ is not just a country of "baby boomers" heavily into property investing, subsidised by wealthy immigrants or foreign buyers "pushing up" these ridiculous property prices. In fact I would even call our "open market' to foreigners buying (especially in Auckland), the Kiwi version of "QE" ..... printing money !!! All this does is transfer this wealth to current owners of usually multiple properties, that's all.

And what is all this "free market" crap, when the taxpayer is subsidising the following:

*Rents - through the accommodation supplement - thank you WINZ

*Wages - WFF - if a family can't live on the salary/wage paid by a business, that business should not be here and go elsewhere.. that is a real "free market" !! and to all those who say "what about the jobs" well if the cost of housing wasn't so high, the difference could be covered by the business.... rather than the taxpayer stepping in !

The 20% deposit was just another kick in the guts for the FHB - and a great ploy to close the market even further, to the FHB's etc - while opening up the market to the "already established" property investor.

Then we have the tax breaks for mortgage interest payments - how about we do this for "owner occupiers" to ....if all you investors want to run residential property as a "business" aren't then the owner occupiers in the "business" of wealth creation too ???

C'mon - cut the BS and let NZ "ride the wave" of the new economic boom (media speak haha) to invest in new businesses for the country - not for some "pampered, arrogant, one-eyed, self righteous baby boomer" !!

by Your Landlord | 20th Jan 14, 1:25pm 1390177511

Reading through these posts I note there are almost none by property investors.

I suppose they are all too busy recalculating their wealth every few weeks in this booming market.

Tauranga PIs will be even busier... the rental market there is really heating up now.

by Crazy Horse | 20th Jan 14, 2:03pm 1390179782

YL ...a ? .....where are all those front page articles about the "rental crisis" in Auckland gone ? ... usually about this time of the year .....I see more "For Rent" signs around the burbs than ever .... ? ....good luck with your rental increases :)

by dh | 20th Jan 14, 2:55pm 1390182937

It's a shade early for the Auckland Rental Crisis season. Look for the first reports sometime in the first two weeks in February, then running for about 5 weeks.

by Crazy Horse | 20th Jan 14, 3:42pm 1390185723

dh .... you hope :)

However, point taken re: my timing as may be slighly early - but as an ex property manager and never in my 2 years (very recent) did I have to put out a "for rent" sign ...... at any time of the year....I suspect at this time, market "saturation" perhaps ???

by gordon | 20th Jan 14, 3:08pm 1390183705

YL like shares property is not worth anything until you sell it and get the proceeds in the bank account. With interest rate increases coming into the market this year it will be interesting to see what it does to both the share and property markets. The share market of late has been amazing. Even after paying tax on the profits from trades it still beats property.

by bob | 20th Jan 14, 1:25pm 1390177513

Back from holiday to find nothing changed. The best cities are still the most expensive. Places like Detroit are still the most affordable. Therefore Sprawlographia still think we should become like Detroit, because it's got an awesome 2.2x affordability factor.

Still no account of transport costs in the 'affordability' index (Hugh did admit last year he knows nothing about transport costs/petrol subsidies and how it skews 'affordability' in his favourite sprawl cities).

Unitary Plan will be interesting this year.

by PhilBest | 20th Jan 14, 1:47pm 1390178875

Here's some good data about household costs for US cities.

http://www.comparebloomington.us/include/reportsmedia_157_2541343573.pdf

Do the affordable cities look like they have transport costs that swamp lower housing costs?

Actually, when you "price out" young people from the most efficient locations, you force up their housing costs AND their transport costs together. Now they have to buy a house in Thames or Kaipara so as to be able to afford a mortgage that would once have got them something in Newmarket, how exactly have we "helped" their finances?

by bob | 20th Jan 14, 1:55pm 1390179345

As below your own introduction states that there's more to affordability than just providing the cheapest freestanding houses and infers that allowing unlimited sprawl (and nothing else) is not neccessarilty the automatic answer to affordability.

I see on Trademe that there's still plenty of cheap freestanding housing on the fringes of Auckland, much like Detroit. How come people don't get excited about the cheap houses that are already sitting there waiting to be bought?

by PhilBest | 20th Jan 14, 2:32pm 1390181572

They are NOT "cheap like Detroit". Show me some RE site comparisons.

You have missed the whole point about affordability and overall efficiency of "housing plus transport" costs. A market that is systemically unaffordable obliges young FHB's to sustain inflated costs in BOTH: both the housing cost AND the cost of additional travel from wherever they are now "priced out to".

by bob | 20th Jan 14, 2:59pm 1390183172

So something is new this year. The sprawl-must-be-the-only-housing-option-because-it's-the-cheapest is starting to look at transport costs. Don't start thinking about infrastructure costs like you introduction guy does.

You got to be careful Phil. If you start thinking about transport and places people want to live you might start claiming that people should be allowed to live in townhouses or, horror of horrors, apartments if they choose.

by Dale Smith | 20th Jan 14, 3:17pm 1390184258

Bob, I am typing this slowly because it is obvious you cannot read very fast. As the research shows, there is a direct correlation between fringe land prices and prices going back into the centre ie cheaper on the fringe and progressively dearer toward the centre. This is irrespective of whether the city has restrictive or non-restrictive land zoning policies. The more affordable you make owning land and a house/townhouse/apartment on the fringe, the more affordable it is to own land and house/townhouse/apartment closer in. The only reason you would have for not wanting it to be more affordable to own a house/townhouse/apartment is if you have already prescribed to the ‘Greater Fool’ theory. And if you don’t understand any of this, then even my slow typing was too fast for you.

by Brendon | 20th Jan 14, 4:03pm 1390187007

Here is an example of a integrated transport new town solution to housing affordability in Greater Christchurch. I am sure readers more familiar with NZ's other housing hotspots like Auckland and Tauranga could come up with similiar proposals.

by PhilBest | 20th Jan 14, 5:23pm 1390191782

There are two potential paths to this.

One is for the government to do it, like the UK government did "New Towns" from the 1930's to the 1960's

The other is to deregulate so that developers can get on and do it in a competitive market, resulting in developments like "The Woodlands", which really has no disadvantage over a UK "New Town".

by Brendon | 20th Jan 14, 8:05pm 1390201549

I worked in a psychiatrict unit in Harlow - a post WW2 outer London new town for a few months once. Near identical roundabouts everywhere, soulless town centre and weird people who 'escaped' the cosmopolitan London influx in the 50s and 60s.

What I envisioned was Central or Local governent would put in the trunk line transport infrastructure. It will need to be acquired by eminent domain/ compulsory purchase as Alain Bertaud discussed. You cannot acquire 90% of a powerline, road, track etc at rural prices and then have the last farmer demand many times that price due to their 'monopoly' position.

Then as you said it is question of leaving it to the private sector or the government doing it all.

by Brendon | 23rd Jan 14, 10:21pm 1390468866

"Government doing it all" would be government (Central or Local) selling sections at cost directly to the new home owners. The danger is bureacratic uselessness.

The private sector doing it assumes they can provide a better product with the added profit margin cost cheaper than the government bureacrats. The danger is that there isn't enough competition in the system to provide low cost sections.

by Brendon | 23rd Jan 14, 10:35pm 1390469707

For those who are tiring of the RaRa Houston is the answer consider the German model.

From Lorax in the comment stream on MarcroBusiness

Leith, can I make one point without being yelled at? As discussed many times here the planning system in both Germany and Houston/Atlanta have resulted in much more sensible house prices than the UK, Australia etc. However the German system has created more compact, walkable, sustainable cities whilst Houston and Atlanta are known as the poster children for sprawl. Why then your emphasis on promoting the Houston model over the German model?

Leith replies

I have written many times on the German system. It, too, is a worthy model. The key benefit is that Germany has “right to build” embedded in its constitution, which provides a presumption in favour of development, rather than the negative approach employed here. Germany is also very decentralised, with loads of small cities built around its various manufacturing companies. It is a real economy.

There are other interesting comments made in the same comment stream about Germany. Check it out.

by Brendon | 20th Jan 14, 10:16pm 1390209367

Phil there was a couple of threads on Oliver Harwich's Friday Top 10 that discusses how we could move forward and how we got here regarding the whole housing affordability issue.

You might want to comment?

by avatar99 | 20th Jan 14, 10:52pm 1390211539

It's been said by others but the evidence is mounting that urban growth boundaries worsen sprawl. Look at the stats on lifestyle block growth or try driving north of Auckland at 7am and see the stream of commuters from far flung but more affordable towns like Puhoi and beyond. Also fewer apartments built because the high cost of land relative to rents (which are constrained by incomes) makes them less attractive as an investment.

by PhilBest | 20th Jan 14, 5:19pm 1390191585

That is NOT "dirt cheap like Detroit".

They are selling houses for $1 in Detroit.

Even in thriving Houston, houses as far away as those Huntly examples are from Dorkland, of equivalent standard, can be had for $80,000.

In Detroit, comparable houses (the $1 example would be in seriously dangerous areas of the city) could be had for $30,000.

It is incredible how some people refuse to understand the definition of "affordable housing market". After all you only have to have been around in Auckland itself for 20 years to remember when it WAS that. We are talking about a market that has inflated by some 180% in real terms since then. No new value or amenity has been created, other than zero-sum "for" a lucky few at the expense of others.

by Boatman | 20th Jan 14, 1:37pm 1390178243

Once again emotions getting the better of people on this site....... as usual over house prices.

When will people realise that home ownership is not a right ?

It only comes with hard work, careful budgeting and planning and diligent saving , and then after you have bought a house , years of living frugally

by PhilBest | 20th Jan 14, 1:50pm 1390179020

FREE health care and education are a "right" but AFFORDABLE housing isn't?

We'd soon see people demanding affordable food and clothing if we had a cartel effect at work in those things. No-one is asking for those necessities to be free; just free of gouging by zero-sum rentiers.

by bob | 20th Jan 14, 1:41pm 1390178460

Actually the introduction to the Demographia Report this year is rational, well done:

"The mobility and affordability objectives are tightly related. A residential location that only allows access to only a small segment of the job market in less than an hour commuting time has not much value to households, even if it is theoretically affordable.

For instance, the government of South Africa has been building several million units of heavily subsidized “affordable” housing in areas that require long and expensive commute – transport costs representing in some cases more than 50% of a worker salary. In this case, affordability without mobility is only a poverty trap. Affordability and spatial mobility are therefore inseparable objectives." Pity they can't factor this into their figures.

by PhilBest | 20th Jan 14, 1:57pm 1390179433

Alain Bertaud, the author of that Intro, is a neglected genius. I have been quoting his work for years. A few other experts have made the same point, but it is shockingly little known:

http://www.newgeography.com/content/003856-the-evolving-urban-form-port…

On THIS 2009 thread, I mention Bertaud and his work several times, including the point about the effect of inflated urban land prices on location efficiency:

http://www.interest.co.nz/news/45351/keith-locke-wants-more-certainty-p…

And that was not the first time I did so.

by bob | 20th Jan 14, 3:01pm 1390183318

If so why are you the second in command of the pro-sprawl brigade?

by PhilBest | 20th Jan 14, 5:02pm 1390190557

Heck, you're SLOW. Are you even reading anything I am posting?

Because "sprawl", with a low, flat urban land rent curve and dispersed employment, results in SHORTER trip-to-work location options being available to most people.

Here's a fascinating proof.

By the standards of the anti-sprawlers, the UK, with the highest urban densities in the OECD, must have the shortest average trip-to-work times? Right?

http://news.bbc.co.uk/2/hi/uk_news/3085647.stm

“.....British commuters have the longest journeys to work in Europe with the average trip taking 45 minutes, according to a study. That is almost twice as long as the commute faced by Italians and seven minutes more than the European Union average…..”

The US average is 26 minutes……

http://economix.blogs.nytimes.com/2011/10/14/world-of-commuters/

The UK has the highest urban density, with Europe next and the USA below that.

I can give you a lot more references for academic literature on "the decentralisation of employment and the stability of travel times in dispersed cities". But I suspect I have given you all this before and you refuse to learn from it.

Your agenda is showing, pal.

by two otherguys | 20th Jan 14, 6:51pm 1390197115

Yep, good question. Unanswered of course. Ol' Phil's on fire today with the release of Hugh's annual report. Hugh's not in the office today. He will be attending news media engagements and out on the speaking circuit.

by PhilBest | 20th Jan 14, 8:57pm 1390204649

I answered the question. I thought it was about "why" I am "pro sprawl", not "why" am I the "second-in-command".

Actually I am not, but I feel honoured to be thought of that way.

I am my own man and make my own arguments distinctly differently to Hugh's approach. I am merely on his mailing list along with thousands of others, and get the same "heads-ups" as everyone else.

I am hoping Hugh gets a Knighthood one day for devoting so much of his life to this cause. Me, I'd be happy with a Nobel in Economics or at least an Honorary Doctorate from a leading University in recognition of my elucidation of economic land rent issues.

Hugh is a grounded industry practitioner who knows when the sums don't add up. I try to sort out the academics and allegedly qualified bureaucrats who can't harmonise their navel-gazing with the facts on the ground; these people are a massive obstruction to progress until they can be pointed to the correct theories on land markets that for some reason, nobody is bothering to teach in Uni these days. Possibly because the issues have been dead for decades and have only resurfaced because planners are distorting urban economies in new ways.

More and more of them are "getting it". I am sorry that this forum tends to lag in terms of "experts" who "get it" and "get with the program". The exceptions know who they are. Thanks, guys.

I have concluded that the nigh-on-invisible "big property" rent-seeking lobby is a major obstruction to the broader economic interest; the finance and banking lobby which is its Siamese Twin is more visible and obvious. Then there is the "existing home owner" vested interest - a century ago things were much clearer. An upper class minority owned almost all the land and political action was necessary as economic development occurred, to avert a revolution. The resurrection of economic land rent and the abolition of consumer surplus in housing now that the majority are incumbent home owners, could hardly have been better designed as a deliberate subversion of a nation by enemy powers.

How long might it take before there is sufficient electoral mass of non-home-owning voters to force a change? Of course the vested interests are powerful and use propaganda via the mainstream media to maximum effect. Unfortunately many politicians of the Left have preferred to have dependent constituencies, so that their preferred policy "solution" all over the first world since "saving the planet" became a mania, is "back to government provision of large volumes of social housing". And I am afraid many of the voters fall for it. And the big rentiers will remain unscathed in this alliance of convenience with the Left. Strangely, no compulsory acquisitions of land, or special tax assessments, will be used as tools to "save the planet without harm to the poor".

I say "strangely", because one would have though these things were second nature to the Left. But the Left has learned from its "mistakes" of the past - in a "property owning democracy", petit-bourgoise who "drive to the polls", tend to switch their votes to the Tories even if they were loyal Labourites by birth.

by MJenkins | 20th Jan 14, 1:56pm 1390179364

@BigDaddy, If you consider the medium multiple as "left wing" then I suppose you should include the World Bank, UN as well as the Harvard University Joint Center on Housing given that all of them explicityly incorporate such into their methodology. Ad-hominen attacks attest to your lack of ethos in a subject that demands a higher standard of critical thinking than your aforementioned quotes.

Having grown up in American (Phoenix during GFC and Portland, the urban planning poster child) as well as NZ recently, I can honestly attest that housing equivalent to 8x HHI is atrocious and this will not end pretty for Kiwiland. Only two ways will this end: Prices stagnant [SEE: Japan 1990s] or they tumble dramatically [SEE: Phoenix, Vegas, Miami, etc during 2008].

Think about it critically, with all the disposable income going ot the banks and financiers mostly, who suffers? The younger generation for one, priced out. Small business also occur heavy loses as once again, income that would usually trickle there and other sectors of the economy are locked with the "Big Four" banks.

Its ironic if you ask me how similar this is to the US....I wonder, are these banks also "too big to fail / too big to jail?"

The solution is quite simple: Abolish negative gearing, raise interest rates, limit foreign buyers with housing and find a way to address the abundant land banking problem. While I commend NZ for doing more than OZ with their recent LVR limits, this alone will not solve the problem.

A wise man once said that insanity is the process of doing the same thing over and over again and expecting a different result.....learn from America's mistake (there are many) and hold your banks and politicans who spruik to the masses accoutable.

by PhilBest | 20th Jan 14, 2:02pm 1390179759

One thing I find incredible is that Ireland's cities median multiples were all around 4 to 6.5 when they crashed big time. I doubted the possibility that a national economy could sustain a much higher average for long.

But I was not reckoning on the sheer venality of policy makers kicking the can down the road, and worse, almost maliciously engineering further inflation via lower interest rates, little control over the lenders, guarantees of the banking sector, and encouragement of overseas speculators.

It will be a Pyrrhic victory for people like us to "be proved right". This is an unfolding object lesson in human calamity from ignorance, venality, propaganda, and the refusal to listen to sense.

by PhilBest | 20th Jan 14, 6:39pm 1390196375

2007:

Cork 4.7

Dublin 5.4

Galway 4.6

Limerick 3.5

Waterford 4.1

2008:

Cork 5.4

Dublin 6.0

Galway 5.6

Limerick 4.3

Waterford 4.9

2009:

Cork 3.6

Dublin 4.7

Galway 3.2

Limerick 4.2

Waterford 3.7

by Happy123 | 20th Jan 14, 2:24pm 1390181078

My disdain for the median multiple approach is well documented so lets think about this a different way. The key question we should be asking ourselves is why do people pay so much to live in Auckland? As oppose to say Hamilton. There is nothing stopping someone driving 1 ¼ hours down the road and enjoying the cheap prices in Hamilton, Te Kuiti, etc, so why don’t they? Take a look at the list of ‘most unaffordable’ housing markets in the world on this article, how many of these also rate as some of the most desirable cities in the world to live in? Sydney, Melbourne, San Fran, Vancouver, San Diego, Auckland, Hong Kong all regularly feature in lists of the most desirable cities in the world to live in. They all have bigger price ranges too especially at the high end which would skew both the median and mean upwards.

Is it reasonable to expect that people will pay more to live in a more desirable city? I’ll pay more for a Audi RS4 than say a Toyota Camry, not because they provide a different function but because in my opinion the RS4 to worth paying more for.

No offence intended to the Tron.

by PhilBest | 20th Jan 14, 2:43pm 1390182190

So when the prices in Pheonix and Las Vegas doubled between 2005 and 2007 - the most rapid price inflation ever, anywhere in the world, these cities had suddenly gone from dreary, desert-suburb, utilitarian ticky-tacky development hell-holes, like Houston only in Arizona and Nevada; to massively desirable, amenity-laden cities?

The UK's cities are all desirable and amenity-laden, that their median multiples are all over 5?

You miss the point about paying for an Audi RS4 versus a Toyota Camry. Nothing has changed in all these markets with their house price inflation. They were a Camry a decade ago, they are still a Camry now. They are just an Audi RS4 PRICE now, that is all.

You are wrong about median multiples being skewed by "high end" data. This is a valid criticism of AVERAGES, NOT MEDIANS. This is why Demographia, the UN, the World Bank, etc etc, use medians.

Actually, what we are not giving sufficient credit to, is that because all the inflation is in the LAND value, the prices of the LOW end of the market are inflated disproportionately, with the greatest impact on the poor who buy at the bottom end of the market. Imagine a car market distortion by regulations, that made a Kia Rio $75,000 instead of $25,000, and an Audi RS4 $200,000 instead of $160,000, and you can picture the NZ housing market. Or better still, that made a 30 year old car $10,000 instead of $1,000.

by Happy123 | 20th Jan 14, 3:39pm 1390185597

The median multiple measure is far too simplistic. There are 1.5m (ish) people living in Auckland and paying more for property than Invercargill, these 1.5m people could go and live in Invercargill, there's nothing stopping them, they choose to live in Auckland. Despite the higher cost of housing, they make that choice because (they perceive) it to be better value. Your example of UK, US cities, the answer is yes, there is someone (millions actually) of people who think it's worth paying $X amount to live there.

The median will also be skewed, just not as much as an average.

There are house sales in Auckland every day, at todays prices, an asset is worth what someone is prepared to pay for it.

You also, conveniently, ignore the worlds increasing population.

by Kleefer | 20th Jan 14, 4:28pm 1390188494

"The median multiple measure is far too simplistic."

Simple is good in this case. Three times incomes: affordable. Eight times: outrageous.

"There are house sales in Auckland every day, at todays prices, an asset is worth what someone is prepared to pay for it."

I bet they said the same thing in California in 2006.

by PhilBest | 20th Jan 14, 4:50pm 1390189830

Happy123:

Here is the "not rocket science" explanation of why housing is affordable in some cities and not in others, regardless of popularity and demand and local income levels.

Start with price of farmland.

Add costs of development.

Divide by number of sections subdivided.

The result is around $40,000 to $100,000 for sections up to half an acre in size.

Why is this not happening in any particular city?

Ans: a UGB imposed by planners. This hands opportunity to gouge, to a few land bankers.

http://www.nzherald.co.nz/anne-gibson/news/article.cfm?a_id=39&objectid…

It is extraordinary how many people who probably claim to be decent moral individuals, and claim to be horrified by child abuse along with all other decent people, don't give a toss for a systemic racket that differs from outright violent child abuse only in the magnitude of brutality at the time of a particular incident, and in remoteness of the perpetrators from their victims.

This is not a Marxist conclusion, it is a "free market" conclusion regarding cronyism, rent-seeking and zero-sum wealth transfer. Employers of labour who allegedly (according to Marxists) "exploit their workers" in a relatively free market, are saints by comparison.

by Happy123 | 21st Jan 14, 2:48pm 1390268890

Your referring to one of the causes of house price inflation in Auckland, constrained supply, and I agree. The question I’m posing is regarding the method we use to measure affordability, the median multiple. I’m saying another measure should be used that considers the rather complex animal that is the housing market; not just taking one figure and times by 3.

Comments I've made on this site previously that you may want to consider all relate to buyers not starting from $0. Such as capital gains in previous properties, savings on OE, inheritance from wealthy baby boomer parents or any other leg up that FHB get these days that they didn't tend to get in the past.

If the median multiple is such a great measure why do none of the worlds most desirable cities conform to it? I'm saying it's not a good way to measure if housing is overpriced; it would be nice if a 4 bed villa in Ponsonby cost $225k but it's just not reality we need a better measure.

by PhilBest | 20th Jan 14, 4:55pm 1390190137

".....Your example of UK cities, the answer is yes, there is someone (millions actually) of people who think it's worth paying $X amount to live there......"

Being born there, and the costs (financial and personal) of international emigration, doesn't make most of these people relatively captive and exploitable fodder for the rentier classes in "big property" and "big finance"?

by Happy123 | 21st Jan 14, 2:51pm 1390269099

As above, I'm debating the measure we use, you say Auckland is overpriced cause it doesn't confirm to the median multiple of 3, I'm saying maybe Auckland is overpriced, maybe not. First show me a measure of affordability that considers all demand and supply side factors, not just one demand side factor times by three, it's simplistic in the extreme.

by Dale Smith | 21st Jan 14, 8:10pm 1390288214

Hi Happy123 – I look at this affordability/unaffordability in a different way and have come to the conclusion that the median multiple is a fair reflection of whether the price of housing is being offered at the ‘right’ price.

The basic premise for the value of any property is that it can be developed at a cost that will allow a margin via capital and/or yield. This margin comes about by adding value to the transaction; by bringing separate parts together to make the whole ie the whole is greater than the individual sum of its parts.

It also assumes that the cost of each of the parts is also put in at ‘added –value’ and that the market value can never be determined by just a cost plus basis without understand the real costs that need to go into the product.

So what are the real cost and what does added-value look like? It is actually easier to see what the non-value items are, take these out of the equation and what is left if mainly value-added.

In my comment in a reply below I say

'One of the most common threads that Demographia highlight is the countries or states that have the most Government interference by way of restrictive zoning policies (Local and/or Central) are also the places with the most expensive housing to income median multiple ratios.'

Why is that? Well restriction of supply is one of the obvious ones. It also allows land banking which further restricts supply and allows land bankers to maximize returns above and beyond what would otherwise be possible without the monopoly position that the restrictive zoning gives them.

Moreover it gives local government a monopoly position in approval and delivery of services. They use this position to leverage as much revenue from developers as the market will stand. Like any good parasite, they know how to get the most out of the host, without killing it.

And because council are notoriously inefficient in approval and delivery, it is very difficult for developers to match their supply to the rate of demand. This adds considerable extra time into the process which is an expense in its self, and because of the unpredictability of this delay, it adds considerable extra financial risk for the developer.

All these costs, which are considerable, are passed onto the home owner in higher prices. All these extra costs are known as non-value added costs in that they add nothing to the amenity value of the end product.

Remove these non-value added costs and the product would still exist, and at a lot lower price. Other way of describing non-valued costs is waste. Waste is part of any system, but it is the amount in question in property development that needs to be looked at.

If you are a beneficiary of this waste, to you it might be called income/revenue and you will justify why you should receive it, but it has to be remembered that this is being subsidized by someone.

In my opinion, it cannot be justified and any median multiple over 3 is starting to red flag dysfunctional government policies.

In markets that have non-restrictive zoning policies, they have none of the non-value added waste as described above; their prices are lower at around a median multiple of 3.

This is irrespective of whether the city has low interest rates, high immigration, rapid growth, has an international airport, a nice place to live etc.

A coincidence, I think not.

by Happy123 | 22nd Jan 14, 8:41am 1390333265

Thanks Dale, good comment and I couldn't agree more but I'm afraid I'm being misunderstood today. You are talking about one of the causes of house price inflation, in fact, the number one cause in our city. What I'm getting at is measuring if house prices are overvalued, considering and not trying to change, all the various factors. Constrained supply isn't going away and there are many who don't agree with urban sprawl, I don't think it's a good idea for Auckland to stretch to Hamilton.

So in a world (or city) that can't go on sprawling forever and has to start intensifying, how do we measure if house prices are overvalued? Times by 3 certainly isn't working. As for affordability, the measure again does not consider enough factors.

I think we both know that in Auckland (and other major cities) the median multiple rate will stay above 3 times from now on and you have to ask yourself is it relevant?

by Dale Smith | 20th Jan 14, 2:26pm 1390181213

One of the most common threads that Demographia highlight is the countries or states that have the most Government interference by way of restrictive zoning policies (Local and/or Central) are also the places with the most expensive housing to income median multiple ratios.

Having lived and worked in property development in both types of countries, I know as a home owner that wants a life, which one I preferred.

Back as early as the 1980’s NZ median multiple was around 3x.

Why is it that some commentators cannot understand or do not want home owners to live in a country with steady growth, low interest rates and low median house multiples, like other counties or states do?

Well we do know why, don’t we?

by bob | 21st Jan 14, 9:37am 1390250259

Basically your assumption is the less government controls the lower house prices and the better the city is to live in . Lets look at the most libiterian city in the world - no government at all. Mogadishu. I haven't been there, but a relative has and they don't rate it - they prefer living in Auckland.

by BigDaddy | 20th Jan 14, 2:35pm 1390181709

Isn't amazing how many lefties come out of the woodwork and insist that the facts are not the facts when they push their agenda?

If there is an "affordabiity" crisis where is it?

In the fevered minds of the politically skewed posters on this site- not in real life.

Don't believe it?

Look up Trademe.

At this moment there are 3087 homes for sale in Auckland under $500K ( well under Barfoots average of over $700K) plus 4407 properties to rent under $450 per week.

Then there is Manukau, Papakura, Hamilton, Huntly, Orewa, Silverdale etc with still more affordable housing available all within reach of everywhere.

Explain that away.

by Brendon | 20th Jan 14, 2:44pm 1390182249

Trademe search of Auckland, Houses under $500,000 indicates 1778 properties. First page of 24 only 5 actually under $500K. Most for Auction or price by negotiation. There is over 8000 properties for sale in Auckland, it would seem only 400 to 500 of them are openly for sale under $500K. I would imagine they would be lemons of one kind or another and that is why they are the bottom of the market.

Big Daddy you are full of misinformation, buyer beware when it comes to advise from you or your ilk, Olly Newland.

by puketepapa | 20th Jan 14, 2:53pm 1390182795

Lemons? Lemons? How polite. So euphemistic

by Brendon | 20th Jan 14, 3:02pm 1390183373

I know, swearing doesn't come naturally to me and it is best not to upset the delicate eyes of DC.

But you are right we are talking about s...holes, old dungers, leaky buildings, former P labs, neighbours to your local tinnie house or gang headquarters and other unmentionables.

by PhilBest | 20th Jan 14, 2:48pm 1390182512

In a city with a median household income of $70,000, "affordability" is NOT "under $500,000".....!!!

THIS is "affordability" (median household income not a lot different to Auckland):

http://www.realtor.com/realestateandhomes-search/Houston_TX/type-single…

Stop the child abuse and get a conscience.

by Dale Smith | 20th Jan 14, 2:54pm 1390182897

Easy, just because a property has a lower than average list price does not mean that property is seen as affordable or is value for money. Even those like yourself that think the property market is affordable, have some criteria which you judge a house to be not worth buying in this market, even if you can afford it. This is where your definition of ‘affordability’ is all up the kazoo. Just because the husband and wife both are working, grandparents have moved back in, the kids and pets are sent out to work, so the mortgage or rent can be paid, DOES NOT mean that housing is truly affordable.

by Kleefer | 20th Jan 14, 4:56pm 1390190178

BigDaddy, your tactic of calling everybody with concerns about housing affordability a 'leftist' is tiresome and inaccurate. I am a libertarian and what I see when I look at Auckland's affordability crisis is a state-sponsored land banking cartel. Obviously you are on the "winning" side of this worse-than-zero-sum game that has not only locked thousands of Aucklanders out of home ownership but has inflated a bubble that could take New Zealand's economy down if, or, more likely when, it pops.

by BigDaddy | 20th Jan 14, 3:14pm 1390184095

Trademe makes it compulsory to fill in the approximate price range when listing a property for sale so it appears at the appropriate value level even if it is not shown on the actual viewing page.

If you want affordability there are 256 properties for sale in Manukau for under $300K right now.

If there is a problem they should all have been sold immediately with absolutely no listings left to view.

by Brendon | 20th Jan 14, 3:51pm 1390186280

So when you said there wqs 3087 homes for sale under $500,000 in Auckland were you lying, telling the truth or guessing?

by BigDaddy | 20th Jan 14, 4:26pm 1390188360

The number came direct off Trademe's site at the time of writing.

I may be biased and have strong opinions but suggesting that I lie is offensive.

by Brendon | 20th Jan 14, 4:28pm 1390188490

If you made a mistake, fair enough. Admit to it and we will leave it at that....

by iconoclast | 20th Jan 14, 4:34pm 1390188863

Just for a bit of context .. you need to exercise a bit of scepticism with tademe .. we bought a place 3 months ago .. it's STILL listed on trademe .. in fact it's sprayed all around the internet

by BigDaddy | 20th Jan 14, 4:33pm 1390188814

As of this moment the number of properties for sale on Trademe in Auckland under $500K has risen to 4428 in less than 2 hours.

by PhilBest | 20th Jan 14, 4:39pm 1390189162

"Under 500K" is NOT "affordable" in a city where the median household income is $70,000.....!!! Half of households will be earning LESS than $70,000. And that is gross, all types of income included. Take tax off, for a start.

What's your b-----y agenda?

by Boatman | 20th Jan 14, 5:02pm 1390190537

Do you understand what a median is?

Basically , 50% of all households earn more than the median ....... there are a lot of households earing serious money in Auckland .

by PhilBest | 20th Jan 14, 5:45pm 1390193101

So the rest can go and eat cake.....?

The top part of the income distribution is expected to buy the homes in the top part of the price distribution. The bottom part of the income distribution are expected to buy the homes in the bottom part.

If the median multiple is high, the whole position will be skewed so that the middle class will be the new "stretched but just coping" buyers of the bottom-end houses; and anyone below that, probably the entire bottom quartile, can't buy anything and will have to suffer renting inadequate housing which is associated with health problems and so on.

All this is so dam UNNECESSARY, even if you have some Gordon Gekko philosophy to justify it. The whole ECONOMY and society works best with minimal zero-sum rent feedback loops in it.

by doublegz | 20th Jan 14, 7:51pm 1390200700

Hi Guys, Just want to keep you updated with the latest top 21 Auckland million dollar suburbs in terms of Median House Value (QV) as at Dec-2013.

1          Herne Bay       $1,770,900

2          St Marys Bay   $1,534,300

3          Remuera          $1,331,850

4          Epsom            $1,292,600

5          Westmere        $1,271,900

6          Stanley Point   $1,253,250

7          Ponsonby        $1,195,900

8          Campbells Bay $1,188,900

9          Orakei            $1,178,050

10        Mission Bay     $1,158,600

11        St Heliers        $1,133,000

12        Kohimarama    $1,126,550

13        Devonport       $1,125,650

14        Omaha            $1,106,400

15        Glendowie      $1,105,300

16        Parnell            $1,085,500

17        Takapuna        $1,074,500

18        Castor Bay      $1,055,450

19        Mellons Bay    $1,022,050

20        Narrow Neck   $1,013,150

21        Greenlane       $1,002,100

by Brendon | 20th Jan 14, 6:52pm 1390197161

Trademe search, Auckland, All districts, House, under $500K - 1782 properties found. Many of which will be sold for more than $500K as being auctioned or price by negotiation. Slim pickings for those with a "affordable" $1/2 million budget.

by PhilBest | 20th Jan 14, 4:36pm 1390189008

Included in the "256 properties" using that search filter:

Single room apartments

Unpriced advertisements

"Offers over $300,000" advertisements

Advertisements for properties at above $300,000.

At a guesstimate there might be 50 genuine examples under $300,000. And what are the chances they aren't "leaky homes", ex P labs, etc?

In my example of a FAIR housing market, stuff like this can be picked up for $80,000 and even less.

Suck on this: that is a search filter for housing in Houston and surrounding municipalities within 30 miles of the centre, for less than $70,000 (but not less than $30,000, to eliminate the really unfair examples).

http://www.realtor.com/realestateandhomes-search/Houston_TX/type-single…

by Happy123 | 21st Jan 14, 2:54pm 1390269293

Philbest, should I do a search of housing available in Shanghai, London or Sydney and compare.... Auckland will look darn cheap if I do.

by Signals | 20th Jan 14, 4:33pm 1390188784

The relationship of rental to price is one key to unlocking the difference between the good old days and today. It made sense to buy when your were marginally worse off after paying a mortgage, as wage increases, capital gain and mortgages rates were all likely to go in your favour in the medium term. That is not the case now. Wage rises are rare, capital gains are looking shaky, and mortgage rates are promised to go against you. So people rent. But the supply side does need to be addressed and the sooner we get to the end of the Unitary Plan roundabout, the better for all.

by PhilBest | 20th Jan 14, 5:48pm 1390193324

You mean the Unitary Plan notified by the Councillors in the face of its having been prepared by planners so incompetent that they assumed that every site included in their upzoned areas would be developed to maximum intensity within 30 years, including gold courses, school playing fields, churches, unbuildable slopes and unstable ground, etc etc?

The Plan needs to be torn up, the planners sacked and possibly prosecuted in a class action by first home buyers and renters, and the government needs to appoint Commissioners and strip the whole Council of its powers to consent and plan.

by Gareth Vaughan | 20th Jan 14, 4:35pm 1390188950

FYI, the latest monthly sales figures are out from REINZ - http://www.interest.co.nz/property/68108/national-median-house-price-hi…-

by delboy | 20th Jan 14, 5:32pm 1390192339

If housing is severely unaffordable in Auckland how come they are selling like crazy and the prices are increasing?

by Plutocracy | 20th Jan 14, 5:57pm 1390193831

Perhaps they mean unaffordable for New Zealanders?

by PhilBest | 20th Jan 14, 6:44pm 1390196659

Refer to California circa 2007 and Ireland circa 2008

Classic symptoms of bubbles about to pop:

First home buyers no longer in the "booming" market, which is made up almost entirely of incumbents relocating (and selling and buying in the same market); speculators still crazed enough with greed to leverage up their portfolios a bit more; and well-heeled overseas immigrants and investors.

by Happy123 | 21st Jan 14, 2:58pm 1390269491

Because by international comparisons Auckland is dirt cheap, there is strong demand, tight supply and a booming economy.

And most importantly the median multiple measure is hopelessly antiquated; there may come a time when housing is really unaffordable in Auckland and having a good measure to know when that time comes will be great.

by PhilBest | 20th Jan 14, 7:39pm 1390199955

Here's some more busting of the myths propagated by Hong Kong Hotel Room Len and his cabal and his cronies and the Central Planners of the Soviet Socialist Republic of Auckland.

Density: Auckland is 2400 people per square km already.

Only Toronto in the Anglo New World is denser (2800), and it has 6.5 million people.

I say "Anglo New World" because history and economic evolution matter.

Nevertheless, 2400 people per sq km is about the average for EUROPEAN cities. Auckland would be the densest city in the USA if it was there.

Every city in FRANCE outside of Paris is less dense than Auckland.

The Ruhr Valley urban area is less dense. Amsterdam is not much denser.

Is Hong Kong Hotel Room Len aiming for Japanese densities or what?

Why would it be necessary in a primary-produce-based, bottom-of-the-OECD country, with spare land to burn, to impose urban form density not even along the lines of the status quo in densely populated Europe - but well in excess of that?

Hong Kong Hotel Room Len needs to be made to "wear" his statement that Hong Kong is his model city:

http://www.dailymail.co.uk/news/article-2306842/Stunning-images-Hong-Ko…

http://www.dailymail.co.uk/news/article-2275206/Hong-Kongs-metal-cage-homes-How-tens-thousands-live-6ft-2ft-rabbit-hutches.html

Why stop at urban residents and producers? Why not force the farmers into multi-storey buildings too? Their workers often commute a heinously long way to work. To hell with competitiveness and productivity. But Hong Kong Hotel Room Len and his cabal and his cronies allegedly believe (are they really this stupid?) that "stack and pack" creates economic agglomeration economies.......!!

In all sectors, all of the time.....! So why leave farming out of it?

News flash: there is a wide range of economic sectors in an economy, that vary in their requirements for space and their ability to pay for space. Forcing them to pay through the nose for space, and indirectly, forcing them to pay their workforces for a cost of living space several times too high, will destroy and close down those sectors. Sadly, many of them are sources of primary economic income.

IF you "are" Hong Kong, and for well over a century you were a tax haven, a trading gateway into all of East Asia, and a locus of global finance for a third of the world, then yes, it makes sense to have a high density urban economy. This is nice work if you can get it. But "planners" had nothing to do with this and never will. In fact if contemporary planners had always been in charge of Hong Kong or NYC these cities would NOT have ended up as they are - the high income sectors would have sprung up elsewhere. And nothing like Silicon Valley could ever evolve if contemporary urban planners were running things. (This is commonly stated in analysis in the UK including the Barker Review).

Germany's highest income city - Wolfsburg - is part of its least dense region. Germany is an economy not run by and for rentiers in "big finance" and "big property", and it has no Manhattan or London leeching economic rent from the producers in the rest of the country via debt secured over inflated-price land. It just has a powerhouse manufactured exports economy and an ongoing external surplus.

by Brendon | 20th Jan 14, 8:41pm 1390203713

It is a shame that Demographia doesn't have more housing affordability data from Europe.

by PhilBest | 20th Jan 14, 9:12pm 1390205542

I note that Alain Bertaud, in the intro, infers that it is an indication of the culpability of bureaucracies in this debacle, that accurate and harmonised data is never available; and lightly-resourced individuals like Cox and Pavletich have to devote massive amounts of time to digging data out and putting it into presentable form.

It would be really helpful if the critics of Demographia's methodology directed some of their criticism to the bureaucracies whose main interest seems to be in maintaining the highest possible level of public ignorance on the subject. Hugh is right - "institutional failure" is really where this problem needs sheeting home to. Vested interests and ideological capture are really just opportunistic movers in consequence of the institutional failure.

Singapore seems to be one place where the bureaucracies are actually "proofed" against this sort of thing. Lee Kuan Yew was a very wise observer of human nature, in the way he designed the bureaucracy there. Kind of like "compulsory military training" - you're selected; you're in for 3 years; then you're back out into the real world. And remuneration is heavily performance-based.

by powerdownkiwi | 20th Jan 14, 9:27pm 1390206457

Lotta comments

No many commentators

Lotta ranting from the well known ranter.

No new info

And over on the top 10, the real story. Unmentioned by all.

Goodo

by Happy123 | 21st Jan 14, 3:00pm 1390269604

Maybe your on the wrong site.

by Your Landlord | 20th Jan 14, 10:42pm 1390210952

Na PDK.

Big Daddy has had a good day today.

A few judicious comments and he has been able to wind up so many of the 'lefties' on interest.co.nz.

Makes for a fun day's reading.

by rjf | 21st Jan 14, 9:58am 1390251488

A good day? Looks like he's been ripped to shreds to me. Not lefties, we want less government thanks, give us a free market, let us build and solve the problem.

by avatar99 | 20th Jan 14, 11:03pm 1390212200

I have become a one issue voter for the nect election. I will vote for the party with the best chance of curing this cancer on our economy. Haven't decided which that is yet. (By the way I own an over priced Auckland house but would cheer if house prices came down as it is simply where I live, not my retirement plan.)

by Brendon | 20th Jan 14, 11:13pm 1390212835

Good on ya mate. Me too.

by rjf | 21st Jan 14, 9:49am 1390250998

Same.

Jonkey ain't getting my vote again. Odd that YL is calling folk on here "lefties", I'm quite the opposite. Small government please. Let us build, cut the bureaucratic nonsense.

by puketepapa | 21st Jan 14, 9:59am 1390251547

There are only two possible alternatives that will meet your objectives and that's a vote for either KDC or WP

I wonder if all 3 of you are on the same page?

by Brendon | 21st Jan 14, 10:38am 1390253922

I am sure we have different ideas about the role/size of government, moral matters, enviromental concerns etc. Like any three random people. But we agree that the housing market is a nonsense, the situation is getting so bad it is affecting our whole society and it needs major reform not tinkering around the edges.

by Kleefer | 21st Jan 14, 10:19am 1390252768

I've always considered the housing racket to be an unholy alliance between the environmentalist left and vested property interests on the right.

by Happy123 | 21st Jan 14, 3:03pm 1390269801

In my opinion National has done more to curb house price inflation than any other govn in my life time, housing accord, LVR ratios, improve affordability through lower intererst rates.

Compare that with the naughties boom under Labour....

by Gareth Vaughan | 21st Jan 14, 3:20pm 1390270800

Aren't LVR ratios & improving affordability through lower intererst rates more to do with the RBNZ & GFC than the government?

by Chris_J | 21st Jan 14, 10:12am 1390252348

Has anyone asked the question: why should someone earning the median income of all households be able to buy a median house in the best suburb of the most expensive city with just 3 years pay? (Which by my reckoning with a concerted effort means they could be mortgage free within maybe 8 years ie before 30!)

by Kleefer | 21st Jan 14, 10:23am 1390252995

I don't know a single person saying that Chris. The median multiple is for the whole urban area. My question in response is: why should people earning well above the median be forced to pay five to six times their household income to live in outer suburbs?

by Happy123 | 21st Jan 14, 3:07pm 1390270020

They not, your assuming they are starting from $0 which they are not.

by Happy123 | 21st Jan 14, 3:05pm 1390269917

Nail.... head. It's a terrible measure.

by SimonP | 21st Jan 14, 4:40pm 1390275622

I suspect that if you used any other metric,e.g. Case Shiller, you would still come to the conclusion that NZ houses are horribly mispriced.

http://www.nbr.co.nz/article/picking-stocks-and-housing-bubbles-ck-150761

The correction will come someday and it might happen quickly or very very slowly.

by Boatman | 21st Jan 14, 10:56am 1390255007

I am aware of the various textbook definitions of unearned income and suggest that there is no such thing .

If you are referring to windfall gains from the increase in price of any asset , its not unearned income .

Someone risked some capital and took the time and effort to make the deicison to purchase the asset in the first place .

They anticipated a gain , otherwise they would not have acquired the asset if there was no upside .

Either way , its not unearned , although it may be a windfall in excess of the normal return expected

by Dale Smith | 21st Jan 14, 11:08pm 1390298925

Classic - listen to what this expat has to say about the value for money of Auckland houses. http://www.bloomberg.com/video/the-least-affordable-home-markets-in-the…

by bob | 22nd Jan 14, 10:50am 1390341057

The hidden costs of sprawl in Canada:

http://thecostofsprawl.com/report/SP_SuburbanSprawl_Oct2013_opt.pdf

Of course one of the costs is around pollution - which pro-sprawlers don't consider an issue. Also this is out of a University so obviously not as credible as a home made website from a lobby group.

by Dale Smith | 22nd Jan 14, 11:37am 1390343845

Bob- if its brains you are after, you can buy them by the bucket load, real cheap, at your local abattoir. But trying to find any common sense, especially from some of the contributors on this site, is hard yards.

I’m already familiar with this report and it only confirms they are ‘educated idiots’, which universities are full of, I know, I studied with many there. Education does not mean you can think, or you are balanced in your thinking, or you are unbiased on how you think.

The report is so unbalanced, you could write a book in rebuttal, but in summary there is one paragraph that shows their bias.

‘There are many public policy instruments that can correct the price relationships that currently encourage sprawl. In addition to reducing the future growth of sprawl, such policy instruments can revitalize urban cores and existing suburbs, raising property values for existing owners (my highlights).’

That’s right, use central or local government regulations (like Auckland’s shared value up lift zoning) to raise prices, create revenue for council, AND by default give a free capital gain for all existing owners, most of whom have never had to pay any levy when they purchased.

by bob | 22nd Jan 14, 12:07pm 1390345624

That where you got yours? Your constant al hominem attack doesn't make logical arguement.

by bob | 22nd Jan 14, 12:29pm 1390346941

First paragraph - ad hominem attack contributing nothing to arguement

Second paragraph - unsubstantiated claim that you can refute something

Third paragraph - out of context quote

Fourth paragraph - paranoid rave

You seem to completely miss the point that although suburban sprawl might look cheap there are externalities. I don't want the cheapest housing if it comes with big hidden costs. I don't want to subsidise other peoples cheap sprawl.

If people want cheap housing it is available now in Auckland on the fringes. It doesn't sell because people don't just want cheap, they also want good.

by Karl May | 24th Apr 14, 7:39pm 1398325141

Well it's an interesting topic. lots of points of view that conflict. All highly rational and logical even though many points of view are polarised they all seem to be plausible. I'm 6th generation Jaffa ,mid 40's and I have about $1.5 M to invest in rental properties (residential) at the moment. My father owned a mid sized construction company and his father was a builder too.

I have been to 26 auctions in the past 12 months. Bid at all of them and still can't bring myself to pay what some of these things are going for. It is out of control and a lot of what is happening is being fuelled by first time buyers in New Zealand that are also recently new Kiwi's.

My concern with the OCR situation and the demand on property by our new country men will actual escalate the price of property further. I think the likely hood of a major collapse extremely unlikely due to the stake holders involved. A correction of 15% and a flattening out ,yerp, in the short to medium term gotta happen. Long term it'll just get worse.

Namely the banks,our new countrymen and women of course,the government and our rate hungry councils,the construction industry in general and of course the real estate agents. Are the main stakeholders with respect to the current situation and I think it is extremely convenient for all of them to keep things on the boil.

i spend a bit of time in the east and we as a country are naive with respect to the quality of life this country offers. The people that come from these places have accrued funds in markets and business's of a size that many New Zealanders couldn't even fathom. These people will pay anything and to them $800k is a trifle .especially when they can get funding offshore at 3 to 3.95%

I think we're simply victims of a global market and we aren't equipped income wise to cope with it. We're loosing control.

by steven | 25th Apr 14, 8:35am 1398371748

Agree....

We could easily do something about it of course simply ban foreign ownership, but there are enough vested interests making rentier levels of income that such a action isnt that likely.

regards

by Mark L | 24th Apr 14, 9:50pm 1398333000

They used t express house prices in multiples of the median wage - not household income. I bought my first house at 3 times my (very average) income in 1980. although an all time low, that would equate to $180k now for a house that would sell for $400k - and thats in wlg not akl - overpriced housing helps no-one except lucky speculators. Hopefully there are big falls coming. I feel for the people who will wear the cost of this stupidity.

by steven | 25th Apr 14, 8:22am 1398370963

They still do, except Hugh P uses the worst ratios in order to justify his political view point....

build baby, build

Bound to end well...

regards