New urban zone affordability views

Property

How cheap money and expensive Councils have affected affordability in Auckland and Wellington housing zones

27th Feb 14, 10:32am by David Chaston

Today we are releasing two summaries of housing affordability measures for the Auckland and Wellington urban areas.

Although overall housing loan affordability is in a deteriorating trend again, the severity is quite disparate even within some of our major cities.

Cheap mortgage money has been very seductive for many borrowers and certainly most lenders, allowing larger and larger loans.

But affordability is also heavily influenced by local authorities, their policies and political opinions. Planning 'fads' have a lot to answer for.

In the end, the real stress imposes itself on first home buyers who are on regular incomes and looking to purchase.

When these financial stress levels are elevated they intersect by forcing unreasonable choices between either a mortgage or a family. It is rare that public policy settings consider such consequences. The history has been that Councils respond to existing homeowner/ratepayer goals which prioritise protecting or growing house values. That is easily done by strangling supply.

Our research work which is supported by the Roost Mortgage Broker network allows us to track affordability in the major urban zones of both cities.

We track affordability in a number of ways:

- home loan affordability for a standard buyer who purchases a median priced house

- home loan affordability for a first home buyer who purchases a first quartile house

- home loan affordability for a two income family with one child

- home loan affordability for a two income couple buying their first home

- comparing Rental Affordability and Home buyer affordability (after equalising the components)

- the Rent Ratio - relating rent levels to house prices

- Median Multiples - relating household incomes to house prices.

These various views add depth to the issue which is likely to be topical in the 2014 election debates.

We hope this data, which will be updated monthly, helps inform that debate.

The Auckland urban summaries are here.

The Wellington urban summaries are here.

Data for other centres can be found within the main reports which are located in our menu systems.

We were motivated to publish these views by Peter Jeffries of CORT and we thank him for his suggestions.

We welcome feedback on this work.

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.

49 Comments

by Simon | 27th Feb 14, 11:11am 1393452698

Shows Auckland is way above NZ average in terms of price to income, or price to rent. Not representing good value at these prices.

Wellington however, not so (since 2008 anyway). Wellington around the NZ average, and in some instances (e.g median income multiplier), better than NZ average in terms of housing 'value'. Biggest NZ incomes and house prices that have not had the auckland boom make buying in wellington not too bad at all...

by cowboy | 27th Feb 14, 4:32pm 1393471977

They can be no effective solution until the population growth is controlled.

While population growth is contuinally demanding more resources, no amount of cutting back or belt tightening is going to provide relief, let alone working surplus.

by Maybar | 27th Feb 14, 10:35pm 1393493757

http://infographics.economist.com/2014/hpi0114/?n=21540328&w=595

I don't see the sense in your endless comparison with Texas/Houston and Auckland. The US house prices suffered a crash along with Ireland, that is why prices are cheaper there. See the above link and compare house prices to income for Canada, Australia, New Zealand and Britain. They all follow a very similar trajectory and are converging, and it shows how house prices globally are effected by global events. What is the common link between these countries? Are their governments copying each other in terms of monetary policies, planning systems etc? New Zealand is not alone in its housing unaffordability.

by Andrewj | 28th Feb 14, 10:48am 1393537688

http://market-ticker.org/akcs-www?post=228806

by Roelof | 28th Feb 14, 1:03pm 1393545782

zz... 26000 skm = 6 million acres...

U been drinking to much,... low interest rate diet Cola..? :)

by Plutocracy | 1st Mar 14, 10:28am 1393622917

Hugh should start petitioning for some name changes - hey presto, instant affordable "Auckland" housing! Cheap commuting too I hear.

How are the mutiple of the medians in Huntly?!

by PhilBest | 1st Mar 14, 6:14pm 1393650845

Zanyzane, you can't possibly be sincere with that stupid argument.

So what if Houston is 7 times the size of Auckland. It also has 5 times as many people.

This effectively means that if Auckland was a free to sprawl as Houston is, and hence have affordable housing, it would only need to be around 40% larger in area.

If you are sick of using Houston as an example; and indeed it is too big to be compared with Auckland (but Len Brown uses London and Hong Kong, doesn't he?); then use Indianapolis or Nashville or Jacksonville or Salt Lake City. All with similar population but much less dense than Auckland; all with house price median multiples around 3; all with FAR less traffic congestion delay than Auckland.

by waymad | 28th Feb 14, 2:28pm 1393550895

ZZ, it's not the divisor (the total sq km) which matters when we all talk about 'boundaries'.

It's the economic effect of that zoning squiggle on a map.

The Productivity Commission Final Housing Affordability Report estimates the rural/urban price differential for Auckland at roughly 10 times - P9 - a direct quote follows:

"In Auckland the MUL is a binding constraint on the supply of land for urban growth and has increased section prices within the city. This is indicated by the large differential between land prices 2 kilometres inside and 2 kilometres outside the MUL (Figure 0.9), which suggests that Auckland Council’s proposed compact city approach, based on containment of the city, undermines the aspiration of affordable housing."

Effects:

Instant CG handed to the landowners of 'urban zone', the moment the squiggle is put into effect. Rural land prices (say, top-end dairy) run around $50K/ha. Urban undeveloped land prices, using the PC's figures, start at around $500K/ha.
The Urban land price (thus inflated) transmits successively across the market for the adjacent area, the suburb, and the city. After all, if you owned a shack on a formerly rural plot, for which you paid $17,500 in the days of yore, whaddareya gonna sell it for now that it's Urban zoned, and the neighbours on a subdivision where average house/land prices are $750,000?
The price is also transmitted directly via the operation of land agents (recent sales), city valuations (entire areas, also based on sales and rules of thumb), and hearsay (did ya hear what ol' Bloggsie got for that darned Shack???)
Every such price increment is a minor CG (for the accounting types, a Revaluation rather than a Cost asset component), and added across all sites, this becomes a substantial sum.
Now, what do we expect our FHB to buy? Why, a Modern Shack, at Urban land prices which inevitably contain a massive CG component (as distinct to actual rural-land raw costt). And pay for that via a mortgage, delivered by bankstaz eager for the interest revenue stream on that inflated sum, whereupon as much will be expended in Interest as was paid in Principal.

So ignoring, as the Clueless Councils do, the economic effects of artificial squiggles on maps, nevertheless has real-world results, which in the way of this wicked old world, fall mostly heavily upon the young, the poor and the start-ups.

The accounting equation is startlingly simple.

Raw per ha cost of rural land: 50K debit, asset

Other side: 50K credit - Landowners equity.

Revalued once urban boundary moved: 450K Credit landowners equity Revaluation Reserve

Debit 450K Asset Value

Owner sells the plot:

Debit Landowners Bank Account 500K (which for youse non accounting types is a Credit on der Bank Statement - yum yum)

Credit Asset Value 500K

Owner's equity is still 500K - it's now just in the form of Cash, not Fixed Asset. In effect, the $450K Revaluation Reserve has been cashed up.....hence my characterisation as Capital Gain (CG).

Unearned.

Placed there by a squiggle on a map.

And we call this 'Godzone'......

by bob | 28th Feb 14, 3:48pm 1393555736

There is (within the Auckland MUL) already 3 bed freestanding sprawl homes on the market under $300K which don't sell and have been going down in value relative to inflation over the last few boom years.

Knowing that they don't sell I can see why developers are not interested in building more of them (you can sell $500K-$600K plus big sprawl homes - but that's not affordability). On the other hand you can sell a sub $300K central apartment the moment you can get it on the market.

by PhilBest | 1st Mar 14, 6:26pm 1393651607

Total population is irrelevant? Some people seem to just desperately thrash round trying to bury discussion threads in nonsense every time this topic comes up, as if they are desperate that people be prevented from learning the truth.

by Brendon | 28th Feb 14, 2:27pm 1393550836

What is artificial about Greenbelts, Housing accords, RUBs, MULs and other squiggles on the map. If you redraw Auckland to include Waikato and Northland then move all that nonsense to the new boundaries too.

P.S ZZ I think your arguments are getting even harder than normal to follow lately.

by PhilBest | 1st Mar 14, 6:38pm 1393652336

The difference IS:

You can buy farmland anywhere within driving distance of Houston and build what you like on it.

This is a typical result:

http://en.wikipedia.org/wiki/The_Woodlands,_Texas

https://www.youtube.com/watch?v=pe9qAQZ1pp8

Are we really so smart by having laws that prevent anything like this from happening anywhere in NZ?

We can’t get our heads around the fact that this new city which sprung out of the forest in less than 2 decades, has jobs-housing balance, and affordability in spite of the very high local amenity.

This is what you can do when you can buy cheap land ($20,000 per acre) and do what you like with it. The fact that you can do this also keeps the property market in the existing cities honest.

http://www.realtor.com/realestateandhomes-search/The-Woodlands_TX/type-single-family-home,condo-townhome-row-home-co-op/price-70000-na/sby-1?pgsz=50

I can see massive scope for this sort of thing in Canterbury, and south of Auckland where the island starts to widen out.

Young Kiwis priced out of the housing market, looking at RE sites like the above - and that for Houston itself, must feel swindled, surely? Time for a revolution not against the capitalist overlords, but against the Council Planners. Of course the Council Planners are in the pockets of the land rentier and financier overlords.

by Roelof | 2nd Mar 14, 3:05pm 1393725948

You can buy farmland in NZ and build as many houses as you like

Ar u sure about that..,.??? My understanding is that u can't...

But... I'm not 100% knowledgeable on that.

Maybe your friend had some kind of special consent ... ??

by Kumbel | 2nd Mar 14, 3:40pm 1393728003

Yes and no. Apparently my council got a bit toey about the third dwelling I put onto my single title but - and it's a big "but" - we tend to forget the RMA is permissive at heart. In other words everything is allowed unless there is a good, enviromental reason for stopping it. In practice councils have subverted the original principles of the act and tried to turn it back into the Town and Country Planning Act by creating zones etc that do not exist in the act.

Pegasus was supposed to be standalone originally. I don't know what Waimakariri DIstrict thought of the plan originally but, by the time Southern Capital got the proposal into the Environment Court WDC were not part of the case and it was only Ecan trying to stop it on transport grounds of all things.

So generally no in most districts just cos that's the kind of folks they are in Plan Administration but anyone who has deep pockets has always got a better than even chance in the Environment Court. And developers have run up a fairly regular set of victories there.

by Roelof | 2nd Mar 14, 6:03pm 1393736639

thks Kumbel... much appreciated..

by dtcarter | 28th Feb 14, 12:26pm 1393543612

"Many women are unnecessary "Mortgage Slaves" today ."

Wow, you really are from a bygone era aren't you? Women are slaves to feed the mortgage, presumably when freed from slavery you expect them to return to domestic chores? While for men it's just normal to go out and work.

by Brendon | 28th Feb 14, 2:42pm 1393551762

Maybe HP could have worded his argument a bit better. But his point is why does house prices capitalise the income gains of middle income families. Women enter the workforce house prices go up, Interest rates go down house prices go up, WFF introduced and house prices go up. Baby bonus and house prices go up?

This doesn't happen to other necessities, food prices don't go up in response to interest rates or moving from single to double income families

We need to jump off this treadmill and reform this system so that effort is rewarded.

by steven | 28th Feb 14, 8:38pm 1393573122

Give tax cuts, house prices go up.

Have LVR restrictions eg in texas you see constrained prices. Here LVR restrictions seem to have kneecapped rises.

Ergo there is a lot more to the equation than land restrictions and there are questions around removing them.

regards

by Brendon | 28th Feb 14, 9:10pm 1393575023

Steven read these two links here and here, plus the comments that follow for a new perhaps more balanced view of the housing/transport issue.

by steven | 1st Mar 14, 6:55pm 1393653346

Hi Brendon

Opinion...it may or may not be correct...

What I look for is peer reviewed work, that for me carries a lot of weight.

In terms of left V right, well sprwal is an energy no no...

The US seems to be buckling under the cost of managing that.

Huge Qs and frankly I cant be bothered spending much time on it...

regards

by steven | 1st Mar 14, 7:23pm 1393654990

Oh and in terms of give transportation funds to local level I think quite a lot is, but frankly I dont give much space to councils effectiveness.

regards

by Brendon | 1st Mar 14, 10:12pm 1393665141

Well thanks for replying Steven even if it didn't interest you.

I don't think you should judge LG from your experience here or in the UK, but rather in what they could be. Best practice re LG is in Northern Europe.

by PhilBest | 1st Mar 14, 6:33pm 1393652001

Last November the Bank of International Settlements published an interesting working paper entitled “Can non-interest rate policies stabilise housing markets? Evidence from a panel of 57 economies"

http://www.bis.org/publ/work433.pdf

From conclusion of the study:

“…..None of the policies designed to affect either the supply of or the demand for credit has a discernible impact on house prices. This has implications for the degree to which credit-constrained households are the marginal purchasers of housing or for THE IMPORTANCE OF HOUSING SUPPLY, which is not explicitly considered in this Study……"

by PhilBest | 1st Mar 14, 6:36pm 1393652168

When there are regulatory constraints on land supply, even if there is no credit at all, house prices will rise to "price out" a similar proportion of the population; and this is usually at median multiple levels not a lot different to when there IS "credit". Those that do succeed in buying, manage to save the whole purchase price (and/or get loans and gifts from family). Those that don't, don't.

by steven | 1st Mar 14, 6:49pm 1393652945

Of course a bunch of free market bankers....oh yes bound to be trust worthy.

Yet here we introduce a LVR and that seems to have an the effect. Also texas has a 80% LVR...

regards

by steven | 1st Mar 14, 7:47pm 1393656444

I dont disagree with the first statement.

Leaving it to the free market to alleviate? no frankly.

I am not, what I am not advocating is your solution, because a) I dont see that it is a solution, and b) because energy is no longer cheap.

Oh and you odnt have to take on a mortgage....so its self inflicted slavery, free choice after all.

regards

by powerdownkiwi | 2nd Mar 14, 9:31am 1393705868

Hugh - women were pushed into the 'workforce' by the systemic need to 'grow'. It's the same reasom obesity has appeared. We once invented a system to track trading. Because it started small, we invented one which could 'grow' (although it had a safety-valve called inflation).

It fitted the increase in 'productivity' gotten from fossil fuels, but inevitably there came a time when satisfying 'needs' wasn't enough. So they created 'wants' (advertising). Parallel to that, they mechanised the woman out of the kitchen, which conveniently gave her more time to 'earn, so she could join the needed growth in 'consumption.

Obviously there was a limit. There's a limit to how much any individual could eat, drink and consume in 24 hours. The system had to force bigger houses, more contents on everyone, and those people feared a depreciation of their major 'asset'. So they demanded 'rules' - particularly after their 'leaky homes' scare. They are your biggest problem now. They vote, and they'll vote with their asset.

But you and they share the bigger problem. Neither have an answer, neither want to even ask the question. Fear, do you think? I find it quite funny that I - who did ask the question and didn't like the answer - then built a 135 sq/m house for $50,000. I did that without complaining about the Council, oddly enough - just thought laterally and with logic.

by scarfie | 2nd Mar 14, 10:55am 1393710949

Hugh, what PDK says here about women entering the workforce is a great example of what I talk about when I comment on the ability of intuitive thinking in temperament types. Most of my life I formed the opinion that woman working was a cause of unemployment(at least I had perceived the problem and started the thinking process), now i realise it is a symptom just as Murray outlines. You make some valid points but overlook the real point about us being trapped in a downward spiral into poverty. We are now 40 or so years into that cycle, so how can you disregard that?

The fact that housing ISN'T affordable really says the answers are more complex than you claim.

Sometimes it pays the split the argument. For instance in relation to disease modern medicine has lost the plot, but for trauma it is astounding what has been achieved. So sure some remarkable advances have occured in housing but they are not all smart or applied in the best manner they could be.

by Plutocracy | 2nd Mar 14, 1:09pm 1393718957

I think you're right Scarfie, most are likely to get a lot poorer as more time passes and the world continues to fill up with people. This is why that article about increasing New Zealands population to make us 'wealthier' is rubbish. Here's a lovely quote from an ecologist about why increasing population = increased poverty for all:

Population tends to grow exponentially. In a finite world this means that the per capita share of the world's goods must steadily decrease. Is ours a finite world? Specifically, can "the greatest good for the greatest number" be realized?

No--for two reasons, each sufficient by itself. The first is a theoretical one. It is not mathematically possible to maximize for two (or more) variables at the same time. This principle is implicit in the theory of partial differential equations.

The second reason springs directly from biological facts. To live, any organism must have a source of energy (for example, food). This energy is utilized for two purposes: mere maintenance and work. For man, maintenance of life requires about 1600 kilocalories a day ("maintenance calories"). Anything that he does over and above merely staying alive will be defined as work, and is supported by "work calories" which he takes in. Work calories are used not only for what we call work in common speech; they are also required for all forms of enjoyment, from swimming and automobile racing to playing music and writing poetry. If our goal is to maximize population it is obvious what we must do: We must make the work calories per person approach as close to zero as possible. No gourmet meals, no vacations, no sports, no music, no literature, no art ... I think that everyone will grant, without argument or proof, that maximizing population does not maximize goods.

The optimum population is, then, less than the maximum. The difficulty of defining the optimum is enormous; so far as I know, no one has seriously tackled this problem. Reaching an acceptable and stable solution will surely require more than one generation of hard analytical work--and much persuasion.

by steven | 2nd Mar 14, 1:54pm 1393721694

Sure we'd all like to live like kings. Yet 1.5billion of us have more energy at our disposal than individual kings and queens in the past. Another 5.5billion would like to live like us.

There isnt the energy, space, food or time for that to happen.

Nature wont care...simple.

"advanced" no, consumed...

If we had truely advanced we would have realised, accepted and stoped consuming as we do.

regards

by dtcarter | 3rd Mar 14, 9:14pm 1393834471

Hugh,

What evidence do you have that the vast majority of people are interested in living in your autodependent sprawl cities?

Yes Huston is successful, but there are pleanty of successfull cities that control their footprint.

by cowboy | 2nd Mar 14, 11:28am 1393712891

No PDK, women were not pushed into the workforce like that. It has been well researched and documented.

When the World War (WW2) occurred many menfolk were drafted up, so many that most of the factories and shops and services suffered. In pastoral ages, such wars were self limiting, losing your workforce meant losing the war.

In the Industrial Age a woman could operate a machine as well, if not better than a man. And many of the tools had improved as well.

This meant more men could be killed in the war effort, and the factories would still be supplying the war and politicians (previous wars tended to supported by factions in government rather than whole countries).

However at the end of the war when the men came home it was found to the men's surprise that the womenfolk didn't want to quit their careers and usefulness to sit around home and wait for an allowance to spend and a man to tell them what they can and couldn't do.

Having a job meant income and contacts. That meant freedom.

It also meant a huge shift in consumer focus and liquidity.

That also meant inflation and employment issues (remember the rolling strikes in the UK).

Government therefore reigned in the excesses creating many of the financial crippling we see today.

by waymad | 27th Feb 14, 11:41am 1393454504

DC, congratulations for getting this comparison out. It will add greatly to the coming storm over expensive and dysfunctional Councils, the building materials duopoly, the New Guilds (LBP's and Elfin Safety) and the static household incomes which sit as the divisor in most of these ratios.

by Noprogram | 27th Feb 14, 3:42pm 1393468970

Another great piece by Catherine Cashmore....

"‘Capital Growth’ in land values does not occur by way of some abject force of nature. Everything that makes our cities ‘liveable’ comes from the collective ‘investment’ of our taxpayer dollars – which we ‘grudgingly’ pay in the first place, to provide the social amenities needed to form the base from which we can all progress.

This would include, community services such as, transport, parks, roads, trains, trams, medical facilities, and most importantly, schools.

Yet, it is also these facilities that produce the needed demand for real estate that pushes values upwards. Not through the efforts of the individual homeowner, but the productive efforts of the taxpayer – renter, homeowner and investor alike.

Housing on its own is worth nothing without the infrastructure that surrounds it and rising land values are ‘reward’ for nothing other than unwontedly buying into a system that – under the current structure – promotes inequality and forces social polarisation."

http://www.macrobusiness.com.au/2014/02/one-auction-and-its-impact-on-t…

by cowboy | 27th Feb 14, 4:31pm 1393471867

"comes from the collective ‘investment’ of our taxpayer dollars"

NO.

These things are merely handled as a monopoly by the State. They can be done better and cheaper through private interests, but those in power hold the monopoly on the rights.

That is why places like Aussi have had success with Mixed Ownership models...while State run places like Greece have gone all-but bankrupt despite having the best roads in Europe.

Areas like Scandanavia have huge taxes and massive State power, the people are "happy"..yet for all the billions in Oil and foreign export, why do we see so little culture or tourists from there? Because their State is sucking them dry and their culture is a study in denial in the face of hopelessness.

While corporate greed creates massive problems, the State institutionisation of it is not the answer.

by dtcarter | 28th Feb 14, 12:41pm 1393544500

"why do we see so little culture or tourists from there?"

Are you delusional? Have you never heard of scandanavian design?

Have you ever travelled the world? It's full of scandanavian tourists.

For instance, Sweden has a population double ours, but the number of Sweedish tourists to Thailand is 7 fold

http://tourism.go.th/index.php?mod=WebTourism&file=content&dID=6&cID=276

by dtcarter | 3rd Mar 14, 11:05pm 1393841124

"For an adequately accurate fix, international researchers use the Demographia Urban Areas Directory."

Lol, if by 'international researchers" you mean Hugh Pavletich and Wendell Cox.

by powerdownkiwi | 2nd Mar 14, 9:10am 1393704657

One wonders what Pavlovtick would say when he emerged from Oncology. "That can't be right, I didn't have cancer before".

Yes, Auckland could sprawl all over the Waikato, indeed every major city on the planet could sprawl over every adjacent area - but those cities require food, water, energy and other resources. They could be built, until they couldn't be supplied any more.

The smart look forward, the cranially-constrained look backwards, and chant mantra.

http://www.scientificamerican.com/article/apocalypse-soon-has-civilization-passed-the-environmental-point-of-no-return/

http://ourfiniteworld.com/2011/10/24/2012-reaching-limits-to-growth/

https://physics.ucsd.edu/do-the-math/2012/04/economist-meets-physicist/

The question is: how long can it continue, and the supplementary question is: What are our best actions in light of what is - inevitably - coming. It's already here for Bangladesh, Rwanda, Haiti (some twits reckon that all those folk need is 'more money, which is the same a 'cheaper housing, but no amount of 'money' ever changed biological overshoot or untimate scarcity) and the rot is coming up through the middle-classes.

A whole different take is required. Which means that those who barrack for a past take must be wrong.

by scarfie | 2nd Mar 14, 11:04am 1393711475

It is actually a question for you to answer ZZ. The worlds population is going to shrink to about 1 Billion, how would you like to get there?

by scarfie | 4th Mar 14, 8:12am 1393873971

We are a biological species and therefore very much subject to the Seneca Effect. Take a look at it mate, then take a look at a world population graph (the most accurate ones I first saw have gone from the net) and tell me it isn't already happening. The slope of the curve changed in 1961 and since then the rate of growth has been negative for the first time ever in mankind. That is a peaking move, it is happening regardless about what you think, physics trumps opinion every time. In business this is called sigmoid curve.

Notice the back side of the Seneca curve is steeper than the front side. So we took 200 years of constant growth to reach the inflection point, we have been in the peaking move for 50 years and near the top. So who knows, the downside back to a billion could happen in under 100 years. So sure we don't know when, and how long it will take, but it is happening. It is the ultimate technical indicator :-)

by Brendon | 4th Mar 14, 9:38am 1393879117

In the biological world are there some species whose population increase at an ever decreasing rate until total population peaks and then that population is maintained at a plateau?

The species after the growth phase becoming a stable part of the wider biological ecosystem.

Say like a forest recolonises an area after a forest fire.

Is that not possible for humans too?

Is the post growth seneca cliff a biological certainty?

by steven | 4th Mar 14, 9:47am 1393879647

Some? but in say animals as opposed to plants?

I am not aware that any animal achieved this?

Possible for humans too? yet looking at past civilisations they collapsed, surely if it was possible we'd see examples and copious ones?

"seneca cliff" sadly, yes. why? because we greatly exceed the planet's carrying capacity for us without fossil fuels.

We certainly have/had the intelligence to not fall off this cliff.

Look at some examples, pakistan it has someoning like only 5% of woodland left as its population has stripped the wood away to cook with. What are they going to cook with a few years from now? They have no money for oil/gas or the infrastructure....and they have nukes, that could end very well couldnt it....

Or on a bigger scale our never ending argument on peak oil, look how many ppl deny it (in one form or another).

regards

by Brendon | 4th Mar 14, 10:15am 1393881301

When did the Chinese civilisation collaspe? How did that go Seneca effect wise?

Did the Roman empire suffer from a seneca effect or has it gradually changed from a European continent run by a monocentric model to Europe being run by polycentric city and nation state model?

Did all civilisations collaspe or have some of then changed, adapted to a changing world?

by Kumbel | 4th Mar 14, 11:11am 1393884691

The Roman Empire definitely went out with a whimper not a bang. In its last 200 odd years it was really two empires: Western Rome based in Rome and Eastern Rome based in Byzantium (modern Istanbul). The Eastern Empire survived the fall of Western Rome and wasn't finally wiped out until the fifteenth century.

What did for the West at least was probably the fact that the model of taxation and governance was not sustainable given the size of the borders it had to protect. Basically Rome couldn't afford the number of legions required to protect the Rhine border.

If you are looking for a Seneca effect then the collapse of the Mycenean civilisation c1150BC is a better example. Although the rank and file populace carried on very nicely even after the palaces were gone.

by scarfie | 4th Mar 14, 11:33am 1393886017

Part of the Seneca effect is the decline is in relation to the growth rate. The hockey stick growth phase starting in 1750 is what should catch your attention and it is this aspect that tells you there will be a steeper back side.

by cowboy | 2nd Mar 14, 11:31am 1393713063

You're right, we have to re-evaluate how the work-incentive is handled in a globalised economy when many basics are easily supplied (and fiat dollar cost is the biggest headache). In the past resources have been scarce and labour the biggest problem..... that has changed, energy overconsumption and boredom and loss of hope are the big problems. Once upon a time, hope for a better day tomorrow was enough to go on - today tomorrow is more of the same with punitive government action should anything improve.

by dtcarter | 3rd Mar 14, 8:47pm 1393832835

"hardly recovered probably due to restrictive immigration policies."

Uh, the population of Berlin is growing, and allot of it has to do with immigration. There are 200,000 people of Turkish origin living in Berlin. Berlin remains far and away the biggest city in Germany, almost twice as the next biggest, Hamburg.

It's not growing faster because the German population isn't growing fast. They have a low birthrate. Since 1960 population has gone from 73M to 82M, about 10% increase.

At the same time NZ has gone from 2.3 to 4.4, almost 100% increase.

The Germans appear to favour living in small cities spread around the country rather than once super-city. http://en.wikipedia.org/wiki/List_of_cities_in_Germany_by_population

Certainly helps avoid the growth problems Auckland has. Favouring good public transport surely helps too (the S & U Bahn is how you get around most cities. The Auto Bahn is for getting between cities.)

And they don't seem to be any poorer for this lack of population growth, quite the opposite in fact. Yet that is often the solution postulated in NZ to boost our wealth.

by PeakEverything | 2nd Mar 14, 11:27am 1393712855

Yeah PDK, stop ramming down my throat that we need to eat and consume resources for economic activity.

Hugh you talk about financing infrastructure properly. Can this be done in a world without economic growth year on year on year? If so how?

just because you say your proposals are solid Dosn't make them so, surely if they were so obvious we wouldn't have zoning problems in the first place? Perhaps there is a good reason for them,?

by cowboy | 2nd Mar 14, 2:05pm 1393722359

" They could be built, until they couldn't be supplied any more."

Without population controls, not "could" but "will".

question is what breaks first, and how long can the system limp along until the number of breaks finally nails the old camel...