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English says Reserve Bank could use high LVR limit again or other Macro-Prudential tools to slow Auckland housing boom again, but supply remains key

Property
English says Reserve Bank could use high LVR limit again or other Macro-Prudential tools to slow Auckland housing boom again, but supply remains key

By Bernard Hickey

Speaking after fresh signs of a second wind in Auckland's housing market, Finance Minister Bill English has pointed out the Reserve Bank could go back into its Macro-Prudential toolkit again to try to slow the market, although the Government remains focused on building housing supply.

Westpac economists suggested this week the Reserve Bank could consider a tightening of its Macro-Prudential policies in response to another surge in house prices in Auckland as post-election uncertainty faded, consenting stalled and migration jumped. The economists suggested the bank could toughen capital rules for home loans.

Earlier on Tuesday, Auckland's largest real estate agency group, Barfoot and Thompson, reported sales volumes rose 17.7% in November from October and the median price rose 5.6% to a record high as "keen" buyers returned to open homes and auctions. See Greg Ninness' article here.

Asked about the prospect of further Macro-Prudential tightening by the Reserve Bank, English told reporters in Parliament the Reserve Bank seemed satisfied with its high LVR speed limit, but could use that tool again or use other tools.

"Clearly they were concerned about some resurgence in prices and actually they have got a reasonably benign view about interest rates - but those tools are available if Auckland housing really did take off again," English said.
 
Asked if he would be comfortable if the Reserve Bank bought in new Macro-Prudential tools, he said: "They've got a tool kit and it's their job to use it, but I think from the track record of the Reserve Bank, if they see housing prices start rising again quite rapidly they would probably take some action, but you would need to talk to them about what action they would take."
 
English was then asked if he would prefer the Reserve Bank to limit lending or increase capital requirements for rental property owners and speculators.

"I understand they have been working on whether to change the banking regulations around people with multiple properties," English said.
 
"I think they would probably need a bit more evidence than just the Barfoot & Thompson median price that's come out. House prices in Auckland have been slowing, we'd like to see them slow further but the best way to achieve that in the long run is to look at supply rather than relying on the Reserve Bank tool kit," he said.
 
English said the Reserve Bank was responsible for financial stability.

"If they see fit to take that measure, then they will take it. Our job is to get the planning rules altered so that we can get more supply of lower value housing, because that's what's really putting pressure on New Zealand families," he said.

"Rising prices, for people that are in houses, make them feel better but there's a whole lot of New Zealanders who are really stretched meeting their housing costs and we are working with the Council and with the State Housing agencies to get more supply of housing at lower value faster."

Australian restrictions on foreign buyers

An Australian Parliamentary Committee report into foreign investment in residential property last week called for tougher reporting and sanctions for non-residents breaching rules on buying existing properties.

English said the Government would look at what Australia was doing, but it was a distraction from the real issue.

"The real issue here is planning rules which over the last 15 years has constrained supply in Auckland and haven't allowed the city to grow in relation to the population. And we need to get those rules changed," he said.

Meanwhile, Labour Leader Andrew Little told reporters first home buyers in Auckland were being outbid by foreign buyers.

"The Government has to do something about it. The Australians have had a look at their programme of putting restrictions on offshore buyers, we should be doing the same thing," Little said.

Prime Minister John Key said a foreign buyer's register was not the Government's focus, although it had not been ruled out, and IRD records of tax returns on non-resident owned property had not shown a dramatic increase.

"They've been very consistent over the last five or ten years, so it's not showing that there's a dramatic increase in foreign buyers at this point. I think sometimes people confuse someone that is Chinese of another ethnicity and think of them as foreigner, but they may well be a New Zealand resident or citizen," he said.

Dairy price collapse

English was then asked about the 7.1% fall in whole milk powder price in Tuesday night's Globaldairytrade auction and the wider impact on the economy and the Budget.

English said under questioning in Parliament (pictured above) that the economy remained resilient and he pointed to other commodity prices going up, and a fall in oil prices.

"We're in a good position to handle the ups and downs of global pricing. Some of them work for us, like lower oil prices feeding through to lower fuel prices at the petrol pump, but also lower dairy prices - and we can handle both," he said.

 

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44 Comments

LVR is mainly efficient against first-home buyers.

This is good because it scare us away from an overpriced market and prevent us from joining the ponzi scheme. Some, like myself, might not buy simply because we refuse to take on a loan that financially does not make ANY sense. Some others might not buy simply because they cannot afford the loan despite dreaming with taking it on. It's ok, it prevents sistemic risk in the whole economy, which is good.

But that does not fight speculation. What fights speculation? Taxing speculation.

In any case I rather see speculators loosing it all than foolish first-home buyers that arrived late to the party loosing it all.

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rubbish

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Rubbish???  Makes sense not to pay and pay and pay the banksters for ever and ever.  And tax the g-dam spectulators and "land bankers."

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Fixing supply will pull the rug out from under the speculators.

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Amen and hear, hear!!!!!!

And the late Owen McShane. And Don Brash. 

If you have the time and the intelligence, and you look into the facts on the ground in all these house price bubble epidemic markets:

http://www.thebubblebubble.com/european-housing-bubble/

And Aussie, Canada, and other non-European first world housing markets: 

You will find that in ALL cases the problem is preceded by "save the planet" urban planning manias.

Anywhere there is not a problem, it is because freakin' houses get built without any tinpot soviet central planners telling you no.

In several dozen US cities, it is because the people do not elect local governments that try to centrally plan their lives.

In Rome and some other Italian cities, it is because no-one gives a toss about plans and regulations and 25% of housing is built illegally anyway.

France outside Paris is surprisingly affordable because they actually have rural exurban living traditions on myriads of tiny "farms", that replicates US-style sprawl. 

Germany does not too bad but a whole separate essay is needed to explain why and how. One significant reason is that the higher the speed you can travel by car beyond urban limits, the effective supply of land for residents accessing the urban economy, is increased by the factor of the higher speed, SQUARED, times PI.  Being able to drive at 160 km/h versus 100 km/h (and who does that in Kiwiland at rush hour anyway?) means EIGHT TIMES as much rural exurban land accessible for residences for people wishing to access that urban economy. OK, if the city is on a coast and only 180 degrees of travel counts, it is 4 times as much. 

It is correct to argue that geographic constraints reduce the ability of a city to supply land for greenfields growth, but how much do they reduce it? There is not one city with geographic constraints that did not have systemic housing affordability prior to growth boundary policies being adopted. The amount of land actually required for a city to grow, is peanuts compared to how big it already is - and the amount of land being farmed within 20 minutes drive of virtually any city, would generally comprise 100 years worth of urban growth. The boundary policy is always absurdly tight so as to create oligopolies and price gouging in greenfields land.

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

This sort of stuff is going on all the time, a rare article like that one has to have slipped through at the Herald, whose string-pullers are at best ideological useful idiots of the land bootleggers and at worst might be actual corrupt shutter-downers of genuine investigation into their racket. I know of some interesting confrontations on this and some highly shifty, evasive behaviour on the part of key persons. Quite possibly property dabblers themselves, like many MP's. 

 

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I'm not that sure and my opinion is based on situations in countries with over-supply where speculation was not stopped until bubbles burst:

  • Ireland
  • Spain
  • China

In Spain there was a regulation in 1998 for councils to free land for construction. Prices started to go up while construction increased at crazy speed (along with immigration).

Only in 2007 in Spain (45 million population) there were 600.000 new homes built while "only" 300.000 were being sold (another 300.000 to increase the stock).

The speculation madness and the decission of thousands of families to take on loans to buy overpriced assets were driven by factors like:

  • The media/government/banks brainwash that made people believe that "prices never go down", "better to buy now expensive than tomorrow more expensive", "buy whatever now to access the property ladder", "renting is wasting money", etc.
  • Cheap credit, encouraged credit (through fiscal benefits) and European banks putting money into the speculative orgy (only Germany put 800.000 million Euros into the construction Spanish bubble)
  • Social pressure. Buying it's what you are supposed to do to be successful in society. "Look at them, they bought a house already, when are you gonna buy yours and stop paying someone else's mortgage?"

My point is: Over-supply does not stop speculation because housing market is not a rational market as long as people keep thinking that prices will never go down. It's not the lack of supply the only factor.

 

The only thing over-supply will bring (in some years when more than needed houses are built) is a stronger price correction when the housing market collapses

 

What stops speculation? Taxing, making speculation not profitable and ending cheap credit (and I think RBNZ is doing the right thing with LVR and increasing rates). Regulating to redirect capital to productive investment rather than financial economy.

And I say that it's not a rational market because buying a leaking hutt 10-20kms from workplace for more than 4 times (or even 7 times) the household anual income is not very rational precisely.

New Zealand has not oversupply, but New Zealand has the exact same irrational buyers dreaming with being able to afford overpriced assets without questioning that in a few years maybe they struggle to keep paying an asset whose price could be lower than now.

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It is an appallingly destructive myth that in Spain there was deregulation of land supply to remotely match the conditions that actually DO keep housing systemically affordable in several dozen US cities.

Actually the 1998 regulations imposed controls on the supply of land that were not there before - it is alleged that this supply of land was large and it is true that it was progressively increased as time went on. However, it is a classic example of a quota system and also a long, slow supply pipeline that guarantees that hold-outs and capital gains will remain the norm even as "supply" quantity ramps up.

This is why when the music stops in a market like Spain, the country is covered in developments in progress that get abandoned, and there are large land banks that take their owners down into bankruptcy - note that while "house prices" might crash 30%, raw land prices crash 80 to 90% - they inflated tenfold or 20-fold to start with. 

But when your supply response takes 6 weeks, as in Texas, not only do the prices not inflate, no-one bothers to land bank, and downturns in demand merely result in some proportion of builders driving their pickups back home and concentrating on something else for a while like maintenance and renovation work. 

This 2005 paper on Spain (well predating the eventual crash) is very clear and confirming of how I understand the mechanisms that lead to oversupply along with unaffordability. It deserves to be better known.

http://proxymy.esade.edu/gd/facultybio/publicos/1311346343068The_Determinants_of_housing_prices_the%20case_of_Spain%20.pdf

Note especially:

“….in the particular case of Spain municipalities have a measure of monopolistic power over the supply of land, that must be taken into account. Many local governments own considerable tracts of land that are released for development only when demand pressures reach the point where they can be sold at high (“speculative”) prices, more with a view to replenishing government coffers than for long-term planning purposes. This speculative approach is not a negligible force behind the supply of land in the country…….”

There is also some excellent comments about land supply on page 9 of this 2009 IMF paper (page 11 of the PDF):

http://www.imf.org/external/pubs/ft/scr/2009/cr09129.pdf

“The supply response was slowed by zoning regulations, reinforcing house price increases. House price inflation in Spain deviated significantly from construction and land costs. This is related partly to costly land use regulations.7

Land approved for building saw average price increases of 30 percent in 2000–01, while agricultural land increased only 5 percent.8

Application processes for building permits are lengthy.9

Furthermore, Spain’s  land law entitles local governments to 5–15 percent of rezoned sites (for roads etc.). Until 2007 this provided municipalities incentives to keep prices high to benefit from sales of excess land later on (OECD, 2007).10

Bureaucracy, segmentation and uncertainty induced by zoning processes aggravate scarcity of developable land further.11

Thus, relatively tardy supply translated the sizable demand shock into a doubling of real housing prices between 1999–2007.

Supply is also subject to long building times (Figure 3). Average time between building permit and house completion is around 2 years. Such delays can cause large swings in house prices, in both directions. On a structural basis, Ayuso and Restoy (2006) estimate that 2004 prices exceeded long-run equilibrium values by 24–32 percent. However, prices were only marginally overvalued compared to their short-term equilibrium, which takes supply rigidities into account. At the current juncture, supply sluggishness implies peak housing starts of 2006/07 reach completion in the recessionary period 2008/09. Thus, inventories will keep increasing for some time. This is exerting downwardpressure on prices and transacted volumes, because price expectations are now to the downside.”

7 Brueckner (2007), Eicher (2008), Glaeser and Gyourko (2002) or Glaeser et al. (2005).

8 OECD (2005, p. 74), OECD (2007, p. 79) and Ministerio del Medio Ambiente (2008, p. 22).

9 In particular, planning of electricity and water infrastructure is complex and lengthy at 7-10 years (OECD, 2007).

10 From 2007 on legislative changes obligated municipalities to use this percentage of land exclusively for utility provision.

11 Tribunal de Defensa de la Competencia (1993, p. 149 and 1995, p. 37).

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LVR restrictions are only gone make the rich even richer. Young people who can afford a mortgage but not enough deposit are just sitting back and watching the prices go up and up.  

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why are they gonna be richer? because they will sell houses to each other? because they will rent those houses and the frustrated first-home buyers will have to pay rent forever? Because they can take on bigger loans due to the expected market value of their homes?

 

The problem is not being able to afford the mortgage due to a high deposit requirements, the problem is not being able to SAVE any 10% or 20% deposit because salaries don't grow at the same pace as house prices and because house prices are totally disconnected from the real productive economy. It's a gamblers' game that we don't need to join. The problem is thinking that we all can be rich though owning a property despite having to borrow money and pay interests. It's a ponzi scheme!

 

The solution is simple: not to buy now, and let the "rich" sell houses to each other. When prices go down they will suffer the consequences and rents will always be more connected to reality (the reality of the incomes).

 

What is the problem with renting? Taking on a loan to buy a house is essentially renting the money + long-term commitment.

Why is that better than paying for a service (rent a house) and enjoy the freedom, more spare cash at the end of the week and the possibility to live wherever you want to live and not only wherever you can afford to buy?

As I said, financially it doesn't make sense to buy now a property (do the maths) and expect to sell it in the same market while assuming that prices will go up at the same pace. Nonsense.

I rent the place I want to live in, 10 minutes cycling to my work. 1 minute walking to the beach. A house that I would never ever be able to afford to buy yet I am enjoying it in a maintenance-free and worries-free way. We spend 35% of our household income in accommodation and have plenty of money to travel, save and enjoy youth.

I am not afraid of loosing my job because if I loose it or I am not that happy I can be without job, move to a cheaper place, move to another city looking for something better/different, or whatever. This freedom feeling is something very difficult to measure.

 

With the global capitalist system in crisis (unable to grow without further debt) and an uncertain future for energy and resources I just think that "investing" in a house is the wrong move right now. This is not the 60's or 70's anymore.

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You are betting on the house prices to fall and rents to stay flat (which has already started going up in the last month or so in Auckland), others are betting on or fearing prices to go up - its all speculation. 

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Muntijaqi, you are sensible.

One of the depressing things I have read recently, and found quite convincing, is Phillip J. Anderson "The Secret History of Real Estate and Banking".

The problem is that these property price boom cycles can go on for so long, and a downturn that should have been an actual crash could have been averted by government playing dirty tricks (eg in NZ and Australia in 2008) - that the likelihood is a HUGE crash later instead of a medium one earlier, so much further down the track that everyone will have resigned themselves to it never coming!

This might not be till 2023-2026 in NZ and Australia.

One of the biggest problems is that women regard their men as "losers" if they don't "own" and it is very, very hard to hold out against that for as long as is necessary to finally be proved right. So when the real big crash comes, it really does take down the maximum number of victims you can envisage in your worst mightmares. 

Not only are speculating maniacs still gearing up with more and more overpriced additions to their portfolios, but numerous first home buyers will have been enticed into the market with "innovative" solutions, not just involving finance, but involving disgraceful sacrifices in housing space and quality. Expect large numbers of deeply distressed "owners" or PART owners of tiny shoe-box type "homes" for which they will be mortgaged to the extent of 6 to 10 times their annual incomes, in which they will end up massively in negative equity. 

The Irish could end up looking lucky that their housing markets crashed with the median multiples doing the following:

2007:

Cork 4.7

Dublin City/County 5.4

Dublin Exurbs 5.0

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

Get that - their HIGHEST median multiple was 6.0 - in Dublin.

What is Dorkland now - 9? 

The John Key National government are a pack of scum for not managing the market right on down from the turnaround from peak in 2007/2008 - they could easily have blamed it on Clark and Cullen, and sold the increased affordability as a desirable reversal of the trend to unaffordability. The cost of this cynical politicking will be massive ultimately - I blame the fact that Mr Nice and Popular, John Key, is a fully-paid-up member of the Finance and Banking Club Lounge fraternity. Ironically, Don Brash, smeared as a stooge of the rich, is the man who would NOT have pissed into the FIRE sector rentiers pockets on this one. Of all sad words of tongue and pen, the saddest are these - "what might have been". 

 

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Yes Phil, it is certainly ironic that Don Brash is/was perceived as an advocate of the old boys club. Key has a small excuse in that his understanding of the macro economy is poor. Brash, on the other hand, certainly had the credentials and his foray into politics was his frustration manifesting itself. Unfortunately, I doubt he would have been all that successful in implementing change as even his own colleagues would have labelled his policies too radical. The resistance from the vested group would have been too great and in hindsight I think Labour did him a favour in taking that third term.

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Glad someone else is clear about this. Who knows, indeed.

In a way I have even wished Clark got a 4th term so she and her government would have had to completely own the downturn. As it is, we get the most ridiculous arguments making it into the mainstream media, that Cullen was a great Finance Minister because he could spend like a drunken sailor and still balance the books, while Bill English runs deficits and is allegedly "austere" with it. 

It certainly is too good to be true, but left voters are too ignorant to understand anything about this. 

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The main difference was that Cullen had the tax take to enable a foot in both camps, where English doesn't.

Makes one wonder how we've apparently had a "rockstar" economy in recent times but not the "rockstar" tax take that should come with it.

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Foreign buyer register required, until such happens then Bill Engish's words that they are not having an effect are totally empty.

Completely disingenuous to keep on refusing to do so.

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It's not just about land supply its also about all the other components which make up demand and supply and where price point is at any point in time.

The Government could easily change the immigration policy much more quickly than fixing the land supply issue to manage the rolling 12 month migration rate.  It can set the points required to enter the country for new migrants after allowing for returning kiwis and aussies jumping the ditch.

The Reserve Bank and ANZ (previously on this site) have provided graphs showing the strong correlation between the net migration rate and housing prices.

A lower net migration rate would also allow interest rates to stay lower for longer, reducing the interest rate differential with other countries and reduce the demand for NZ dollars.

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Didn't Dotcom get residency on the back of a $10.0 million purchase of NZ Goverment debt?

 

The obvious failure of the middle class to fund government programmes through taxation will cause officialdom to seek other revenue sources to backstop the needs of the entitled.

 

Witness this story:

 

Did you know that there exists a federal Immigrant Investor Program that grants “EB-5″ immigration visas to foreigners who provide at least $500,000 to U.S. projects that create 10 or more American jobs? I wasn’t familiar with this, but apparently the good folks at the Pennsylvania Turnpike Commission are well aware of it, and are using it to raise $200 million.  Read more

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Is that $500k in investment?  like with a proper ROI?

I know my little brother got his Canadian residency on something similar.
It was embarassing because he had no money is his daily account previously so they kicked him out of Canada, and he had to reapply and prove he had the funds.

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National are deeply culpable for changing the rules in 2010, so that an "investment" in New Zealand on the part of an investor immigrant, from then on could be PROPERTY, which had NOT been the case before.

The underlying problem of them all was of course the Council utopians getting too much rope under the Clark government and strangling the supply of housing. But the Nats have done nothing but pour fuel on the fire. I do not believe their sincerity at all over "restoring affordability". Housing Accords and Special Housing Areas are stitch-ups that merely allow the site owners/developers to make their killing a bit faster.

And the Nats opponents make so much hysterial fuss over "paving over paradise" anyway, that the Nats might as well just tear up the RMA and ban growth boundaries and have done with it! Roger Douglas had the right idea - your opponents will make just as much noise over timid and ineffective reforms as they will over real ones, so do real ones and get re-elected on the results. 

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Nice article in the NZHerald today.

Is the Government weakening and/or taking off their blinkers?

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Dear Mr English, unless prices are falling relative to incomes then housing is not getting more affordable. You are failing. Less talk, more action please. Yours sincerely, every future generation.

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Cripes, that would cause a flash crash - and certainly invoke an OBR event - capitalising interest is a pernicious practice given depositors are now the only certain re-capitalising agents in the event of bank insolvency

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I think that would frankly cause huge issues Even preventing new interest only business would be "interesting".

I just dont see the need for a regional basis for LVR, 95% (or whatever)  is simply too high, 80% is enough.

PS much commercial property is interest only I think? so that might cause some ansties as well.

Sure you can aim for such things but not overnight.

regards

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Is there a lack of Political will ? Bernard Hickey recently investigated this land shortage mess .

Between Central Govt ( Beehive ) and local Govt ( Auckland Council) they could put a stop to land supply contraints in an instant .

There are supply constraints driven by a whole host of different things.

Bernard Hickey pointed recently out that 45,000 sections ( some of which are zoned for mutiples dwellings , apartments and Units ) are being held by people we Kiwis euphemistically call LAND BANKERS .

I am an avowed Capitlaist , but we are being held to ransom by an ugly side of Capitlaism , thats both unfair and prejudicial to our long -term financial wellbeing and the development of our city

This is the worst kind of speculative  activity as it generates ZERO economic activity and is purely oportunistic , and in my view its not investment , its specualtion and should be taxed for what it is.

The solutions are really so simple

1) If you buy land and do nothing with it but seek specualtive gain , you cannot be an investor as your intention is for specualtive gan , simply you are not an investor , you are a SPECULATOR  trading in property , and must pay tax  on the profit

2) Most Western cities penalise vacant residential  land through the rating system .

We could have RATES  levied at zero for the first year of a subdivision , then RATES plus 100% in the second  year , rates plus 200% in year 3 , and so on  up to year 5 .

This would encourage land speculators to leave the market completely to remove the doistortions and allow the free hand of the market to dictate the price

 

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Not so sure.

Council, legislation and infrastructure will be holding up development. Owners will be waiting on Consents and Re-Zoning, Council will be stuck trying to plan and build services. Anyhow, will building supply quench demand, without controls on immigration and overseas investment? 

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Talking to a bloke yesterday who said it took 7 years to get a resource consent to build, finally, got it built this year, now wants to sell and leave the nightmare behind

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Given the seven years, I can only imagine that it was a difficult site - one which was non-conforming on a number of aspects perhaps?  I think in many cases we find people want to build in places that just have too many problems. Rather than just accept that the land is worthless for residential build purposes (or for the type of dwelling they want to squeeze on the site), they press on and on through what becomes a very complicated and lengthy consenting process. 

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Caleb, that is an important point to raise. 

I, like Cowboy, support free market capitalism and condemn in the strongest terms, crony rentier capitalism. Ayn Rand actually said such people should be hung. Ironically big-government socialists generally play right into the hands of rentier capitalism.

You are quite right that as long as Councils retain their role in actually providing the infrastructure, abolishing a growth boundary would achieve nothing. The golden era of housing affordability in NZ was underpinned by Councils staff being enablers of growth, not obstructers of it. Same power, different attitude. The rot set in as Planning departments were stacked with half-witted ideologues who had been pumped with propaganda at what by then passed for "urban planning schools".

Besides over-riding boundaries, we need to do something else to ensure infrastructure expansion. Central government and/or the private sector would be perfectly capable of handling it. There is an excellent system in parts of the USA where developers can literally incorporate new municipalities, raise money for infrastructure in well-developed bond markets, and pay it off in eventual property tax revenue.

Alain Bertaud, who gave a lecture tour of NZ a few months ago, pointed out that what planners SHOULD be doing, is putting in the "rights of way" over huge swathes of land and allowing anyone to go ahead anywhere, paying their bit for the infrastructure needed at their spot as they go. He uses the example of a Plan imposed on Manhattan in the year 1813 - most of it was still farmland some decades later. However it is the famous street network we all know today. That was imposed as rights of way in 1813. 

However, what WE have are "planners" who deliberately want to leave it so late to try and build any major arterial roads let alone highways, that NIMBYism and cost of acquisition of land (and demolition of structures on it already) will kill it. Wellington has had massive ribbon holdings of land sold off more recently, that had been earmarked for decades for 4-laning of much of the western and norther suburbs connector roads. The arrogant "war on the car" planners of course assume they know better than their predecessors. Like with a lot of things in decadent civilisations, the loss of basic common sense and knowledge is considerable. 

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Can you please tell us how much expansion should be enough, how much growth will be enough before we can say, "well, there we've done it, that is about the right amount of everything"

We are now at a time when we must start to firgure how we are going to prosper WTHOUT growth WITHOUT expansion, methinks a new way of doing things is required PDQ. The time is actually upon us now as even you guys must understand that we cannot have infinite growth on a finite planet

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The planet is about 1% urbanised. Most of the growth is when people move from rural subsistence, to cities. Even suburban living involves a reduction in their footprint. The amount of land that used to be needed to grow food for horses and draft animals was far greater than any amount of urbanisation the planet might get. 

Cities tend to expand around 16-fold in 70 to 100 years, then growth after that is derisory. We are hyperventilating over allowing NZ to move from 0.8% urbanised to 0.9% over the next century perhaps? Of course if we really "thought globally", probably 30 million or more people could live more sustainably here than where thet currently are. 

The Netherlands would fit into Canterbury province, and has 17 million people - and interestingly half their cities are about the same density as Auckland is already. 

Housing only takes up a small amount of the space in a city anyway and if you force people into half the living space, you only reduce the urban footprint by 7% (Ian Gordon, 1996) because you still need the same schools, playing fields, etc.

There is no inherent causative link between density and the sustainability of people's lifestyles. Low-carbon cities tend to be rentiers paradises like Manhattan, which do not provide anything for humanity as a whole except defrauding them out of honestly earned income.

The more credible resource doomsayers are telling people to go back to the land, not cramming in into urban battery hen farms where they will all starve and fight to death if resources really ever did run out.  

If we tried at the "development" phase to stop cities growing 16-fold, there are consequences for the kind of economic development that occurs. Money is sucked out of the economy by the land rentiers instead of going into productive and humane causes - or you might get round that by Marxism - nationalising property, and that has its own dynamic of unintended consequences. 

All we need to do is price stuff right and let the market sort it out. There are as many mitigation strategies as there are people, and central planners imposing their own one or two favourite (and stupid) strategies on everyone do much more harm than any alleged good they claim to be doing. 

 

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So now if all the cities are so sustainable can you explain all the felling of rainforest to replace it with palm plantations, if they are so sustainable why are tuna fisheries on the point of collapse.

When you call a city sustainable clearly you ignore ramifications in other places on the planet. It would seem we have already reached a number where we need to keep destroying things in order for us to live, I will be stunned if you think that is ok in order to keep the "free market' going.

It is said that the world's population will peak at about 10billion and then begin to fall, what then for your precious "free market" Truth is there is only truly enough resource for about 2 - 3 billion of us. Problem is the free marketeers will never ever accept this, even while destruction goes on around them, the markets must prevail at all costs. That surely is complete and utter madness

You do understand that we are quite likely witnessing the world's 6th great extinction and this one will be almost wholly and solely down to us. Should the market take precedence over that?

 

 

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What you are agonising about is nothing to do with urban form. It has everything to do with the number of humans, what their discretionary incomes are, and what is the current state of technological advancement and its commercialisation.  

By all means raise a sincere argument in favour of mass sterilisations, abolition of basic medicines that enhance human survival, and abolition of growth in food production by whatever means turns you on.

Urban growth containment is utterly insincere and using your narrative of alarm to support it merely makes you a useful idiot of the big vested gouger interests that are really driving it, and using a whole class of people like you in this way. 

The market should be the means that we work WITH to solve these problems as intelligent beings. Do you get it that 1000 people with the incentive to consume less resources will find 1000 different ways to do it, in contrast to planners fixating on two solutions only, (apartments and trains) and foregoing 998 solutions that had a far greater net of benefit over opportunity cost?

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That 1% is 1% of what?  Considering most of the world is water, then mountains, then desert.  If you look at arible land it usually surrounds cities land which is being built on.

Be that as it may the energy that surburbia consumes and indeed the over-population problem is fossil fuel.  Without bountiful cheap oil its going to be stiffling.

"urban battery hen farms where they will all starve and fight to death if resources really ever did run out."

SO you are happy to leave it to Darwin or believe in a flat earth then?

The problem is really selecting the foot print for the end game and that end game has to be in place within 20 years at most 40 years.

So continued growth and doing it while blindly ignoring that end position is frankly retarded as a species, I'd hoped we were brighter.

 

 

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I have referred you before to the Lincoln Institute's Global Atlas of Urban Land Consumption. The percentage of arable land that is urbanised is around 4 percent.

And of course it is possible to urbanise non-arable land. 

"Suburbia" per se does not "consume energy". Humans with discretionary incomes consume energy in rough proportion to that income.

There may be factors that are mutually endogeous and self-sorting, that make suburbia seem to be correlated with increased energy consumption - however you could change just two things - the vehicles they drive, and the sources of their energy, and this would be completely different. You could also utilise the space of low density living, for on-site independence of national grids and even food supplies. Like your mate Powerdownkiwi.

"The problem is really selecting the foot print for the end game"

Not just total nonsense, but dangerous nonsense. You exemplify the lack of brightness in the species that leads to periodic political tragicomedies. You are already an enabler of the biggest newly imposed wealth transfer gouge in political-economic history.

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Raegun when you see mother nature destroy your city and you realise that rebuilding it is going to ten times more difficult because of growth and expansion limits that have been imposed over recents decades then it is clear what needs to change PDQ.

 

Then when you look a bit deeper and realise the current regulatory arrangement re housing is a fantastic tax on productive workers and entrepreneurs that is transfered to a lazy class of unproductive capital you doubly realise why change needs to come PDQ. You also realise why these simple changes have been resisted so greatly.

 

Raegun when the call for change comes which side will you be on?

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Chch is a bit different isn't it? And my argument is not necessarily about making or not making land available for housing per se, especially when regulations make it so easy for people to make huge coin by just sitting on land as need grows for it.

My concern is that the human race is failing terribly to address that we have come to end of growth, which requires ever increasing population. New thinking is required not old if we are to be able to prosper without it

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http://andrewatkin.blogspot.co.nz/2014/10/housing-affordability-new-zea…

Christchurch is not that different. Housing in NZ is in crisis. More people are homeless. More people are living permanently in caravan parks. Third World diseases like tuberculosis are returning due to overcrowded poor quality housing. Schools are having trouble educating kids from rentals because they move so often due to tenancies being so short. Housing is becoming a social disaster.

All of this is the logical consequence of rationing residential land by bureaucrats and rentiers.

The above video explains it well. The beggining is better than the end and I believe the solutions are more likely to come from the left than the right but it is well worth watching.

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Andrew Atkin has been demonstrating clear thinking ability for years.

http://andrewatkin.blogspot.com/2009/06/smart-growth.html

See also Dushko Bogunovich's works on "De-Compacting Auckland's Planning Thinking"

 

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Just to be clear Bertaud is mode of transport neutral and the latest NYU Urban Expansion program (which Alain is a member) report believes that a grid of arterial public right of ways at 1km spacing 25-30 metres wide so that bike lanes, bus lanes and vehicle lanes can be accomadated. That this grid would also accomadate the major water and sewage infrastructure and all of this would be generously be provided and planned for well in advance of actual development as PhilBest describes.

 

Why don't we have planners who actually do their job?

 

Forget the mission creep stuff of 'smart growth', 'resilence', 'sustainability' etc that is so ill defined it may as well be fairytale magic thinking. They should just focus on the bread and butter easily defineable metrics such as 'affordability', 'mobility' and 'access'.

 

I know in Canterbury if a grid of developable 1km spaced public right of ways had been done around Christchurch in a sensible way -avoiding areas of risk -flooding and liquification rather than the stupid Green belts and urban containment policies then the rebuild would have been much cheaper and faster. Given the unstable geology of NZ this ability to build or rebuild elsewhere should be a planned for contingency not restricted by our governing bodies.

 

As Xeinaga, PhilB and others here rightly say the problem is a lack of political will that benefits a few while harming the majority of normal kiwis.

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Of course there is a lack of political will. The business as usual party got voted back in. Nothing will be done.

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People voted in the do nothing party and are surprised when nothing is done.

Lots of talk and worry and no action at all.

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Oh they do stuff for their friends.  And don't do other stuff, also for their friends.

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You SAID it. John Key National is essentially a crony rentier capitalist enabler government. It is nonsense to think of them as principled market right wing. Them and Labour are Tweedledum and Tweedledee on this, like is the case with the Tories and Labour in the UK. The Tories are rentier capitalist cronies, and Labour are rentier capitalists useful idiots because of their blind faith in "planning". 

There are a small minority on the left, such as Ian Abley, who agonise over the stupidity of their comrades. And a small minority on the right who are principled free-marketers who are clear about the egregious nature of both mainstreams.

But I have never, ever, heard of a single Green anywhere who had the economic nous to be able to have it explained to them what a useful-idiocy role they play with regard to rentier crony capitalism. I have tried with a few. Truly dangerous "stupid and certain" ideologues, nay, neo-theocrats. 

Was it Bakunin who said "woe to the mass of the ignorant ones" when this kind of ideologue gets power?

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