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PM cites changing societal norms of later families, more people wanting to rent to explain falling home ownership rate; says RBNZ best placed to target rental property investors; won't use crisis or bubble words for Auckland

PM cites changing societal norms of later families, more people wanting to rent to explain falling home ownership rate; says RBNZ best placed to target rental property investors; won't use crisis or bubble words for Auckland

By Bernard Hickey

Prime Minister John Key says changing societal norms towards having families later and more people wanting to rent are more responsible for falling home ownership rates than the rise of rental property investors.

Key's comments came as concerns grow about a spike in rental investors buying houses in Auckland and beyond in recent months that has grabbed the Reserve Bank's attention and is sparking talk of a speculative frenzy and a bubble in Auckland.

Key said in an interview on RNZ this morning that falling home ownership rates were a result of changing societal norms, rather than necessarily a failure of Government policy around taxation.

He also said the issue of dealing with property investor lending was more one for the Reserve Bank than the Government.

Key denied that Core Logic's estimate of 46% of Auckland properties selling to investors (see more below on that) and the falling home ownership rate marked the end of a property owning democracy.

"It's true that home ownership rates have been falling since the mid-1980s and they've slowly come down a bit," Key said.

"It partly reflects a number of societal changes. People buying houses later, getting married later, having children later. Also, when you buy a place in a retirement village under the home ownership stats it doesn't show up because it's a license to occupy," he said.

Key said the investor buying was not new, and he suggested this was because people wanted to rent, rather than investors wanting to buy.

"It might be slightly higher than it was a wee while ago and that partly reflects the fact that there is a cohort of people for a variety of reasons that either wants to or does rent. I accept those numbers are a little bit higher," he said.

'Something for the Reserve Bank to look at'

Asked if was worried about the rise of the rental property investor share of buying, Key started talking about the prospects for Reserve Bank action.

"I think it's one of the issues that the Reserve Bank can give consideration to because they can target groups, just like they did with their LVR ratios, and they're looking at income ratios. They have the capacity to look at that," Key said.

Asked if the Reserve Bank could do more, Key said: "Potentially."

"One of the points the Reserve Bank has made to me around the LVR ratios is it's reduced in terms of bank balance sheets the number of loans that they have at the very high end. That's important if the system comes under a bit of stress that the bank balance sheets are in stronger shape. All I'm saying is that the bank has options available to it and it can consider those options," he said.

Asked again if the bank would do more, he said: "It is certainly on their radar screen. They are looking at it as well."

Key said the two year bright line test brought in last October may not be deterring some speculators, but they should be aware that the tax applies beyond two years if the IRD can prove intent to trade rather than hold.

"If your intent is to buy the property for a capital gain then you're subject to the tax. Even though they're being stung, it's not stopping them necessarily," Key said.

"I know people are sick of it, but all roads lead back to supply of housing. If you want to do more around borrowing in that area and the capacity for those people to access that market, the easiest road home there is through the Reserve Bank's actions."

'I won't use the bubble or crisis words'

Key declined to say if the Auckland market was a bubble or crisis.

"Prices are over-heated. I get really reluctant to put certain terms around things. I'm not going to spend this interview or any other interview to go into characterisations of it," he said. When people say the Government should do more, there is a long list of things we've done -- much longer than any other Government," he said.

"People had screamed at me to put on tax impacts because they said it would fix the market. We put on those tax rules around bright line test, more investigators, more people looking at transactions and you're now telling us that investors are in the market and others aren't," he said.

"My point is you've got to do a lot of things and our Government is doing a tremendous number of things. We might need to do more and we'll constantly consider doing that, and it's not like we've sat on our hands for the last few years and done nothing. It's everything from bright line test right through to Special Housing Areas, through to reform in so many other areas."

Speculative activity 'scary', says Core Logic

Meanwhile the share of property sales going to investors in Auckland rose again from 40% to 46% between January and May this year, Core Logic has said.

Core Logic's Jonno Ingerson told Q+A on Sunday that the speculative activity in the Auckland market was now looking 'scary' and that the most common length of time for Aucklanders to hold a property was less than a year. The two-year bright line test was obviously not enough of a disincentive, given the scale of the profits on offer allowed tax to be paid and still have plenty left over, he said.

He wouldn't call Auckland a 'bubble', but "bubbles are also characterised by the behaviour of the people in the system."

"And if you look at Auckland, the most common length of time for an Aucklander to hold their property for is less than one year, followed by two to three years, followed by one to two years, and then eight years, which is kind of normal in a market. Eight years is a distant fourth," he said.

"So you’ve got this activity happening in Auckland of people buying and selling property really quickly. Why? Well, it’s not just investors. There’s all sorts of people that go, ‘Because the market is increasing, I can make some money off it. I can move around in it.’ It becomes self-perpetuating. That’s the bit that as an economist looking at this you’d say, ‘That’s the bit I’m worried about, that speculation.’"

Ingerson said he would personally be nervous about investing at these levels in Auckland.

"Can it keep going like this? I don’t think so. Do I think it will calamitously collapse? No, but probably more likely we’re going to see a period in the future of there might be a short dip and a period of flat growth. It’s a risky time, I think, to be looking at getting into the Auckland market. There’s so much attention on it, so much intention to try and slow it down. Be careful," he said.

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gee you think, it should have been ten years as suggested by IRD but no I JK know best, seriously this guy has lost touch with the real NZ
Key said the two year bright line test brought in last October may not be deterring some speculators, but they should be aware that the tax applies beyond two years IF the IRD can prove intent to trade rather than hold.

LOL so is Max Key part of the "new Generation" of Kiwi's who is going to become a tenant in his own country?

Paying off an asset owned by someone living in Shanghai who has borrowed money at 2,5% from HSBC when Kiwis have to pay over 5% for a mortgage locally.

Nah, he'll be living in Maui

making of Auckland into Honolulu

not to be confused with
but does seem to work alone

Don't underestimate Max Key, every minute he gets on air is one less devoted to fact checking his farther. He's become an act in the grand "Nothing to see here" play.

PS. I bet he gets paid in houses...


I have friends worth as much or more than JK (50m from memory) - NONE of their children flaunt their families wealth, pose half naked, and generally show off as much as this guy's son. It's just not done in nz. USA definately but not here we strive to be humble. It tells you a lot about the real John key

"we strive to be humble"

We probably shouldn't do that anymore. The world is too diverse - Its YOLO now.

...and tells you a lot about the gormless NZ MSM and click bait society.

It tells me a lot about you that you feel entitled to tell people how to act, that you feel the next generation need to follow your personal view of what's 'appropriate', as judged by you.

He can do whatever he wants, within the constraints of the law. If you don't like it then you'll just have to figure out a way to deal with that.


Where in my post did I tell him how to act?

I'm free to judge who I want as you are to judge my judging! My dad's not trying to win public votes though so that's a minor difference..

I voted national last time and everytime before then but won't next time. Not just because of his son but that sort of laudatory behaviour colors my judgement. So many people are struggling in nz and around the world and not only is JK not doing enough to help those people chosing to pay off debt at a time when it is so cheap instead, but he's lauding over these same people. I have wealth but don't pose with ferraris as I consider how that may make others who can't afford to put food on the table feel. Its called empathy.

Your whole post is telling him how to act. You want him to be humble, quiet and to fade into the background. If you want to do that in your personal life then knock yourself out. Call it empathy if you want, whatever floats your boat.

But you aren't the moral compass of the country and he can do whatever he wants. As can I.

No I'm forming an opinion of the moral standards of the key household so that I gain a better understanding of why JK has made certain decisions as PM (Spending 20+ mill on a flag so that he may have a legacy for example) so that I'm better positioned next time I vote. Narcissism doesn't win my vote

Have you even bothered to look at the Facebook and Instagram feeds of the average teen or twenty something? If you had, you'd know that publicising these antics are very common indeed in NZ. I guess that says a lot about parents across the country, using your own logic?

He was never "in touch" ever! But he has found a fan club of 45.4%


JK has totaly lost. To prove their point as do not want to take any measures to curb speculation comes out with insensitive arrogent remark. It goes on to show that PM has lost touch with the people of NZ otherwise how could he say that people of newzealand prefers to rent instead of buying house.

See the hidden interest let the overseas people buy NZ property and we Kiwi can rent from them.

Now it is clear why government is so determine to not do anything and let the bubble continue.
Rest assure that this givt will not do anything infact may take measures to help speculators that too overeseas.


Do nothing say nothing government

In 2007 he quoted the housing market as being in a crisis. Now is 2016 and prices are up from 500k to 1m in Auckland and it is not a crisis ?

This man is just stumbling ... it must drive him nuts having to deny things constantly when he knows it's a disaster and most importantly it happened on his watch so he can't blame any other party ...


I think you nailed it.

If the Government polled people renting in Auckland what they pay, and if they would prefer to own, they would find out the truth:

The truth is, couples thinking of starting a family, would prefer to be in their own warm, dry, home, and be in a financially stable position first.

The truth is, a lot of people are struggling to afford to rent a house that doesn't feel like a home, unsure whether they will be able to stay there year to year, unable to change anything including even putting a family photo on the wall, or own a pet, and have to tolerate a grumpy over worked property manager every three months.

I hate to use the phrase, but the prime minister and other senior ministers are making comments that make them appear they are in la la land.

Maybe they should poll people on that.

What amazes me is the opposition don't seem to be capitalizing on it.

Maybe most Aucklanders have no faith in the left winged council as they are not fixing the housing and infrastructure issues either, so why or how would a left winged Government make a difference?


Hi Hobo, you are absolutely correct. National us comming out with utter nonsense statement one afrer another and checking the patience if Kiwi.

This is the limit. Here average Kiwi us Struggling to buy s house of own and OUR HON PM instead of comming out and helping or giving hope to strugling Kiwi, comes out and redcule them, laugh at their problem.

We all should use social media to condenm n shame the govt and expose them.

Either we let them make fun of us and we keep quite or in a democracy where oposution and media is weak, we really take to social medua as a tool to expose.

Hi Hobo, you are absolutely correct. National us comming out with utter nonsense statement one afrer another and checking the patience if Kiwi.

This is the limit. Here average Kiwi us Struggling to buy s house of own and OUR HON PM instead of comming out and helping or giving hope to strugling Kiwi, comes out and redcule them, laugh at their problem.

We all should use social media to condenm n shame the govt and expose them.

Either we let them make fun of us and we keep quite or in a democracy where oposution and media is weak, we really take to social medua as a tool to expose.

We should and we willas social mefia is a pwerful tool to raise your valid concern.

Am not an expert if someone can create a webpage and post the link can vote and highlight our concern. Am sure many Kiwis will join

"it must drive him nuts having to deny things constantly when he knows"....

Such things never bother narcissists.


So it is now everyone's fault except the govt?
People are buying later due to society or because they are saving for more years due to prices JK?
The Reserve Bank should do something - why not you JK, surely the govt are running this country not the RBNZ?

That people still follow and support this BS without any question is amazing.


The more he slurs his speech the more people see him as an innocent ordinary New Zillunder.

The more benzo's his Dr is prescribing ...


The changing social norms are just people not being able to afford a family. It's pretty simple stuff to figure out. Those that are having children are also discovering that they couldn't actually afford children, or have to get loans from their parents to afford a house and children.

Society is changing with the poorest 50% being poorer than they've been for a long time.

"Society is changing with the poorest 50% being poorer than they've been for a long time."

Surely this is because of changing social norms, people are just putting off earning a decent living until later in life!


Uncle John is absolutely correct. I love living in a place where:

- I can be kicked out in 42 days
- I can't have a pet
- I can't get UFB installed because three property managers have to agree to get the driveway trenched
- I must buy expensive plastic hooks that tend to fall off the wall then remove them when I leave
- I can't install a second heat pump or a ventilation system so my bedroom is damp despite leaving windows open 8 hours a day
- The owner has a Chinese surname

This guy deserves to be hanged from the nearest lamp post for treason.

What is the problem of having a Chinese surname?

It just shows I'm being displaced out of a home by immigrants.

To be fair keyo, just as many US and Brits/Euro combined have been doing the same for quite a while now. It's just that prior to 2008 no one seemed to give a toss as long as they were getting top dollar for their house from them.

You're absolutely right. Back then it was the Brits I went to school with quite a few.

move out then and why you are at it find a landlord with an Anglo Saxon sounding surname....sounds like by your logic that will sort your issue out? better yet, vote labour / greens and all your problems will go away....i promise.

A bit out of order and surprised this comment was allowed past the moderators, healthly debate does not equal death threats, I am sorry but if you can't operate in a democracy and must moan about killing people probably explains a lot about you as a person, blaming others for your miss fortune to feel that you are being victimized, sounds somewhat delusional, as a renter for twenty years but as a landlord of others I can assure you the landlord is the one usually left out of pocket due to tenants

What is exactly wrong with the owner having a Chinese surname? That seems very racist.

Impressive amount of upvotes Keyo_. No one wants politically correct balderdash anymore.

Buy a dehumidifier mate, its portable and you can take it with you. These are the only real way of getting rid of the dampness or more specifically the water out of the air anyway. What you have to do is SHUT the house up all day and run one of these. I run two at either end of the house downstairs.


"It partly reflects a number of societal changes. People buying houses later, getting married later, having children later

Perhaps it's because of high house prices that people are forced to marry later have kids later and buy later.... hardly going to be able to do all those things and come up with a hundred grand

He is the king of twisting and turning arguments


Cause and effect ... honestly, JK is giving the standup comedian.

I just hope people are starting to understand now that he is not fit for office.


You don't buy a property because you prefer to rent not because you cannot get a deposit together.
You prefer not to get hitched and have kids because the kid would be just as much trouble as a pet in that renter.
You do not buy in case you may have to shift after you lose the job.
That is all basic Key logic so it must be right.
Stands to reason really.
You really need to make sure you get out and vote for the guru come end of 2017.


Moon whisperer

According to John Key the moon rotates in response to the tides going in and out

Thumbs up

Hahaha, lets give Home start grants, SHA's and allow FHB's to withdraw Kiwisaver because we all want to rent.
It's better to keep quiet at this stage.....

The Herald described the subsidies as "free money".

Firstly, it's not free. It's taken from tax payers and I don't mean landlords I mean high income workers.

Secondly, it's not really going to the home buyers, it's going into the property market as capital gains.

Thirdly the limits for first home buyers establish a bare minimum rock bottom price for properties and it only goes up from there. National want to inflate housing? No problem - jack the subsidy up and the whole price curve moves up.

and also subsequently hits people's retirement provision. Personally I totally disagree with using kiwisaver to buy a house.

I wonder if Mr Key has solid empirical evidence to back this ludicrous statement ?

A few years ago when my 12 year old spoke to me about good and bad debt , I asked him if he knew the difference and told me that a mortgage was "good" debt because you were paying off something valuable .

Every kid who has been through the New Zealand state education system has been taught the difference between "good and bad" debt as part of life skills training, and they know that cash loans and payday loans are "BAD" and borrowing for a house or education is "GOOD"

If we end up with US sized student loans then loans for education will move into the bad category.

that's bad education, there is no such thing as good debt.
that's the problem with the world the bankers have perpetrated this myth that to take on mortgages is good because you are buying an asset .
that is fine as long as the asset appreciates by more value over time than what you have paid for it.
not so good if the asset depreciates (USA, spain, Ireland)
the only time debt is a good idea is if the asset you are buying produces an income to pay off the debt
there is only one winner the banks


John Key is a very good salesman. Superb. But that skill is also self limiting as people come to realise spinning the line is the only thing the salesman is capable of. There is no substance.

He's become that unwelcome compulsively-lying trespasser with an overpriced vacuum cleaner who won't go away, and when he does he'll leave a pile of crap on the rug..


"Jumping the Shark" comes to mind. (if that's mysterious - Google it)

Now it is official. JK is suffering from severe Merkel syndrome. He lives in a parallel reality. High time a medical and/or legal professional takes corrective action.

jokes aside, and there are many including the countries first observed case of BSE, or fooling round looking for a 8B (4) (d) Cert. this seems a continuation of what we saw Bill do last week.

Someone is writing this stuff for them both maybe. Does anyone who who writes this stuff?

Bill said that immigration fixed high debt - we saw this as a panic to the Herald weekly run of damaging debt stories, tearing relationships apart and ruining lives....
We said then, and still think it didn't work, cause Bill is the numbers guys, and taking him off numbers message knocks his numbers message credibility (Bill should have seen this himself - and subbed a.n.other to do the voice work to say the two problems fix each other - we had a problem with this as he needed something down to cancel something up, his problem was he saying something up cancels something up - it never even made fake sense)
- next he will be putting out a Mallard style proforma....
So now we need a new numbers guy..
Key said the investor buying was not new, and he suggested this was because people wanted to rent, rather than investors wanting to buy.

This is an attempt to say the lack of first home buyers is (opposite to crowding out - is there such a world, say vacuum - and sucking in investors) Sucking in investors.... its like pulling the scrum.... Sucking in investors

Everyone knows that investors are crowding out first home buyers, fewer investors, more first home buyers, etc etc... - it makes sense at the most basic level, something up, something down.
Some clever cloggs has just turned the "equation around" crowding out becomes sucking in. They reversed the flow.

or done by half sentence. the real sentence is as follows:
because people wanted to rent as they could not buy.
and you can see the effect of using just half the word
because people wanted to rent as they could not buy.

it also works when you say
people wanted to rent cause its shit living in your car.
anyway you get the picture....

thing is these PR/word game/persuasion games are generally acceptable when done for the forces of good, and we are ok with it.
looking round the blog pages of here and other media sites, no one is seeing any good forces. nobody being OK.

Does anyone who who writes this stuff?
Maybe they are right
Investors are really getting sucked in.....
People wanted to rent cause its shit living in your car.......

Am notan expertbut please start a web page and post the link so that we and many kiwi can vote and vouce theirconcern.

Need a platformto raise our concern and can vouch that many people will join.


Where is the researched empirical evidence that young Kiwi's want stay in a cycle of poverty as tenants ?

Correlation is not causation, perhaps?
Easily disputed in this instance with even the most basic time series tools, I dare say..


Correlation vs causation - That was my thoughts exactly.

More people rent ERGO more people must prefer to rent... really?

More people marry later ERGO more people must prefer to marry later... really?

More people have children later ERGO more people must prefer to have children later... really?

You have to start to wonder about the current government when the PM is coming out with rubbish like this, and is quite happy to sit back and take zero action.


Wow - OMG what planet is this guy and his party living on? And to think I voted for him in the past

He is SO detached from reality and the arrogance to simply deny deny deny a problem that everyone can see is breathtaking. Just ignore it till the story dies....

If you ever want to see an example of how absolute power corrupts absolutely look no further.... This man and his party have irrevocably changed our country for the worse, Generations Sold out for a short term bump in GDP.

Absolute Moral Bankruptcy to deny something that is SO obvious rather than lose face

I've gone from admiring him back in 2007 (god I cringe..) to being horrified at what he is now - not much short of a blind dictator guided by some insane ideology.


"What? No affordable houses, you say? Then let them all rent!"

Can we just storm the Bastille already.

Next step, send everyone with glasses to the countryside.

Well this comment might get me banned... but that might just solve Auckland's housing crisis...

It's obvious from the tone of the posters so far that the NZ Herald is ghost writing their responses or there is a hidden gremlin inside
The bottom line is that no body is "entitled" to an affordable home that they can buy, as witnessed by the ten of thousands of people who do buy with and do so without complaining like a bunch of lip tremblers. The vast majority of homers owners just get on with it and succeed and the whiners are mere sore losers who want nanny state to spoon feed them night and day. If the majority can succeed, you whingers get off your butts, stop complaining, and get going.


..... absurd comment of the day.


Yeah BigDaddy - imagine if your generation had to borrow 10x your household income (at the risk of record low interest rates increasing) to put a roof over your head - you would have screamed the house down....(Boomers pretty much borrowed the county into oblivion propping up your standard of living..All that free health care, total employment, free university.. it must have been hell - where do I donate?)

I didn't realise AKL was the most expensive property market in the world relative to income when you were
building your portfolio?

No one expects anything for free but to expect a playing field that isn't so tilted one way isn't unreasonable -

Buying a first home should be a stretch BUT not near as dammit impossible (PS/ Im Gen X with a free-hold house already so not one of the one's "whinging" - it was approx 3.5 times my household income at the time BTW in 1998)

To say this generation is whinging is pretty heartless - you and me never had to deal with what they have right now.

Not - even - close - period.

I'd be very very reticent to borrow 10x my household income to buy the $800k to get a very average roof over my head in AKL in this crazy market,

To deny this is a problem and blame it on a lack of "motivation" is a darned lie.


It may not have been easy back in the day to get started either, but they had the benefit of inflation making the debt load very manageable in 10 years, given the income growth in that time, even at those interest rates.

The debt was proportionally 3 times lower, so how could it be otherwise?

At today's 1-2% wage increases (if you get any), the majority of today's FHB's are going to need the RB to keep a low interest rate policy to be able to service the mortgage.

I know who's Super we're going to be revoking, and assets we're going to be taxing the hell out of, when the time comes.

Slight suggested edit to your excellent comment:

At today's 1-2% wage increases (if you get any), the majority of today's FHB's are going to need the RB to keep a low interest rate policy FOR TWENTY YEARS OR MORE to be able to service the mortgage.

That's where your argument falls off the wall mvgsmf.
Back in "my day" as you call it was common practice to borrow around 4-5 times income for one simple reason. Interest rates were 3-4 times higher than today.
That sort of economy lasted for over 40 years.
With interest rates today at around 4% its totally logical that people can afford 8-10 times income.
The world and the economics have changed and we are unlikely to see 15% interest rates on mortgages for decades.
Here's the funny bit. If interest rates do go back up significantly then guess what? Inflation is back, the cost of everything will rise in price. And here's the kicker:
The prices of houses goes up as a hedge against inflation.
We are in a "new normal" so you and all your bleeding heart supporters better suck it up. You're too late for the party already


.second nomination for absurd comment of the day.

So BigDaddy enlighten us if you think this generation is whinging over nothing. If you were a young person in 2016, who does not have wealthy parents, how would you buy your first home?



So giving a damn about others less fortunate than me in society is now "Bleeding Heart"??

Enlightening indeed! (Especially since I'm what would be called a high income conservative in every sense.....)

Funny thing - caring about others used to be normal in NZ I grew up in when we had a set of core beliefs that placed value on other things that made our society the envy of many. (And I'm only 48 - not 70)

Values over and above "money" and the gloating of those who have benefited due to nothing more than good timing.

So next time you need a policeman, a nurse, an ambulance driver, or a teacher (you know - the careers and occupations that actually benefit our society from the kids to the elderly... Just remember, most of them couldn't buy a house in their home town now unless mummy and daddy are wealthy - that's what is wrong.

Self perpetuating elitism is evil in every sense and those gloating about it disgust me and many other "bleeding hearts" by the looks of things.

Thanks for the confirmation though - now I know who the is problem is.... and it sure as hell isn't "bleeding heart" me.

Well said.


"Interest rates were 3-4 times higher than today."

You have absolutely no argument on that basis. The "back in my day" violin tunes have been debunked so many times.
You show a fundamental lack of understanding of inflation, leverage and real house prices - it's all nicely summarised here (and this is only based on 2009!!):

The reason interest rates were high was because inflation was high:
1. Wages were inflating at a similar rate to interest;
2. Inflation was eroding real house prices - so the principal itself was inflated away over time; and
3. That "sort of economy" did not last for 40 years. That is absolute BS. High interest rates were short-lived phenomenon in the mid-70s and again in the late 80s.

Contrast that to today:
1. Inflation is non-existent - wages are not keeping up with house inflation and are not inflating away the principal for recent buyers;
2. Interest rates are at historic lows yes, but that means that anyone stretched now is putting themselves at considerable future risk. You say that this isn't the case because they will be inflated away - this "kicker" highlights your lack of understanding - interest may get to 10% (for arguments sake) and be countered by 10% wage inflation but when you're starting from 8-10x leveraged position this is a far, far different proposition to the 4-5x position in the 70s or 80s. Quite simply, that is the inherent danger of leverage!!
This is diametrically opposite to the situation faced by those stretched in the 70s & 80s.

I own a house so I'm not a sucker, a bleeding heart or a mindless liberal.
My concern lies with people like you who are clearly financially illiterate to the point they can't understand the risk they are placing themselves and the wider economy in.
You're like lemmings to the "party", herd mentality and blissfully unaware of the precipice you're approaching.
If "winning" is scraping together a deposit and managing to convince the bank to give you $600k+ in debt then well done you and any other muppet who can't understand fundamental value.

That puts my job at risk and my family's prosperity in jeopardy when I'm not the one being irresponsible.
Your grasp of economics may be a joke, but that isn't.



Brilliant comment.

You don't have to be a "bleeding heart or a mindless liberal" to see that one day this crazy FOMO and leveraging to the hilt will all come crashing down and it will hurt us all - my financial prudence should not be at risk due to the filthy greedy...

The argument does have a basis. Interest rates were like that.
When an employee loses their job, they can possibly use up their savings to survive.
A home loan with high interest rates can be serviced if wage inflation keep pace too.
When an employee loses thier job, there still remains the high interest rate home loan to service.
So then there is no longer a job paying anything, and a loan can't be paid back with zero income, let alone with double digit interest rates on top.

Yes, I'll say it slowly for you - read. my. post. in. full.

Interest rates were like that for i) relatively short periods of time; and fundamentally ii) matched by wage inflation - two small, but important footnotes, that either aren't understood or are conveniently ignored / forgotten.

Anyway, I'm not going to repeat myself, read my post before reverting to the "back in my day it was harder" BS - we've heard it all before, it's been debunked hundreds of times because it simply doesn't ring true.

I don't know why people hold on to that argument, it's wrong for starters and it proves absolutely nothing - rampant house price inflation is not a good thing and it does not create "winners".

An era of high interest rates was experienced, it didn't work out well.
Just because the high interest rates occurred back in some elses day, that doesn't make the point that high rates don't really benefit the consumer any less valid.

Moa man - under the high interest rates, high inflation, small loan scenario - you were at risk for around 10 years max. Job loss, incapacity, etc. Each year, the mortgage burden was inflated away so by year ten you could expect to pay off the balance out of that years income.

Under the current scenario, in ten years time, new borrowers will STILL have a MASSIVE mortgage relative to their income. Even in TWENTY years plus, you remain vulnerable to any bad luck.

I don't know what you thought your argument was supposed to prove.

My argument was to prove that borrowing doesn't work.
It's a slow leak on the consumer.
Encouraging consumers to save would be more beneficial.
But then the lenders would have no income.

And banks profit margin is mostly in lending.
It's how they make their money.

not surprised to see many taking on massive mortgages with our kids now being taught this. now I see why when young people tell me they have taken on 500+ mortgages for a house they are at ease with it while it would give me the yips.
maybe because I was taught all debt was bad unless buying something that generated an income to pay it off.

"A few years ago when my 12 year old spoke to me about good and bad debt , I asked him if he knew the difference and told me that a mortgage was "good" debt because you were paying off something valuable .
every kid who has been through the New Zealand state education system has been taught the difference between "good and bad" debt as part of life skills training"

Here's a thought. What if people were entitled to an affordable home? What if we as a society considered a few things entitlements and ensured they stayed as such? What would that society look like? In contrast, what would a society look like where the majority were not able to afford a home and a lot of other necessities regardless of how much they strived for it?

Then people would be looking for other investments such as businesses that actually provide others with employment and benefit local communities by doing so.
Having recently visited a Kibbutz in Israel, socialism can work but not without challenges.

Yip BD there are a lot of whinging sods on here....

They have no damn idea how business works, think that regulation and taxation are the answers to all problems.....they want everyone else taxed but their own incomes left alone....pleading for causes that give personal benefit to themselves, while stripping others of their hard work........


"they want everyone else taxed but their own incomes left alone."

A bit like landlords pleading for no change so they can keep their gains?
I prefer a fairer society with no distortions. Doing nothing keeps those distortions.
Either way it does little to affect my life other than believing in helping all not just myself.

Landlords pay income tax!! Property traders pay income taxes....and still some people want more.

I think you get the wrong end of the stick when trying to understand what causes price distortions! Not having something keeps a market free of distortions......implementing something creates distortions and alters pricing levels......that is why some of us on here do not want CGT as we know that it will change the market behaviour to the detriment of those who are most in need.

If you want to help people then get rid of all taxes and regulations....that way most people won't be working half of each and every week to fund the system and the playing field will be level for all. Let voluntary organisations do the charity work.

So if drug dealers paid income tax, that would excuse them any guilt for the lives destroyed?

You sound like my Father when he sold his business, retired, and decided to hand in his Labour Party card for an ACT card. Self serving, and I told him so.
I own/run a business. I pay the tax I should. I go out of my way, much to my accountants disgust, to not play the game and hide income. Everyone deserves a fair go, if to acheive this for all my countrymen it requires me to pay tax, so be it.
Homes are a tax haven, plain and simple. The tax rules allow them to be. If not CGT then something else, but the playing field needs to be levelled. Personally I think well over 50% of speculators in property have no idea of the risks they are running. Unfortunately the not so smart people who really have no idea are the ones that end up being burnt.
I cant see how CGT will change the market for the needy ? If people like you run at the thought, you will invest that money in something and end up paying more tax than you do now which could be used to help those most in need

Big Daddy gets it wrong when he says "no body is entitled to an affordable home that they can buy" In our society I think they are entitled to exactly that. It's good for them and it's good for us all.
I think of myself as a right wing thinking believer in free enterprise. I don't think we should just hand people homes, but we have gone to the other lunatic fringe and made it impossible for many. Making it impossible is just daft Big Daddy.

The lunatic fringe is the one where people think that working half of every week to fund the system that creates the rules and regulations that slows/stops houses from being built is not the problem and then expecting that system to hand them out houses that can't be built in the first place.

If people want affordable houses then they have to give up the system, stop whinging every time something goes wrong, stop pointing the finger and making Nanny State responsible and take responsibility for themselves.........the cost of housing is on the whole down to the price of the system.

You got that right, anyway. I have plenty of sympathy for the young people priced out of the housing market, but that sympathy evaporates for specific individuals if I discover they are voters for politicians and parties who represent "save the planet" urban planning...

If they voted Stephen Berry last time round, they are consistent.

@ KH Well Said - Ditto

"No body is entitled...."
Depends on one's world view I guess.
Is anyone entitled to a free life? Is any one entitled to be free from repression?
All these things involve value judgements. There are no absolutes.

But in the democratic world, I think it is fair to say that like public education the reasonable aspiration to own one's house has been a cornerstone.

Big daddy is entitled to his views. And so am I. In my view he has a very greedy and selfish view of the world.

Shelter (a house) is one of our hierarchy of needs as Maslow would say.

But according to Big Daddy's theory of entitlement, he would also say that food and water are also things people are not entitled to.

Bit harsh? I am aligned with your view, but Big Daddy might say that shelter is available, it's just an increasing number of people need to rent it rather than buy it....

The way BD phrased it, that everyone has had the same equal opportunities over the ages, so stop whining.

In his world, everyone is equal, but some are more equal than others.

He is defending the indefensible, I think it is he that protests too much.

Another thing he fails to mention in his 'it was never easy' rhetoric is that an awful lot of students are leaving uni saddled with heavy debt. Many spend the first 7-10 years of their working life paying that off before they can even think about saving for a house deposit.

Life is free - only mankind have commercialised it in the pursuit of "wealth" and power.

Everyone is entitled to be free from repression - it would require mass enlightenment and human evolution though.

Key is correct in that societal norms have changed. The current situation is a trade off for the freedoms you all enjoy. Unfortunately, for many, earlier societal norms were there for a solid reason, like the foundations of a house. Change the foundations and the results are likely to be interesting.

Key may well be correct that societal norms have changed. I'm sure it has nothing to do with the high cost of housing now though.

I find it funny when the older generation get all moral about societal norms but the same people will complain when people have kids when not in a financial position to support them.


I think that it's time for the establishment of a Corruption Commission in NZ.
The first assignment would be to figure out "whether" any MPs have been bribed around immigration, banking, RE investment and construction. Let's start with the past 8 years.

I know one has already - Taito Philip Field went away for bribery and perverting the course of justice. Just sneaked into your eight year limit too. Do you really think one more layer of bureaucrats in the housing sector will help?

120 MP's own something like 200 investment properties between them. In addition to their own homes.

It is shame that the govt is not acting to curb everising house prise but what is worst for comming out with utter nonsense.

It is pity that opposition and media are too timid for in other democratic country govt would be taken to task for such a remark and ask for resignation. WHAT SORT OF MINDEST AS THIS THOUGHT WILL NOT COME TO A NORMAL PERSON.

I did mention earlier the more the govt and his ministers come out with such arrogent statement more the anguish they will have to face of the people of NZ.

Why do property values go up and up? Because we are handing tax free gains on a plate to people who would otherwise pay tax on their investments. Property investors will happily accept a 0% to 4% rental income return because of the pot of gold they are getting when they sell. A capital gains tax on property other than your home is a no brainer. Mr Key (my political leanings are to the right) for the astute man I believe he is, just doesn't seem to get it. The taxation system should favour no section of society. People are renting not because they choose to but because they cannot afford to get on the ladder.

There are plenty of markets around the world where a CGT made little difference to a runaway house price bubble driven by supply and demand imbalances.

Only because those rates of CGT abroad were/are set way too low. NZ could introduce a CGT rate of 90% if we want. Bet that would have an effect.

Justice what you are proposing would actually be an illegal use of the tax system.......

Why would anyone build houses with a 90% CGT? But it is not houses you want or anyone else that proposes more silly taxes is it? You actually want to ensure that the house supply issue is never resolved! How damn selfish is that!

I think this is one of those (finger crossed) " at the end of the day most clear thinking kiwis would say" moments that are not backed up by any facts at all.
Its all part of keeping to nationals playbook which is one of their strengths until it becomes one of their weaknesses.

A capital gains tax is dumb. It hasn't worked anywhere in the world as a brake on property prices.
In fact it does does just the opposite. People withhold property off the market thereby increasing prices even more. Failing that they hike the prices to cover the tax. Either way a capital gains tax has been a total failure as as a price moderator anywhere it has been applied.

CGT should be part of a fair and balanced tax and not as a handbrake on house prices. However, it is part of the solution which includes a number of differing parts

If someone is trading property, has a habit of trading property they will already be taxed on their profits so there is already a fair and balanced tax in place!!

If you have a CGT implemented then in any price decline that occurred there would have to be a tax refund to balance things if Key's plan of increasing house supply works and prices ever dipped back then you have just put the taxpayer on the hook for paying enormous tax refunds.......

I keep seeing that CGT arguement about refunds.
1. Who sells at a loss and the refund would be less than the loss.
2. I don't get a refund on GST if I don't buy something, or if I pay myself less this month. It is a tax on profit and that is it's limit.

Who sell at a loss? The person who bought at the top of the market and finds they can't stump up with the dollars for the bank to keep their mortgage from going under.Possibly 20% of the current market.

You don't get a refund on GST if you don't buy anything because you haven't paid any GST if you haven't bought anything.

GST is a crafty tax on all labour!! You do not add/pay GST to your wages, salaries or drawings etc you add GST to your charge out labour rates and other costs etc.

In business you deduct your GST business costs from you GST income and it is the difference that is paid or refunded.

You bet there will be losses, en mass, one day, in a market where the median multiple has now hit 10.

Dublin never went over 7, and look at the carnage there when the inevitable bust came. In fact it was the luck of the Irish that they got it over and done with with median multiples "only" six point something.

If you are relying on capital gains to make an asset profitable, then it should be taxed as income plain and simple. Interest on a loan should not be claimable as an expense against a rental property. And any loss should sit with the asset not be transferable to personal income.

Perhaps the tax isn't high enough where it is applied. Howard reduced it significantly in Aus.
A 20% tax may offer little disnIncentive but a 40% tax may....

Japan experimented with higher and higher rates, hitting 80%, during their infamous long boom. Some people blamed the hikes for "crashing the market" eventually.

But there is also a downside for housing supply, in that sites suitable for development end up being withheld from the market because the seller can't be bothered paying a stiff CGT. There are ways around this, but there is no proof that a CGT prevents house price bubbles when there is a supply and demand imbalance.


I can imagine an epidemic of suicides in 10 years time. People who were forced out of the housing market and heading towards their late 40’s will realise that they’ll never accumulate any wealth, they don’t have children, and they don’t have enough for a comfortable retirement. This will be a direct result of allowing foreigners to hyperinflate the housing market. To say that people “prefer” to rent is disgusting.

Yup, he's spinning an absolute crock of s...

We already have an epidemic of suicides, nearly 50 per week. Not as easy to talk about as the road toll though..

I'm glad you brought this up Fatpat, I literally have been thinking the same thing myself. It's not something to be taken lightly but I am very serious in saying that it will be a genuine concern. Our epidemic of suicides will only grow in numbers going foward as a result of the social fabric being ripped apart for anyone not lucky enough to already be comfortable.
I already think and see that people are drinking more because of the stress and I can imagine drug use will go the same way.
I have already been quoted as saying I hope I die before I retire. Mind you, I doubt I'll ever get to retire as I will be paying rent forever. But that's ok because JK thinks I 'chose' this life.
This current situation is doomed to fail in many many more ways than one big crash. It will either be quick or a long, slow painful death, it's gone too far now.

I wonder how long before there's a 'send a message' suicide, of the bomb-strapped-to-the-chest taking hostages variety?

I believe there is one thing JK is forgetting. There is such a thing as 'anarchy'. I wonder how far as a society we'll be pushed before the anger lashes out in one way or another. But again, my renting peers appear not to care and are taking no notice of what is going on in the big bad world. Maybe they are happy and have 'chosen' this life? Right now I feel like the odd one out.

Am with anyone who is out to expose national party.

Things have gone on this way in the UK for much longer. There certainly should be anarchy over there, the term "generation rent" was coined over there years before Shamubeel wrote the book about NZ. If you google it, you will find sites dedicated to horror stories of the UK housing market. People paying $200 per week equivalent for a crawl space, stuff like that.

We moved from the UK in the 70's and the first thing I noticed was we were 10 years behind in this country. This in itself is not a bad thing, however what is bad is we don't learn from the mistakes that the UK made with the likes of immigration and we just go blundering on and make the same mistakes.

The most intelligent housing anarchists in the UK, "AudaCity", are advocates of well organised mass squatting on the Green Belt. Hasn't happened yet. A few small scale attempts have been very rigorously dealt with under the full weight of the law.

Hardworker the inequitable status quo which is caused by ultra low interest rates cannot last forever. When rates go up it will be hell for highly leveraged individuals. The booms and busts are getting larger and that’s predicted by the financial modeling of Steve Keen. The phenomenal growth that the baby boomers enjoyed will not be repeated. Have a look at the work of Satyajit Das. Its very cold comfort for someone sitting on the sidelines watching prices skyrocket – I know because I missed the Auckland boom.

I suppose one always has choices. There is always opportunity lurking out there even if it’s not obvious. Not just opportunity for financial gain either. Opportunity for happiness which may, or may not involve living and buying a house in Auckland. You just need to have a strategy and figure out a way to move forward.

Im an atheist but I find the words of the serenity prayer quite relevant. "God, grant me the serenity to accept the things that I cannot change; Courage to change the things I can; And wisdom to know the difference."


Key said in an interview on RNZ this morning that falling home ownership rates were a result of changing societal norms, rather than necessarily a failure of Government policy around taxation.

Isn't it time the regulatory capital subsidy offered to banks to spur private home ownership is revoked to better represent the business undertakings of residential landlords indebting themselves against the value of properties which in turn are dependent upon tenants servicing debt repayment cash flows? Read historical narrative

Where is his evidence for that statement. Did the interviewer ask this obvious question? Or was Guyon just being his usual John Key lapdog, facilitating Keys spin.
Pure BS and spin more likely.

As someone born in the 90s i believe that it is infinitely better to rent than to live in a property that you own. If you and a mate both purchase adjacent properties you'll be better off renting to each other than living in the property that you own. I believe that those complaining are generally older people who can't do math...


And there is the problem with the current society - you present a situation where you can see tax benefits whereas familes want to live in a place they can call home.
It is not all about the money and there is a lot more tro life.

It seems that you would prefer to shape society according to your view of what society should look like and to heck with anyone else. There is a reason we have constitutional law!

One can complain about the system or get out and make the most of the system and that is freedom of you can complain on behalf of families when they get so well looked after in NZ is beyond me......families get paid parental leave (and still they want more) free Dr visits, WFF, accommodation supplements, subsidised childcare, basic free schooling, there is a plethora of handouts for uniforms and other schooling needs, there is often free transport to get to schools, did I mention free dental care for looks to me that families are getting plenty of tax benefits in NZ........but people still want more!!!

One thing that really annoys me is that many people struggling to buy a house have very high expectations of what they should live in......sometimes one has to lower their expectations to get their foot in the door.......".He/She who has no expectations has it all" is a good rule to follow......"plan for the worst hope for the best" is another!!

..your onto it. If they aint going to change the tax rules, then join the scheme. Do it with your mates, your bro or sis or whomever. They buy your house, you theirs. Both of you are then landlords and can deduct the mortages, rates and so on and use those losses against your own inome.

Or by a couple in Ohura as well as your home in Auck and have all three in a Company, your just one tenant. use those losses. No tax law against it, would have to prove avoidance - and there is none.

There must be quite a few people doing this already, it's just such an elegant way of abusing the system. Once the masses catch on the government will have to do something about it because it will ruin their tax take.

Deny til you die JK, deny til you die....


I rent by choice, but recently the landlord announced he has family coming from China and we have to be out in 42 days. Every rental property we have looked at has an international landlord (not living in NZ) and the properties are tired and worn out with no obvious maintenance and simply not worth the $ they want. We have our house packed up, but no where to move to as yet and we have to be out in 2 weeks time. It's seriously unaffordable out there but we are better off than a lot of people as we have choices, many don't...


Prime Minister of NZ... Home ownership is important to Kiwis and whilst not a right, if you work and save it should be an achievable goal. It is your job to make it so, you have kept wages down.. now keep house prices down and dont talk about LVRs or the reserve bank, this is your mess clean it up.

Yeah, in 2008 it was the Helen Clark government's bubble with a median multiple of 6.5 - and trending down. Simple matter to do reforms and manage it the rest of the way down. Don Brash understood this stuff standing on his head.

It is now John Key's bubble, median multiple 10+, what will the history books say about him after the BIIIIIG bust that is inevitable?

Camels back. You are corrrct but do you think they do not know what is hapening and in newd day in and day out and housing crisis is talk of the town whenever ànyone meets still the denial. The reason is simple thàt PM has more concern for not even overseas buyer but chinese buyer than the Kiwi.

If the govt has guts to bring out the housing data fairly and without manipulatio but will never do. We the people do not need data also as everyone knows.



As people have already succinctly put it above. No, we do not choose to rent when we can be kicked out whenever the family is moving back in. We can't hang pictures on the walls or have a pet. We can have kids if we like but we can't paint their nurseries before they are born and we'll never really know if we'll be able to provide a stable, secure place for them to grow up in OR if we'll have to keep moving them from school to school as we run around looking for our next rental in a city that doesn't want us and we can't afford to put down roots.
I have spoken to 3 couples in the last couple of weeks all going through the same thing. What now? No house, best not have kids - can't afford them, why marry then either? There's no logical next step for them and with no way of being able to carefully plan a future. They've all split. All of them heartbroken.
Me being one of them. I know it's nothing compared to the families living in cars, but social fabric is being ripped apart and yet JK says we CHOOSE this life? We CHOOSE to have uncertain futures and we CHOOSE to be lorded over by our landlords? Good one JK, another joke of the day.

Yeah, more people want to rent because they don't want a $700,000 mortgage over their heads! Why the government believe this is okay is beyond me.

You know I think it's high time we push for an early election - time for Mr Key to GO!!!!!


'At the end of the day' John Key is a dick

And voters who put the PM in power? How about them? PM's don't elect themselves. Not in this country anyway.

You mean the landlords and property speculators who are benefitting from this corrupt policy? Well 'at the end of the day' they're dicks to.

I am sure landlords and property speculators make money. No Doubt.
To quell a cycle of getting rich quick property flipping, is going to take some doing.
LVR adjustment may be an option. But that steps on depositors toes as well.

Watch this double shot video.

"The Residential Tenancies Act needs to be overhauled to better suit the needs of long term renters".

The answer for renters is covered in it and would solve many problems in crystal clear detail.

nah nah BD, Apparently according to JK it's just a "supply problem" is all mate

WINZ probably gave him this info whilst visiting the homeless with the Salvation Army, yeah right!


Honestly, I think many on this forum need to start a new party cause Labour and the Greens combined are not going to cross that line and they seem reluctant to include Winnie who quite often is the only one in parliament taking it too the government with some blatant in your face facts.

We need a new alternative party that delves into the actual 'reality' for the many kiwis being dis-infranchised from any chance of just basic hope and dreams let alone basic human rights. One that captures, X,Y and Z..

Just one party that will state just 5 things:

1:Non residents are no longer allowed to own property of any kind.

2: An immediate holt to immigration until housing supply & demand & speculation is addressed

3: The immediate end of the Accommodation Allowance combined with a nationwide rent freeze to curb any compensation effects via spiteful rental increases. It's a ''national crisis'' remember!, so the authority is warranted

4: The removal of all mortgage Interest tax deductions on rentals/investment properties

5: An immediate stamp duty introduction.

Feel free to add or explain a better alternative


This comment will be deleted immediately due to the common sense it contains.

To start off, start a website or weblink and see how many people will join. Does any computer person kniws and can start.

Not sure how much money we would need to get a few things rolling, but I believe to start a new PP we also require 500 signatories.

@ evita: Actually you don't need a techie to help set this up, you could start this yourself quite easily through Twitter, as quite a few people are starting to do with the global disgust of out of control property prices.

Vancouver has very much been on the front line with their citizens being shut out of the property market, so people have been speaking out about this. One good example is the Twitter link #Don'tHave1Million

Worth a shot, some would say it might not be affective but every avalanche needs it snowflakes to start with.

Just putting this out there but I can actually build a website. I'm no coder or developer but there are ways, I do it everyday.

Please do, I think it's now time for action.

To start off, start a website or weblink and see how many people will join. Does any computer person kniws and can start.

The fact that you mentioned nothing about Council urban planning departments and their enabling of rackets in land for development, shows just how much of a hard lesson this is going to be to learn. If a majority of people don't see that as a problem.

None of the things you mention would be necessary in a housing market with elastic enough supply. There are median-multiple-3 cities in the USA growing twice as fast as Auckland.

PhilBest - whilst I share your concerns around urban planning, is it not a bit unfair to be too harsh on the planners? They are part of the problem, but it's ultimately the councillors who make decisions. And their decisions are based to a large extent on what they think the majority of the populace wants.

However, i guess that all comes back to how planners frame the issue. If we come from the starting point that as a western democracy we aren't going to enact mandatory population control ala china, then Auckland is going to grow. Then, the question is how should it grow.
This is where I think the Planners DID fail. Only a very cursory and token glance was given to options beyond the 'Compact City' in the Auckland Plan. The Council should have had a much more robust look at other options.
I guess they would say, though, that they consulted on the Auckland Plan...

Isn't it a bit arrogant for the likes of you and me, not matter how right we think we are, to expect that the majority of the population and planners will follow our view? It's one view, it's up ot people like us to get it out there, but we can't force anyone to subscribe to it....

#4 instead, ringfence losses and remove the intention rule. If it's income it's taxed. The capital/revenue distinction in current tax law is outdated and no longer fits with reality. This way nobody can complain about a CGT because it won't be one.

The biggest issue is that it's too late to fix the problem. Affordable housing requires a massive correction to existing prices, a massive correction to our valuation models, a massive correction to our belief systems. The housing issue is merely a symptom, one of many and at this point in time the process must run its course. History repeats until one learns their lesson - mankind as a collective has lessons to learn.

So you would ride rough shod all over the constitutional arrangement of NZ then Justice?

May be can start and see how the readers will grow. Put a comment and ask for comment or vote. Sort of survey

A suggested name/s for this possible Party?

Social Democrats
99 Percenters

The Kiwi party, New Zealand for New Zealanders.

what is the difference to NZ FIRST?

The Progressives? Got to be better than the 'procrastinators' which are currently in power?

What about "The People's Front of NZ", not to be confused with the bastriches from the "NZ People's Front"

PM: King of Spin: "Those pesky 20/30-somethings never really wanted to buy a home anyway - they just like renting. You can't blame the Govt for new socio-economic demographics."

Any of this sounding familiar?

Cash strapped US renters race from high prices, hit wall of gentrification

At least in the US, you can get out of California and New York and go somewhere that house price median multiples are still around 3, and job growth is above national average. Dozens of cities are growing BECAUSE they do housing properly.

Got 26mins free? This is an interesting watch.

Tariq Ali: Global revolt against corporate capitalism & inequality - 'On Contact' with Chris Hedges


Actually John - I don't rent by choice. Cheers for the sympathy though.btw I hear you have a place in Parnell within walking distance of the CBD. I was thinking of crashing for a few months - is that cool? Let me know if not, otherwise we'll park our camper outside. I understand if neighbours might not like it so we can move it onto the tennis court if you prefer.

It was easier in the past anyone who thinks otherwise needs his head read. Nz has highest prices relative to income in the world. Now days you need two income earners not one to get by. Now days you compete with foreign buyers local (students and temp) and offshore who buy 39% of property . Nearly every second buyer is an investor in nz (46%). Now days you need a 20% deposit. Loan to household income (2 workers is 10 to 1)

Wake up daddy

Better tighten your belts for a long recession as immigration drops of.
A property crash wont happen until the asset rich baby boomers sell up when their savings is wiped out by rising rates.
Dairy prices wont recover until France reaches peak production, and the Chinese mega powder factory sends it straight to the Chinese Capital.

Actually JK is right! I choose to rent because I'm not going to buy a house at the top of a speculative bubble!

People are renting because theirs no job security, wages are low, and stagnant,
and higher paid jobs are just not there, or are locked out.
Theirs no reason the Auckland council could not introduce a vacant levy,
or the Government could.
Vacant houses are not contributing to GST take, so are a significant tax loss.

Those on the dole that enjoy doing nothing at the end of the day need to aim a bit lower and put their name down for leader of the national party.

I wouldn't place any weight on what 'Big Daddy' Olly Newland says. As a professional landlord with multiple properties he has huge vested interest in keeping the bubble pumped up.

Most home owners who have studiously scrimped, saved and sacrificed like myself and my family so that we can own multiple properties don't want to be penalized because a bunch of whinging lefties on a so called 'neutral website' keep trying to defy the laws of economics of supply v demand. SE and BH still have their knickers in a twist as they decided to rent instead of buy or moved to wellington (BH that's come right now so hopefully you didn't sell - but knowing your timing you probably did) This website has been hijacked by the left brigade who seem to care more about my young children than I do? My sincerest advice to you is to head over to Russia or China and have your freedoms shredded "for the greater good" ... because that's where you are headed with a red/green alliance hell bent on destroying the NZ property market - 2 bedroom terraced houses are going for $2 million+ in Sydney so pucker up as that's where we are headed...

Interesting, so now anyone that has a different opinion to you has to be grouped and called names.
Laws of supply AND demand need policies to cover supply AND demand not just build build build.

The laws of supply and demand have policies and that is why the market is where it is!! That is why there is a shortfall of affordable housing stock......that is why we end up with WFF and other accommodation supplements.

It is people with opinions and attitudes like yours that have caused the housing shortage in the first place !! As long as people like you promote policies that don't build houses then we will have a shortage of housing!! Do you own a house maybe more than one as you are advocating further policies that hold prices up and ensuring supply remains constrained. NZ needs to build build build but you don't want that because you are afraid that the build side might build too many.

Actually I own 1 house and don't care too much about the price as I only intend on living in it and not using it for a profit.
You seem to have woken up in a bad mood today?
Supply and demand - for some reason there are many people that believe the only solution is to build more houses. You can have policies for many things that help with with supply AND demand. Building more homes and filling the country with them is one option, or an extreme is stopping immigration - not something I would agree with but one of many answers that are not just based on more supply, more supply, more supply.

I am not sure how I have caused a housing shortage though.

Mate, your lefty friend Keyo_ at the top of the comment section is saying we should kill our PM. I think I am well entitled to call you guys a bunch of whinging lefty lunatics and this guy gets 41 up votes. Disgraceful.

You are not actually entitled to call anyone anything.
Typical of the Hoskins lovers that anyone disagreeing with them gets called lefty.

I have never liked Hoskins hair

I was recently in Russia. I found the people there to have much more sense of community and belonging than self centred Westerners such as yourself.
Dont worry its not just you, not just kiwis. Its the Kardashian effect. The Keys are our Kardashians. Kind of there but not a lot of substance, opaque.

Politically speaking, Key has no competition apart from the aging yet still viable Winston. Seriously, who is there of any combined substance and charisma in all of the Opposition parties apart from him? This is the main problem really. Little is not who your average Kiwi sees representing them, for all his good qualities. I think it is because he comes across as an old-school unionist which not many people resonate with now.

It really surprises me that there hasn't been any widespread popular protest like the French public have done on various issues over the years. The really unfortunate part is that the damage is already done, and bubble pricking will hurt many before it helps others. And you can't rely on CPI inflation to deflate the massive debt either, once the bubble pops. Leverage in reverse combined with overall CPI deflation is extremely scary as your equity will be decimated and the real value of the loan will grow not diminish. An example, your $1.2m speculative "investment" property has an $840k loan with $360k equity. The bubble pops and over a year values sink 20% to $960k. Your leveraged bet has evaporated your equity to $120k, a loss of 67% on equity.

Politically the system is broken when people vote for a person and not a party to run the country. It is getting too much like America with a populist vote on who smiles most and with little robust debate about what they are saying.

Denpal - are you not just perpetuating the urban legend about donothing Key who in my opinion is all smoke and mirrors? Key actually is the anomaly here - Little is representative of all the NZ leaders that have come before him over the last few decades except for possibly Lange. Safe, reliable and dare I say it boring - think Hill Billy Jim, Ethel Shipley and The Helen.

I remember Norman Kirks words - "people don't want much, just "Someone to love, SOMEWHERE TO LIVE, somewhere to work and something to hope for."" Key is definitely failing on at least one of those big time.

It has nothing to do with Left v Right and all to do with FHB/existing homeowners v property speculators (aka investors).

- Loan to income ratio of 4 to 1 is just sensible financial management. (investors borrow at 6 to 1 currently)
- Currently investors buy 46% (Canada its 10%)
- Household debt is increasing by 8% (currently 216bn)
- NZ has the HIGHEST average prices relative to incomes in the world (This alone should sound alarm bells).
- Our own PM was quoted as stating it was at crisis level in 2007 (averages were 500k) and now we are 500k higher at 1 million.

If we learnt anything from GFC we learnt that regulations/controls are needed to reduce the impact of the booms and busts and that the free market requires it. Lets not forget the huge bank public bailouts that were needed to keep the system afloat.

Has nothing to do with communism and all to do with sensible financial management. You must have had your head in the sand during the GFC to think that regulations are not a good thing.

Protecting the households & speculators from taking on too much debt and reining in banks that are just looking to maximise profit.

In NZ the "do nothing say nothing government" and the "Reserve Bank of Mismanagement" have been completely asleep at the wheel and have helped create the status that exists today. Worlds highest Prices relative to incomes. Let that settle in. No lessons were learnt.

I agree if the government and Reserve bank fail to act then prices will continue to increase. We may even smash our own household income to price records.

I agree and hope that if people feel the way people are commenting than their should be protest to make your voice heard.

This time, we may see soon protest and social media outrage as national has become to arrogent and it shows with theie lie and insensitive comment which reflects their mindset.

No one is against investor but speculators - yes and anyone protecting speculators of which mostly are overseas buyer despite petmanent denial by JK

Patience. There is a helicopter coming that will drop money and houses all over the land so that everyone can get a home and a four figure income without even trying. The Government will save us all.

"Helicopter money has been proposed as an alternative to Quantitative Easing (QE) when interest rates are close to zero and the economy remains weak or enters recession. Economists have used the term 'helicopter money' to refer to two very different policies. The first set of policies emphasizes the 'permanent' monetization of budget deficits.[1] The second set of policies involves the central bank making direct transfers to the private sector financed with base money, without the direct involvement of fiscal authorities.[2][3] This has also been called a citizens' dividend or a distribution of future seigniorage.[4] The idea was made popular by the American economist Milton Friedman in 1969"

Quite. The funny thing is that's why Auckland house prices are rising so much. It's the money flowing in that pushes up prices. More people gives us more per room, more wages gives us more rent, more money gives us higher prices, but then you know that. Everyone else, Japan, China, Germany, France, US, UK, all cheat and find ways to create money that then flows to these hapless isles that don't know where the money came from. We are outwitted.

We are no where near zero interest rates.

Knowing our PM even if helicopter was comming will divert to china.


Let us remind ourselves :
Key: Speech to New Zealand Contractors Federation
Tuesday, 21 August 2007, 9:29 am, Speech: New Zealand National Party

Home ownership

"We also want to ensure that every young New Zealander who works hard and is disciplined about saving can expect to own their own home and thereby have a real stake in the economic future of this country.
Today, I want to talk in some depth about the declining rates of home ownership in New Zealand."

No mention of wanting to rent back then....

"It’s those aspects of the home affordability crisis that I want to concentrate on today.
But first, let’s take a minute to look at the enormity of this problem."

Note back in 2007 John Key thought their was an "Affordability CRISIS"... somehow with prices 500k higher at 1m today in Auckland it is no longer a crisis...

"It wasn’t so long ago, in the 1990s, in fact, that New Zealand had a high level of home ownership compared to other countries. Not so anymore. We now have what has been described as the second worst housing affordability problem in the world."

.. he wasn't happy with 2nd so he has taken us to NUMBER ONE income to house prices in the world...

His speech gets better ...

"Make no mistake; this problem has got worse in recent years. Home ownership declined by 5% between the 2001 and 2006 census to just 62.7%. To put that into context, home ownership for the preceding five years had been stable at 67.4%."

and then this...

"The result is that too many Kiwi families can’t see a way to get themselves onto the first rung of the property ladder. They don’t even aspire to owning their own home anymore. We have to turn that around."

How have we gone from turn this around to Kiwis love renting .... ????

and then this classic quote

"More importantly, however, I think it’s dangerous for the Government to pretend that developments such as that at Hobsonville are some sort of panacea to the housing affordability crisis."

hahaha....and then his Conclusion ... note it "threatens a fundamental part of our culture" and "ownership crisis. The crisis has reached dangerous levels"... dangerous at 500k what is 1m ? Extreme Danger ???


Over the past few years a consensus has developed in New Zealand. We are facing a severe home affordability and ownership crisis. The crisis has reached dangerous levels in recent years and looks set to get worse.

This is an issue that should concern all New Zealanders. It threatens a fundamental part of our culture, it threatens our communities and, ultimately, it threatens our economy.

The good news is that we can turn the situation around. We can deal with the fundamental issues driving the home affordability crisis. Not just with rinky-dink schemes, but with sound long-term solutions to an issue that has long-term implications for New Zealand’s economy and society.

National has a plan for doing this and we will be resolute in our commitment to the goal of ensuring more young Kiwis can aspire to buy their own home.

It’s a worthy goal and one I hope you will support us in achieving. Thank-you.

Wow! Thanks JP.

Is there a single journo in the MSM who has quoted any of this back to JK and sought a reaction?

JP. That needs to be on the front page of NZ Herald etc.
please keep reposting until everyone reads it. Its a classic. I don't no weather to laugh or cry at how JKey sold NZ out and continues his spin. The media has let this country down.

STOP foreign ownership of NZ land and houses except newbuilds.
CAP immigration at 10,000 useful people.
The bubble will deflate and working class NZ'ers can be intergrated back into ownership of property and homes.

Great speech to bring up in Parliament .. perhaps Winnie could do the job ...then sit back and watch DonKey twist and turn like a used car salesman...

Has home ownership now become unaffordable outside of Auckland?
Because if it is just Auckland then most of the comments seem overwrought. Different locations should have different values. That too is a fundamental aspect of our culture.

Zachery, the provinces are still affordable as a generalization. Hard to get jobs though, tends to be who you know not what you know. Us provincials already know how to drive taxis, cook fast food and sell realestate so we don't need immigrants. Displaced Aucklanders have got our economy humming building houses but things will go pretty flat after that as we aren't making new farms or other productive enterprise. If any thing productive land being used for housing and additional lifestyle blocks will lower overall productivity.

That is precisely the problem Zachary. Most NZ cities outside of Auckland and Wellington simply don't have the business infrastructure to support such high prices and rent increases. It's just unsustainable compared to average salaries within each area.

Our current cities that are over heated: Auckland and Queenstown. Hamilton and Tauranga are rapidly heating up too due to local (Auckland) Investors/Speculators.

Once you have price increases in the double digits it's just too rapid for salary based buyers to keep up and get a foot hold on the housing ladder.

@CJ099. I agree with your view about the double digit price increases.
I suggest however you need to rethink about out of Auckland business and salaries. There is heaps of substantial business outside Auckland. Put on your pith helmet and get a bunch of native bearers and venture over the Bombay hill to see. Lots of us yokels have lots of money, and it wasn't just because some Aucklander came by and scattered some beads.
Joking aside, there is a view also that Auckland is good for people who want a salary job inside a bigger system, but Auckland is a deficient environment for those who are more entrepreneurial, or seek more creative and interesting roles.

@ KH, I hope you're right. I work in the creative digital industry, the next area for me would be to move to Wellington which we have been considering. It's either that or head back to Europe.

Just when you make the commitment to emigrating half way around the world you hope to have better weather than the country you left behind. :)

The investor demand pushing up Auckland is now pushing up the provinces last time I checked...

per the article:
"Hamilton's median house price sales had risen 7.5 per cent in the month of March alone."
However, more dramatic figures were on display in the year since March 2015 where the median house price sale in Hamilton increased $122,000, or 34 per cent. It rose to $472,000 from $350,000.
The rest of Waikato and Bay of Plenty also recorded an increase in house prices.
so if affordability isn't an issue now it may may become later ."

7% rise in one month sounds like a problem to me Zac.

7.5% in a month is a disaster waiting to happen... and purely due to the lack of regulations on Investors.

7.5% monthly increase at a time when Dairy isn't doing so well you would think a town like Hamilton would be negatively impacted. No not when we have property speculators/investors borrowing at income to loan ratios of 6 to 1 or higher at record low interest rates.

My niece has just bought a nice two bedroom B&T unit in Hamilton for 320K. It will be cheaper than renting for her, even more so if she gets a flatmate.

Yes I agree and thats exactly the mindset I had and it worked for me. Now Mortgage free a couple of years ago and no looking back. Problem is most people don't want a flatmate but want a $800K house first up and so there is no compromise and then they whinge on here all day how they cannot afford it. A mate of mine had 2 flatmates and at one point 3 flatmates before he came out the other side. This is done on a single income and you have to tough it out for 10 to 15 years. Not interested ? keep renting but quit whinging, you have the same choice.

A guy called Bob I met in a pub is looking at a whimsical 2B, no toilet shack in Dead Horse Creek for only $21000. It will be cheaper than renting for him, even more so if he gets a flatmate.

Trouble is he works in North AKL.

How very convenient for John Key that just as home owning becomes evermore unlikely for a growing part of the population, he can conclude that they all really prefer renting to buying.After all, who wouldn't want to rent poorly maintained, insulated and heated houses?

I wonder what evidence he has for this? I suspect the answer is none whatsoever. Just when are Kiwis going to fall out of love with his brand of neo-liberal economics?

How very convenient for John Key that just as home owning becomes evermore unlikely for a growing part of the population, he can conclude that they all really prefer renting to buying.After all, who wouldn't want to rent poorly maintained, insulated and heated houses?

I wonder what evidence he has for this? I suspect the answer is none whatsoever. Just when are Kiwis going to fall out of love with his brand of neo-liberal economics?

John Key to renters: But you all want to rent!

[Edited out. Sorry but that is offensive. If you have to invoke a Nazi example, you have lost the argument. You can do better than that. Ed. ]

Editing out perfectly valid, if somewhat extreme, analogies now, are we?

What can we say, I wonder.

John Key to slaves: But you want to work long hours with all the benefit going to somebody else!

The comment was out of order. Calling it an analogy is stretching it.

Our society is in trouble when the truth is offensive!

But the PM's lies are - go New Zealand!

Where were we on the corruption standings again?

And for ED, by no means am I trying to win an argument, I'm simply attempting to shine the light of truth on what to me appears to be a great injustice. It's difficult to see the light when one's head is in the sand...

The house price boom in Auckland should be viewed by many as a major opportunity for a lifestyle change. Aucklanders who are unfulfilled should think about starting anew in the provinces. Maybe a small business, self sufficiency, early retirement or get to work on that novel or project that you dreamed about. It really is a unique and largely unforeseen happening that should be taken advantage of. Sell up and use that excess to do something different.
I know it is kind of annoying for non-Aucklanders, this windfall, but if it became a trend to make life changes the oldies could make way for younger ones and could also invigorate other places around NZ or make other places around NZ more desirable.

I rented a place in Palmy recently and had 2 ppl fly down from auckland keen on the place. I have a friend who's renting a place in kapiti to an islander family who own a house in South auckland and rent that out to cover all costs of a beach front place on kapiti coast and they never want to leave even offered a house swap. I have other older relatives who are retired who have sold up in auckland and bought in northland.

So many people are doing this. There is no stats measure of internal migration though so we won't see the effects of this until next census. Best cure for high prices is high prices.

Ive seen a few people buy businesses on the back of their equity over the last couple of years. I would say do your homework first especially if your worldly exposure has been through corporate tinted eyes.

a) Small business is HARD WORK
b) It is not a road to riches
c) It is not a corporate - having meetings all day does not put food on the table
e) It is very rewarding growing something from nothing and employing people
f) It can be 7 days a week, and it can be flexible
g) It is not a corporate - hire people who are better/smarter than you
h) Be frugal - The Maserati is more likely to be a Lada...


Sorry couldn't resist.

Lucky its funny.

The bread price boom in NZ should be viewed by many as a major opportunity for a diet change. NZers who are unfulfilled should think about starting anew in potatoes, sago and rice. Maybe a small business, self sufficiency, early retirement or get to work on that novel or project that you dreamed about. It really is a predictable and largely foreseen happening that should be taken advantage of. Sell up and use that excess to eat something different.

I know it is kind of annoying for bread eaters, this windfall for bread makers, but if it became a trend to make life changes the crony capitalists and social engineers could make way for younger ones and could also invigorate other diets around NZ or make other places around NZ more desirable.

People who feel they can never afford a house in Auckland should just give up on the idea and see this as not a problem but an opportunity to focus elsewhere, either in another town or even another country. Auckland is also not the place for the poor and needy, certainly after giving it a go and finding it is not working out. The expensive suburbs of Auckland, which are expanding daily, will forever be the citadels of the lucky and affluent - it is just a hard fact like anywhere else in the world like this. By all means give it a go if you feel you need to but there is no point bashing your head against a brick wall if it doesn't work out.
This is the secret, and it may even slow house prices, just don't get so heavily invested in the idea of affordable housing in prime locations.

I rarely agree with what you say but this is a positive way to approach the issue. There are better places to live than Auckland.

The important point is that NZers need to get over their housing obsession. Although most will see it as their only way of getting ahead, while missing the point about saving and investing. It's also unlikely that we'll be able to return to realistic house prices as in the past a 50% deposit was needed, I don't see that happening again.

Our Hon PM will still deny that Auckland housing price is unaffordable. May be he is correct for he is working for chinesse and for them still cheap.

Current barfoot auction is breaking all record and auction hall is full of I need to say. Our PM should visit the auction hall but than will deny till eternity.

Ok. We can now confirm its a Bubble! When the PM PinoKeyo says he's reluctant to call it one, he's confirmed it by saying, "I don't like/want to use that term!" The Big Four Banks are calling it one, all of NZ's reputable Economists are calling it one. The "Real Data" provided by Treasury, RBNZ, Statistics NZ & economists are all in sync with each other as well as the Big Four Parent Banks in Oz, the NAB of Aus & CBA & their Reserve Bank too are worried the bubble has/will burst. Coal mine mining towns are closing down due to mines been closed and people (est. 150,000 jobs lost) are walking away from their homes as they're unable to pay down their loans and/or can't find buyers and speculators are left with vacant rental properties which has led to speculators/investors having to sell up their family homes....Contagion.

Wow. 225 comments here and counting. Mr Key better start thinking about Maui, because I am assuming that most of the critical comments here are coming from people who otherwise would be his natural constituency.

I wouldn't get too carried away KH. That is 226 comments by 62 people in a story read by about 7,000+ so far. The commenters hardly reflect the readers at 0.9% and it is wrong to assume so in my opinion. Comments only reflect those who take the time to comment and commenters usually only take that time if they disagree.

Not to forget the 1,265 likes - most I assume liking the negative sentiment towards the PM's comments.

Meaning, I think David, we can assume, a vast majority of people do disagree with Key on this - do find him offensive, out of touch and lacking in decency.

Let's just hope the anger gets rid of the guy for good once the next election results are in.

Just part of the political cycle I reckon Kate. Helen Clark become quite unpopular in the end. Is he becoming less decent, or are people just tired of him?

Make that 63 people, there are plenty sitting on the sidelines just reading.

What is stunning to me is the 40 likes up thread, I have never seen anything close to that before.

But at the end of the day, the PM is still the PM.....

Yes David. I don't think this outburst is the gamechanger. But it's still a lot bigger train of commentary than usual.

Seems like national party is comming out withh data that suits them and not face the reality.

JK just makes stuff up. he is quoting 40 houses a day being built when its a lie
Andrew Little: Does he stand by his statement that “We are building 40 houses every working day in Auckland.” given that under his Government only 23 homes, on average, have been consented in Auckland per working day, compared with 35 under the previous Labour Government?
Rt Hon JOHN KEY: Yes, I stand by my statement.
Andrew Little: I seek leave to table a document prepared by the Parliamentary Library that sets out the building consents issued under the previous Labour Government and the present Government and shows the very figures that I have just quoted—
Mr SPEAKER: Order! Leave is sought to table that particular information. Is there any objection? There is objection. [Interruption] Order! I have put the leave. The leave has been denied

Whenever national opens their big mouth it is foe a lie. Nothing unusal.

Why was leave denied?

someone on national side objected. if leave is granted and document tabled then the document becomes public

Can leave be objected against without having to give grounds? or did they have a valid reason? If so, what was that reason?
And why would a document like this not be allowed to be made public, I wonder?

When is a housing crisis not a crisis?

"Temporary, pre-built houses could be placed on empty lots in Auckland to help ease the housing shortage, Prime Minister John Key says." the web site goes on to say that "Temporary housing units have previously been used in Christchurch for families displaced by earthquakes."

Its a hole now but give it a while and we will look like a war film set.

Also noted in OZ media was this following article about the cost of traffic congestion over there - I would suggest with National's immigration policy per capita we will be worse off.

"Just 3 more years and then I will go - I promise"

I always laugh to myself when sitting is traffic is considered less productive than sitting at a desk in an office tower.

Now we will see refugee camp in NZ ( In developed country high class people call it temp houses)

"...sitting in traffic less productive...". I learned Spanish travelling between Takanini and Nelson St. Heaps of time.

Farr-Kinnell - might be more beneficial learning Chinese rather than Spanish. Will help at the auctions..

Got that when I wound my window down.

God please forgive our PM for he does not know what he says.

Like it or not, we are all responsible for what has happened in Auckland..We wanted to become an international city, and went along with the policies that made us one. No point in blaming anymore.
If people cant be bothered mobilising themselves and others, to find viable candidates and policies
Its all just blather....

If you become international you lose the ability to mobilise. It would be like everyone mobilising against everyone.