GUEST BLOG: Willie Jackson – Housing crisis not helped by smug speculators

By   /   April 5, 2017  /   88 Comments

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We need Government that uses its powers to rebalance the extremes of free market capitalism, and we need politicians who aren’t frightened to say words like free market capitalism.

I’m sick of reading so called news stories about 30-somethings who have managed to buy their own house.

Good for them, but the exceptions to the rule bragging about success doesn’t motivate the vast majority who are finding it so difficult to find a house to rent let alone buy.

I’m equally sick of hearing people trying to turn the housing crisis into a generation war. The main difference between Baby Boomers and Millennials isn’t cultural, they are economic.

It’s not because Millennials are spoilt wanting fancy coffees and city living excitement any more than its greedy smug boomers who have lifted the ladder up behind them, the enemy is the free market extremes that forgot the past to betray the present while ignoring the future.

We need Government that uses its powers to rebalance the extremes of free market capitalism, and we need politicians who aren’t frightened to say words like free market capitalism.

I’m sick of blaming everyone else for the housing crisis, I want solutions and I want them now. There are families in South Auckland that desperately need to see real hope that matches their grim realities, not ‘we bought 5 properties by the age of 35, aren’t we neat’ stories. These types need to keep their stories to themselves and understand the desperation particularly in our area Manukau, South Auckland.

The solutions cannot be our communities taking the responsibilities of government. As fantastic a job as Te Puea Marae did last winter in terms of looking after the homeless they surely should not have to replicate it again this year should they? I mean what has our country come to when we had marae like Te Puea stepping up, who had no financial assistance at the beginning from the government or their Tainui tribe performing essentially what the government is meant to do, that is to house and look after people.

It is an indictment on our society that we have allowed things to go this far and it will be a further indictment if people just start accepting that this should be normal practice. The state and the government who ever that government is have a responsibility to look after our basic needs in life and having a roof over our heads is surely one of these needs.

Obviously we need thousands of affordable houses that are for first time home buyers only, not speculators and not those trying to make a quick buck. Beyond that, we all have an obligation to ensure we demand our political leaders are serious about making the housing crisis a priority of anyone fortunate enough to form the next Government.

We can solve the housing crisis, it just takes determination and political leaders prepared to fight for it.

First printed in the Manukau Courier  

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88 Comments

  1. Castro says:

    Then issue a statement calling on the armed forces to step in and remove this Chinese puppet government by force; the other option is sliding into a civil war, as is the case under “our” current trajectory.

    • ropata says:

      We are heading in that direction. NZ has suffered economic and political colonisation (by transnational interests) for the past 30+ years. It’s just the last 10 years or so that it has become obvious, foreign interests have control of the levers of power in NZ, and they aren’t trying to hide that fact any more. Class war anyone?

  2. CLEANGREEN says:

    True every word Willie.

    Speculation is dangerous and is same result that the “Gold rush” caused back in the 1840’s that caused so much death and destruction.

    I saw while living in Toronto what happened in the 1974 era when that housing market peaked after the same bubble and crashed.

    It never recovered until the 2012 era and I knew many who suffered during the 30 yr. slump so we don’t want this here, so best to “nip it in the bud” now before we all suffer again as the Canadians did.

  3. J S Bark J S Bark says:

    Wow! Is this the first time a Labour candidate has actually decried neo-liberalism?

    Hoo-bloomin’-ray!

    Is this the beginning of the cure?

    • Jack Ramaka says:

      Willie might get the chop if he knocks the Labour Pary’s neoliberal agenda still some grubby old neoliberals floating around the party.

      • WILD KATIPO says:

        Tides turning now , Jack…

        Neo liberalism is fast becoming a dirty little word in many , many circles… usually spoken of now in a pejorative manner.

  4. WILD KATIPO says:

    Sock it em , mate.

    I particularly liked this bit :

    ——————————————–

    ” I’m sick of reading so called news stories about 30-somethings who have managed to buy their own house.

    Good for them, but the exceptions to the rule bragging about success doesn’t motivate the vast majority who are finding it so difficult to find a house to rent let alone buy.”

    ——————————————-

    I also liked naming the disease:

    Free market / free market capitalism / neo liberalism / classic liberalism

    All mean the same old self serving thing.

    We see in the NZ Herald ( should be renamed the Offshore Foriegn Owned Herald , btw… ) constant glowing compensatory story’s about individuals who have ‘ made it’.

    Well how about all the people who haven’t made it in this neo liberal paradise?

    What about all these record numbers of homeless living on the streets which never existed until a few years ago?…. how does anyone reconcile THAT with some bullshit ‘Rockstar Economy ‘ wet dream , huh ?!!?

    What about family’s sleeping in cars and garages and even under bridges at times, huh?

    What a bullsarse crock of shit this govt is.

    From Key to English – bullshit upon bloody bullshit.

    And I tell you what,… if Labour get in, – not only should this whole disgusting mess be rectified,… there’s the issue of the grave of a wee 3 year old girl over in Afghanistan that needs to be honored and a formal apology given to her parents as well.

    Its time this country got its integrity back.

  5. Siobhan says:

    The solution to the housing crisis is not affordable homes, though that’s an important emement.
    The solution is a rental environment that people can live in with dignity.

    Rents that people can afford, a culture where it is normal for people to rent the same house for as long as they want, without Ma and Pa landlords constantly taking all the wage increases in rent hikes.
    For people to be able to access ‘Life Time’ leases, say 10 years.
    Or more.
    So people can raise a family in one home.
    Or Head into retirement in one home.
    How are all these non home owners planning for retirement when they have no idea just how much they will be paying in rent?
    And how much is the tax payer going to be handing out in landlord subsidies to cover the rents of retiring Xers and even more so, millennials?

    The future for the majority is not home ownership…so lets face up to that now, rather than standing around watching this slow moving train wreck……

    • ropata says:

      Siobhan, great common sense solution that should be obvious even to right wing ideologues. The basic human right to habitation is not something to be commoditised and left to the vagaries of a broken “free market” model

      • Sam Sam says:

        They won’t listen, only to themselves assuring wave after wave of financial crises.

        What is deemed by our esteemed leaders of the finest stock. Is in fact the trade of secound hand houses with the figurative odometer wound back and underlying structural issues. This is the kind of value add that drives a rock star economy. Really it should be subtracted from the economy because it is value extracted.

        You can only paper over macro problems like this for 10 years. So we had Reganomics/roger/ect around 1980, S&L crises in 89, tech bubble in 99, merica crises in 08 and its now 2017 and another bust is all stored up and STILL, not a single thing learnt, I’v looked for policies that actually address these macro problems that ill us all, you wont find any solutions in mainstream parties. You have to talk to mino parties and try and convence them to listen. They will of course because they have to broaden there appeal away from big party money because minos cant compete like that.

        If people honestly think that ticking a box with out meaningful political engagement will bring about different results after 30 years. Thats the definition of crazy

        • NiceRightWingDebater says:

          It’s easy to ask for this, and it sounds wonderful for the tenant.

          But the problem is “how”?

          Any landlord forced to accept below market rents and inflexibility of long tenancies won’t be a landlord.

          Good, you say.

          But that shrinks the rental market. You’ll have people sleeping under bridges.

          But wait, you say. The state will provide!

          The state faces huge costs in doing so. Where will all that money come from, given you’re essentially giving a large chunk of the market “free” stuff?

          The only solution is to massively increase supply and reduce the cost of development. The private sector can foot the bill, at modest return, and you keep the return modest by ensuring supply exceeds demand.

          • Sally's Husband says:

            “The state faces huge costs in doing so. Where will all that money come from, given you’re essentially giving a large chunk of the market “free” stuff?”

            The same place the Nats find money to throw at Rio Tinto smelter at Bluff or Saudi businessmen. The Nats can always find the $$$ for their business mates but when it comes to social services, all of a sudden you Righties can’t find the cash??

            Give me a break!! The money is there. Stop taking dividends and taxes from Housing NZ, and invest some hard cash into the organization instead of throwing the money at the Middle Classes as election year tax-cut bribes!!
            That’ll do for starters!!

            • Jack Ramaka says:

              … or the Clinton Foundation, or the Saudi Businessmen and the Agricultural Hub, or the New Flag, or Tax Cuts for the Wealthy, or….

          • ropata says:

            Bull. Shit. The rental market is stuffed full of landlords that should not be there so they can fuck right off.

            • NiceRightWingDebater says:

              You can test it for yourself, if you like.

              Buy a rental property and rent it out below cost for ten years. That will be great for the tenant, but unless you can constantly meet the shortfall, the bank will come knocking.

              Being a landlord is a business, like any other. The rent must cover all costs.

              • Sam Sam says:

                Why Is there there high demand for below market rate rentals?

              • ropata says:

                It’s not a business like any other it is the very definition of parasitical rentier capitalism.

                • NiceRightWingDebater says:

                  Yes, it is.

                  Should people build or buy a house every time they want to move?

                  It’s the medium term accomodation business, placing the risk with the landlord and removing it from the tenant.

                  • Sam Sam says:

                    Is the risk, worth the reward?

                    • NiceRightWingDebater says:

                      You place a lot of risk on an occupier if they must buy and sell a house every-time they get a job transfer or want to move. i.e. the sales and buying costs, for starters.

                    • Sam Sam says:

                      Can you guarantee you’ll get all your investment back?

                    • ropata says:

                      And most landlords are absolutely shithouse at the “business” because there is a huge power imbalance and market dysfunction. It’s become a “business” of exploiting the poor and the Nats and their rich mates are laughing all the way to the bank

                  • Samwise says:

                    You’re not very convincing as an apologist for the landlords/free market, mate. The reality is that speculators are denying first home buyers the chance to buy a house for themselves and you think that’s ok? You have the morals of a Tory politician.

            • Sam Sam says:

              Hey Ropata, better yet, lets ask simon 10 bridges 4, u guest it, 10 northland bridges due in a couple years.

              Or hekia nova parata where these super amazing test scores are.

              Or congratulate john car keys for making nimble enough to kill children.

              This game works both ways. But the crown can sleep easy because they have tourism.

              If you want to talk serously about supply and demand. TDB is a good place to start. I haven’t seen your user name around so if I am, let me be the first to say hi

            • Jack Ramaka says:

              Landlords whose eyes are slightly different to ours?

              Subsidizing overseas landlords, free market economics, paying subsidies to overseas landlords?

            • darth smith says:

              alot of those landlords are highly leverage it wont take much to go from boom to bust just a case of when not if.

          • Siobhan says:

            If a landlord doesn’t buy a house it just sits empty? You think that Nation wide we would end up with thousands of empty houses because landlords have exited the market leaving families living under bridges.
            Just take 2 seconds and think about that.

            The market would adjust, and horror of horrors, people could buy their own home to live in.

            • NiceRightWingDebater says:

              Developers would tighten development if you took the investor class out of the housing market.

              Development risk would increase if you can only sell to owner-occupier. Owner-occupier would also face high risk if they could only sell, not let i.e. they may be on transfer for a limited time. Many investors will buy off the plan, but many owner-occupiers don’t like that risk, so fewer apartment buildings would get built.

              I don’t think it’s a “horror” people own their own homes, but your plan means less houses will be available, for reasons stated.

              You increase development risk.

          • Strypey says:

            Welcome to TDB NiceRightWingDebater.
            “But that shrinks the rental market. You’ll have people sleeping under bridges.”

            We have that now. Reducing the number of people making money out of rent from houses does not reduce the number of houses. It just changes the management model. If housing is less attractive as a rental investment, the number of houses on the market increases, and prices go down. This means more people can own their own homes, and the state, councils, and NGOs can buy up former private rentals and other potential residential property for social housing.

            The “let the market increase the supply by deregulating” argument fails the basic real world test. In other words, it’s been tried, and the result is leaky near-new houses, recent buildings that fall down in earthquakes, chronic under-building of the kind of housing need, and over-building of mansions, inner-city apartments, and holiday homes for the wealth. I debunked the supply-side argument made by both NatACT and Generation Zero/ TOP blue-greens in a recent guest post on TDB:
            http://thedailyblog.co.nz/2017/04/03/guest-blog-danyl-strype-some-home-truths-about-house-shortages-housing-affordability-and-the-generation-gap/

            I’d be interested in your comments.

    • NiceRightWingDebater says:

      With respect, that isn’t a solution. That is a wish list.

      A nice wish list. No one could say it wouldn’t be nice.

      The problem is “how”?

      You can’t hold the rent below actual costs. You’ll destroy the rental market. That means people literally without a home. If you want the state to build all those houses, then where will it get the money?

      • Sam Sam says:

        Government recives money through taxes, central bank or off shore borrowing which varies but if government was to borrow from the reserve bank they could do so at 1% interest rather than paying 4-5% interest or more from off shore lenders.

        Any one with the time to leave a message on TDB could surley find the time to look it up on google to answer what is pretty straight forward questions.

        I hope to god you have nothing to do with the public service because you know fuck all

        • NiceRightWingDebater says:

          What has that got to do with what I wrote?

          • ropata says:

            I think the point was that the Government has the available capital and market power and economies of scale to embark on another state housing programme like Labour #1.

            The building industry & housing market in Auckland is a wreck, caught in a bizarre feedback loop.

            Why Auckland can’t build enough houses

            NZ tops the global house price index

            • NiceRightWingDebater says:

              Where will you put these houses?

              Government faces the same land constraint of teh district plan as the private sector.

              • Sam Sam says:

                Do houses promote migration?

                • NiceRightWingDebater says:

                  Try answering the question.

                  We aren’t short of land in the physical sense. NZ is 1% built upon. We create artificial scarcity with town planning.

                  • Simplistic in the extreme, NiceRightWingDebater.

                    When nearly 50% of properties in Auckland are snapped up by wealthy investors/speculators, then the problem is much deeper than town planning rules designed to prevent urban sprawl.

                    June 2016:

                    Investors now account for a record 46 per cent of all Auckland house sales, up from 42 per cent in mid-2015, and 40 per cent by year end.

                    ref: http://www.stuff.co.nz/business/money/80836958/auckland-investors-not-always-the-reason-for-house-prices-rises-corelogic

                    March 2017

                    Latest data shows Auckland investors account for a 43% share of all sales & first home buyers have dropped back to a low of 19%.

                    ref: http://www.propertyclub.co.nz/first-buyers-still-missing-out-in-aucklands-most-affordable-properties/

                    Rampant capitalism is the problem here, NiceRightWingDebater, and the distortions in investment caused by tax-free capital gains (two year “brightline ” test notwithstanding).

                    If capital gains in housing were taxed at the company tax rate (28%) instead of the suggested GST rate (15%), there would be no unfair advantage to the property market over any other taxed business activity. And let’s be honest here, property investment is a business activity. Anyone who suggests that investors/speculators are buying up houses for the good of renters will be treated with the scorn and derision they richly deserve. The proliferation of “Ghost houses” in Auckland shows clearly why investors are in property.

                    As for suggesting “We aren’t short of land in the physical sense” – that may be true. But houses are not just ‘plonked down’ willy-nilly, as if on a life-sized Monopoly Board. They require infrastructure by way of piped water; roading; power/gas supply; removal of waste-waste; telecommunications lines; transport services; rubbish collection services, etc. That has to be paid for, in case you thought it materialised out of the ether.

                    When you suggest “You can’t hold the rent below actual costs. You’ll destroy the rental market. That means people literally without a home” – that is a blatant piece of bullshittry. If those homes weren’t rentals, they’d be bought by first-home buyers. Or families currently living in cars, garages, and crammed into other peoples’ homes. It is speculators/investors who crowd out first-home buyers, thus forcing those same first-home seekers to rent.

                    Your argument is riddled with holes, inconsistances, and outright inaccuracies.

                    • NiceRightWingDebater says:

                      There is potential for a good debate here, but it is disappointing some can’t do so without abuse.

                      We both – hopefully – agree on the outcome we want i.e. affordable homes.

                      Yes?

                      The solution is complex.

                      Perhaps I’ll post the rest of this post down at the bottom as the forum software seems to be narrowing the replies.

                    • Sam Sam says:

                      Could you also touch on higway and other arteries, if its not in the unitary plan ect, thats a huge problem you cant ignore.

                      Oh, and no lazy sewage outlets to the sea. Tourists are starting to gossip about the smell.

    • CLEANGREEN says:

      Brilliant Siobhan.

      • NiceRightWingDebater says:

        It’s one thing to state a desire. It’s another to provide a method to solve a problem.

        We all agree, I hope, that it is moral and just for everyone to have affordable accomodation. Agreed?

        The only way to really do that is to ensure supply exceeds demand. Hammering landlords sounds fun, but it doesn’t create any extra supply. On the contrary, it’s likely to shrink the rental pool and reduce development, making the problem much worse.

        Siobhan’s view would make the problem much worse as it would lead to a deduction in housing supply. No landlord can lease below cost.

        [NiceRightWingDebater/BigRickyStyles – please use only one pseudonym on this Forum. – Scarletmod]

        • Sam Sam says:

          Do businesses have falling marginal costs?

        • bert says:

          “On the contrary, it’s likely to shrink the rental pool and reduce development, making the problem much worse.”

          How?

          If Landlords don’t get tenants because they charge to much, then one of two things will happen., they will need to drop the rent or sell up. This will therefore increase supply.

          • NiceRightWingDebater says:

            For reasons stated in one of my posts that appears to have disappeared.

            Some appear, some do not. Odd.

  6. saveNZ says:

    For a start they can bother identifying who’s doing all the speculating and just put laws in to stop it completely and make it illegal.

    Is our property being used as gambling chips off shore? If speculators have a spare $300k to pay extra then just adding more taxes on top is not going to do anything. Clearly they have the money. The government needs to move to stop the practise not just the neoliberal user pays ‘tax it’.

    Local people just don’t buy a house for another $300k in a couple of days. It should be investigated and stopped, not taxed.

    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11828537

    • simonm says:

      Even the Chinese are trying to place restrictions on housing speculation in their own country. Of course it will never happen here while Bill and Pulla remain in charge – anything that attempts to rein the invisible hand of the free market looks too much like Communism to them.

      http://uk.reuters.com/article/uk-china-economy-property-idUKKBN172040

      I absolutely agree we shouldn’t be selling any land or housing stock to foreigners. I don’t know why our moronic government is so hell-bent on making us “tenants in our land” (to quote the former Dear Leader). Still, if they insist on doing it they should charge overseas buyers a hefty surcharge (say 50% of the purchase price) – at least then NZ gets something in return for hocking-off the family silver.

      We all know the reason this government refused to bring in a foreign buyers register. It’s because New Zealanders would be horrified if they knew the true extent of New Zealand property that has been bought up foreign speculators.

  7. Jack Ramaka says:

    Neoliberalism has been described as the last pornographic orgasm of capitalism?

  8. Jack Ramaka says:

    Neoliberalism has been described as the last pornographic orgasm of capitalism?

  9. Nick says:

    Essentially Siobhan is right.

    The best approach to the housing crisis is initially attacking the rental situation. Not supplying artificially “cheap” (but still too expensive for most) houses for middle class young people with good jobs.

    The lease details that Siobhan refers to are extra to this. There are lots of different rental situations and solutions. Rentals can be aimed primarily at families, initially, but the spin-off effect of the competition will make rent cheaper for all renters. The end goal is to get away from the universal accommodation supplement,by this intervention, although this will take time.

    The rental housing can be funded by the State using its clout to build houses for the general market. At the highest possible price. The State can build cheaper than the state sector, but need not sell cheap. This is not the time to give deals to the lucky few subsidized buyers. House prices will ultimately come down with this combined policy anyway. People will just have to patient a bit, because any intervention, this one included, will take a few years to bear full fruit.In the meanwhile rental accommodation will be easier

    As affordable rentals become easy to obtain, investors will abandon the bottom end market in droves, so house buyers will start to find houses in South Auckland especially, will progressively come on the market.

    In the meanwhile, young people who want to buy cheaper houses should take another look outside the largest, most expensive cities.

    I trust Labour understands all this and I am preaching to the choir, because the idea of just building price-controlled houses is just going to distort the market and create even more arbitrary winners and losers.

  10. Samwise says:

    I’ll take Labour at its word when it introduces a capital gains tax, and not until then.

    • Sally's Husband says:

      “I’m sick of blaming everyone else for the housing crisis, I want solutions and I want them now. ”

      Capital gain s PLUS a land tax. That’ll do for starters. Labour has the tools at least, they just need to have the hairy cojones to implement them!

      • saveNZ says:

        How many locals are going to be abel to afford that, on NZ wages… It is hard enough for many to afford council rates which is a land tax, as it is with the constant increases.

        As for capital gains taxes. I’m all for some sort of property tax but one that actually is going to catch the most wealthy, not just the average joe. Better to have something like stamp duty which is nearly impossible to escape AND discourages speculation as they pay each time they buy and sell. Capital gains will have accountants just pushing money around the world for the wealthy and they just get richer and more locals will lose out and property ownership will drop.

        The government needs to actually stop foreign land and asset sales in the short term at the very least. Too much has been sold off already.

        In the UK their Brexit problems have stemed from allowing massive off shore investment in property and they have capital gains taxes, stamp duty, 17.5 VAT and still police and nurses can’t afford to rent or buy in London. It’s not about taxation at all, it is about opening your doors up to the world and thinking the markets is perfect and those that are not rich enough to compete against the world, deserve to both pay all the local taxes AND not be able to afford to even live in their own country.

  11. AB says:

    Good on you Willie.
    The practical issue is how you make homes ‘affordable’ in such an absurdly inflated market. You actually need to lower the value of houses – in Auckland by 50% or more.
    You can’t lower the value of houses while owning ‘rentals’ is a pathway to wealth through unearned and untaxed capital gain. It is far, far more profitable to own ‘rentals’ than to save some of your earned income in the bank to be lent at a reasonable rate of interest to businesses actually engaged in productive activity or innovation. (The latter is how capitalism is classically meant to work I believe, not via financialisation and bubbles).
    So will you support a swingeing CGT (far higher than 15%)on houses people sell but don’t live in? Will you dare to make it retrospective to 2008 to soak up and redistribute a chunk of the free money extracted by the 1% since the GFC?
    Will you remove the right of private banks to create ‘endogenous money’ out of nothing for residential real estate investment?
    Will you commit yourself to making the state the primary provider of rental accommodation with renter-friendly terms as Siobhan describes above?
    I don’t expect you to frighten the horses – but just have a determination to create economic justice over time and by whatever method works, not necessarily excluding stealth.

  12. BigRickyStyles says:

    It’s government that is the problem.

    The problem is in the supply side
    The state constrains supply
    Part of the reason for that is that the people demand i i.e. they object to new development/roading/expansion
    They reject apartments, yet apartments are what you get if you demand “clean. green, walkable cities”

    You can see proof of this in the US cities that allow expansion, like Texas, vs those that don’t, like Portland. Guess which city as much higher land costs?

  13. XRAY says:

    Lay waste to investors Willie, tax them off the face of the earth.

    Time for for a good old correction to take the greed out of them.

  14. XRAY says:

    Although it has been in the media I can confirm schools, of all years, are struggling to get teachers in Auckland because mortgages are crippling as are rents or renting in general is problematic. Finding a home and or holding on to it without it being “sold” is another set of issues. A teachers pay is too low for Auckland.

    Now if schools are struggling, what of other jobs are in a similar postion?

    This problem also effects the children whose parents continually change schools chading somewhere to rent. Their transient lifestyle means the kids fall behind, never make friendships and in general struggle.

    All this is being ignored by National.

  15. Mike the Lefty says:

    The Real Estate industry goes like this:
    The People: “There’s a housing crisis, prices are unaffordable except for the rich and those who already own a few. Prices are now spiking in the regions where wages are already lower and jobs fewer”
    The Real Estate industry response: “Well yes you are right, hang on! let me answer my cellphone, Hello Mr Lai, yes we have several houses available for you in Cromwell right now. You want to pay how much??? That’s well over GV but don’t worry you’ll be able to sell in a few months and make 20% on each one. A pleasure doing business with you; Now what were we talking about a moment ago?
    There is no housing crisis for the wealthy and the Real Estate Industry.

  16. NiceRightWingDebater says:

    Reply to Frank (cond)

    >>When nearly 50% of properties in Auckland are snapped up by wealthy investors/speculators, then the problem is much deeper than town planning rules designed to prevent urban sprawl.

    It is part of the problem, however the reason investors are attracted is because of the constraint on land supply. Remove most investors and you still have problem, namely supply of houses can’t match demand.

    >>Rampant capitalism is the problem here, NiceRightWingDebater, and the distortions in investment caused by tax-free capital gains (two year “brightline ” test notwithstanding).

    They are buying because it’s near impossible to lose. The underlying fundamentals make it a good investment. It’s the underlying fundamentals we need to change. I think a better idea would be to incentivise investors to develop.

    >>

    If capital gains in housing were taxed at the company tax rate (28%) instead of the suggested GST rate (15%), there would be no unfair advantage to the property market over any other taxed business activity.

    Yes, but CGT doesn’t solve the pricing problem. See Sydney, London, San Franciso, and so on. What it does do is add a further cost, which is the opposite of what is required, in my view.

    >>And let’s be honest here, property investment is a business activity. Anyone who suggests that investors/speculators are buying up houses for the good of renters will be treated with the scorn and derision they richly deserve.

    I said it was a business, but a poster above disagreed. You appear to be arguing a straw man.

    >>As for suggesting “We aren’t short of land in the physical sense” – that may be true. But houses are not just ‘plonked down’ willy-nilly, as if on a life-sized Monopoly Board. They require infrastructure by way of piped water; roading; power/gas supply; removal of waste-waste; telecommunications lines; transport services; rubbish collection services, etc. That has to be paid for, in case you thought it materialised out of the ether.

    Yes, which is why Twyford’s idea is good. Infrastructure bonds. He’s parroting what they do in Texas, a state that didn’t have house price inflation the way, say, Portland did.

    >>When you suggest “You can’t hold the rent below actual costs. You’ll destroy the rental market. That means people literally without a home” – that is a blatant piece of bullshittry.

    It would make for a better debate if there was less abuse. It’s true – you cannot artificially hold rent low. As we both agree, investment property is a business and no business can operate at a loss for long.

    >> If those homes weren’t rentals, they’d be bought by first-home buyers. Or families currently living in cars, garages, and crammed into other peoples’ homes.

    Yes, but what happens tomorrow when 50 or so marriages break up and now extra housing is needed – immediately – where only one house was required yesterday?

    Supply must stay fluid. Landlords have a purpose.

    I think you may be agreeing with me that supply is the problem.

    >>
    Your argument is riddled with holes, inconsistances, and outright inaccuracies.

    It isn’t.

    Supply side is the answer. There is precedent for this, namely Texas and their infrastructure bonds.

    Both National and Labour have been hopeless in the face of this problem. But the others would be even worse as they constantly block RMA reform to release more land and do not promote development.

    • … Remove most investors and you still have problem, namely supply of houses can’t match demand.

      You are ignoring the stats; nearly 50% of available properties are being bought up by investors/speculators. Take those parasites out of the equation and housing availability jumps by 50%.

      It’s not clear what part of that is digfficult to grasp.

      They are buying because it’s near impossible to lose. The underlying fundamentals make it a good investment. It’s the underlying fundamentals we need to change. I think a better idea would be to incentivise investors to develop.

      In other words, calling a spade a spade, there is no capital gains tax on speculators.

      The developer pays tax on the houses they build and sell. The investor/speculator who buys that same property; rents it out (or simply leaves it empty, as in the case of Auckland’s “ghost houses”); sells it two years plus one day later; and pockets the tax-free gain.

      You call it “underlying fundamentals”. I don’t use such euthemisms. I call it parasitism on the economy, with billions going into a non-productive sector: housing speculation.

      Yes, but CGT doesn’t solve the pricing problem. See Sydney, London, San Franciso, and so on. What it does do is add a further cost, which is the opposite of what is required, in my view.

      Oh, I’m sure all property investor/speculators hold that view. It’s rubbish, of course. Taxation as an incentive/disincentive is one of many tools that can be used. High cigarette taxes are a case in point.

      It only ” adds a further cost” because housing prices are over-inflated. 28% on a $1,000,000 bungalow is more than 28% on a $400,000 similar house. It is the property investor/speculators driving up prices, not a tax that hasn’t been brought in yet. You may have noticed Auckland’s skyrocketing housing prices by now.

      … It’s true – you cannot artificially hold rent low. As we both agree, investment property is a business and no business can operate at a loss for long.

      So it’s a business is it? Perhaps it’s time it was taxed properly, as are other businesses.

      Yes, but what happens tomorrow when 50 or so marriages break up and now extra housing is needed – immediately – where only one house was required yesterday?

      That has to be the dumbest thing I’ve read here this week.

      • Sam Sam says:

        Big night stick talks supply side economics. He cant even derive a market demand curve. There fore what he’s written on this message board about supply side economics is mathematically impossible to derive. And he’s done that by running a downward sloping demand curve in one market then asks can we do that for more than one consumer.

        nicerightect said: “Yes, but what happens tomorrow when 50 or so marriages break up and now extra housing is needed – immediately – where only one house was required yesterday”

        Frank was right to point out that this demand curve is the dumbest thing he’s heard all week, possibly this year. Ill explain.

        This the dumb part. What big night stick did was derive a downward slopping demand curve and asked can he do that for more than one consumer and he said yes he can. Under two conditions. A) all consumers are identical, B) all good are identical. This is proof by contradiction that he cant do it.

        He’s dreamt up a mathematical tool that shows irrational numbers. That not all numbers are A) over B)

        You normally learn this dribble in advanced text of micro economics which is a PHD qualifier. So if you go that far into la la land your that brain washed (‘obciously’) and the real thinkers are driven out just thinking about sitting next to night stick, only the autistic group is left who believe this (insert, super long, extremely loud, R++ pepe the frog tirade against supply and demand curves here)

        • NiceRightWingDebater says:

          Sam, your post makes no attempt to address my points. It appears to be some misapplied Economics 101 cut n’ paste?

          I have replied to Frank’s well-made points, but the post is being held, for some reason.

      • NiceRightWingDebater says:

        >>You are ignoring the stats; nearly 50% of available properties are being bought up by investors/speculators. Take those parasites out of the equation and housing availability jumps by 50%.

        Look it another way. Let’s say all houses were owned by investors. So long as supply exceeds demand, you have downward pressure on price and power shifts to the tenant.

        Yes?

        >>In other words, calling a spade a spade, there is no capital gains tax on speculators.

        Yes, there is. It is payable. If someone decides not to declare it, they are evading tax and breaking teh law.

        >> I call it parasitism on the economy, with billions going into a non-productive sector: housing speculation.

        Whatever we call it it’s due to government settings. Not only is it a favoured investment class, supply is artificially constrained.

        >>Oh, I’m sure all property investor/speculators hold that view. It’s rubbish, of course. Taxation as an incentive/disincentive is one of many tools that can be used. High cigarette taxes are a case in point.

        I gave you examples of it not working to constrain price. So your point is incorrect. It’s because housing is impossible to substitute, so it just becomes another tax (cost) of sale.

        I have no issues with a capital gains tax. I’d apply it to all houses. But it will do absolutely nothing to reduce price.

        >>So it’s a business is it? Perhaps it’s time it was taxed properly, as are other businesses.

        Yes, it’s a business and yes it is taxed. Are you saying landlords do not pay tax?

        >>That has to be the dumbest thing I’ve read here this week.

        Then perhaps you didn’t understand it.

        • Sam Sam says:

          Lelz, there you go agian with all consumers and goods are the same.

          Your entire economic thesis has been totally discredited.

          If you make any money at all, all you are doing is coming up with solutions to trade goods and services already in circulations.

          Further more, you are a charlatan

          • NiceRightWingDebater says:

            Never said they were all the same.

            Your posts appear to consist of straw-mans, evasion and misdirection.

            It would be great if you could debate the points, however.

            • Sam Sam says:

              It’s obvious why you cant mention supply curves, you charlatan!

              • NiceRightWingDebater says:

                The problem with political discourse these days is there is none. Just people calling each other names.

                Consider property prices in Detroit…

                • Sam Sam says:

                  Thats never a good trade idea because people lie.

                  But you are different. You’re wrong, through and through.

                • NiceRightWingDebater, you are called ‘names’ when your neo-liberal ideas are distilled down to nonsensical garbage like your bizarre comment;

                  Yes, but what happens tomorrow when 50 or so marriages break up and now extra housing is needed – immediately – where only

                  one house was required yesterday?

                  If weird hypotheticals like that are your basis for your economic argument, then your argument is bankrupt.

                  But ok, let’s play your childish inane game. I’ll go you one better to show you how pathetic your level of framing a scenario really is;

                  Yes, but what happens tomorrow when 50 or so marriages break up the Chinese Red Army/space aliens/mutant penguins invade New Zealand and now extra housing is needed – immediately – where only
                  one house was required yesterday?

                  Personally, I think my silliness gets more of a giggle than your silliness. More inventive.

        • Look it another way. Let’s say all houses were owned by investors. So long as supply exceeds demand, you have downward pressure on price and power shifts to the tenant.

          Yes?

          No.

          You are indulging in a free-market masterbatory fantasy. Whatever bizarre world inhabits your brain bears no relation to real life.

          Yes, it’s a business and yes it is taxed. Are you saying landlords do not pay tax?

          Not on capital gains.

          Have you not been paying attention?

          If you’re trying to score points, you are failing on two levels.

          Firstly, you’re on the wrong forum. Try Kiwiblog or TradeMe.

          Secondly, your so-called “facts” are dubious and your hypotheticals childish.

          I’ve already pointed out that nearly half the properties in Auckland are snapped up by investors/speculators. The fact that does not raise alarm bells with you suggests you’re a neo-liberal acolyte wasting your time and ours.

          Your comments get more ludicrous with each post.

  17. Mike says:

    At the end of the day, with a bit of hard work and a commitment to saving anyone can buy a house. We are a meritocracy after all and if you want something enough and are prepared to sacrifice KFC, then you will get it.

    All of the complainers who are “struggling” to get into the housing market should look to John Key and Paula Bennett as people to look up to. They both came from humble backgrounds and worked their way to the top. This is proof that with a bit of initiative, anyone can earn enough money to live comfortably. You just have to want it.

    John Key fan.

    • simonm says:

      “John Key fan”

      Surely you mean satirist. You had me in stitches.

    • ropata says:

      Spoken like someone who bought his first house in 1970 for $10000 and doesn’t understand what all the fuss is about. Go back to sleep, Grandad

  18. Strypey says:

    Willie, I agree with most of what you say, but…

    “Obviously we need thousands of affordable houses that are for first time home buyers only”

    This is only obviouse because it’s “obviously” Labour’s only policy on housing so far, and quite frankly, it’s like trying to fill an abandoned mine shaft one pebble at a time. People who are in a secure enough position to get a private bank (even a credit union) to lend them money for a first home are not the people most seriously affected by the twin crises of the housing availability shortage and the housing affordability gap. What about:
    * working people with no housing at all, living in cars etc, with no savings for a deposit? Will Labour have the state issue no-deposit mortgages directly to these people, as it used to do before the 1984 Labour government canned it?
    * people who rent by choice because they’re not sure where they want to settle down yet, or they’ve relocated to be near family or change careers? Even ACT’s David Seymour acknowledges that people paying 50% of their income in rent is exploitative. What will Labour do to make sure rents stay proportional to wages and that slumlords (Housing NZ included) don’t treat renters as second class citizens by renting them squalid, mouldy hovels?
    * people who live long term in public housing? How will Labour reform Housing NZ so that it functions as the social service agency it should be, instead of as a state-owned slumlord business? How about turning it back into a government department that aims to break even, not return a profit to government, and is funded if it needs to make a loss to fulfill its social mission?
    * people who live in vans, house buses, tipis, yurts, and other mobile “tiny houses” by choice, perhaps because they do seasonal or contract work, and face constant harassment by the anti-freedom-camping brigade, and anti-community council planning rules? What will Labour do to ensure there are secure, affordable spaces for tiny house dwellers to park up, do their work, plant a few seasonal veges etc, and to support land-based communities who want to create those spaces?
    * people who want to live together in a reduced city footprint, in CoHousing communities, instead of living apart in alienating apartment buildings? Will Labour make sure that city council development rules not only allow but support and encourage this kind of land use?

    I want to see more policy on housing from Labour, and the Greens and the other parties, and on everything else for that matter (policy, policy, policy!).

    • NiceRightWingDebater says:

      Some excellent points here.

      I especially like:

      “other mobile “tiny houses” by choice, perhaps because they do seasonal or contract work, and face constant harassment by the anti-freedom-camping brigade, and anti-community council planning rules?”

      I would like to see policy that enables the tiny house movement. Not only would it provide accomodation flexibility, but I think it’s a great way to supply seasonal labour to our agricultural industries.

      Encourage settlements of tiny houses with shared facilities. Like a more homely version of a camping park.

      >>David Seymour acknowledges that people paying 50% of their income in rent is exploitative.

      Yes, it is.

      Again, more supply is the answer. Building at scale. A rethink of code and compliance

  19. andrew says:

    You really think the government can build houses for sell than private developers?

    Why would you think that?

    They will use the same material, the same land and the same builders, but add a layer of bureaucracy on top.

    The problem with housing development in (mostly Auckland) NZ is the bureaucratic hurdle that has to be leapt over in order to get a project started.

    If Labour really wants to kick start housing construction:

    1. Remove arbitrary urban boundaries. As well as opening up more land, it will undermine the ‘land bankers’ in one simple step.

    2. Replace the RMA with something that gives the developer a presumption of the right to build and that local government has to prove otherwise if it wants to hold up a project.

    3. Allow for ‘type approval’ of house designs so that the larger construction companies can create a portfolio of designs all over which are nationally pre-approved, subject to local geotechnical considerations. (What we do with housing at the moment is the equivalent of demanding every Toyota Corolla owner provide design calculations to council before they can drive their car.)

    4. Consider limiting the legal liability of Councils in terms of construction quality so that they don’t have to be so conservative when it comes to building approvals.

    5. Reconvert half the newer universities back to technical colleges where we can create a new generation of competent tradesmen. In parallel with this, allow tax relief to engineering and construction companies who run apprenticeship schemes.

    • You really think the government can build houses for sell than private developers? … They will use the same material, the same land and the same builders, but add a layer of bureaucracy on top.

      You forget, Andrew, that government has the twin advantages of low-cost finance and able to purchase in bulk.

      The former is what finances government borrowings, at a fraction of what consumers pay to banks.

      The latter is the same principle that allows supermarkets to buy cheaply and sell at a lower cost than your corner Dairy.

      What I find curious is that a “leftie” like me has to explain Economics 101 to a capitalist like you. For your edification: http://www.brap.fm/wp-content/uploads/2012/04/1+122.jpg

      • Sam Sam says:

        Further more. Privatisation is a one way street, once private, it remains private. There fore under no circumstances at all should state houses be sold into the free market as the current crises for low cost housing clearly shows. This is one more example of simple credit guidance that says you can speculate, but not with public funds.

      • Andrew says:

        Frank, you’re living in an economic dream.

        The cost of borrowing by government and by industrial scale housing developers is pretty similar, or do you think the likes of Fletcher Construction finance their operations with a credit card? LOL.

        Either way it is largely an irrelevant point: We have historically low interest rates (which is one reason house prices are high) so the cost of working capital to build houses is not a major factor in the cost of building. The proof of this is that I can build a brand new house in many parts of NZ for about 300K today.

        The real reasons for high house prices are:

        Low interest rates (so people can service a larger mortgage)

        Migration to NZ, most of which are returning Kiwis with money to spend and who want to settle in the major centres.

        The geography of both Auckland and Wellington. One a dissected isthmus and the other trapped between sea and mountains. With hindsight, dumb places to put a commercial hub and a capital city.

        The fallout from the leaky building saga: Councils swinging from laissez-faire to paranoia over building design. Auckland now has over 1,000 ‘planners’ most of which spend their days sifting through building plans trying to find ways to avoid issuing resource and building consents. I deal with these people – it would be funny if it wasn’t so sad.

        An artificial rural/urban boundary and no viable plan to increase the density of occupation within the urban boundary. It’s taken Auckland Council 8 years to figure this out and still they haven’t quite grasped the fact that densification over aging and inadequate infrastructure will ultimately fail. Inevitably Auckland will develop as a ribbon from Whangarei to Hamilton and the council can’t stop it. The fix is to rezone and encourage work to move to the outer suburbs rather than wasting money on public transport that attempts to move everyone to the CBD. As for Wellington, I would use the opportunity of the earthquake to begin moving government departments out to Palmerston North.

        • Sam Sam says:

          Faark what ever andrew.

          You’re stuck in the 80’s. You are flogging dead horses, killining them, then reanimating them so you can flog them again to show every one how big your brain is. Then you bring the old dead horses out again, to flog it in front of every one.

          So if you know all that genius. Why are do you approve of official migrant numbers?

          And andrew. The current planning for the auckland region has been exceeded in many ways and you want to double down on that and say ‘lets extend the boundaries and do more of the same!” Amazing!

        • Andrew, your love for Palmerston North is noted.

          However, 40,000 state sector workers will probably pass on your invitation to re-locate and join you there.

          • Sam Sam says:

            And Andrew. If you have a girlfreind or a sister that likes cheating on relationships, send em my way eh champ.

  20. Sam Sam says:

    6. Residents are extremely liable for taxes incurred on (insert what ever what ever andrew is calling his new zone theory here)