Housing; broken promises, families in cars, and ideological idiocy (Part Tahi)

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1949 state house in Taita

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Intro. Lamp-posts, letterboxes, and liquor outlets

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Barely  three weeks since the election, and Key’s re-elected government is set for one of the biggest state asset sell-offs since… last year.  In line for privatisation; an estimated $5 billion worth of State housing.

TDB Recommends NewzEngine.com

State housing is one of the most critical of this country’s social service,  delivering a much-needed roof over the  heads of society’s poorest, most vulnerable, and often most transient. It is fair to say that without state housing – a legacy of enlightened Labour governments and a more sympathetic past public values –  we would have thousands more families living in squalor or on the streets, as currently happens in the richest nation on Earth.

In the US, street homelessness is now as much a feature of the urban landscape as lamp-posts, letterboxes, and liquor outlets;

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Homeslessness

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Here in New Zealand, we seem to be going all-out to emulate our American cuzzies, as our housing situation at all levels is worsening.

Overall home ownership has dropped from 1991, when  73.8% of households own their own home (or held it in a family trust) – compared to last year’s census which now reports 64.8% home ownership (or held in family trust).

In Auckland, home ownership rates are worse, 58% today, compared to 64% in 2001.

Homelessness is a more difficult notion to measure, as the Statistics NZ pointed out for it’s 2013 Census,

In general, people are becoming more difficult to contact in any census or survey collection…

• people having no usual residence (eg homeless people)

However an Otago University study, released in September 2013 concluded,

An estimated 34,000 people, or about one in every 120 New Zealanders, were unable to access housing in 2006, according to the latest available census and emergency housing data.

UOW researcher Dr Kate Amore says very little is known about this population, and the study provides the first ever New Zealand statistics on the problem.

“These 34,000 people were crowding in with family or friends, staying in boarding houses, camping grounds, emergency accommodation, in cars, or on the street. They all had low incomes.

Many of these people are excluded from poverty and unemployment statistics, and are not on social housing waiting lists. They are extremely disadvantaged, and it’s great that we now have a way to produce robust numbers about the size of the problem and who’s affected.”

The tragic nature of homelessness was chillingly spelled out when the report went on to state,

A quarter of severely housing deprived people were children under 15 years, living in these inadequate situations with their family.

The  report went on to reinforce the growing social problem of the working poor,

About a third of the adults in the population were working, but still could not get a house for themselves or their family.

The 10th annual Demographia International Housing Affordability Survey showed housing as severely unaffordable in all eight of New Zealand’s major centres.  Christchurch-based survey author Hugh Pavletic blamed recently centrally-imposed State controls on mortgage loan to value ratio (LVR) restrictions, low mortgage interest rates, and lack of land as reasons for increasing unaffordability.

The same report stated that Auckland house prices were  less affordable than Los Angeles or London.

Meanwhile, the Reserve Bank’s loan to value ratio (LVR) controls – approved by Bill English on 16 May 2013 – has apparently succeeded in not just forcing first home buyers out of the housing market, but into renting, and pushing up rents.  The average weekly rent for a three bedroom home in Auckland  increased by 29%, from $440 in 2005 to $570 in 2013.

Long time property investor, Ollie Newland, has warned of slums developing as over-crowding increases,

Some landlords were capitalising on the desperate market by renting out homes on a room-by-room basis.

“It’s not a good look. We don’t want to go the way of Bangladesh. It’s quite rife. We come across it all the time, especially in the lower socio-economic areas.

So has housing only recently become a critical social problem?

Not according to the Prime Minister…

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National’s pre-election policy: 2008

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In January 2008, then Opposition Leader, John Key attacked Helen Clark’s administration for Labour’s track record on the economy. He said, in part,

“Tomorrow, Helen Clark will tell us what she thinks about the state of our nation.  In all likelihood, she’ll remind us how good she thinks we’ve got it, how grateful she thinks we should be to Labour, and why we need her for another three years. 

Well, I’ve got a challenge for the Prime Minister.  Before she asks for another three years, why doesn’t she answer the questions Kiwis are really asking, like:

[…]

  • Why can’t our hardworking kids afford to buy their own house?”

Indeed – why can’t our hardworking kids afford to buy their own house?

In the Otago University study (see above) Dr Amore stated,

“We know that housing shortages, poverty, and crowding are very serious problems in New Zealand, so these findings are not surprising. We expect the problem is bigger now than it was in 2006. This study just adds to the evidence that housing is major issue, and we need a lot more quality housing that people on low incomes can afford to live in.”

In the Sydney Morning Herald, when interviewed on the issue of child poverty in this country, John Key was uncharacteristically candid when he admitted,

“Our opponents say more children are living in poverty than when we came into office. And that’s probably right.”

So what is the National government doing about a pressing social problem that is, by the Prime Minister’s own admission, growing?
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Gerry Brownlee – Waiting for Godot, Tomorrow, and Private Enterprise?

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Earthquake Recovery Minister Gerry Brownlee has been made aware of a critical housing shortage in Christchurch, due to the September 2010 and February 2011 earthquakes which devastated much of the inner city. According to a Buddle Findlay report dated February 2012,

The sheer number of buildings up for demolition is significant.  The Canterbury Earthquake Recovery Authority (CERA) currently lists 742 CBD buildings that have been or will be demolished.  In his state of the economy address in Auckland on 25 January, Prime Minister John Key said that of the 1,357 buildings approved for partial or full demolition in greater Christchurch, over two thirds have been demolished.  In addition, the demolition of the up to 7,000 residential red zone homes has recently begun in Bexley.

This has resulted in a massive shortage of rentals in Christchurch, with rents continuing to escalate, and people forced to live in substandard or over-crowded accomodation. A 2013 Ministry of Business Innovation and Employment (MoBIE) report revealed,

No reliable statistics are available on the number of people living in insecure housing. To generate an estimate of the scale of housing insecurity the report starts with a baseline established by a study of homelessness in Christchurch, supplemented by 2006 Census figures on people living in overcrowded housing. Qualitative information from non-government organisations in the area is used to identify plausible increases in the numbers of people living without shelter or in temporary or emergency shelter. Estimates of the housing stock lost due to earthquakes are used to identify the potential increase in numbers of people living in crowded conditions with other households. Through this approach, the report’s initial estimate of the scale of insecure housing is expressed as a broad range. That range runs between 5,510 and 7,405 residents, up from 3,750 before the earthquakes.

The same report updated the decline in housing stock in the quake-ravaged city,

“…it has been estimated that the total housing stock has been reduced by a net 11,500, or 6.2% of the previous housing stock.”

Predictably, as housing stock and rental numbers fell, rents skyrocketed. According to the same MoBIE report,

In the month of February 2013, the average weekly rent from new bonds lodged for the greater Christchurch region was $384. This is a 31% increase compared to the pre-earthquake month of August 2010 when the average rent was $293. The majority of this increase took place in 2012, as shown in Graph 6. Greater Christchurch’s average rent increased $92 per week which is very significant and will have an adverse impact on many tenants’ financial wellbeing. During this same period, Auckland’s average rent increased $50 per week or 13%.

When confronted with this crisis, Minister Brownlee’s response was reported in The Press, on 20 March 2012, offering this “solution” to Christchurch’s housing-shortage;

The Government appears to have ruled out further intervention in Christchurch’s worsening rental housing crisis.

The solution is best left to the market, Earthquake Recovery Minister Gerry Brownlee says.

A month later, Brownlee continued his ‘King Canute-like’ resistance to the problem,

People may be sleeping in cars, sheds and garages, but there is no rental housing crisis in Christchurch, Earthquake Recovery Minister Gerry Brownlee says.

“This is a problem, I’ll accept that, but I don’t think this is a crisis,” he said yesterday.

And incredibly,

Brownlee said the steep increase in rent was “not a problem that has been brought to my attention”.

The Government would not intervene in the issue, he said.

“A rent freeze doesn’t increase supply and will never encourage new stock to come in. We won’t be moving to regulate rents but we most certainly are actively providing new housing.”

Brownlee’s defensiveness is understandable. Nationwide, it is estimated that 20,000 – 23,000 new homes are required per year,  to meet demand.

However, over the last three years, less than 15,000 per year have been built.

So much for “the market”.

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Making Supply “meet” Demand – a sleight-of-hand trick

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When “market” supply doesn’t meet demand, there are three options available,

  1. Increase supply
  2. Dampen demand
  3. Ignore the problem

National chose Option 2 as the fastest, cheapest way to address the problem. As referred above, on 16 May 2013, Finance Minister Bill English approved a “Memorandum of Understanding” with the  Reserve Bank’s loan to implement  Loan to Value Ratio (LVR) controls. In simple terms,

Banks will be required to restrict new residential mortgage lending at LVRs of over 80 percent (deposit of less than 20 percent) to no more than 10 percent of the dollar value of their new residential mortgage lending.

Banks which exceeded the limit (10% of all lending) of low LVR (20% deposits) risked considered reprisals from the RBNZ,

If a bank breaches the speed limit it will be in breach of its conditions of registration. The Reserve Bank would need to consider the reasons for the breach and may impose a range of sanctions.

Again, Key was candid in the plan to address demand-side pressures on housing,

“Even with LVRs introduced, interest rates may ultimately rise anyway, but the intention with these loan-to-value ratios is to provide the Reserve Bank with other tools to dampen demand.”

Not since the Muldoon-led National administration, when price-wage controls froze the economy in 1982 – with dire results – has a government attempted to control a facet of the banking system with such direct, interventionist controls. Again, state intervention was the tool-of-choice, as Key admitted,

“We need to try to help people into their homes but also facilitate an orderly market.”

This was Muldoonism 2.0, and it was coming from a supposed free-market National government, with the blessing of Muldoon’s successor, John Key.

Even before the RBNZ implemented their new, prescriptive LVR regulations, National was pushing for exemptions with  New Zealand Bankers Association chief executive Kirk Hope stating the obvious,

“The Reserve Bank policy will have an impact on low income buyers. It will knock them out of the market.”

By December 2013 the Reserve Bank had “buckled” to government pressure. The government realised that preventing first-home buyers from getting into their first house was not a palatable political option.  The opposition would have a field day at National’s expense, and New Zealanders would begin to notice.

Forcing the RBNZ to implement first-home buyer exemptions for new-build houses ultimately proved fruitless. By 1 October  this year, the damage had been done and the results were wholly predictable;

Experts say the Reserve Bank’s controversial home loan restrictions have achieved the desired effect, but at the expense of first-home buyers.

One year ago today, the central bank introduced limits on high loan-to-value ratio (LVR) loans in an attempt to slow house price growth and reduce risk to the financial system.

The latest bank lending data from the June quarter shows the rules have been highly effective, wiping $5.5 billion worth of high-LVR loans from the balances that were recorded on September 30, last year.

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HSBC chief economist Paul Bloxham said the limits had helped dampen house price inflation, though it was difficult to say by how much.

“It’s still unclear as to whether LVRs were the driver, or the higher interest rates were the driver.”

Bloxham said the limits had worked well in removing risk from the financial system, but not without social consequences.

“Along the way . . . the largest effect it’s had is to cut the first-home buyer out of the market.”

New Zealand Institute of Economic Research economist, Shamubeel Eaqub,  was damning of the government-sanctioned LVR restrictions,  saying that   first-home buyers had been unfairly blamed for  the housing bubble,

“The data we have seen very clearly shows it was investors.  We don’t think there’s any reason to maintain the LVR restrictions any further, especially now [the Reserve Bank] has raised interest rates.”

Bear in  mind’s National’s technique for solving problems. It would set the stage for  New Zealand’s growing shortage of social housing, and National’s ‘Clayton’s‘ response.

To be Continued: Housing; broken promises, families in cars, and ideological idiocy (Part Rua)

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References

TV3 News: State housing sell-off worth $5B

Radio NZ:  Home ownership on decrease

Ministry of Business, Innovation, and Employment: Housing key facts

Statistics NZ: Coverage in the 2013 Census based on the New Zealand 2013 Post-enumeration Survey (pdf)

Otago University: 34,000 people missing out on housing, University of Otago research shows

Fairfax media: Housing affordability getting worse

Reserve Bank NZ: RBNZ signs MOU on use of macro-prudential tools

NZ Herald: Rents rise as buyers forced out of market

John Key: A Fresh Start for New Zealand

Sydney Morning Herald: The Key Factor

Buddle Findlay: The Progress of earthquake related demolitions in Christchurch

Ministry of Business, Innovation, and Employment: Housing Pressures in Christchurch (pdf)

The Press: Christchurch rent crisis ‘best left to market’

Fairfax media: No Christchurch rental crisis -‘Pontius’ Brownlee

Reserve Bank:  Loan-to-value ratio restrictions – FAQs

Dominion Post:  Few first home buyer details in PM speech

Te Ara – TheEncyclopedia of New Zealand: Muldoon announces a wage and prize freeze, 1982

TVNZ News: Govt pushes for loan restriction exemption

NZ Herald: Reserve Bank buckles – new homes exempt from loan rules

Fairfax media: LVR works at first-home buyers’ cost

Scoop media: Gateway to improve housing affordability

Hekia Parata: State housing improved in Porirua

Additional references

Dominion Post: Housing policy will destabilise life for children

Fairfax media: Over-crowded house blamed for baby’s death

Previous related blogposts

Review: TV3′s The Nation – “Let them eat ice cream!”

Previous related blogposts

Can we do it? Bloody oath we can!

Budget 2013: State Housing and the War on Poor

Budget 2013: State Housing and the War on Poor

National recycles Housing Policy and produces good manure!

Our growing housing problem

National Housing propaganda – McGehan Close Revisited

Social Groups

Facebook: Affordable Housing For All

Facebook: Housing NZ Tenants Forum

Facebook: Tamaki Housing Group- Defend Glen Innes

Other blogs

The Jackal: More homelessness under National (30 July 2012)

The Standard: Unaffordable housing & the culture of greed

No Right Turn:  A surprise policy

 


 

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32 COMMENTS

  1. Make no mistake, this is Nationals unstated but well planned economic policy to cover up for the lack of economic vision and it will for them kill several birds with one stone.

    Their number one objective is to get re-elected no matter what. But there is a large problem of their constant inability to balance the books. Even though they have most of the media on board it’s getting incrementally harder to justify annual deficits and growing debt even to your average idiot Kiwi voter. No recent natural disasters, no GFC and the last Labour led government now 6 years back.

    So what do you do? Sitting on $17 + billion in state houses and having no time for the losers who need these places, National have the solution, sell the bastards.

    Having watched Key and his government over the past 6 years the pattern becomes familiar. Key starts fronting an “issue” we never knew existed, namely social housing. We all know ordinary property prices are out of control but social housing? It wasn’t really an issue until HNZ lost its portfolio to WINZ who as we are all now aware are in the business of rejection. Now we are hearing that people are being forced to live in cars, vans, caravans, the street!

    So we will see the Salvation Army get given say 10% of state houses in a complex arrangement, (why the SA’s I don’t know, perhaps they are linked to National somehow, and we know they inherited the mantle of the Problem Gambling foundations work when they spoke out against Key).

    Then the sell off will begin. Just think of the 3 billion per annum for example that can be put on the books to take them into surplus. As each year goes on the housing stock value will climb even though the inventory will decline. There is maybe 8 years worth of sales here.

    National donors, MP’s and insiders can line their pockets and add to their investor housing portfolios whilst doing so tax-free and feel paid back for their support.

    And more housing stock can be put into Auckland’s housing bubble thereby giving that looming disaster a bit more time before the inevitable economic reality hits and it bursts. Its all terribly short term to hide some very bad sins!

    Whilst this is going on the smoke and mirrors diffusion/confusion dept will be in full swing. National will “care” because they believe that the SA’s are better placed and look at the mess the government departments are making of it.

    Additionally there will be some carrots like increased housing subsidies (cos they care of course) albeit these will be difficult to obtain but publicly they will be trumpeted and besides its only welfare transfer for Nationals landlords anyway.

    And finally they will retain some housing, maybe 20% of the hardest to sell to say they haven’t dismantled the state housing model.

    But never ever take your eye off the ball on this occasion. This is all about looking fiscally stable and clever and covering their arses, it’s all about enriching the well off and its nothing to do with social housing.

    Michelle Boag gave the game away on “The Panel” with Jim Mora this week, talking about selling assets to provide money for the things we all want. This was in reference to Auckland Council’s finances but the truth was she was speaking about Nationals sales pitch for the unpalatable truth that the state housing model is being dismantled for money.

    And National have NO mandate to do this and no justifiable reason either.

    • Well-written and thought out reply. Agree with the points you raise, but the question is, how do you sell this version of events to the average Kiwi? Most people can barely put two sentences into a political conversation, how do we as the Left expect them to figure out this labyrinth of subterfuge?
      Many people I’ve talked to, for instance, like John Key because he has a ‘much nicer face’ or ‘sounds like a real person’ more than Cunliffe. No fucking critical thinking at all. None.

  2. Last year MSD together with BNZ and good Sheppard sisters and salvation army came up with a low interest loan which is being piloted out in South Auckland involving 10 million dollars. This was suppose to help low income earners and beneficiaries break the cycle with finance companies.

    As far as I know at the moment is that this is really not working because the people that have been targeted can’t really afford to have any more debt added onto their existing debts. The question is why couldn’t these organisations come up with a consolidating loan to really break that cycle?

    The National government is not wanting to break any cycle to help the low income, homeless people or any people in the low social economic. That is there hold on these people.The way the employment law is written these people will have no one to fight for them to get what they should be receiving as good wages so they could pay their rent and able to afford a home of their own.

    Elections are over and the majority of the people have spoken and in my opinion the only way to change things is investigating Dirty Politics but who can you trust to that anymore?

    No set hours for work and these agencies that are now in charge of recruiting they are the only ones to make money. They sell your contract with them to the company that might want to make you full time worker,and you just get minimum wage, no added benefits to you. It is a like a slave being sold onto it’s new master.

    I feel that New Zealand is now heading into dark times, we will no longer be the peaceful loving country that we have always been. Who knows with IS we now have terrorism in our back yard. Entering into this war a lot of us will now live in fear, either travelling or just at home.

    • “Who knows with IS we now have terrorism in our back yard. Entering into this war a lot of us will now live in fear, either travelling or just at home.”
      I would really like to see some evidence to back up this statement. A week or two ago nobody even know who IS was, then the MSM started their scare/warmongering. Plastic swords aren’t great for decapitations, and why no outrage at the 59 beheading Saudi Arabia have carried out this year. In my opinion the best way to bring this “terrorism “into our back yard is to swing a baseball bat at the IS hornets’ nest. Perhaps a better idea may to treat our Muslim brothers will more respect.

  3. Good article Frank. A lot of the Labour leader candidates are mentioning how expensive NZ has become. This being a rort against the little guy. As duopoly ‘ s etc transfer wealth and income from the hard working to the well connected. Think banks, supermarkets, electricity, building supplies. A decent commerce commission could sort it out tomorrow.

    With regard residential land we could get rid of green belts and other urban limits and the well connected would not make massive capital gains from favorable treatment by planning departments. This is Hugh Paveltich campaign.

    Alternatively as Raf Manji from CCC said the government always has option of buying rural land at rural prices then rezoning it residential. I think this is what Labour should do with kiwi build if elected. Plus it should include integrated high speed public transport using well planned dedicated right of ways.

  4. State housing and privately owned houses are two distinct issues that require different solutions.
    Most people in State houses will not ever be house owners especially these days with low wages, casualization, student loans, etc keeping people poor. The question is how to ensure this group of people, many of whom are in poor health, are adequately and securely housed. I think the system of state owned houses and units would be pretty hard to top for providing for this group. It has ( as discussed above) provided a stabilizing effect on society and allowed children of the poor a better chance of moving into the middle classes and upwards in the past.

    As far as first home buyers ( the children of the middle class) well that is a whole different subject. It is not that helpful to mix these issues together because the middle class need ( more houses to buy cheaper) tends to trump the issue of housing for the poor in peoples minds.

    We need to prevent a cardboard box future for people in this country and that means good housing policies that help those at the bottom first.

    • Hi Janine,

      In part 2, I tie the two issues of State and private housing together, to show how the Nats are dealing with the seemingly unrelated types of home occupation/ownership.

  5. It appears the Prime Minister and Bill English are unaware of the obligations of Housing NZ.

    Their desire to shift the social housing responsibility away from Housing NZ to the private sector fails to acknowledge the legally binding functions and responsibilities of HNZ,
    these are well described in the Housing Corporation Act 1974. ————————————————————————–
    FUNCTIONS AND RESPONSIBILITIES OF HOUSING CORPORATION (HNZ)

    The functions and responsibilities of the Corporation are described in the Housing Corporation Act 1974, and in the Corporation’s Statement of Intent.
    The Corporation’s legislated objectives in the Housing Corporation Act 1974 are:

    To give effect to the Crown’s social objectives by providing housing, and services related to housing, in a business-like manner, and to that end be an organisation that:
    1) exhibits a sense of social responsibility by having regard to the interests of the community in which it operates
    2) exhibits a sense of environmental responsibility by having regard to the environmental implications of its operations
    3) operates with good financial oversight and stewardship, and efficiently and effectively manages its assets and liabilities and the Crown’s investment
    4) To ensure that the Minister of Housing receives appropriate advice, other advice, and information, on housing and services related to housing.

    The Corporation’s mission statement is:
    The Corporation provides access to decent homes, helping New Zealanders manage their own circumstances and contribute to community life.
    ——————————————————————————-

    In particular take note of point 3) it’s the role of the responsible Minister for Housing to ensure it meets its obligations to operate with good financial insight and stewardship, it is not the ministers role or the Prime Ministers role, to say oh well we can’t do a good enough job, let’s give it to the private sector, they will do a better job.

    We all know the private sector won’t do a good job because they must put profit before people at any cost to the people and the people we are talking about are those who need social housing.

    You may also like to read the briefings made in 2011 and 2013 to the incoming Ministers for Housing, http://www.hnzc.co.nz/our-publications/briefing-to-the-incoming-minister
    if you do look at them you will notice a large amount of information in those briefings have been “withheld to protect the confidentiality of advice tendered by officials”. Does that not alone raise some questions? What officials and why does the publicly owned largest single stakeholder in NZs residential property market need such secrecy?

    The proposed selldown was not highlighted by this government prior to the recent election and was not clearly spelled out in the National parties policy on housing. They have no mandate to effect a selldown.

    This issue is of importance to the nation because Housing NZs asset base is a multi Billion dollar honeypot.
    There is the opportunity for the private sector to profit confidentially and massively from the initial historic event of a selldown, to the tune of hundreds of millions of dollars at the publics expense whilst cloaking crucial information from the unsuspecting public with the tried and true ‘Cloak of confidentiality’.
    This modus of operandi has been used to successfully hide the truth from the public, by politicians, countless times and has made a mockery of the Official Information Act.

    • Great piece f investigative Journalism Kieran,
      Unfortunately all those SOE’s acts were passed during Kirk’ Labour years and this Government is hell bent on dismantling all traces of Labour policies in this country with such vengeance even if they were good policies as many were.

      This shows how insidious this toxic Key Government is and will be till we put this dog down before it runs rampant.

      Strange that the Labour party have been so silent on this issue that their fathers placed for our future and being destroyed by National?

  6. There’s another effect on the population with the LVR restrictions that no-one is talking about. That is that some older people need to downsize their house and are having a problem selling at a fair price because those who would like the larger home can’t get the finance. Where does that leave thosd older people who need to sell because of failing health? Struggling to maintain the property in a reasonable state, and missing out on a more comfortable less worry retirement. No person has spoken up for those folk.

  7. With regard government using compulsory acquisitions for housing as discussed above they have two options selling it all off. But then they lose the ability to a anchor prices down. This is what has happened in Hong Kong. Or they can retain ownership and through long term leases etc they can be a break on property inflation. This is the Singapore or Japanese model.

    Judge for yourself whether selling off state houses is good or bad for property inflation.

  8. With regard to why the government wants to sell to the Sallies is that silences their management. Through a combination of carrot and stick. Through a process of appointments (to other organisations) and funding reviews a previously independent and trusted organization is now in team keys tent.

    What Key fears is people with high profile going off the team key script. Exposing him as an emperor with no clothes. Exposing who he really is.

  9. For the love of god will people stop quoting John Key or anyone from The National Party. They are liars and criminals, but co-incidently, they are also not responsible for the housing problems in NZ. Those problems lay at the feet of everyone who has the aspiration bug i.e. Greed. John Key doesn’t own all the rental and investment properties in NZ. They are owned by the greed of average middle-class New Zealand and above. There’s always an excuse as to why the already well-heeled can’t take some responsibility or fix the issue. The government policies are “stopping them”. LOL Please. The gubmint is stopping them housing the homeless. The gubmint made them vote National. What a bunch of whining losers.

  10. Overall home ownership has dropped from 1991

    I’d just like to point out that home ownership is actually a bad idea both economically and socially. Much better to go for state rentals as a matter of course rather than as emergency housing. That way housing will always be affordable and available with the only exceptions being natural disasters.

    We’ve been conditioned to believe that owning a house is normal but it’s really not. Then, of course, there’s the fact that society has been structured in such a way as to be insecure for most people and owning a home feels more secure but it shouldn’t be that way.

    • To have long term leases available our tenancy laws need major changes to allowfor tenant security and warrant of fitness for the home so that I is warm, dry and suitable to living with floor coverings, drapes, hot water etc, and maintained to a suitable standard. Only when we have strong enough rules in place to protect the tenant will renting become a viable option.

      • @dorothy and Draco, your comments on leasing get to the heart of the matter,which is :- Why is it possible to buy land at all? What usful purpose does it serve? The present problems are caused by speculation. There has been very little increase in the cost of building a basic house in the last decade. Second hand houses, like second hand cars, have no speculative value as long as there are enough of them. All of the increase has been in the land value. If the State owned all of the land, and tenants had 99 year leases, speculation would be pointless, and the cost of acquiring a leasehold property would be stable.

  11. Very thorough, logical discussion, as usual Frank, and hard to see why anyone would vote for these guys. This is just the start of their 3rd term, so they will be going hard out for a while yet, ready to smooth over the yawning chasms before the next election. Health service has started to be “privatised” aswell now, spinning some crap about governments don’t run health services well, so we are going to hand over to (profit driven) industry…crikey, when will people realise it doesn’t have to be like this?

  12. I think social progressives like ourselves will get more traction on this issue if we make sure that we have all our facts in check. There has been a lot of talk for instance about The Salvation Army obtaining many state houses and that most community housing providers are religious groups. However if you take a look at the social housing regulator’s website http://www.shu.govt.nz/chra-home/ you will find the names of all 34 registered community housing providers which encompasses all organizations currently eligible to benefit from asset transfer. The Salvation Army is not on the list. You will also notice that most community housing organizations are not religious organizations. Just not-for-profit groups trying to do a good job. Lastly, these organizations have huge experience working people with extreme housing needs and typically support the governments goal to grow a market of community housing providers who will grow stronger as a consequence of asset transfer. If they, who clearly have the best interests of those in housing need at heart, support the governments goals for social housing, we would we think we know any better and argue against them?

  13. Global economy is heading for a second depression, and any jiggling with a deck chairs of our housing mess or selloff isn’t going to save our economy, even by these idiot NatZ Read on Frank.

    From 2009 this is what we were facing and no doubt its way worse near a quadrillion dollars today.

    There’s a $700 trillion elephant in the room and it’s time we found out how much it really weighs on the economy.

    Derivative contracts total about three-quarters of a quadrillion dollars in “notional” amounts, according to the Bank for International Settlements. These contracts are tallied in notional values because no one really can say how much they are worth.

    But valuing them correctly is exactly what we should be doing because these comprise the viral disease that has infected the financial markets and the economies of the world.

    Try as we might to salvage the residential real estate market, it’s at best worth $23 trillion in the U.S. We’re struggling to save the stock market, but that’s valued at less than $15 trillion. And we hope to keep the entire U.S. economy from collapsing, yet gross domestic product stands at $14.2 trillion.

    Compare any of these to the derivatives market and you can easily see that we are just closing the windows as a tsunami crashes to shore. The total value of all the stock markets in the world amounts to less than $50 trillion.

    According to the World Federation of Exchanges.

    To be sure, the derivatives market is international. But much of the trouble we’re in began with contracts “derived” from the values associated with U.S. residential real estate market.

    These contracts were engineered based on the various assumptions tied to those values.

    Few know what derivatives are worth.

    I spoke with one derivatives trader who manages billions of dollars and she said she couldn’t even value her portfolio because “no one knows anymore who is on the other side of the trade.”

    Derivatives pricing, simply put, is determined by what someone else is willing to pay for the contract. The value is based on an artificial scenario that “X” will be worth “Y” if “Z” happens. Strip away the fantasy, however, and the reality of the situation is akin to a game of musical chairs — without any chairs.

    So now the music has finally stopped.

    That’s why stabilizing the housing market will do little to take the sting out of the snapback we are going through on Wall Street.

    Once people’s mortgages were sold off to secondary buyers, and then all sorts of crazy types of derivative securities were devised based on those, and those securities were in turn traded on down the line, there is now little if any relevance to the real estate values on which they were pegged.

    We need to identify and determine the real value of derivatives before we give banks and institutions a pass-go with more tax dollars.

    Otherwise, homeowners will suffer as banks patch up the holes left in their balance sheets by the derivatives gone poof; new credit won’t be extended until the raff of the old credit is put behind.

    It isn’t the housing market devaluation, or the sub-prime mortgage market defaults that have us in real trouble. Those are nice fakes to sway attention away from the place where greed truly flourished — trading phony instruments to the tune of $700 trillion.

    Let’s figure how to get out from under that. Then maybe the capital will begin to flow again through the markets. Right now, this elephant isn’t just in the room, it’s sitting on us.

    Thomas M. Kostigen is the author of You Are Here: Exposing the Vital Link Between What We Do and What That Does to Our Planet (HarperOne). http://www.readyouarehere.com

    http://www.marketwatch.com/story/the-700-trillion-elephant-room-theres

    • The derivative market is a rug that will be pulled when the money masters are ready to serve us up the post-money world.

  14. What I’m wondering is how big a windfall is this for all those Aussie owned banks. I’m assuming, perhaps incorrectly, the government didn’t take out mortgages on these state owned properties but charity organisations will have to pay interest on book keeping loans written onto banks accounts with no money changing hands.

  15. @ Frank .

    I have one question . A serious question .

    Why is it that my belly button lint is never the same colour as the clothing I wear ? I mean , what the fuck is that about ???

    I also have a confession . I lied .
    I had two questions . Maybe even more . I’m a wild rebel am I not ?

    You’re a meticulous finder of facts . Which begs the question .

    What should we do . About it . About everything ?

    What do you think might be a direct and forthright course of action ? Against the Greater Wattled Fuck Wit .

    We are being completely rooted by a cadre of old , wrinkly Freaks wandering around OUR parliament buildings looking for their Show .

    They’re already rich so it’s not about the money for them .

    What-are-we-going-to-do-about-them ?

    How-are-we-going-to-get-rid-of-them ?

    We , The Daily Blogger-philes , are a sound force to be reckoned with . We know others who are equally unhappy with that cadre of geriatric , mentally fucktarded , greedy , power crazy , lunatics ruling our lives for the last vestiges of their morning stiffie . I literally blanche to a chalk white thinking about what paula bennett might have of a morning .

    bill english is a cunt for Gods sake . He’s an awful little man . He’s also a crook and a liar . He’s also getting a massive , six figure salary . And here he is , telling you and I , or [me] , if you prefer that we should sell the houses we paid for to keep those less fortunate , or can’t be arsed ( Who fucking cares ! ? ) warm , dry and safe . I’m ok with that , I don’t know about you .
    When little billy tells me he’s selling OUR houses to private enterprise , he’s telling me , in fact , that he’s giving them to the foreign bankers to lend debt against . Now , that’s just not right . It is considered in some circles … evil . Little billy , good Catholic Old Boy , delving into Evil . I see . You seen the wonderful “ Boardwalk Empire “ ? Agent Nelson Van Alden flagellating himself . Is that what you do little billy ? Knowing you’re going to put terrified adults and at – risk little kids out onto the streets .

    Frighteningly , where we must come into this fracas is here .

    ‘ Evil prevails when good men ( And obviously women . ) fail to Act !

    The time for discovering and dissecting the minute is over . Enough .

    What do you think @ Frank ?

    Please , don’t get me wrong here . I think you’re wonderful . A brave and clever man . But we must now surely need , deserve , crave … Brawndo ! And action !

    But how , what , when , where ?

    If we remain this unfocused yet well knowing ? I think we may in fact be empowering them . The enemy . We’re outing ourselves for our fantastic knowledge but our fatal lack of the ability to act .

    Call me paranoid if you must but it’s starting to look like a complex script of triple swindles . Maybe I need another holiday ?

  16. Fairfax are on the left-wing trail again. Losers who want state houses in top locations, a teacher on second marriage, who can’t budget and control himself, and a couple who want to buy a mansion in top area for first home. I am sick of these socialist-inspired whingers. Work harder and control yourselves, it is your responsibility, not taxpayers/government.
    Wimpy Paker having a grease to murderous Muslims, thinks he should have a say in new terrorist/travel laws . . . what a loser. Tighten up on these Muslim killers, if they transgress, deport them and their hangers-on.

    • NOTE: We don’t often allow trolling comments on TDB – we are very tight with our moderation, but in the wake of a country that electorally rewarded mass surveillance lies and dirty politics, I think we on the progressive side of politics need to hear from time to time the hate of the right to understand just how damaged many of our fellow NZers who voted in the last election really are. IGM sadly sums up the wilful ignorance and prejudice of the masses, let’s not kid ourselves how steep the challenge in winning 2017 will be.

  17. When viewing the election results for Christchurch, it would seem that the people of Chch are right behind Gerry and John- job well done, according to the people of Christchurch!! Mmmm

  18. Hi,

    Agreed National is failing on the housing front – both social and general affordability. But now I’m worried that Labour is going to join them. I just heard Parker on the news saying all policies including the capital gains tax were up for consideration. Translation – people don’t like the sound of “tax”.

    The problem is that to combat a large and growing problem like housing affordability you need to tackle both sides of the equation – supply and demand. Building more houses – which everyone wants to do, is supply. But the only demand control ever discussed was the CGT. It devalues the value of houses as an investment, thus encouraging more people to put their investments in stocks and shares etc, and decreases demand for houses, thus easing the inflationary pressure.

    But if neither party is willing to look at demand side control – how the hell will we ever solve the problem?

    Cheers, Greg.

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