The worst part about this housing crisis is that the Government’s solution to allow Auckland to sprawl until Hamilton is a southern suburb is that their solution isn’t designed to work.
National have far too much invested interest in this free market speculative property bubble to do anything about solving it because when you strip out rebuilding from a natural disaster and selling over inflated milk powder to China, National’s got nothing. The Nats need this free market speculative property bubble to create the pretense of growth.
If this is a rock star economy – John Key and Bill English are lip-synching.
The Government refuse to look at the demand side and focus only on the supply side because the supply side solution will take decades to kick in. Rather than enriching an empire of slum lords, the Government needs to take an active role in housing the way Labour did with the first State House builds.
We need to stop the baby boomer speculators from out pricing every other generation who had to pay for their own education out of the market and we need to stop the vast number of foreign speculators from buying up as much of our residential market as they can get their hands on.
We need a Capital Gains Tax, a real one, not the fake one the Government have currently put into place. The argument that Australia has a CGT and their housing market is still expensive is bullshit. The question that needs asking is how much worse would their market be if they didn’t have a CGT.
Housing values in Auckland rose 9.7% over the last 3 month, workers wages went up .7%, so while workers have an extra $90 over 3 months, the price of houses has jumped $67 000. With the middle classes who vote National gaining an illusion of wealth from their housing prices, those who have will snarl at anyone threatening to damage their illusion.
Hence Andrew Little’s backing down of a CGT.
We also need a huge rebuild of state housing, not a privatization which the National Party are currently embarking upon. Using the welfare of the tenants to rush through this ideological wet dream is as offensive as it is gross. The poor, the handicapped, the mentally ill all need a warm, dry, secure home for life, they don’t need the constant threat of being kicked out the second someone earns more than $10 extra a week.
The National Party are selling state houses for one reason and one reason only – they have run out of other Assets to sell to keep the budget looking reasonable and have now descended upon the weak and the voiceless who can’t fight back.
The solution needs to be a huge state run rebuilding project that connects NZs forestry industry with wood processing, training schemes for builders and then the actual building. We have the money in the Cullen Fund that could be reinvested into a plan of this scale, so let’s not pretend we can’t do that.
The simple reason we don’t embark upon that is the middle classes would lose their illusion of wealth and politically punish anyone who tried this. The reality is that we won’t be able to begin with the solutions until this current bubble bursts under its own weight damaging all it touches. Only once the illusion of wealth has been lost by the middle classes of NZ will they demand a response that helps them and by default, everyone else.
In Kaitaia Northland a chinese businessman has bought up a huge swathe of land for a farm , he has built a huge building to make a an accommodation block for 600 workers imported from China to work the farm. This is an area that badly needs jobs, how can the government jusify this .
Where is the immigration law that allows businessmen in on a visa that is supposed to set up a business to help employment, its meant to be employment for NZs I believed .
Some people say “oh but the 600 would pay tax’s” but do they?
Wouldn’t local workers pay tax , I believe they would.
Northland is needing help but this is only helping the government in some way.
Also a comment “the 600 would buy stuff” ,but a farm can provide all the food they need.
Seems to me the only economy benefitting from this type deal is the Chinese economy.
@ ELLE
Agree with you. Importing of cheap, sweatshop foreign labour is disgraceful and should be stopped. Either employ domiciled out of work resident Kiwis, or none at all!
And the worst aspect is, the imported labour force, apart from being abused, will live on the smell of an oily rag, sending their pittance of earnings back to their country of origin, generating zero economic stimulation, doing absolutely nothing for the local economy!
This is what this government wants, keeping wages low for the few and dwindling NZers still in the workforce!
Sickening ELLE when I read this, it seems that the natZ are deliberately creating jobs for Chinese only here and our kids are left to rot by them.
Genocide is another word for this. They are criminals that are directly watering down our jobs for cheap imported labour and we are doomed.
Key is a criminal, a carpetbagger and a Judas would be.
They did forecast that 2015 the next crash would come, and they have now borrowed 90+ Billion Crown debt more than Labour did to prop up the Crown purse so we are now at compete risk of a collapsing economy with no cushion that Labour left for us all in 2008 with only 8 Billion Crown Debt.
I hope they push key out of the tallest tower in Mega town when the country crashes, as they did in NY when the market crashed in 2007.
You are correct Cleangreen. One wonders if Maori agreed to the sale of a Northland peninsula,they usually jump up and down about any land taken in Northland.
This sale has been done under the radar,does Winston Peters know of this,it was probably done and dusted before he won Northland from National,but he needs to be made aware.
Overseas backpackers are the only ones doing fruit picking etc,some kiwi uni students came up to Northland to try fruit picking as a holiday job, were told overseas backpackers were given priority , why?cheaper labour probably.
Quite a number
of Solomon islanders (they desperatly need the work so easier to accept)come every summer to work,so another job situation lost to Northland people.
The problem is that Northland has a situation that is not helped by overseas people taking jobs,
WINZ insists NZs look for work knowing full well that even tempory work is not available to them,then local people are judged as “don’t want to work”.
Is Winston Peters opening an office in Northland,?it would be useful if he was a presence here when he’s not busy in parliament.
National are having meetings already to gather donations to help get Northland back in next elections, so much for sending them a message, they didn’t get it !
I can corroborate this, because I used to do seasonal work in the Nelson-Blenheim region and was told many times that backpackers are preferred over Kiwis. Its largely, because backpackers don’t know their employment rights (what few there are in this New Zealand) and even if they do they don’t have the time to wait around to go through the employment disputes process.
If someone one with no skills, connections, qualifications and little ability to speak English can take your job from you, you need to take a serious look in the mirror.
You need to go and try fruit picking sometime.
Or has daddy got a farm, and can get you a job?
Steven doesn’t need fruit-picking money Macro and Frank, he’s already getting troll money.
Steven – congrats for another simplistic response to a complex problem. Any other “get a job!” cliches you want to throw in here?
Actually, don’t bother. We’ve heard them all.
Elle, good to see you supporting Winston. NZ First is more of an enemy to Labour than a friend.
I think that in worrying about the tax implications of these Chinese workers you are missing the point. Assuming that the reporting of payments aren’t fudged by the owner, or the Government turn a blind eye, yes, they will pay tax, but what will the owner charge the workers for food and accommodation?
They will be effectively slave labour. Even so, what little they have left over will be sent back to their Chinese family (or why would they bother to come to NZ at all?) The owners profits will also go back to China and a smart lawyer will ensure he pays no tax here. All this outward cash flow will have an adverse effect on our International balance of payments, so the Government will have to borrow more money. Things dont get much worse that this.
Yes Dennis,and the food grown on such a big tract of farmland will probably be exported to China.
Might as well chop the peninsular off NZ and call it Chinese territory.
Most of NZ’s wine industry is foreign owned – same thing.
The deeply odd thing @ ELLE is that while you have hit the nail thing on the etc, there is a darkly familiar sentiment running through The Daily Blog, as it does in the MSM generally.
@ Martyn wrote, and I quote :
” when you strip out rebuilding from a natural disaster and selling over inflated milk powder to China, National’s got nothing.”
That’s incorrect and the reason it’s ominous too is that it’s blindingly incorrect so one can assume that there is a an agenda because I’ve come to know something of @ Martyn’s sharp mind . A mind that doesn’t miss much, if anything. So it begs the question. How come @ Martyn has missed the blindingly obvious ? Worse still , continues to deliberately ignore the reality of NZ’s economy.
Let us fly little pigs ….
What, who and how did New Zealand grow up, to have an average town housing most Kiwis who live on a false economy ?
What industry, for the want of a better term, earned the money that built NZ into a First World Economy ?
Here’s a clue . It took 141 years to do so .
What is that industry that National and its quislings own, via bank loans, logical fallacies and debt generally ?
What industry infrastructure is National selling to Chinese people for the Nats select few’s profits at the expense of us Kiwis ?
What is that industry that’s only spoken of in ridicule and contempt . Not only for its hokey, folksy, hillbilly, redneck sheep shagging, muddy gumboots false, media generated image but for its isolation ?
If I could, I would call New Zealands entire agrarian community out on strike. For one calendar year.
No farmer generated product to leave the factory ( Farm ) . No rams with the sheep . No bulls with the cows . No seeds in the ground. No wool , beef , mutton, milk, bread , vegetables , wine , pork , fruits, honey, berries .
Nothing .
You think you’re so fucking clever National Party. With your smug arrogance. When Big Jazza Brownlee literally eats David Carter, then you will know @ Martyn Bradbury . You will know then that National no longer wallow in the security of cheap farmer money and you can say with accuracy finally , that National will have nothing.
Why do I suddenly feel old and bored with this ?? Perhaps I’ve become old and boring ?
You farmers who keep on supplying the noose that National keep hanging you with ? And you town people who think that it’s Fairies from down the garden that put food on your table ? You’re fools . The lot of you . You media people who perpetuate the Lie with your honest or deliberate ignorance, you will be held accountable for your laziness and dishonesty . Mark my words as my old Aunt would have said .
Im so in agreement with you countryboy, I get so angry with the stupidity and acceptance of some people. I think ive had my say ,quite often on this site I put the correct capcha value but am told its incorrect,is this the way we are told we have had our say or is it a computer problem,does anyone else have this problem.
This bubble isn’t like other bubbles. This one will last forever.
(I honestly thought it would pop around March. It’s a bit overdue)
Unlimited urban sprawl does nothing except gobble up valuable farmland and leave a massive headache for our children.
Didn’t we learn a single damn thing from the 1960s and 70s??
Yep, Key and English are the Milli Vanilli of New Zealand politics. Milli Vanilli got caught out eventually and hopefully so will our NZ versions. Unfortunately, it probably won’t be soon enough.
Despite the constant rant from Auckland a very large part of NZ is experiencing low to moderate growth. There is no law that requires the population to live in Auckland and for the rest of the country to pay a capital gains tax to help fix the Problem this creates.
Except, Grant, that is where the jobs are.
And if unemployed or pther beneficiaries re-locate to smaller towns, right wingers then jump up and down and rant about people “avoiding” living whrre the jobs are.
That’s the annoying thing about right wing moralising; no logic or consistency.
Frank, you are better than that. Not all the jobs are in Auckland. For example the South Island has low unemployment (and not all employment is in Christchurch) the lower North Island where I live is no worse than the average.
The infrastructure problems of Auckland are real ( I tried to drive around there at Easter). However, I do not agree that all business needs to be based in Auckland maybe some of the support services could be set up in the provinces?
“Better than” what? The right wing trolls on various internet fora who continually demonise the unemployed, for living in areas with little or no employment prospects, continually parrot the mantra of “lazy benes living in small towns with no job prospects”. So you can cut that crap, Grant.
The unemployed get it in the neck from judgemental right wing jerks who feel better when they lord it over others less fortunate than them. It seems to validate their own existence.
I’ve heard and read all the stupid comments, Grant, that the unemployed should “do this” or “do that”. Because if there is one thing all those right-wing asses can do, it’s tell others what they should be doing. But not when it actually comes to providing an unemployed person a job. Hell no. They’re too busy being judgemental wankers on internet fora.
“Move to Auckland – that’s where the jobs are, you dole bludging bene!”
“Get out of Auckland and live where you can afford it, you dole bludging bene!”
You righties should make up your mind which prejudice is flavour of the month. That way we can keep track. And move the unemployed around in cattle-trucks to suit your capricious whims.
Tut tut – we are angry!
The discussion was about the economy,which offshore commentators think is going okay. However, clearly the Auckland housing situation is far from okay. But this is a problem owned by Auckland plus a few other pockets in the country.
My observation was that there are other places in NZ where people are employed and housing is cheaper eg Wellington, Hamilton, Palmerston North, Dunedin and so on.
Absolutely right, Frank. Here in Dunedin since this Government’s tenure began, it has been closing down virually every Government agency and centralising the work in Auckland. Perhaps we are being punished for voting Labour.
Grants position is totally back to front. Where there is no work, people move out and house prices fall. Saying that if people move out of Auckland jobs will follow is just nonsense.
My wife was,born in Dunedin and I had the good fortune to work there for more than 7 years. Had it not been for a company transfer we would stil be there. As well my children are graduates of Otago University.
I don’t agree with centralisation in Auckland as located in such a relatively expensive base must over time just add to the overheads and the cost.
Dunedin has an excellent infrastructure, in fact all the things that Auckland lacks. Dunedin needs to belive in itself.
I suggest you read some basic investment theory. Even the IMF has strongly recommended the need for stronger and more comprehensive CGT. Why invest in a longer term project even if it might have a bigger payback and generate jobs wen you have a risk free certainty.
John Key has the brilliance to come up with new financial products that revolutionised the derivatives markets. Prior to that he was a sharp foreign currency trader who made truckloads for his employers and himself. He was taken into the Fed Reserve – they don’t offer that to any old schmuck.
So when Key et al appear to be incompetent about economic management, what’s wrong with that picture?
We know he’s smart – It’s not a question of that. It’s a matter of ethics, which he and his party are profoundly lacking in. The attitude is summed up well in Killing Joke’s “Age Of Greed”: “Educate your children, educate them well – To feather the nest, and fuck the rest.” That seems to be the National Party’s real slogan, despite the pithy one they use on their billboards.
Respectfully you display a lack of understanding of what makes a good FX / MM trader. The primary requirement is short term tactical market nonce, i.e. the nose for a deal and how the other players will react. More holistic / strategic thinking is actually detrimental to a trader, e.g. a trader will ride market surges were as a strategist will look at fundamentals, obviously in a hot market the traders make big bucks and will call the shots, there is nothing like big profit to make the board go gaga and prudence goes out the window – this is one of the reasons that many very smart institutions got caught with there pants down and proverbial in their hand.
There are two primary weakness to Mr Keys thinking, one is like many of his generation he was taught / indoctrinated (?) with the Friedman / neoconservative free market doctrine (I was also reading economics at this time and also was partly convinced) the second is his trader mind set.
Leaving aside everything else these characteristics alone are unsuited to leadership / guidance of a multifaceted economy where a multitude of production, demand and social factors are at play. This is compounded by globalisation and the huge movements in value which are leaving most economists bemused.
Unfortunately his time in corporate USA was spent working for Merryl Lynch, the company that was the world’s number one trader in sub-prime mortgages until it went bust in 2008. Even though he wasn’t working for the company during the sub-prime mortgage scandal it says a lot about the corporate culture he comes from. Funny you don’t hear the name of that company mentioned often these days when people talk about John Key’s past.
When the housing bubble bursts, we will hear shrieks of panic and anger from the middle classes. And you know what? They’ll have no one but themselves to blame!
the problem is the middle class are drowning in debt they cant and wont beadle to payback but unlike the the us new Zealand mortgages are recourse loans they cant walk away from them
Regarding this “rock star” economy – was talking to a very good fish & chip business owner at lunch time and he says things are the flattest he has known him in this particular provincial town. He says he was told by a representative from one of the major suppliers of chips in New Zealand that it is the same across the country with shops selling chips hugely decreasing their orders.
Maybe people are making healthier food choices now? Fish and chips is hardly s gauge of an economy. Frankly it’s shit food for fatties.
I saw a sawmill for sale on Trademe for $30,000 the other day.
When the government says it’s going to “transfer state housing” to community providers, is this Natspeak/demonic language, for “sell”? English’s webpage has a nice write up about starting the “transfer” in Tauranga and Invercargill. He then goes on to say that the community providers will be so much better positioned to connect tenants with the help that they need from, for example, mental health agencies, .
I can think of few more utterly alienating and horrifying scenarios than being labelled as “needing special mental help” because I am unemployed, or have a thoroughly crap wage.
No wonder people go to the Sallies instead of looking to WINZ et al for help. Too invasive and degrading.
Janice – Paula Bennet confirmed on TVNZ’s Q+A on Sunday that “transfer” meant sale.
@ 2.13
Corin Dann: “But the point is, they are going to get these houses, they’re going to be sold these houses, aren’t they? You say transfer but it’s a sale of houses at a discount, right?”
Paula Bennett: “Well, I’m sure it’ll be less than the market value, yes.”
http://tvnz.co.nz/q-and-a-news/govt-social-housing-target-3000-homes-video-6310455
It’s National party spin to keep the masses sleepy…
Just about time to roll out the “Anatomy of a Bubble” chart:
http://portfoliolive.wpengine.netdna-cdn.com/wp-content/uploads/2011/06/bubble-phases-1024×686.jpg
I’d say we’re somewhere between the “greed” and the “delusion” phases right now.
When you start hearing economists say “this time it’s different, we’re in a new paradigm” when asked about us being in a bubble, hold on to your hats.
yes bubbles do eventually burst however in this case we have an endless stream of migrants and the liquidity they bring with them . The pop will come only when the taps turned off. Don’t see that happening any time soon.
Providing the dollar stays up!
Despite protestations to the contrary by National, Bankers and the deluded speculative housing investors, this bubble will burst. It will burst *hard* as this kind of pricing correction is always proportionate to the degree of over-inflation of prices.
When the time comes, and it will, that house prices fall, those who have spent their millions will find their assets value halved but their mortgage the same. They’ll be paying for their greed for the rest of their lives, or they’ll go bankrupt. If they bankrupt then it’s the rest of us who pay, because you can bet that the old argument that banks are, “too big to fail,” and need to be bailed out by government will be trotted out. You and I both know that National will be as eager as always to transfer the wealth of the masses into the hands of the few.
“Rather than enriching an empire of slum lords, the Government needs to take an active role in housing the way Labour did with the first State House builds.” What you fail to mention here, Martyn, is that in 1935 Lee made the Reserve Bank fund the building of State houses by issuing loans at 1%, so you dont have to have the money squirreled away in the Cullen Fund. The Reserve Bank already creates (at virtually no cost and without debt or interest) our notes and coinage, so why can it not issue money to build the necessary houses.
You are right in saying that it will take decades to meet existing demand and the government should be condemned for that but the Labour record was no better – the 2007 crash was Labour’s doing; the next crash will be National’s undoing.
If you think a Capital Gains Tax is required, you simply dont understand the economics driving every housing boom. In a boom it is the land price that goes up due to speculation, not the house price. If sufficient houses are built, and overseas speculators are excluded from the market, there will be no capital gains to tax because a second hand house, like a second hand car, should slowing depreciate. Is there a Capital Gains Tax on second hand cars?
Ideally all land should be owned by the State on behalf of Kiwis and should not be sold at all. It should simply be leased on long term by the tenants. Speculation would then be impossible. It seems that, in the last century or so, we have learned absolutely nothing from the ideas of Henry George and C.H. Douglas (who was Lee’s inspiration).
We have leasehold land on some farms, all that happens is the right to hold the lease gets sold. What we need to do is make it affordable for average New Zealand people to own their property. The 1/4 acre section is history & living in your neighbors shadow is probably the way of the future for most but people need to be investing in their own future not paying off property for others.
Martyn has pretty well hit the nail on the head. Given that Key and co have, for what ever reason, swallowed the perfect market fallacy, are intellectually rigid and unable to reassess their believes they will rationalise what they are doing is for the long term good.
The constant denials that there are housing, living standard, regional and equality issues in the face of expert opinions and hard facts clearly demonstrate this detachment fro reality. Therefore given the slump in commodity prices, the lessening of the impact from the Christchurch rebuild over the coming years immigration and demand stimulation with its underpinning of the housing bubble will be the primary source of growth.
i will disagree with what is a good Post on one point that has been made, it ain’t only National Voters who are involved in the clusterf*ck of ‘Housing investment’,
Far from it, when the tax breaks available to such ‘Investors’ were being touted round New Zealand in seminar run by a troika of tax lawyers, real estate agents and accountants a member of my family paid an exorbitant fee to attend,
What He imparted to me besides the gist of the tax breaks available to ‘Investors’ was the fact that there were a number of high ranking figures from the Labour Party machine at the same seminar,
So, there’s one hell of a reason that the Neo-Libs in the Labour caucus have given Andrew Little the big Nyet as far as a capital gains tax is involved, and, you only need to get an honest answer out of the likes of the authors past and present over at the Standard to have an understanding of how deep the rot of the ‘investment Housing’ scourge runs through the veins of the ‘supposed left’,
This from, http://www.scoop.co.nz>Business tells us the size of the problem across the whole of New Zealand,
”The level of lending to Property Investors in New Zealand has increased to about 40 percent of all housing market transactions”,
i believe that the above is a direct quote from Wheeler the Reserve Bank Governor,
This also comes from the same Scoop.co.nz article, again i believe, taken from a direct quote from the Reserve Bank,
”Rental yields in Auckland are running at historic lows”
And,
”Reserve Bank data suggests Investors make greater use of ‘interest only loans, which might partly reflect their ability to offset mortgage expenses against income tax”
i suppose it ain’t the Governor’s,(of the Reserve Bank),job description to describe fully the tax implications, ie: exactly how much income tax is being waived annually for these 199,000 ‘Property Investors’ running, some would infer deliberately, ‘housing investments’ at a loss knowing that the tax base, (you and me who cannot escape a cent of our due GST and Income Taxes),will dish them out a credit for their efforts playing the game of Monopoly which is the ‘Investment Housing Market’ across New Zealand,
Will today’s effort by the Reserve Bank stop the game of Monopoly, Ha ha ha, only if pigs really can fly,
How many of the 40 percent currently playing the inflation game with house prices in Auckland have access to capital in other countries???,
i would suggest plenty, so those that do, have access to capital from other countries that is will simply blink and carry on the game of Monopoly among themselves,
While that might somewhat ‘protect’ the New Zealand banking sector,(which was the Reserves Banks intention in the first place), the cohort of ‘Property Investors’ who have no access to foreign capital will be forced out of the Auckland ‘market’ and simply go find someplace else to play,
‘Some place else’ of course is the rest of the housing stock of New Zealand, 40 percent of these houses of course are already part of the Monopoly game and those sitting on these ‘investment Properties’ will be more than happy to have the Aucklander’s shut out of ‘playing’ in that city by today’s announcement from the Reserve Bank join them in the provinces to do to provincial real estate prices what they have accomplished in Auckland,
The solution’s???,
Pretty simple should a political party like Labour or it’s Leader find the Guts,
(1), As the author suggests, a robust State House building program with a focus on a split between the poorest of the poor, beneficiaries,and, the working poor, families with children earning shit money being offered shit hours of work, as the tenants,
(2), A graduated lowering over the next decade of the tax breaks available to these men and women driven by greed, ‘the Property investor’,
Lowered in 10 percent increments such tax breaks would in ten years time become non-existent thus removing the impetus that began the greed fueled ‘inflation race’ in the first place,
(3),A Capital Gains Tax, the same as above, graduated over a period of ten years so as to give the ‘Greedies’ the chance to remove their ‘investments’ into more traditional areas,
Starting at 3 percent and graduating by 3 percent annually for 10 years such a tax will in a decade, along with 1 and 2 above, put houses back to what they were intended to be,
Homes!!!…
Comments are closed.