GUEST BLOG: Geoff Simmons – Even a global pandemic can’t dampen our broken housing market

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Our economic system is broken. It’s devastating that despite New Zealand’s economy going through the most significant economic challenge in a generation, the housing market has continued to skyrocket. Meanwhile, we have the most important election in living memory next month and we have the current government fuelling the problem, not dampening it, and the National Party who are silent on it because they don’t want to lose votes. We all lose as a society by not having an affordable housing market, we have to fix this.

We had the most unaffordable housing market in the developed world going into Covid, and even a global pandemic can’t slow it. We need to tax houses like any other asset to stabilise house prices for a generation. We also need to reform rules around building, and local government funding, to allow us to build up, not out, more quickly. This will mean we can cater for the huge growth in those living in our cities over the next 30 years. TOP has a solution to the housing crisis and I would strongly urge people to look at our housing policy because it is better than anything, any other political party is proposing.

In terms of economic stimulation post Covid-19, The Government has left the Reserve Bank with no option but to flood the country with $100b in cheap money which will keep interest rates at record lows. Cheap money encourages people to take on more debt at a time when we can ill afford more of it. As we have seen overseas this will continue to fuel the housing market, benefiting the banks and wealthiest Kiwis. TOP would divert this money directly to the pockets of struggling businesses and people. $100b divided between every Kiwi would be $20,000 per person. That would allow a 18 month Universal Basic Income (of $250 per week) and it’s money the Reserve Bank is already creating. Imagine what could happen if we all had an extra $20,000 in our pockets. We’d pay down debt, put down deposits on houses, go on New Zealand holidays and spend up on a bunch of cool stuff. But instead Labour is importing failed economic policies from overseas. It’s heart breaking.

The time has come to reset our economy. The COVID recovery is an opportunity to build back better. We need to stop speculating on property and start investing in businesses that can provide jobs and exports. We need to work smarter, not harder. We need to add value rather than squeezing out more volume – more cows, more logs, more tourists – all at a cost to our environment. Both National and Labour have been talking about these issues for 20 years and neither have the guts to deliver. TOP has a plan to take the country forward, to reduce property speculation and grow some world class clean and clever industries.

Geoff Simmons is the leader of TOP

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20 COMMENTS

  1. All fair comment.
    Just recently I have been thinking about selling my house and moving on and have visited a few open homes and had an agent give my exisiting home an appraisal.
    The selling rules have changed dramatically in the last few years. If they even put an overpriced figure on the ad (most don’t these days) unless you are prepared to offer at least 30% more you will probably get laughed at.
    The housing market is not just broken – it is insane.
    RVs are scarcely relevant.
    Agents work on causing panic amongst buyers – telling them that unless they make an obscenely overpriced offer they will miss out on their dream home so act now. So the prices keep going up in an exponential bubble.
    I bought my house for $328K five years ago.
    A real estate agent says he thinks I could sell it for at least $700K right now.
    That is something I find it very hard to get my head around.
    Treasury thinks the housing market will drop in price by some 10-15% over the next year.
    I can’t see how it can happen when even a traditional sale becomes a bidding and counter bid war between potential buyers with real estate agents rubbing their hands in satisfaction as the prices go up $10,000 with each stroke of the pen.
    Something has got to give.

    • Agree about house prices, what annoys me is that others now see you as a money grabbing capitalist whereas it’s not your fault (‘you’ meaning everyone in the situation of having a house worth so much).
      I guess if you were a good lefty Mike you can just tell the estate agent that you feel $480 or $510k is reasonable and just sell it for that…as you are still gaining.
      But you won’t will you, you will take the highest bid!

      • I would have to take the highest bid because the seller of the house I want would undoubtedly do the same.
        That is the way the market works at the moment.
        Just because I am a leftie doesn’t mean I want to take a loss.

  2. Sorry Geoff, the TOP suggestion of tackling the junk food sector is on the mark but things you have written above are absolute nonsense and a recipe for worse disaster than we already have. You have demonstrated your utter cluelessness and given us very clear reasons for not voting TOP.

    I suggest you do some thorough research.

    1. ‘We need to tax houses like any other asset to stabilise house prices for a generation.’

    Well actually, the entire global financial system is on the brink of collapse and there is no stabilisation for a generation. Indeed, with the ongoing planetary meltdown, there probably isn’t ‘a generation’.

    2. ‘We also need to reform rules around building, and local government funding, to allow us to build up, not out, more quickly.’

    Building up is a disaster in-the-making. Recently highlighted in the Guardian was the fact that going up wastes more and more energy, as water, people and food need to be lifted against the force of gravity. Anything more than what people can comfortably climb is out…which means three storeys for most and one storey for many. When the electricity grid goes down some time between 2030 and 2040 (if not before), as it most certainly will (100% guaranteed) no one will want to live in a city and certainly not in a high-rise. Indeed, the exodus from New York, the epitome of dysfunctional thinking, is already underway.

    3. ‘This will mean we can cater for the huge growth in those living in our cities over the next 30 years.’

    Your statement is utterly preposterous, bordering on the surreal. People are leaving cities in droves in the US -almost a stampede- as cities become hell-holes. To think that won’t happen in NZ in NZ is to be utterly deluded. Cities are by definition, unsustainable, acquiring everything they need from the hinterland or in the short term in the globalised system, from overseas. Cities produce nothing other than pollution and mega-problems. Case in point: Auckland cannot even organise a sustainable and reliable water system or a sustainable and reliable sewage system. Remember that long-term only composting toilets or excreting on the ground are sustainable. Everything else come to a halt some time between 2030 and 2040 (at best).

    I have urgent preparations for the impending global financial meltdown so cannot spend too much time. but one final thought: ‘Our economic system is broken.’ It is not ‘our economic system’. It is the economic system imposed on us by banks, corporations and opportunists. We have endured it, But not for much longer because it is collapsing.

    • To ignore housing demand is no way to look at it.
      Record immigration, migrant workers, off shore buyers and property speculators, allowing housing to be used as a rental investment and having no control on prices or eligibility to buy, all add up to the mess you have had for many months.

      Meanwhile banks are profits are booming, families are sleeping in cars and nothing effective.is being done. Building more houses will not solve the problem.
      Infrastructure will become a bigger problem with even more people and housing.

      Yes some radical changes will need to be put in place and no govt dare think about it let alone do it.

      An easy one is to make land ownership a prerogative of resident Kiwi citizens only.

  3. I don’t understand the UBI proposal and must say it makes me nervous because of my ignorance. However I do agree with your broken housing situation comments. This is a man made rort by older generations that don’t give a flying fuck about the younger generation, and the poor, that have not a shit show of owning there own home without taking on a life crippling mortgage, and wouldn’t qualify for one anyway. Locked into rental for the rest of there life. My pet subject, or pet hate if you like. And before all you old geezers out there start up with your bullshit memories of how hard you did it in the old days, what most people call the boomers, you live in absolute denial about how bad the housing affordability is these days. I’m a boomer, technically. But I’m not. IMO the boomers are the propertied class, brought cheap, paid off and sitting pretty
    compared with the rest. Keep buying more and more properties just an investment which creates this high demand and therefore high prices. Yeah it’s a good investment, for you. Politicians are scared of the boomers. The boomers always vote, and vote for anyone that will look after there investments. That’s Labour, National, NZF, ACT – thats 90% of the vote right there, not much choice for the renters to vote for change. We need these investments TAXED heavily because it is an income stream for anyone that’s got a few bob to spare, and it has ruined our domestic housing affordability for the many battlers out there.
    Great to see TOP bringing this out to out attention before the election.

  4. Has anyone seen the Ghetto in the making along Waterview, building a lovely 10 storey housing complex for immigrants and other non-Nzers to be housed in and turned into a ghetto…You couldn’t fucking pay me to live in one of those, however rich white people will see this as another notch in their property portfolio to house poor people and make money they do nothing to earn except that they have equity in their existing portfolios. That Geoff is the fucking problem INEQUALITY of outcomes for actual people who were born here in NZ. Ive seen my extended whanau and the whenua having to live in garages and cars and other hovels. What your proposing is just more of the same inequity with your build-up. It creates GHETTO’s. How about the Govt put a CGT in place on property speculators with more than 2 properties how about that to stop the inequality. And fucking pigs might learn to fly first….

    • Yup dead right Tuibelle – ‘rich white people will see this as another notch in their property portfolio to house poor people and make money they do nothing to earn except that they have equity in their existing portfolios.”
      Jonky’s mum and dad investors are right into this, which is kept on the quiet by everyone as we all know someone doing it if not yourself. I know 3 kiwis that have 20 properties between them. It’s just sheer greed.
      They are all bloody wealthy as is and looking for more. WTF?

      • I guess if people could make a living from wages then they could afford the properties… wages and the cost of living go hand in hand… NZ has essentially stopped wage growth in NZ for decades, into a low wage economy and it’s getting worse. More and more poorly skilled people are coming to NZ (you don’t even need a real job, 50% are income less as dependants of the student or what have you. Those already here are bought to their knees by low wages and lack of regulation (aka Chorus workers, the financial services industry, company behaviour aka Mainzeal, etc). NZ is all about ripping people off in industry here.

        Young Auckland real estate agent made $90,000 last month
        https://www.stuff.co.nz/life-style/homed/real-estate/122775792/young-auckland-real-estate-agent-made-90000-last-month

        Foreign students and dodgy foreign business people can come to NZ and buy a house. Then buying a house seems to help with their ability to stay in NZ for immigration purposes… remember Sroubek and his NZ citizenship/permanent residency granted while in jail, on the back of his 2 million dollar Remuera abode.

  5. The main causes of NZ housing market being broken for many Kiwis is not that complicated. Immigration and investors. Both have turned our housing market into a farce. The reason it hasn’t been fixed is due to there being no genuine interest in fixing what has caused the carnage.

    Wealthy foreign investors have been gifted the opportunity in invest in the NZ housing market for huge returns and an extremely friendly tax regime….for them. They have been the big winners. A disproportionate number of these investors are Chinese. The epic losers in this charade are Kiwi families who have been squeezed out of their own housing market in their own home town / city / country. It’s outrageous that the money men of the previous National Government especially not only allowed this to occur but actually encouraged it to do so.

    There is so much money involved, the figures have been hidden to prevent the alarming reality being known. The figures they let you see are the ones it’s safe for them to collect while protecting the status quo. If you buy a NZ home but you are a taxpayer in Hong Kong for example, you are a foreign buyer. If however you are a Hong Kong / Beijing investor in the NZ housing market but purchase property here via a trust set up in NZ by a NZ taxpayer, all your NZ property purchases show up as being made by a NZ buyer. The actual numbers involved will be huge but the numbers you are allowed to see indicate foreign buyers farcically only account for about 3% of NZ property sales. It’s morally corrupt and an affront to so many kiwis but it is what it is. As long as there is such a vested interest in masking the true numbers involved, the status quo will continue.

    Then you look at the wealthy people especially from China who are gifted residency / citizenship in NZ. They must prove they have x amount of $$. Once they’ve shown that, they absurdly drop off the radar. Very few records are kept here on how they “invest” their money to benefit the NZ economy. We know they put their money into the safest schemes that are of no benefit to kiwis in any way….but serve the purpose of the Chinese investors and new residents beautifully. Stats in other Pacific Rim countries show the income these people declare for tax purposes is remarkably even less than that of refugees. Foreigners both offshore and here have set up the NZ housing market perfectly as a playground / casino for their own needs. Kiwis who already own property will happily go along with this charade as they will obviously get a much better price for their property……but the big losers are their kids and grandkids who must move away from their home city and often home country just to become a home owner. If they stay in their hometown they can look forward to a lifetime of being a tenant. Almost inevitably, their landlord will be Chinese, many of who will have an investment portfolio of many NZ homes.

    Displacement is a massive issue here. Immigrants arrive here cashed up to the max. Our established top level struggle to compete so they are displaced to the level below who then displace the home buyers at that level and so on. Bryan Bruce spoke of the “ripple effect”. Eventually the kiwi family wanting to own a home in the area they grew up in is forced out of that area. Their choices will be continue renting, move to another town / country or move into one of the many depressing subdivisions popping up miles from the action on tiny little sections that don’t even have enough space for a far king lawn bigger than a billiard table. We assisted a family member into their own home recently but the process left us feeling despair for future generations and disillusioned. It’s a sad indictment that this farce has become the status quo. Those profiting from it in epic fashion couldn’t possibly care less. As long as this scenario is allowed to continue, NZ will have a housing crisis regardless of how many subdivisions pop up or multiple monstrosities are built in suburbia by the usual suspects. Welcome to the new New Zealand. No wonder John Key wanted to change the flag. He changed almost every other fucking thing about our country….and farcically got a knighthood for doing so.

    • Exactly JF, this sentence though “The epic losers in this charade are Kiwi families who have been squeezed out of their own housing market in their own home town / city / country”…BINGO!!!! Tell me where do we go Geoff, where is our housing as a birth right in our country. No Govt is going to change this rort as they are all in on it.

    • You are aware Jacinda sycophant that the highest and most rapid house rises were under Helen’s watch, 2003-2008….And now under Ardern. Did National do anything about it no!, Did Helen or Arden…NO!
      So basically it’s all Keys fault in your rose tinted glasses….sheesh must be great to just blame National for everything you see as ‘bad’ and ignore the Labour years that nothing was done to fix that percieved bad.

      • Im right,

        You call me a sycophant to any person away from this website, the next ride you take is in the boot of my car you fucking zero.

        • Of course I’m Right conveniently avoids how National deregulated building to allow cheap, leaky spec housing to spring up everywhere and lead to prolonged worry for unlucky house owners and windfall for lawyers.

  6. The housing market is abusolutly insane! I am dreaming for my own house for years, and each time i felt like i was closer and found out actually i was getting more far away.
    Last week, i tenderred on a house, which is only 80 square meters, and the RV is only $460k. I lost it because somebody beat me at a price of $780k.
    I am a hardworking person, have a good career. I did some calculation, and found out 50% of my gross income was paid for Taxes(income tax and GST) and rent, after taxes and rent i saved 70% of my net income for deposit. But still cannot afford a small house for myself to live in.
    I was balming myself before i read this article. Now i realised, i am not the one to be blamed, there is something wrong in the system. In my opinion, people who is having an average income should afford a house they could live in, if not it means something is completely wrong.

  7. Ha… s’funny.

    “This will mean we can cater for the huge growth in those living in our cities over the next 30 years.”
    Does it now.
    Meh.
    You do realise that ‘city living’ is soon to become redundant, right? With the proliferation of personal, self drive EV’s and no doubt EV trains and buses, people are going to abandon the skanky, tacky, gaudy, ugly little kiwi-as cities like rats from a sinking micky fay Americas Cup play boatie in the haba dahlings, “pass the Gin would you now, dear? ”
    You never mentioned the four foreign owned retail banksters ( Which were once owned by us. ) helping themselves to billions of dollars in net profits? ( $6 billion NET last financials.)
    You mention cowsploitation but not farming. You do know what a ‘farm’ is right? It’s mostly flat and green and has slaves to the machine working every day from daylight to dark to earn less than the machine returns to the farmer. Have you ever been into the country? Is all around yet invisible to all except politicians trying to keep their hands down in farmers pockets. The odd farmer gets points if they help sell out other farmers to the aforementioned retail bankster mobster. Y’know? Like Sir roger douglas and jimbo bolger the helmsman of the Good Ship Kiwi Cluster Fuck.
    I’ve read your post above and it’s meaningless. You’re not going to achieve anything while foreign banks are whipping its minions into selling our kids into debt traps for their entire lives in a country with more house building expertise and raw materials galore while scum like the banksters are controlling you and your mates.
    We are an agrarian export driven country. We make foods and wools and wines and if there’s a God, we will also make the worlds finest hemp too and your dreams of bigger cities to exploit are an anachronism welded to a swindle now thirty years out of date.
    I’d suggest you check the labels before you open anymore cans of worms.
    ( Farmers? Check out jim bolger? What a wanker? Federated farmers aye? He’s handed your heads and hearts to the bankster. Remember ? You had a Union until Federated Farmers came along and fucked you lot over. They stole your strength in your union and delivered you to the enduring enemy. The traitors in your midst who’ve manipulated you and exploited you for generations. )

  8. If govt’s, had been more sensible and had a future proofed ubi in place, instead of the adhoc wage subsidy, then they wouldn’t be going so deep into debt right now. Tourist operators could more readily furlough operations for however long. A ubi would make employment seamless for business, especially with increasing casualisation and gig economy.

    A ubi would only cover basics, so defaulting on rental or mortgages could be covered by some compulsory insurance, for a period of time, cushioning downturns. A ubi could also be temporarily extended to persons trapped overseas, if travel is again restricted. Govt debt would still be increasing, but much less.

    But because of “shortthink” nothing will have changed, by the time the next pandemic comes along. Except maybe the next international airport will have been constructed on its own quarantine island in Auck, and all incoming cargo will be uv sterilized. And the only places with the foresight to have ubi, will be the swiss, nordic, and communist countries.

    By way of example, if a future govt raised super to 70, they could have a ubi from 60 to 70. And later 50 to 80, etc. After kiwisaver funds have built up sufficiently to cover the difference of the lower ubi rate. Those in the ubi age group would have the flexibility of no minimum wage or retirement age, which would be a bonus for businesses needing their experience. In the longer term the reserve bank could use adjusting the ubi rate as an economic lever, instead of increasing interest rates. It would be interesting to see how the social indicators of the ubi group compare. It’s top.

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