Affordable housing for dummies
Labour/Greens actions of supporting private enterprise with huge subsidies (tax breaks on interest) for ‘build to rent’ companies, and granting property developers power to bully build and override community democractic rights, shows the lack of courage and intellectual/economic insight in the centrist political pragmatism that dominates both these parties.
The above actions are all National/Act party approaches to problem solving; done by Labour to avoid criticism, to try and steal center voters who might switch votes (it is beyond logic why the Greens have done this – i.e. center votes aren’t going to deliver urgent climate change action. And you’re pissing off some your left voters – who may as well try the Maori party). National/Act love the centrists as it helps their constiutents make good profits to increase donations to their parties. The crumbs for Labour and the Greens are houses being built. But there is no gaurantee it will be affordable housing, though I’m sure lots of soothing words will be said it will, ‘following the laws of demand and supply (cough cough)’. And soothing words that the ‘ ‘build to rent’ won’t completely lock the New Zealand middle class into perpetual renting, it will just be one part of the market! A transition step to home ownership like it used to be (cough cough).’
I feel I have previously shown reliance on private enterprise is fatally flawed logic, but people still raise the idea there is a housing shortage because there is not enough supply so any encouragement of supply is good. So in a little more detail, not that it deserves it. In classical economics if you have a shortage of affordable houses like we currently have, that sends a signal to the market that a profit can be made by supplying more houses, so they supply more house. The demand gets met to a point where less and less people are able, or willing, (or all supply needs are met), to pay at that price. So demand stops/drops. A drop in demand sends a signal that prices can drop. So prices start to drop. And this in turn sends a signal to a supplier of housing that there is less profit to be made so they will either slow supply or stop new supply. And it all stabiises around a new equilibrium(?) and the market is happy and somehow affordable housing must have been met.
There are many obvious flaws in this logic, especially when applied to ‘affordable housing’. E.g.:
- Many people are not able to pay the prices the market has got to. They still need affordable housing but in a housing shortage the private market is sending signals to keep raising prices. The private market has a built in inflection through price to lock some people out of supply. To ration by price. (Affordable food, shelter, are best not delivered by a private market mechanism. See our current private market supply chain problems as further proof. We can include clothing in this category if we want to introduce ethhics into our markets – most cheap/affordable clothing is based on exploitation).
- When demand starts to drop the supplier instantly has a signal to drop production (this is a very early obvious signal). So they drop supply to a level to sustain residual demand in order to maintain their profit expectations (maximise profits). This shows the private market has a built in tendency to maintain prices at high levels, the levels they have got to. The market has no incentive to maintain supply to drop prices because that will drop profit expectation. Fewer houses at a higher price makes more sense – contrast to low price high turnover items. Competitors could come in but the incentive even for them is keep prices high. Just look at the New Zealand electricity market – there is competition but prices are still massively higher than when it was government run (I recall $30 power bills, something like $60 in winter).
- Those people who are buying houses do not have the same access to information as those who are selling. In part because they buy less frequently. But more importantly when they buy they not only focused the price. Because they are not so focused on price it is possible for the seller to use those other factors as a way to push up price to maximise profit. The buyer is therefore more likely to overpay which helps keep the market high. So the private market is skewed more easliy for the ability to maximise profits by a supplier rather than ‘efficiently’ setting price. This process favours those people positioned as the middle men in the market sitting between a producer and a final consumer.
They and most previous NZ Govts do NOT want to fix the problem.
They just want to look like they’re trying to fix the problem.
It is SO EASY to fix, if you WANTED to fix it.
This lot makes Nero look proactive.
..too true….I’m afraid.
Big Norm would be rolling in his grave. Even Muldoon would be disgusted at whats become of NZ.
Kirk should have laid off the lamb chops.
Muldoon should have laid off the whiskey
Jesus Sam, there are still descendants of Norm Kirk still alive FFS, you inconsiderate moron. You right-wing pricks are such insensitive, gossip-mongering arseholes.
Alex Jones in the USA was fined $43.9 million for his right-wing character assassination, conspiracy theories and fake news. The same sort of Steve Bannon-esque and Cameron Slater-style dirty, sleazy, filthy politics is in the same gutter as Alex Jones. He berated Sandy Hook parents that the massacre was a hoax.
You born-to-rule ultra-right Tory commentators need to fuck right off and put yourself in the shoes of another family and descendants. To Kill a mockingbird by Harper Lee, and then Barack Obama sums up Atticus’s advice best. https://www.youtube.com/watch?v=iZkZ36iU4B0 and https://www.youtube.com/watch?v=Vbr_ri5VYqM
I could have used Atticus Finch link only, but realise how much Barack Obama would piss you white nationalists the most. The first black President of the United States, must absolutely piss you racists off even more than Harper Lee or Gregory Peck!
I should put myself in the shoes of right wing arseholes like you Sam, if you ever find out who your daddy is, I hope he’s more like Atticus Finch and less like Alex Jones. You’ll be better off financially and morally, no matter what your shill payments from the Dirty Politics Commentary Bureau are.
I know it sounds corny and Skinny Ad-ish, that I have the same name as the National Leader, but even he would think your fucking slurs against Norm Kirk are Cameron-Slaterish.
If only Norm Kirk’s descendants could sue you the same way that Sandy Hook whanau took the right-wing arsehole Alex Jones to task for his insensitivity. The sooner that right to sue for defamation comes to NZ, the better Sam.
Agree. Gone too soon.
Don’t worry, exploitation has just been green lighted! Wages overall will be lowered and consumption of houses will grow along with low wages and poverty in NZ.
“Employers have welcomed the government’s decision to allow employers to negotiate a lower median wage for foreign workers in some sectors but many say that it does not go far enough.
They say that given the acute shortage of labour in almost all sectors of the New Zealand economy, the government should extend the benefit of a lesser median wage to cover blue-collar jobs including those not on the ‘Short Skills List.
Immigration Minister Michael Wood announced yesterday (August 21, 2022) that employers in the construction, meat processing seafood, aged care, snow and adventure tourism industries can offer a median wage between $24 and $26 to attract migrant workers.
The median wage for migrant labour in all other sectors is $27.76 per hour.”
“Working Holiday Scheme doubled
Mr Wood said that each of the agreements included expectations for improvement, including implementation of workforce transition plans and industry transformation plans.
The move is an attempt to address workplace shortages across the country.”
“Appeal for unskilled workers
Employers and staff placement companies say that the severe labour shortage has had an adverse effect on production and supply chain management and that there is an urgent need to address the issue.”
https://indiannewslink.co.nz/appeal-to-reduce-median-wage-for-unskilled-migrant-workers/
On that note that is why people are getting poorer in NZ and can’t afford wages and rents.
Meanwhile charity has become a business, where they seem to be paying minimum wages, bullying and falsely accounting for the work that they do (aka in this case claiming they were producing more food parcels to media than they were).
‘Hero of the year’ led food bank with low wages, poor culture, ‘camera monitoring’
https://www.rnz.co.nz/news/national/473530/hero-of-the-year-led-food-bank-with-low-wages-poor-culture-camera-monitoring
If you drive around Auckland you can see that within a year or so when the current crop of apartments and multi unit developments are completed there was going to be a housing crisis of oversupply and many of those units if not left empty start impacting affordable housing. The immigration flood gate had to be opened to ‘protect’ house prices.
@Joseph, “The immigration flood gate had to be opened to ‘protect’ house prices.”
…And keep NZ wages artificially low.
NZ’s house problem starts with demand led poverty as seen by the announcement https://indiannewslink.co.nz/appeal-to-reduce-median-wage-for-unskilled-migrant-workers/
There has been assessment that a family of 4 needs an income of around $160k to live in Auckland comfortably and similar level of wages in other cities in NZ.
So we have to ask why import in foreign migrants to work NZ jobs at a fraction of that, when we are in a welfare state and workers on those on those wages will be in poverty in NZ and eventually be subsidised by other tax payers in a range of top up benefits and accomodation supplements.
Note often the industries paying the low wages are highly profitable and led by multimillionaires if not billionaires. “construction, meat processing seafood, aged care, snow and adventure tourism industries”.
Wonder why NZ construction is dysfunctional and youth don’t want to train to do it anymore in NZ. Wages of $24 and $26 to attract migrant workers mean that it is not worth training in that field. Likewise aged care and all the other industries that used to pay better like meat works and fishing – many paying these artificially low wages are hard physical jobs that end up on ACC pushing up everyone elses premiums.
Totally agree.
The housing affordibility crisis can be solved by restricting immigration and bringing wages upto an affordable house level. Or immigration can be restricted until the projected over supply of housing causes affordable house prices to meet the low wage economy. Any hope or chance of supply meeting demand has been dashed. In two years prices will be ramping again. That’s going to continue while there is low wage immigration and overseas investors can buy houses via NZ companies.
Where is the plan for an environmentally sustainable population, capital investment that inceases labour productivity and a resulting high wage economy?
Times were not good for all . Maori were treated like shit and we are just starting to uncover the harsh way those in care were treated. Black outs were common and items were often unavailable. The government had control of everything that was important and inflation was rife. Housing was affordable but interest rates were high and rentals were none existent .I arrived in Chch in 73 and there were r houses to rent .
The reason there were no rentals to be had was people could afford to buy and mom & pops knew they could rely on the state to look after them in their old age so there wasnt the demand by the more well off to get involved in dirty landlordism. And the two reasons most workers could afford to buy their own homes State Advances Dept/Housingcorp maybe also Maori Affairs Dept loaned money to home owners at the lower interest rates that only goverments can borrow at. And secondly wages were higher in comparison to house price. When I left school and worked as labourer in a factory I was on $5000 per year and the flat I lived in a 25 year old house was valued around $25,000. A couple of teenagers could save a deposit in 6-18months.
There’s a house in my street that doesn’t meet Jacinda’s rental standards so it’s stood empty for the last three years. The owner was going install insulation and a heat pump but then the new tenancy laws were introduced so he flagged the idea.
His view is that while his place doesn’t meet rental standards, there are tenants that don’t meet his standards.
This tells you all you need to know about the rental market.