Franks on Housing

March 3rd, 2013 at 9:00 am by David Farrar

blogs:

Marcus Lush recorded an interview at 5-50am this morning with me on the pros and cons of banning foreigner purchases of houses here. …

I realised that the issues could be summed up simply. Prices go up when supply can’t increase to respond to demand. There is no a shortage of building supplies, or builders. So foreign buyers’ money can only affect prices if there is a shortage of land to build on. But New Zealand is not short of land. It is short of consents to use land. And probably more important than the supply of new land, is the cost, delay and risk in trying to intensify the use of land that is already built on, nearer the centre of our cities.

We need to build both upwards and outwards. We do need to intensify, but we also need more rational urban limits.

In other words, our housing problem is the inevitable consequence of the political success of selfish middle and upper class families, working with  their stupid green children. They enforce their aesthetic preferences for the status quo (labelled as ‘heritage’) by locking newcomers out of their leafy and quaint inner suburbs. The RMA has frozen the dynamic processes of rebuilding and intensification that have created all great cities (and our own towns and cities up till 3 decades ago. The result is that poorer people must pay for more expensive housing ever further from where the work is.

To blame the resulting prices on foreign money is a nice distraction from their own culpability, for the selfish generations, and the councillors and MPs who pander to them.

Nicely put. Blaming house prices on foreigners is just blatant xenophobia.

Tags: , ,

23 Responses to “Franks on Housing”

  1. Reid (15,942 comments) says:

    Nicely put. Blaming house prices on foreigners is just blatant xenophobia.

    Sigh. What about 40,000 new migrants hitting the Akld market all of whom rent or buy, don’t people understand.

    What pray tell does one think this constant pressure year after year year after year is going to do, to a single market, in a single city?

    What is wrong with finding incentives that work to encourage migrants not to settle in Akld. The current points bonus clearly doesn’t cut it. What is wrong with finding an incentive that DOES work?

    And why is it that some people disingenuously insist that when one raises this issue, that one is not saying what I just said, but rather, one is really saying let’s ban foreigners from buying property? Why do some insist on framing the debate in that way?

    Vote: Thumb up 2 Thumb down 1 You need to be logged in to vote
  2. YesWeDid (1,029 comments) says:

    He loses all credibility when he refers to ‘stupid green children’.

    And aren’t ‘selfish middle and upper class families’ a perfect description of you average National voter?

    Vote: Thumb up 5 Thumb down 6 You need to be logged in to vote
  3. Viking2 (11,128 comments) says:

    If house prices rise due to demand and become unaffordable for the average (so to speak), thne the average will go somewhere else particualarly if Govt. remove renting subsidies. If there then becomes a shortage of workers companies will need to pay higher wages,(well the CTU will be happy) and thus employees will again go to Auckland to live because the market will then make it more viable for new construction.

    Any smart employer would move to a cheaper place to operate as the product or service they povide will become uncompetitive.

    We are already seeing this in Tauranga and more Mayors around NZ should follow the example that I saw yesterday of a mayor in Ausssie who has decided he and his council need to do somewthing to protect their towns population from shrinking. Akin to what Shadbolt has in Invercargil and Tokoroa hasn’t done.

    It beggars belief that so many people want to live on a volcano zone at the intersection of two islands bridged by a motorway,only to be clambering for a place to build somewhere on the ends of those two islands.
    For that’s what Auckland is. The Main North Island and its sister the Northern Island of the North Island.

    Always thought chopping it off at the Bombays made sense but perhaps it would be better to let the Northern Island go. :lol:

    Vote: Thumb up 2 Thumb down 1 You need to be logged in to vote
  4. Black with a Vengeance (1,552 comments) says:

    Maybe not all the blame, but definitely some of it.

    Vote: Thumb up 1 Thumb down 2 You need to be logged in to vote
  5. muggins (2,983 comments) says:

    They showed an auction of houses in Auckland on TV the other night and most of the buyers were Asians.
    The main price rises are in Auckland , Wellington and Christchurch. Where I live prices are actually lower than they were five years ago. I was looking at selling about 15 months ago and the best price I was offered was $50000 less than I paid in 2007. I could probably get a bit more today, but still not as much as I paid five and a half years ago.

    Vote: Thumb up 3 Thumb down 0 You need to be logged in to vote
  6. Sir Cullen's Sidekick (786 comments) says:

    Sorry guys – I don’t understand this. As per Labour and Greens, record number of people are leaving NZ every single say under National’s misrule. So there must be too many houses vacant and available….I am confused….

    Vote: Thumb up 2 Thumb down 1 You need to be logged in to vote
  7. bhudson (4,734 comments) says:

    Sir Cullen’s Sidekick,

    That is because the exodus is all those former students who can’t find work because there are no jobs and they have massive student debt thanks to National actually expecting them to contribute to the cost of their degrees. And they have no choice but to leave because their country has nothing to offer them.

    When Labour was in power it was known as “going on your OE”…

    Vote: Thumb up 3 Thumb down 0 You need to be logged in to vote
  8. Viking2 (11,128 comments) says:

    Sir Cullen’s Sidekick (85) Says:
    March 3rd, 2013 at 9:57 am

    Sorry guys – I don’t understand this. As per Labour and Greens, record number of people are leaving NZ every single say under National’s misrule. So there must be too many houses vacant and available….I am confused….

    —————————–
    Not our problem and you should seek immediate physciatric assesment. :lol:

    Off course you could actually round up all the facts and present a coherent story.
    But nah, too hard for lefties.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  9. Viking2 (11,128 comments) says:

    hudson (3,330) Says:
    March 3rd, 2013 at 10:03 am

    Sir Cullen’s Sidekick,

    That is because the exodus is all those former students who can’t find work because there are no jobs and they have massive student debt thanks to National actually expecting them to contribute to the cost of their degrees. And they have no choice but to leave because their country has nothing to offer them.

    When Labour was in power it was known as “going on your OE”…
    —————————–

    Well I covered that yesterday but all the bullshit that you guys produce won’t change anything. Labour spends and the Nats.’s beat up benficiaries that they created with their shit policies.
    Neither outfit is doing the right thing although right now one can look at Moore and Goff and say theynwere on the right track.
    But Kiwi’s don’t seem to matter to politicans. What we have in Parliamnet, in many cases on both sides are people that are dumb, overly educated and people who would rather sell our souls to the world rather than provide incentives for Kiwi’s and Kiwi businesses.
    All in the name of some UN spruiked Free Trade agenda.

    Kiwi’s no longer have pride in their country.
    Why because the politics have removed that pride.

    http://www.stuff.co.nz/taranaki-daily-news/news/8375011/Kiwis-dumped-for-Chinese-toys
    So instead fo using possum skin it’s now faux fur made in China.

    FFS and we think we can win using stragegies like that.

    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10868816

    Viking2 (8,942) Says:
    March 2nd, 2013 at 8:24 am

    Some bedside reading for all you economists, anti business people and Bill English.

    The book also reveals the extent to which Gallagher Group has benefited from its investment in research and development, and how the generous government export incentive policies of the 1970s boosted the company’s growth.

    Tax deductions given to firms that increased exports in that decade effectively reduced the firm’s tax rate to zero. The firm also made use of a government R&D grant provided to companies that hired university science graduates.

    Though the grant existed for only three years, it lasted long enough for Gallagher to appreciate the value that could be gained from R&D and a “culture of research-informed innovation” was established within the company, writes Goldsmith.

    Gallagher Group, founded in 1938 by Gallagher’s father Bill snr, is today one of the country’s most successful and geographically diverse exporters with products sold in more than 130 countries. The company has revenues of close to $200 million and employs roughly 1000 staff around the world.

    http://www.nzherald.co.nz/technology-and-innovation/news/article.cfm?c_id=1501186&objectid=10868182

    As Mike Moore writes in the foreword: “If New Zealand had another 100 Bill Gallaghers we would be the richest, most decent, best-natured nation on earth.”

    As oppossed to the poor and broken arsed sad country we have. and before you all egt excited about that truth just refelct a bit about where we are and how tough most Kiwi’s are having and have had their exsistence for the last 5 years. And don’t blame someone elese like the GFC.

    My concern for what its worth is that NZ is continuing to have disasters. Pike, earthqualkes, drought kwiwfruit, etc etc and what will be next. We no longer ahve any resilience in our economy because we try to be leader of the world rather than leaders in NZ. That’s what our politicians do.

    Question. What if this drought last another year or like aussie another 3 years??

    What is going to happen to NZ in that senario, which could likely happen.
    OR for that matter if we had another biggy earthquake say in Wellington.

    Food for thinking for the weekend.

    Support our companies more and more and more.

    We did it for the Hobits and LOR. Why not the rest of us?? Bill.
    Gallaghers set that apart so a lesson to be learned.

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  10. Black with a Vengeance (1,552 comments) says:

    Facts and a coherent story ?

    Sounds like a job for the “free” press. If only we had one.

    Vote: Thumb up 0 Thumb down 2 You need to be logged in to vote
  11. Viking2 (11,128 comments) says:

    Oh and in case you are wondering I was around in those days and I can tell you business was fizzing. Made huge export gains. Sure some found ways to challange the system but today we have computers and much more transparency and agressive Tax Dept.
    Lets do this again.

    Interestingly enough this morning the Dairy sectionin the Waikato voices concerns about the next seaon’s milk production.

    It needs to be said that it ain’t looking that flash.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  12. hj (6,350 comments) says:

    Recall that I made the point earlier that the US and NZ had similar residential
    investment shares of GDP during the decade prior to the boom. But we financed ours
    at 350bps higher than they did theirs. That is a really rather staggering difference, and
    it has shown no signs of sustainably narrowing at any time in the last 20 years. Why
    did we have such high residential investment? Peter implicitly argues – and I agree
    with him – that it was not about over-investment in housing. If anything new housing
    supply may have lagged “need” at least on some measures. We needed such a large
    share of real resources devoted to residential investment because the population was
    growing rapidly. That was a policy choice.

    Peter highlights that we have a relatively high rate of natural increase in population.
    But we also have a large and persistent outflow of NZers (large by any comparative
    international standards). That outflow should best be seen as a rational response to
    perceived opportunities – those abroad are better than those here. Outflows of New
    Zealanders should generally act as a stabilizing force, helping to rebalance the
    economy.
    Economies with slow growing populations need to devote a whole lot
    smaller proportion of their real resources to simply maintaining the capital stock per
    worker.
    Based solely on the fertility and migration choices of New Zealanders (each
    presumably behaving fairly rationally), our population growth would have been
    growing only quite slowly since the mid 1970s. As it is, our population growth since
    1990 has been second or third fastest in the OECD. What changed? Migration
    policy did in the early 1990s.

    And 80% of our population growth in the last couple of decades has been the net
    inflow of non NZ citizens – thus almost purely a matter of discretionary policy
    choice. Government policy interventions can act to stymie successful adjustment -
    and I believe this to have been the case in NZ over the last two decades. Our negative
    NIIP position is larger, our real exchange rate is higher, our real interest rates are
    higher, and our capital stock per worker (and associated perceived business
    opportunities) are lower than they would have been if we had simply let the self-
    stabilising behavior take its course. As John McDermott’s slides showed earlier, that
    adjustment was working prior to the mid 1980s.

    http://www.treasury.govt.nz/downloads/pdfs/mi-jarrett-comm.pdf

    i.e policy here is purely driven by interest groups. The big cheeses of property, infrastructure provision etc.

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  13. hj (6,350 comments) says:

    But New Zealand is not short of land. It is short of consents to use land.
    ……………………….
    and tax payers and rate payers should pay for the additional infrastructure.

    Geography a key factor in house prices
    http://realestateresearch.frbatlanta.org/rer/2010/06/explaining-local-supply-elasticities-quantifying-the-importance-of-space-limitations-in-housing-pric.html

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  14. hj (6,350 comments) says:

    Interesting opinions from a free marketer “let them live in shacks”:

    “Long before this country was settled with civilisation by Scottish immigrants in the South Island we have survived without poli-synthesised insulation, for 4000 years we managed without double glazing and frame wrap. Since before roman times we have enjoyed the utility of fired clay roof tiles without the need for fully air-sealed mono-membranes under roofing. These materials are all improvements but they are only answers to the problem of excessive controls in the practice of construction. The knee jerk reactions to earthquake and weather-tightness insurance issues is a plethora of building regulations that does much to protect the Insurers and little to advantage the people. The result is that the people are pushed by compliance price escalation, away from being freehold owners and therefore default to be renters of property, most often of an older non conforming construction.
    The RMA on subdivision is even worse, several reputable developers having left NZ to operate in a more sane environment.
    Politically agenda driven cliques including; The greens advocacy, The maori advocacy, The naturalists, The greenbelt conservatores, The anti development nutters and in the spirit of Shadbolt, The anti everything-ists, have captured the town planning function and the RMA function to the point of stagnation where nothing functions.
    The cost is not only revealed in distortions of price, but a huge cost of lost opportunity is manifest. Is it any wonder our best and brightest flee to Australia.”
    http://breakingviewsnz.blogspot.co.nz/2013/02/frank-newman-there-is-no-housing.html

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  15. Harriet (4,514 comments) says:

    “…..Sigh. What about 40,000 new migrants hitting the Akld market all of whom rent or buy, don’t people understand….”

    Reid, it was only yesterday you were commenting on GD about industry and jobs.

    I think it was Lendlease in Australia[it could have been another company] who were either building or had just completed building 80,000 units/homes.
    That figure is what was on their books listed for sale or ‘of the plan purchases with held deposits.’ -AT THAT TIME – it was not their total annual figure.

    That was only one building company – and only their houses/units in NSW and QLD.

    Aus BTW has a total immigration no. of about 140,000 annualy. Yes, you may have a point about a large % all going to Auckland, but the fact is: this is what cities elsewhere do: Accomodate them.

    Vote: Thumb up 0 Thumb down 1 You need to be logged in to vote
  16. Fentex (866 comments) says:

    If it’s true that house and home prices are soaring out of young and new owners reach because of the RMA then it should be likely that nations without such legislation wouldn’t have that problem, one would think.

    Yet it seems a very common thing for houses and homes to be an increasingly unaffordable option around the world.

    NotPC offers an argument that it is true of Houston Texas that lack of regulation leads to cheaper homes. I am not convinced by his argument for lack of rigour, but it does seem there’s an opportunity for someone interested in the subject to unveil important evidence by research.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  17. Paulus (2,500 comments) says:

    Can’t use Land because there is somebody who will go out of their way to stuff you anyway.
    Called Resource Management Act and all that goes with that Greenpeace crap.
    Wait until they get Power in 2014.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  18. publicwatchdog (2,103 comments) says:

    FYI Kiwibloggers :)

    3 March 2013

    Press Release from: Westmere Heritage Protection Association

    Every wondered why Auckland house prices are going crazy or why you can’t even afford to buy in?

    Here is the Real Oil.

    I have just spoken to my contacts in the banking system and most of the properties in the (Auckland) including the Western Bays areas Ponsonby, St Mary’s Bay, Westmere, Grey Lynn and Point Chevalier are being purchased at inflated prices by two specific groups

    1) Queen Street Speculators / Investors, land banking and renting the properties at high rates waiting for intensification to be instigated by the govt or council.

    2) Asian Nationals (Chinese) on work or holiday permits!

    What is skewing the lack of affordability of our inner city suburbs is that both these groups are buying Cash Up Front!

    Ordinary home owner can not compete.

    This in turn means that these people will want to capitialise on their investments and start to build multi story buildings or units to maximise their profits.

    Tight controls are needed to:

    To stop this sort of speculative behaviour we need to pass laws NOW to:

    a) Ensure that people are NZ citizens before they can buy (which is the law in Australia see below)

    b) Your first home is exempt from any tax, all other properties are subject to capitial gains and property taxes etc.

    c) The law is changed so that Heritage Protection makes our inner suburbs unattractive for Developers to decimate.

    We as a group are not against intensification in Brown-Fields areas, in fact we suggest it is the best way to restore our city ruined by uncontrolled industrial sprawl.

    The reason we insist that the law is changed and action taken immediately is that The National government is under the influenced of the Speculator & Developer lobby and the RMA is being changed to benefit them, making the Council impotent to protect to our neighbourhoods

    We encourage the Auckland Council to take the lead and curbing inappropriate develop, protect heritage and stop council officer making decisions that benefit the Speculators & Developers lobby. Re introduce the Character coalition proposal as part of the Unitary Plan.

    The Australian have strict rules around who can buy a house and where and for what purpose! why don’t we?

    http://www.firb.gov.au/content/publications/buying_a_home.pdf

    Regards
    Lisa Prager
    Co-ordinator
    Westmere Heritage Protection Association

    ______________________________________________________________________________________________

    Forwarded in the public interest by Penny Bright.

    Vote: Thumb up 0 Thumb down 3 You need to be logged in to vote
  19. alex Masterley (1,490 comments) says:

    Penny, if that gossip is true and we won’t know until some meaningful research is done on the subject then it’s a good outcome as the areas you identify will become arsehole free.

    And be afraid, the high price contageion is spreading to Kingsland. Crappy old 3 beddies are selling for the high 8s. you might be able to get a good deal on your place and clear all those unpaid rates and water rates.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  20. Johnboy (14,973 comments) says:

    Jeeze It will be fun for us non-Jafas when Mount Eden starts to erupt again. :)

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  21. Fox (202 comments) says:

    I remember the Nats ranting and raving about the RMA whilst in opposition more than 5 years ago. 5 YEARS. And what have they done since then?

    Vote: Thumb up 2 Thumb down 0 You need to be logged in to vote
  22. hane (63 comments) says:

    Meanwhile this RWNJ boomer spent years opposing development of Mt Vic as Chairman of the Mt Vic Nimby’s Association. As if we care what you think, Luddite.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  23. willtruth (245 comments) says:

    Hane,

    Good point. Franks must have had an epiphany since then and realised the error of his ways.

    Of course a capital gains tax is probably the easiest most effective things we could do. Choke off the demand from property speculators and watch house prices ease to a more realistic level that reflects their inherent value as a shelter. And with the added bonus of channelling investors money into more economically productive activities such as new businesses.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote

Leave a Reply

You must be logged in to post a comment.