Turei on house prices

September 15th, 2013 at 12:00 pm by David Farrar

Sadly I was overseas last week and didn’t get to cover at the time the massive blunder by on . It was so bad, that even before the episode went to air, she was on Firstline admitting she doesn’t know their own policy.

Extracts from what she said:

Garner: Would you like to see house prices fall in New Zealand, Metiria?

Turei: Well, yes actually. We would like to make sure that they are affordable. Oh – shocked look on your faces , how dare, how terrible if young families could actually afford to buy a home.

There is a big difference between saying prices should stop rising so rapidly, and saying we want to see house prices fall.

Garner: So, if house prices fall as you would like, you’d like the house prices to fall, that means that some families could have negative equity which could be an economic disaster for New Zealand!

Turei: Yes, that’s right that’s right so you have to be extremely careful….would you like to listen to an answer Duncan?

Garner: I think I heard enough!

Turei: So you have to make sure…

Peters: Hang on, hang on, hang on…

Turei: You have to make sure that if you’re going to change any of those, those economic levers you have to do it extremely carefully and over a long period of time and the first priority has to be building affordable homes – now those are homes…

And here Turei says she wants some home owners to have negative equity.

 “that means that those holding onto the wealth now will have to be prepared to let some of it go…”

And she went further and advocated that it would be good to have some home owners forced to sell their homes because the prices drop.

Won’t a Labour/Green Government be a lot of fun!

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56 Responses to “Turei on house prices”

  1. Ian McK (237 comments) says:

    Fiscally illiterate losers, supported by envious, no-hopers of similar ilk.

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  2. dime (9,356 comments) says:

    Dime is a bit sick of hearing about “young families”.

    why doesnt she be truthful? they have ot be the right kind of young familes.

    Most of Dimes friends are “young families”. but they earn good incomes and own homes (with giant mortgages). i guess they need to give all of their wealth away :(

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  3. nickb (3,658 comments) says:

    This may show my lack of knowledge of the housing market, but IMO people who cry that prices are too high have one problem. Over-inflated expectations. To me the only area of New Zealand where house prices are unaffordable is parts of Christchurch due to a lack of supply and the city fringe in Auckland. Are people really surprised that house prices in Ponsonby / Grey Lynn / Mt Eden / Remuera are $1.5m for entry when it is the most desirable part of our largest city to live in? There are trains coming into the CBD from as far south as Pukekohe and as far west as Swanson. Buy out there if you want to.

    No one forced you to live in Auckland. Move to a city like Hamilton where you can get a nice modern 2-3 bedroom home for less than $400,000.

    Oh, the inhumanity that a 25 year old professional couple can’t by a 3 bedroom character house within 5km of the Auckland CBD. The government must do something!

    I have a suggestion – get fucking real you entitled fucktards. Buy an apartment for half or a third of the cost of the average Auckland house. “Oh but I want a backyard/pets/garden” etc etc.

    Voting Labour and the Greens will only make it worse when they increase the cost of living with taxes and huge inflation. No one should really be surprised about Turei’s comments. The Greens and Labour are completely against wealth generation and creation (remember comments like “trade is inherently immoral”?)

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  4. Adolf Fiinkensein (2,787 comments) says:

    Adolf and The Cook own a very comfortable three bed room home on 1100m of land just 55 minutes by train from the centre of Adelaide. We paid $287k for it two and a half years ago. The market has moved maybe 10% upward in that time.

    You are right, NickB. There are plenty of homes for over $1mil just five km from the city centre.

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  5. HC (152 comments) says:

    Metiria Turei is NOT the economic spokesperson for the Greens, as she has no such qualifications and is therefore not the one to comment competently anyway. She is a qualified lawyer, but apart from that more focused on social policy issues, and yes, she made a rushed, somewhat poorly thought through comment at first. As The Vote is a hyped up debate show, where single, simple arguments are encouraged, she fell into a trap, like many fall into on that show.

    But to be honest, there will always be price corrections, which could be caused also by economic slowdown, by new lending regimes, by newly set interest rates, by a substantial change in migration policy or by increased supply or demand changes.

    Also were there corrections and lower prices after the last big bubble deflated after 2007/2008, and some have since then for a couple of years faced lower equity and high debt, but low interest rates mitigated the effects. There will be another correction also once more substantial building will result in more supply, and in some areas prices will drop, no matter whether a National led or Labour led government creates the environment for substantial construction of residential housing that will increase supply.

    But given there is such a gap between supply and demand, also in view of increased migration, increased interest in buyers to buy in New Zealand, with more returning from Australia and other OEs wanting to buy here, even large scale building like Labour and Greens propose will likely only lead to less price growth and no equity collapse as some dooms-sayers claim.

    I was more shocked about Sam Lotu Iiga having few if any answers to explain why under the National led government nothing much had been done to improve the housing supply for the last five years. He even told the audience that in his electorate there were at least 1,100 homes on offer below 500k, but when Campbell Live checked on this, and John Campbell commented on this at the beginning of his show on Thursday, they found barely 200 in that margin in his electorate, and just over 1,100 in the whole of Auckland advertised on Trade Me.

    So Campbell is waiting for Sam to contact him and show him and his staff around the many affordable homes he claims there are in Maungakiekie.

    I am waiting also for Sam’s answer to his daring comments on The Vote.

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  6. slijmbal (1,210 comments) says:

    Though we should expect any loosening in land supply and reduction in local government massive overheads on new development would result in at best flat prices (effectively a drop in real terms). Such effects would likely be slow in major centres as house prices have shown themselves to remarkably inelastic on the down side in NZ over the last 25 years and any such reductions in house development would take years to push through the system.

    The monsters that the local government soviet town planner brigade are was reinforced to me with recent incidents. A friend had renovations with two example idiotic examples.

    They had dug out the top layer of the lawn as it required replacing and this made a set of steps approximately 2 inches too high according to one other regulation and they were told to install a handrail. Of course this was a temporary situation as the replacement of the top soil made it go away. They ignored the council drone.

    Second example is that there had been a wall removed and it turned out the original builder had done a shoddy job and this required extra support etc. After consulting with the council drone they agreed the approach to address. All good until drone number 2 turned up and said this was not acceptable and it had to be done his way. Luckily, they told him to stick it and to send the original drone back.

    On a final note – looking to renovate upstairs shower and one of the options is to replace with a high pressure hot water cylinder as the water pressure is crap upstairs. Have been informed will need consent for new cylinder and will lucky to get away with much under $5K paying for the council consent. F*&**&KKK! Why?

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  7. Longknives (4,390 comments) says:

    I am constantly amazed by the free ride this nutjob gets from the adoring NZ media…running to her for ‘expert’ comment on every issue under the sun.
    Why has nobody ever asked her how a self professed “Anarchist” can possibly run for Parliament? (Does she even know what “Anarchy” is? Isn’t being elected against everything “Anarchists” stand for??)
    And does she still think people selling drugs to our kids at school are to be commended as “Entrepreneurs”?

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  8. Alan (1,054 comments) says:

    Wow, have we really reached the stage were telling the truth is a “massive blunder” ? (it’s shit politics, that I fully accept)

    We have a situation where house price inflation is outstripping other price and wage inflation in the Auckland market. (I don’t know what’s happening the rest of NZ, frankly I’m not that concerned about much south of Bombay or north of Warkworth.)

    Obviously this can’t continue, history tells us that all forms of asset bubbles result in it being burst and a collapse.

    People who buy at the top of the market will lose; I’ll be fine, I have a $200k mortgage on a property worth $800k, but some people will get burned. It’s market economics, corrections happen.

    Even if we accept the fantasy nirvana of house prices slowing down and becoming less than other forms of inflation, it just leaves wealth tied up in homes being degraded by inflation over 20 years. It’s a loss of relative wealth which ever way you cut it. The maths are inexorable.

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  9. wreck1080 (3,722 comments) says:

    In saying that house prices falling would put some people in negative equity.

    Yes, but , when you look at the massive gains that many people have made without paying any tax, do you think i really care about them?

    Greedy property investors are fuelling another housing bubble that could result in terrible damage to the new zealand economy.

    Don’t think it can happen? Just look some overseas places where people said a bust will not occur.

    As Bernard Hickey points out today — is it really a supply issue as rents are not rising… only house prices.

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  10. WineOh (539 comments) says:

    Turei walked into an obvious trap.

    The most obvious reason why pollys are unwilling to directly interfere in the housing market to depress prices is that it enables additional buyers on the fringe to enter the market, but at the cost of wealth to all the existing property owners. The maths is quite simple, if 2/3 of people own their own property, and a drop in prices benefits 5 maybe 10% (first time home buyers) … where are the votes?

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  11. Ross12 (1,143 comments) says:

    HC

    If Metiria Torei is not the economic spokesperson for the Greens why was she on the program. I’m sure all participants knew what was going to be discussed, before going on the program.

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  12. OneTrack (2,564 comments) says:

    HC – Turei is a Co-Leader of the Green Party. As such, I would she knows what the Green parties policies are and will have had significant say in what those policies are. Her trip up on the Vote is mor a symptom of how illogical and toxic those policies will actually be if implemented. As far as she is concerned, the State should own all housing and allocate it to the citizens based on their “need” (and their party membership).

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  13. OneTrack (2,564 comments) says:

    Longknives – Since Turei is promoting a big-state, communist government, I would agree she has no idea what an anarchist is. Probably she just joined that club in university because that’s where all the “cool” kids were. But it sounds hip, doesn’t it.

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  14. HC (152 comments) says:

    Ross12:

    You have a point, but that means also the makers of the program could have selected more competent persons to sit on either side of the fence. Also then why was Sam not better prepared to answer to some hard questions?

    The Vote is a bit of an “entertainment” show too, and it is intended, to get more audience. So in that respect Metiria delivered exactly the kind of “shock comment” that some would have wanted, and it then leads often to Duncan Garner being able to carry on on the topics covered on his Radio Live roadshow, to get more ratings there.

    It is smart coordination and cooperation between the two of his employers, and of course Garner himself.

    So I take the Vote and what is said there with a bit of a grain of salt.

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  15. Simon (677 comments) says:

    It not a supply issue. The jobsworths at local councils charge property owners but the costs of dealing with these fuckwits is for now outweighed by the return. There is finance avaiable for the capital spending hence rents have not gone up.

    The reason house prices are high is because of RBNZ money print. The RBNZ didnt intend to cause a housing bubble but in face of a useless National govt unable to reform the economy and National govt spending well above revenue, despite high taxation, the RBNZ had to print.

    Yes there are govt turds slowing supply but the Keynesian RBNZ faced with a most useless government have decided to create credit in the economy. The credit in the economy is created faster the council turds can slow production of new housing.

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  16. HC (152 comments) says:

    OneTrack, 01:13 pm: It is new to me that the Greens want to have the state own all housing and allocate this to the individual needs. They admittedly presented a housing policy that would be based on state funding or state access to credit being used for new homes in a special housing program for first home buyers and also for social housing, but that is different to “nationalising” all real estate as you suggest.

    So we should perhaps stay with facts and also accept that appearing on a show with a known topic does not necessarily mean to know all questions put beforehand. And policy is not simply determined and agreed between the co-leaders there, as I know, it is developed by wider membership and voted on.

    The Greens being “communist” is bizarre, as intervention in some areas of markets has been common under quite conservative governments all over the world, especially decades ago, and there is wider consensus among economists, that the markets have largely failed in various respects in housing and some other areas over decades.

    I am not a typical “greenie” or even member of that party, but I prefer to look at what they propose and analyse it, rather than just dismiss it all as “communist” or “socialist”.

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  17. Alan Wilkinson (1,812 comments) says:

    Well, there’s a massive heap of b.s. on this topic. House prices have been vastly inflated by supply strangulation and bureaucratic costs. Yes, we have to face a real price reduction when and if these causes ever get corrected. That is market reality. Whoever is holding equity in the inflated market will get burned – owners and mortgage lenders alike.

    They can blame the moronic environmentalists and socialist bureaucratic governments for that.

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  18. Alan Wilkinson (1,812 comments) says:

    @HC: “The Greens being “communist” is bizarre”

    No it isn’t, unfortunately. The Greens have zero respect for property rights. They regard your property as merely a piece of environment that they must control. They regard your income as merely an excess they can redistribute to those they judge more deserving. They regard your business as merely a resource consumer that should be shut down or taken over by the Government. They regard your vehicle as an intolerable, offensive, private luxury that should be forcibly removed so that you have to walk, bike or use public transport. They regard private education as an intolerable deviation from State control.

    They are indeed not only bizarre, but hideously destructive.

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  19. swan (659 comments) says:

    “There is a big difference between saying prices should stop rising so rapidly, and saying we want to see house prices fall.”

    The difference is – the former is somewhat half-arsed, the other is more in line with the goal of making housing more affordable. Here I was thinking that when politicians talked about housing affordability, they actually meant it. Is this why National has done FA in its time in govt, they don’t actually care?

    The argument for avoiding house price falls is financial stability. The answer to that is in banking oversight (such as the lvr policy), not keeping house prices high.

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  20. cha (3,779 comments) says:

    RBNZ money print

    Here’s their policy statements – doxs or you’re making shit up.

    http://www.rbnz.govt.nz/monetary_policy/monetary_policy_statement/

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  21. thedavincimode (6,519 comments) says:

    ♪ Simple Simon … ♫

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  22. OneTrack (2,564 comments) says:

    Hc – I base my comments on what the Greens say and do. Yes, I have read between the lines in their manifesto and public statements. And what I get is a plan for a communist nirvana, where everyone is equal and the state provides all. Because the private sector cannot be trusted and is inherently “evil”.

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  23. davidp (3,540 comments) says:

    Someone needs to ask Turei just what percentage house prices will fall under a Labour-Greens-NZ First-Mana government. 20%? 30%? 50%? That would allow us to calculate the number of people who would be made bankrupt by the policy, and then those people marked for bankruptcy (and the subsequent loss of their home) can make an informed voting choice.

    Ironically, it’ll be mostly low income people who will be made bankrupt and homeless by the Greens’ policy. It’s struggling first time house buyers who are most likely to be in a position of negative equality. Green MPs earning $170pa and with their own mortgages being subsidised by the parliamentary allowance rort that they’ve had going on for years will be fine.

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  24. thedavincimode (6,519 comments) says:

    davidp

    I imagine that the ginga whinga will have well and truly stuffed a sock in her mouth on this issue by now.

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  25. Harriet (4,495 comments) says:

    “that means that those holding onto the wealth now will have to be prepared to let some of it go…”

    No they won’t.

    She’s really talking about the rate at which wealth in the housing market increases. The wealthy don’t have to be prepared to let some of it go as she suggests, but rather, be prepared for ‘slower rate of growth’ in housing based wealth under a Lab/greens government.

    But that won’t happen either as they want to restrict the supply of land which of course increases the wealth of current home owners.

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  26. tvb (4,193 comments) says:

    So the cow would like some families to be forced out of their homes with a possible bankruptcy so some other family can move into their house. :Low deposit homes do at least provide the best chance of first home owners to get into their first home. In 5 years or so with some repayment of their mortgage and with prices going up they are on their way. But Nooo the cow wants to force them out as they have negative equity.

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  27. swan (659 comments) says:

    Davidp,

    a) getting a fall of prices of that magnitude due to supply side changes is fanciful.

    b) You don’t go bankrupt and lose your house just because its value drops. Even if it drops below the amount outstanding. There is little point in declaring bankruptcy as the bank can chase you for the amount outstanding regardless. And if you are an owner occupier who is otherwise able to make their repayments, they dont have any incentive to foreclose.

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  28. Jack5 (4,568 comments) says:

    I’m anti Melon Green, but let’s be fair about house prices.

    Property prices rise long term, but they fluctuate in the short and medium term. If you take a 95 per cent mortgage loan you are accepting the possibility if the price of the property falls more than 5 per cent you are in negative equity.

    If house buyers suffer negative equity there are only two parties to blame: first themselves, for taking the risk borrowing such a loan (personal choice, what Right wing politics is supposed tobe about), and second, the lenders who are pumping out loans covering as much as 104 per cent of the house cost (the extra is for lawyer fees etc).

    The Reserve Bank is right to look to non-interest-rate tools to try to control inflation, and the housing loan rule is part of this. IMHO, there needs to be one additional non-Reserve Bank requirement. The bank lending officer who signs off the loan should be required to officiate in person at any eviction of a borrower unable to meet mortgage payments.

    National seems to be becoming so Auckland-centric it actually applauds NZ’s high exchange rate, which is hammering our export industries. They tend to believe either in gold deposits at the bottom of rainbows, or riches lying on the ocean floor waiting to be dredged up.

    Despite good terms of trade (that is prices versus import costs), NZ, at the present peak of its international trading environment, continues to run balance of payment deficits.

    Bankers clip the ticket on foreign capital pouring into the country to bridge the gap and partly to be loaned out in home mortgages. Even most of these debt barons concede that there will be a reckoning.

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  29. Rex Widerstrom (5,253 comments) says:

    As wreck1080 says:

    Greedy property investors are fuelling another housing bubble that could result in terrible damage to the new zealand economy.

    Not only would adjusting the situation so you couldn’t make such huge gains in “investment” property help with housing affordability (though I agree with others who’ve said kicking officious, over-regulating Councils in the slats is an absolute necessity) but if it were accompanied by other adjustments to make investing in New Zealand business an especially attractive proposition we might actually find we’re building a productive economy and not one where a small number can get wealthy by tying their money up in something that is, to everyone but themselves, worthless.

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  30. NK (1,060 comments) says:

    No one touches on this at all, ever, in the house inflation argument. And that is the unemployment and misery that would occur if Metiria gets her way. The horse has bolted now. Many, many businesses fund their business and growth plans borrowing against their home as security. That is how a lot of them pay the wages of the very people Turei pretends to care about. You would need the world’s largest calculator to calculate how many people would be unemployed if Turei got her way because a lot of these small businesses would fold. Unemploymenet would be rife. Banks would be owed billions and would stop lending, leading to more economic destruction.

    Turei is a class A clown. I just hope New Zealand actually realises how toxic she and her crowd really is.

    We certainly don’t want massive house price deflation. We need to address affordability, but doing it by house price deflation…..well look to America ~ 2008-current day to see what happens if that occurs.

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  31. wiseowl (751 comments) says:

    So the message to everyone is we don’t need an export led economy.Just lets all buy home after home and prices will rise forever.
    It’s not worth investing in anything else because housing is a sure bet.Guaranteed win.

    There has to be more balance to this in our economy, surely?

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  32. Sir Cullen's Sidekick (783 comments) says:

    They are the ones high on polls bros. Check the latest Roy-Morgan poll.

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  33. Viking2 (11,125 comments) says:

    We have a situation where house price inflation is outstripping other price and wage inflation in the Auckland market. (I don’t know what’s happening the rest of NZ, frankly I’m not that concerned about much south of Bombay or north of Warkworth.)

    =====================

    Much like the other 3 million wish auckland would dissappear into the sea or join Australia and leave the rest of us to growth our wealth without being robbed by the loudmouths from Auckland..

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  34. gump (1,474 comments) says:

    Negative equity isn’t a disaster for the nation, though it may well be uncomfortable for the property owner(s).

    If a person overpays for a property then the moral hazard of a price decrease lies with the purchaser.

    I would like to see house prices fall in New Zealand. Our obsession with residential property is diverting money away from investment into productive enterprises.

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  35. Rex Widerstrom (5,253 comments) says:

    NK says:

    Many, many businesses fund their business and growth plans borrowing against their home as security. That is how a lot of them pay the wages of the very people Turei pretends to care about.

    So are you suggesting (and I ask this not with any hint of sarcasm, because the formulae on which bankers base their lending criteria are not my area of expertise) that if my house was worth $500,000 and I borrowed, say $400,000 to fund my business start-up, and then my home was revalued down by more than 20% so the amount of the loan exceeded the equity in the property, the bank would call up the loan, making my staff unemployed? Even if the business itself was sustaining enough profit to maintain the loan repayments?

    Start-ups may perhaps be at some risk in such a situation but I know several business brokers and they tell me that if a person buys an established business the bank’s primary concern is sustainable net profit and the ROI (which are multiplied to arrive at a sale price) – provided they don’t believe the business to be over-valued and that its profit will remain steady or grow, they will lend. While they’re probably going to want a house as security they’re going to be far more alarmed at a downward trend in profit than in the value of the security.

    The need for business finance is why I alluded above to making business investment more attractive at the expense of second and subsequent property investment.

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  36. OneTrack (2,564 comments) says:

    Wiseowl -”There has to be more balance to this in our economy, surely”

    Well, the government could make available some relatively safe companies that the nz public could invest in, to try and wean them off their addiction to property. I am sure the left would agree with that goal, and wouldn’t do anything to sabotage NZ Inc, would they?

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  37. hj (6,330 comments) says:

    The Rent Trap- Government Stuff Up
    For the housing market’s winners, the gains have been spectacular.
    Infometrics director Gareth Morgan calculates that between 1989 and 2005, the residential property market has provided investors – and owners – with a tax-free 319% gain.
    http://www.catalyst2.co.nz/blog/news/the-rent-trap/

    Tony Alexander’s view on house prices
    In BNZ Chief Economist Tony Alexander’s weekly overview, Auckland house prices are set to move upwards nicely. Here are his 19 reasons why:
     
    1. Auckland did not enter the 2008 recession then late-2008 into 2009 global financial crisis with an over-supply of property. Shortages of personnel constrained house construction from 2004 through 2008.
    2. The shortage has become worse in the past four years and last year annual consent numbers were at a four decade low.
    3. The government is explicitly aiming to grow Auckland’s population as a means of achieving “agglomeration” benefits for economic growth which accrue from high interaction amongst economic players.

    http://www.davidwhitburn.com/blogs/auckland-house-prices-to-rise-over-10-in-2013/
    http://www.stuff.co.nz/business/money/4622459/Government-policies-blamed-for-house-prices

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  38. hj (6,330 comments) says:

    “Creating wealth, security and financial freedom is often an investor’s ultimate goal. 90% of millionaires get there by investing in real-estate”
    New Zealand has strong population growth due to its progressive immigration policy and birth rates. Many parts of the country are experiencing housing shortages translating into strong tenant demand and price growth. This trend is expected to continue with recent population projections by the New Zealand Department of Statistics forecasting up to 64% growth over the next 17 years. Auckland city is predicted to almost double its population in the next 40 years. For property investors, this represents outstanding potential growth in demand and return on investment. New Zealand’s property prices are also relatively undervalued compared to its closest neighbour Australia.
    http://www.nzps.com/

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  39. itstricky (1,535 comments) says:

    Yeah it was equal to the massive blunder in the same show from your man Sam would said a $150k deposit was easily affordable for first home buyers. But that one won’t get coverage here, of course…

    Won’t life with National in charge be fun and affordable for everyone…

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  40. Kea (11,878 comments) says:

    House prices do not need to fall, they need to plummet massively and the only barrier to seeing that is pure greed and self interest.

    The global housing bubble was fueled entirely by debt (non existent money). It has stuffed the US economy and many others. All to pour a nations wealth into non productive debt. When the bubble burst there was no money (there never was) and the tax paying debt laden Americans then had to bail out the banks… whom they owed all that money to ! There is no upside to paying the absurd levels we do for housing.

    Wanna know what your house is really worth ? Then remove credit and see what it sells for.

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  41. simonway (371 comments) says:

    What a hypocrite you are, DPF. Metiria Turei was absolutely correct in saying that the price of houses ought to fall, and then you go and do a backflip, saying

    There is a big difference between saying prices should stop rising so rapidly, and saying we want to see house prices fall…. Won’t a Labour/Green government be a lot of fun!

    implying that you think this would be a bad thing. However, in the past, you’ve said things like:

    How I see it is National is focused on reducing the costs of new houses across the board. Labour just wants to subsidise 10,000 state houses a year that it will sell at a discounted rate through a lottery. If you don’t win their lottery, then bad luck.

    and

    These [proposed RMA reforms] look really good to me, and should make a real difference to reducing both the cost and time of building or altering a house.

    and

    [Labour] also miss the point that it is not only about building new houses that are cheaper, but how to reduce houses prices overall. 95% of house buyers will be buying an existing house and section.

    and

    The only way one can reduce the price of housing in Auckland is to reduce demand or increase supply. Now assuming you can’t start deporting Aucklanders to Gore, that means increasing supply…. Congrats to Len Brown and Nick Smith for working together to do something meaningful in this area.

    The things you have written in the past clearly say that you think house prices should fall (unless you want to argue some esoteric distinction between “falling” and “being reduced”, perhaps), but the moment someone from the other side of the aisle says the same thing, you don’t just point out that it could be politically unwise to say it (which it may well be), but you mock the idea itself.

    Ms. Turei was correct. House prices should fall. If some people lose out on the investments they have made in their homes, then they will learn that is simply what happens sometimes: sometimes you pay too much for a good. We have a strong welfare state to help out anyone who falls into poverty, in any case.

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  42. Kea (11,878 comments) says:

    simonway, DPF seems to think more in debt we are the better off we are. He also thinks a massive and artificial increase in our biggest single expense is a good thing. I wonder if he supports the price of groceries, clothing, cars etc doubling in price due to people spending up large on borrowed money ? Surely you would not want grocery prices to fall after doing the weekly shop or car prices after buying a car ! Like I said, people are blinded by greed and self interest on this topic and get very emotional about it all.

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  43. Steve (North Shore) (4,490 comments) says:

    Mrs McGillicuddy is serious – raving lunatic nutbar, but she is serious

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  44. swan (659 comments) says:

    Simonway,

    Exactly right and well done for going to the effort.

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  45. big bruv (13,210 comments) says:

    “Metiria Turei was absolutely correct ”

    The ever expanding female co-leader of the watermelon party has never been right in her life.

    She (like all of the Greens) are full of shit.

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  46. Meatloaf (142 comments) says:

    In banking class, I did a presentation on mortgages. My research showed that a bank is happy to lend up to 80% of the value of the house. You would have to come up with the rest, the other 20%. If not you would have to pay for mortgage indemnity insurance. This meant that an insurance provider would charge you insurance, in case you defaulted. Because the bank is confident they can get 80% of the value of the property back. So you must make that 20% deposit or pay an insurance provider to take that risk of you defaulting. This was true when indemnity insurance worked.

    Any investment has a risk, and any bank requires that you use some of your own money. For commercial property the bank requires at least half of the money is yours. They won’t lend you money for machinery. But they will lend you up to a full 80% on residential property, if your earnings are high enough. So, no people won’t have negative equity, because banks require people to have at least that 20%

    Also she explained that you wouldn’t let the equity drop all in one go. You’d let it drop a little to start off with. And then keep it steady. So as long as it doesn’t go down by more than 20%, people’s equity won’t be negative. I think it’s time for a real estate correction, people’s wages haven’t kept up with house prices, so it has to drop at some point. This is why banks insist that you take a 20% risk.

    Now shares can lose value over night. If the expected profits in clothing are cut by 50% overnight, the shares in clothing will be cut by 50%. Shares are a share of the profit. Anyhow I’m not for Turei, but on this particular point I agree with her more than the opposition.

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  47. Kelly (24 comments) says:

    This housing crisis is a crock of s**t. 4 years ago we were looking at selling our house in Wellington however the price was still too low for what we needed to sell for. 4 years on and the price is still the same. So I can only assume this pertains to only Auckland and Christchurch. Wellington seems to be the same and there a plenty of jobs here

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  48. burt (7,791 comments) says:

    If any rich pricks think they can keep their houses while beneficiaries can’t afford 5 each…. Must redistribute … must social engineer …. must be a lefty and follow a deeply flawed ideology …..

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  49. burt (7,791 comments) says:

    It’s simple people… Print lots and lots of money so that house prices go down – Dooooh !

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  50. Meatloaf (142 comments) says:

    Printing lots of money won’t make house prices go down. Because prices go up, people put their money in other things. So as prices go up, these assets go up in value. The more inflation is the more people will put their money into real value assets.

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  51. BlairM (2,286 comments) says:

    I would be delighted if housing prices came down and more people could afford to buy their own homes.

    I really don’t see why this is offensive to so many people, other than those who already own homes that have doubled in value on the back of supply restrictions. Well tough shit to you. You need to realise you are part of a cartel and that the privileges you enjoy should not be allowed to last forever. If land is freed up and planning restrictions are abolished, your house will lose value, and many more people will be able to buy a home. This is a good thing, and I hope it happens. Once the market frees up and we have a capitalist housing market in place, your home will be worth less. It is only socialists and wet Tories who want to see two classes of housing and perpetuate two classes of people.

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  52. Kea (11,878 comments) says:

    Printing lots of money won’t make house prices go down.

    Printing money is what put house prices up. It was not a housing shortage, it was a money surplus.

    But there really was no money, a fact driven home when the financial collapse hit. In the US there are people losing their homes because they can not afford to pay back their loans, to the banks they had to bail out. Where did the money go ? It was never there. So they have been printing trillions and trillions more dollars of imaginery money to pay back the imaginery money borrowed. All because people paid too much for their homes. And then we see people here claiming that is a good thing ! Just shows how much self interest distorts perception.

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  53. ross69 (3,652 comments) says:

    It’s inevitable that house prices in Auckland will fall.

    Faux outrage won’t prevent that.

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  54. ross69 (3,652 comments) says:

    What a hypocrite you are, DPF.

    Of course. If wages were going through the roof, DPF would be outraged…but it’s apparently ok if houses are unaffordable.

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  55. itstricky (1,535 comments) says:

    If land is freed up and planning restrictions are abolished, your house will lose value, and many more people will be able to buy a home

    Yes, and what she said is basic economics, right?

    What a hypocrite you are, DPF.

    Yes, I don’t understand why this is not obvious to him as basic economics as well, right? What is he complaining about? That someone said the envitable?

    And those that complain about house prices dropping – they’re putting their “I want want want me me me” in front of the (supposedly) younger generation(s) who would like to have opportunity to own their own home?

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  56. Meatloaf (142 comments) says:

    Very good observation. All money is backed by absolutely nothing. A dollar used to mean an ounce of silver. A dollar note was transferable for an ounce of silver, this is no longer the case. When we say printing more money, what we mean is the banks have more credit to lend, which turns into money once lent. Or the government will spend more that it receives, which again means more money in people’s pockets. So that’s what we mean by printing more money.

    After the housing collapse, they printed off more money, to help carry more people through these tough times.

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