Pity the landlords

April 29th, 2016 at 2:00 pm by David Farrar

Stuff reports:

Bad tenants are being unfairly let off the hook for property damage after a court decision, landlords say. 

The Court of Appeal ruled last week that tenants who caused a fire by leaving oil unattended on a stove in 2009 could not be held financially liable.

The Residential Tenancies Act states tenants can be made to pay for damage caused by neglect or carelessness. The Property Law Act says they are not liable for damage from “perils” beyond their control such as fire, storm, earthquake or volcanic eruption.

Leaving oil unattended on a stove seems pretty careless to me.

Landlords and property managers say that while last week’s appeal court decision may have been fair, the ruling opens the floodgates for tenants being excused for severe negligence and deliberate damage.

One Christchurch property manager, who did not want his business identified for fear of jeopardising live Tenancy Tribunal claims, said they had lost two applications in the last few days seeking orders for tenants to pay landlords’ insurance excesses after damage.

The harm included carpets covered in drink stains and cigarette burns, damaged walls, and ignored plumbing leaks which led to water damage, he said.  

“The Tenancy Tribunal said they had made their ruling because of the Appeal Court ruling. They definitely used that as an excuse to exonerate tenants for any damage,” the property manager said.

So what is the possible impact:

The property manager said the rulings would lead to higher insurance premiums pushing up rents, or landlords excluding risky tenants such as families with children. Insurance companies could also insist landlords take only insured tenants, he said.

“The good tenants will have to pay the price for what the bad ones do”.

Requiring tenants to be insured could well be the outcome.

Labour want to ban pet free tenancies!

February 29th, 2016 at 4:00 pm by David Farrar

From the Hutt News:

Those living in rental properties needed more rights and greater security, Twyford said.

“Renters don’t have the right to have a pet, they don’t have the right to make basic alterations and they can be kicked out on the whim of the landlord within 90 days, no justification needed.

“That’s more than half our population living in those conditions. Is that any way to live? To raise a family?” He said tenants deserved greater rights and Labour would “have to change that”.

So Labour’s housing spokesperson is saying landlords should not be allowed to specify no pets for a property they own. Also he is saying that tenants should have the right to make alterations to the house they are renting, without permission from the actual home owner.

The greatest irony is the article is about providing more homes. This would in fact reduce greatly the number of homes available for rent. There are very valid reasons why some properties are not suitable for pets.

And allowing tenants to make alterations without any approval from the actual home owner – well why would you risk renting a property out?

Twyford’s idea worth considering

November 9th, 2015 at 9:00 am by David Farrar

Stuff reports:

New Zealand wasn’t very clever when it came to how infrastructure at new housing developments was funded, he said.

At present, developers would have to pay all the costs for services inside a new subdivision, with the costs passed on to home buyers.

“It gets added on to the price of the house and paid off over time as you pay the mortgage off, with expensive commercial bank interest rates.”

The impact of this was to pump up the cost of new houses by as much as $100,000 and have that cost capitalised into the market value of all homes nearby.

Twyford said a smarter way of paying for that infrastructure would be by local government borrowing for it, at cheaper rates than mortgage rates.

Home owners would then pay it back through a targeted rate over 30 years, spreading the cost over the lifetime of the infrastructure.

I think this is an issue worth considering. Should infrastructure for new homes be funded by way of up front developer levies, or by targeted rates on the properties?

I think there is a case for more of it to be funded by targeted rates.

Trans-Tasman on Housing

July 3rd, 2015 at 11:00 am by David Farrar

Trans-Tasman reports:

Opposition parties thought they had found the perfect stick to beat up the Govt on social housing needs, after TV3’s The Nation disclosed Aust charity Horizon Housing could be in the market to buy up to 500 state houses. It had those elements (profits going overseas, privatising state assets, “ foreign” buyers for taxpayer-funded housing stock on the cheap) which politicians regard as hot-button issues for voters. But Govt Ministers batted away the attacks, pointing out the Aust charity would be subject to the community housing regulatory authority, and then coming up with a quote from the Deputy PM of Aust (when the Labor Govt was in office) declaring Horizon Housing to be “an amazing organisation” doing a great job in Queensland.

It is only NZ Labour that has this strange hatred of the private sector. Other Labour parties focus on results and effectiveness. but NZ Labour instinctively think anything private sector has little or no role in providing Government funded services.

To rub it in the PM then cited comments from Labour’s housing spokesman Phil Twyford his party wanted to see a larger, more capable, empowered community housing sector. 

They want a larger community housing sector yet oppose all the policies designed to achieve that.


How many houses can you fit in 430 hectares?

June 1st, 2015 at 3:00 pm by David Farrar

I blogged on 21 May:

MBIE sent this brochure out yesterday inviting stakeholders to a programme launch to develop on Crown land in Auckland. This may be giving away a Budget announcement. It even details how they have identified 430 hectares of Crown land in residential zoned areas in Auckland.

If you assume 13 houses per hectare (average in Australia) that’s enough land for around 5,600 new houses.

The 13 houses per hectare was based on the average size in Australia. But I did not take into account new houses are likely to apartments or townhouses. An architect e-mails in:

David- I’ve been thinking about your post of 21st May ‘Govt to make up to 430 hectares of crown land available for Auckland housing’ and I think your vastly underestimation how many houses/ units could be built if you did them as townhouses (or apartments)- my thought would be townhouses would be the best bang for your buck. I am an Architect in Christchurch who does a lot of brownfield townhouse and apartment development (over 165 units completed over the last 12 year and many coming), attached is analysis using real examples based roughly on a 1/4 acre section (1012 sqm/ 50.24 x 20.12m wide) then added another 201sqm to allow for a 10m wide road (road might be 20m but it would service a site each side. I have assumed:

  1. no parks/ commercial function (e.g.: dairies)/ community function was added they would take maybe 5-7% space (i.e.: reduce units by about 5%) as its brownfield sites such features might be nearby already
  2. if stormwater retention, sewer plant needed more space again needed
  3. doesn’t allow for more density due to bigger site=less boundary restrictions (could add maybe 5-10%)
  4. All townhouses are 2 storey with approximately 30-35 sqm of outdoor living and service space (washing line/ bin space). All would comply with Auckland/ Christchurch city council minimum unit size rules

If you did a development of 

  • 2 bedroom townhouses with single garage you could get a density of round 50-65 units per hectare, over 430 hectares that’s about 21-28,000 units
  • 3 bedroom townhouses with single garage you could get a density of round 40-50 units per hectare, over 430 hectares that’s about 17-21,000 units
  • 3 bedroom townhouses with double garage you could get a density of round 35-40 units per hectare, over 430 hectares that’s about 15-17,000 units

If you went apartment style (these figures are far more approximate)

  • 1- 2 bedroom units 2 storey with 1 car park you could get a density of round 70-85 units per hectare, over 430 hectares that’s about 30-35,000 units!
  • Small 2 bedroom unit, 4 storey small units, small deck, 1 carpark uncovered you could get a density of round 118 units per hectare, over 430 hectares that’s about 50,000 units! This figure is so crazy high I must have made an error, but I cant see it (example has 32 units on 2254 sqm=14.3 units / quarter acre)

So that 430 hectares could end up providing a lot of accommodation.

Govt to make up to 430 hectares of crown land available for Auckland housing

May 21st, 2015 at 10:00 am by David Farrar

MBIE sent this brochure out yesterday inviting stakeholders to a programme launch to develop housing on Crown land in Auckland. This may be giving away a Budget announcement. It even details how they have identified 430 hectares of Crown land in residential zoned areas in Auckland.

If you assume 13 houses per hectare (average in Australia) that’s enough land for around 5,600 new houses.

Auckland Crown Land Launch Invite

Social Housing announcements

January 28th, 2015 at 3:00 pm by David Farrar

The release is here and speech here. Details include:

  • The Government will increase funding for social house subsidies from about 62,000 places currently to around 65,000 places by 2017/18 at an estimated cost of another $40 million a year.
  • A $500,000 cash injection will be available for emergency housing, alongside a wider review of funding.
  • An additional 3,000 tenancy reviews in the next couple of years will focus on market or near-market renters.
  • Engagement and consultation will begin soon, including with community housing providers and iwi with a view to selling between 1,000 and 2,000 Housing New Zealand properties over the coming year for use as social housing run by approved community housing providers.
  • The Government is committed to maintaining at least 60,000 properties in Housing New Zealand’s portfolio by 2017.

So the Government is actual going to spend an extra $40 million a year helping low income families get into social housing with an income related rental. No doubt Labour and the Greens will decry this as neoliberalism and oppressing the poor!

Income up, housing costs up

November 28th, 2014 at 12:00 pm by David Farrar

Stats NZ reports:

The latest Household Economic Survey (Income) shows average annual household income rose 9.1 percent in the two years to June 2014, from $81,227 to $88,579.

That’s a big increase. Inflation over those two years was 2.3% so average household incomes have risen 6.6% in real terms.

Median household incomes also up strongly – 7.8% over two years.

In the same period, average household weekly spending on housing costs rose 11.1 percent, from $256 to $284.

So incomes went up $7,352 on average and housing costs up $1,460.

“The increase in housing costs was largely due to higher mortgage and rent payments, as well as an increase in property rates,” labour market and household manager Diane Ramsay said.

“A really interesting shift we’ve seen is that a bigger proportion of mortgage spending is going on repaying the principal than on covering the interest payments.”

Paying off more of the principal is a good thing.

Some other interesting stats:

  • 27% of households in the bottom income quintile say their income is inadequate to meet their needs, as do 5% of households in the top quintile
  • Age has a significant factor in income. Under 20s have a median income of below $1,000, 20 to 24s a median income of $28,000 approx, 25s to 29s are $37,000 approx, and 30s to 60s are $47,000

National’s housing announcements

August 24th, 2014 at 2:54 pm by David Farrar

Their housing policy and social housing policies are linked.

John Key gives an example in his speech of how it might work:

Let’s imagine a couple are both earning $40,000 a year – they might, for example, be living here in South Auckland.

They’ve been in KiwiSaver for five years, and are looking to buy a first home that’s under the price limit.

Under our changes, they could together withdraw up to $29,000 from their KiwiSaver accounts, and get either a $10,000 or $20,000 HomeStart Grant, depending on whether they’re buying an existing or a new home.

In total, that means a deposit after five years of almost $40,000 – or almost $50,000 if they are buying new.

That would be enough on its own to get a Welcome Home Loan for a house costing up to $400,000 or up to $500,000 if new – depending, of course, on their ability to service the mortgage.

Our changes will give a lot more people the confidence that if they join KiwiSaver, and keep saving, they can put together a deposit on their first house.

It’s important to note that most of that deposit will be their own savings.

We want to help people into their first home, but they have to help themselves first.

I much prefer that to the Government borrowing $3 billion more per year to try and become NZ’s biggest property company!

All these changes I’m announcing today will take effect from 1 April next year, if we are re-elected.

Not too long after that, the first people to benefit from these changes will be unlocking the front door of their own home for the first time.

The new policy will cost $218 million over the next five years.

That’s a fairly modest cost compared of around $35 million per year compared to borrowing $3 billion a year.

The details of the changes are:

The package comprises three changes:
Replacing the KiwiSaver First Home Deposit Subsidy with a KiwiSaver HomeStart Grant, doubling the support for buying a new home and increasing the house price limits;
Enabling larger KiwiSaver First Home Withdrawals by including the member’s tax credit (meaning first home buyers will now be able to withdraw all of their KiwiSaver savings except the $1000 kick-start);
Expanding eligibility for Welcome Home Loans by aligning the house price caps with the new KiwiSaver HomeStart Grant.

“We are roughly doubling the number of people receiving a Government grant to buy a first home from 10,000 per year to 20,000 per year, and doubling the Government grant they are eligible for if buying a newly-built home,” Dr Smith says.

“The focus of this package is to increase the supply of new housing and to encourage housing companies to build homes in a price range affordable for first home buyers.

 “The house price limits for KiwiSaver HomeStart and Welcome Home Loans will be $550,000 in Auckland, $450,000 in Wellington, Christchurch and other similarly-priced housing markets, and $350,000 for the rest of the country.”

Currently, first home buyers are eligible for a grant of $3000 after three years in KiwiSaver, $4000 after four years and $5000 after five years. Under KiwiSaver HomeStart, this grant will double to $6000 after three years, $8000 after four years and $10,000 after five years for the purchase of a newly-built home.

The changes to the KiwiSaver First Home Withdrawal in enabling access to the member’s tax credit will increase the maximum withdrawal amount by $512 per year for each year a member has contributed.

The KiwiSaver First Home Withdrawal is limited to members buying a first home, who have been contributing for a minimum of three years. The KiwiSaver HomeStart Grant and Welcome Home Loans have additional criteria of people having an income below $80,000 for an individual and $120,000 for a couple, and the house being purchased must be below the regional house price limits.

I wasn’t at the campaign launch, but I underatand there were 2,000 to 2,500 people there making it the biggest political gathering in a few decades I’d say – and it was a National Party meeting in South Auckland!

UPDATE: I hear the final count was 2,700!

Misunderstanding the investment approach

May 12th, 2014 at 3:00 pm by David Farrar

Stuff reports:

New Zealand’s neediest could miss out on taxpayer-funded homes under a proposal being put forward by Work and Income, an expert says.

The Ministry of Social Development is considering applying an “investment” approach to social housing as Labour claims state housing stocks are expected to drop by more than 2000 in the coming decade.

A similar “investment” approach, taken from the insurance industry, has already been adopted for beneficiaries to help target groups that are expected to cost the state big money in future and push them into work quickly.

MSD, through Work and Income, took over assessing rent subsidies from Housing NZ this year, as part of a push to get more private players involved in social housing.

MSD investment approach general manager Damian Edwards said it was early days in the switch and adopting the investment approach for housing was far from a done deal.

But Victoria University public policy professor Jonathan Boston said while it was “perfectly reasonable” for the Government to seek independent advice, using an insurance model for housing would produce “perverse incentives”.

If the Government was trying to minimise its long-term cost this could push them toward prioritising families and people in high incomes over lower incomes, undermining the whole purpose of state housing, he said.

“Those on higher incomes would be eligible for a smaller state subsidy, thus reducing public funding costs. Yet it is those on low incomes who have the greatest need for social housing.”

I think this is totally misunderstanding the investment approach. This approach doesn’t just look at direct spending, but looks at the long-term costs and benefits. Families most in need will get the most benefits from housing support – it can lead to better health and education outcomes for them. To suggest the investment approach would see state houses go to wealthy families is ridiculous.

In fact this Government has been saying that when a family is no longer poor, then they should give up their state house for a family that is more needy – a policy which incidentally is opposed by the opposition who think that once someone gets into a state house they should never ever be required to leave it – no matter their income.

18,000 new houses for Auckland

May 8th, 2014 at 11:00 am by David Farrar

The Herald reports:

Auckland mayor Len Brown and Housing Minister Nick Smith have this afternoon announced a third tranche of “Special Housing Areas” for 18,000 new residences under the Auckland Housing Accord.

The announcement was made at a site at 11 Akepiro Street, Mt Eden, set to be developed into 18 units by Ockham Residential.

Big parts of Great North Rd, Otahu Coast, Flat Bush, New Lynn, Northcote, Albany East and Takanini are ear-marked as strategic areas, for big-scale redevelopment.

The Auckland Housing Accord, agreed to last year by Smith and Brown, provides for the creation of SHAs by Auckland Council with the approval of the Government. Qualifying developments in these areas are able to be streamlined and fast-tracked but the areas are raising alarm in areas from Takapuna to Newmarket, as people suddenly realise their streets will change dramatically.

Auckland needs more land and more houses (and more apartment buildings), it’s that simple.

Migrants say Labour’s housing policy potentially racist

August 9th, 2013 at 9:00 am by David Farrar

Stuff reports:

The president of a nation-wide organisation that represents Chinese migrant groups says David Shearer’s policy is “picking on” Asian people.

Labour leader David Shearer says the party will restrict the ability of non-residents to purchase New Zealand houses as part of its package to help Kiwi first-home buyers.

Shearer says IRD records show more than 11,000 overseas investors own New Zealand properties they don’t live in.

That data would include people like Helen Clark. Actual sales data has shown that non-residents comprise only 3.2% of house purchasers (and make up 4.5% of sellers).

However, the president of the NZ Chinese Association Virginia Chong is concerned the policy is targeting Asian buyers.

Chong says there is a flawed perception that Chinese nationals are out-bidding Kiwis in the Auckland housing market.

The second generation New Zealander says people just see Asian faces in the auction rooms and assume that they are foreigners.

“It’s all very well saying it’s Asians who have pushed up the price but I don’t think it’s Asians, we are just a convenient fob-off,” the Epsom resident says.

Again the actual sales data shows only 0.4% of house purchasers are non-resident Chinese.

She says while the policy may be a Band-Aid on the problem, it will not have any long-term effect.

“From my perspective it’s potentially racist and it’s contrary to existing free trade agreements,” she says.

It is designed to make people think that Chinese New Zealanders are foreigners and stealing houses off “real” New Zealanders. And it does breach several free trade agreements we have signed, including those negotiated by Labour.

Is Labour’s policy in breach of the FTA they signed?

July 30th, 2013 at 5:27 am by David Farrar

Stephen Franks blogs:

The Labour Party’s new policy to prevent non-residents from buying existing houses seemed inconsistent with the equal treatment Article of the NZ China FTA. That FTA was a proudly claimed achievement of the last Labour PM – Helen Clark.

The FTA’s definition of “investor” refers to a person “who seeks to make, is making, or has made an investment….”. So it clearly looks at prospective investments.

But a technical reading of the equal treatment Article suggests that it may demand equal treatment once an investment has been made, but does not protect intending investors.

Under Article 138 of the NZ China FTA (National Treatment)  all investments and activities associated with such investments made by investors of both parties must be treated, “with respect to management, conduct, operation, maintenance, use, enjoyment or disposal”  no less favourably than investments of its own investors. The list does not include “acquisition” or similar words.

So under that provision a Chinese house buyer must be treated the same as a New Zealander after acquiring residential property, but the protection does not extend to prospective buyers. Whew for Labour!

But wait – another Article (the most favoured nation clause) commits New Zealand not to pass law that discriminates against Chinese investors in comparison with other overseas investors (such as Australians).

Article 139 requires that investors of [China] be treated no less favourably than investors of any third country [Australia] “with respect to admission, expansion, management, conduct, operation, maintenance, use, enjoyment and disposal” of investments.

So Chinese would-be  investors do not get direct rights to insist on investor equality but they can’t be treated worse than Australians.

Labour has said Australians would still be allowed to buy residential property under their policy. This would breach Article 139.

The policy may also breach the Malaysia FTA and the ASEAN FTA it seems.

Also Rob Hosking at NBR reports:

It is a mark of how bogus the housing debate has become that Labour’s figures about foreign owners of New Zealand houses almost definitely include former leader Helen Clark and her four  houses.

The current Labour leader and Miss Clark’s successor as MP for Mt Albert, David Shearer, claimed at the weekend there are “more than 11,000 overseas investors [who] own properties here that they don’t live in”.

What Mr Shearer did not say is the figure comes from Inland Revenue’s numbers about “non-resident” taxpayers who pay taxes on houses they  own in New Zealand.

“Non-resident” taxpayers are largely made up of  expatriate New Zealanders and in this context are those who have gone overseas and who have rented out their properties here.

There are no figures on this but it is a highly common practice – although most who go overseas will have only one, or maybe two, properties to rent out and not, as in the case of Miss Clark, who departed to the United Nations in 2009, who owns four.

Half the Labour caucus have investment properties. If they all sold them to aspiring first home buyers, that would probably do more to help the market, than this policy!

Last year’s Productivity Commission report looked at the issue, but only in the context of immigrants buying houses.

In that context, it found the main inflow was – again– not from Asians, as Mr Shearer dog whistled at the weekend, but expatriate New Zealanders.

There is, the commission said, “no evidence of an inflow of foreign-born immigrants to an  area impacting on house prices”.

There is, though, “a strong positive relationship between inflows of returning New Zealanders into an area and local house prices (with a 1% increase in population resulting from an inflow of returning Kiwis associated with a 6%-9% increase in house prices)”.

The commission concluded the main cause for higher house prices in recent years is  shortage of supply, driven by a mix of investment nervousness since the end of 2007, plus poor regulation leading to slow consenting processes for new developments and some evidence of high building  costs because of a lack of competition.

Labour’s bid on housing, in short, is not aimed at what is causing problems in the housing market and will do nothing to solve them. It is aimed rather at the party’s political problems.

Mr Shearer’s weekend launch was a clear, unsubtle and some would say desperate bid to pick up votes from the segment of the population which does not like foreigners, especially foreigners of a different coloured skin, very much.

Labour is, in short, dog whistling for the New Zealand First and Green Party xenophobic vote.

It is classic dog whistle politics. Blame the immigrants and foreigners.

How many foreign buyers are there?

July 29th, 2013 at 1:00 pm by David Farrar

Tony Alexander in May 2013 looked at this issue. He found the following from sales data:

From these numbers we can derive the proportion of all house sales in NZ which go to buyers from offshore
who have no intention of shifting here – including half of the “Don’t Know” responses.

  • Australia 0.4% 
  • China 0.6% 
  • Europe excl. UK 0.4% 
  • India 0.4% 
  • Other Asia 0.5% 
  • South Africa 0.3% 
  • United Kingdom 0.3% 
  • United States 0.4% 
  • Other 0.4% 
  • All 3.6%

So if you exclude Australia, Labour’s policy may reduce the number of buyers by 3.2%.

However also of note is 4.5% of sellers were based overseas.

Now remember this is based on actual sales data. Alexander summarises:

This is interesting because taking the many sampling uncertainties into account the proportion comes close to the proportion of sales we estimate are to people offshore who do not intend shifting to New Zealand – some 3.6%. The implication? There could be close to zero net transfer of NZ home ownership occurring to offshore investors.

I’d tempted to call the policy a snake oil solution.  The data suggests it may have no impact at all on prices.


Labour’s proposed ban on foreigners buying houses

July 29th, 2013 at 5:19 am by David Farrar

The Herald reports:

Housing Minister Nick Smith said it was a sign of how desperate Labour and Mr Shearer had become.

“The oldest trick in the political book, whether it be over crime or unemployment or affordable housing, is always to blame the foreigners.

“There’s no evidence that overseas buyers are having any discernible affect over house prices.”

It was an “unprincipled” policy because it exempted Australia, Dr Smith said.

“They are the largest group of non-resident home buyers.”

Property commentator Olly Newland said the policy would not work.

Australians would be exempted from the scheme, because of a reciprocal arrangement where New Zealanders were able to buy properties there.

Mr Newland said that made the policy “a bit of a nonsense” because Australians bought the highest number of properties here of all foreign buyers.

“Secondly, of course, any overseas buyer would very quickly find somebody else to buy a house for them here in their name and hold it in trust for them.

“There are a thousand ways to get around it if they want to come here,” he said.

“It sounds good but in practice it just won’t work.”

Sounds attractive to some, but likely to make almost no difference. Increasing the supply of land for housing is what will make the largest difference to house prices.

What Hone was fighting against

July 27th, 2013 at 9:48 am by David Farrar

Paula Bennett FB


This is what Hone broke the law to fight against. That terrible Government providing houses to low income families in Northland.

Hat Tip: Keeping Stock

6,000 new homes in Auckland

June 21st, 2013 at 1:00 pm by David Farrar

Simon Collins at NZ Herald reports:

Intensive housing project of 6000 homes and ideas for attracting new businesses and training organisations will help revitalise eastern suburbs around Tamaki estuary.

Auckland’s low-income suburbs of Glen Innes, Pt England and Panmure will roughly double in population under a draft plan for more intensive housing to be unveiled today.

The urban “regeneration” project, which could add up to 6000 new homes to an existing 5050, is expected to be one of the first “special housing areas” with fast-tracked resource consent processes under a housing accord signed last month by Housing Minister Nick Smith and Auckland Mayor Len Brown.

The target of 6000, included in the accord, makes it the biggest housing development scheduled in Auckland and twice as big as the 3000-unit Hobsonville development.

It covers the area between West Tamaki Rd in the north and the Panmure Basin in the south, including 2880 Housing NZ homes, about 1160 owner-occupied houses and just over 1000 private rental properties.

Unlike other developments, the draft Tamaki strategy also includes 11 other social, economic and environmental elements, as well as housing, designed to make the area more liveable despite doubling the population density.

Sounds very worthwhile.

The area is among Auckland’s most deprived, with a 2006 median income of only $20,000 and an employment rate of only 52 per cent, compared with 65 per cent across Auckland. Sole parents make up almost half the area’s families.

But the strategy sees opportunities for more jobs and training by attracting new businesses, redeveloping under-used land along the existing railway and encouraging training agencies such as Manukau Institute of Technology, Unitec and Te Wananga o Aotearoa to take over parts of Auckland University’s Tamaki campus, which the university plans to sell as it develops a new campus in Newmarket.

Houses, and jobs.

But Dr Smith said development was most likely to be done by “public/private partnerships” as at Hobsonville, where a Housing NZ subsidiary contracted with private developers to build houses.

Oh no, a public/private partnership. That means it is evil. It must be opposed by the left!

Race based housing

June 21st, 2013 at 9:00 am by David Farrar

Kate Chapman at Stuff reports:

Mana Party leader Hone Harawira wants to offer Maori first-time homebuyers no-deposit, low-interest loans but admits he doesn’t know how much the programme would cost.

So do I have this right?

If you have a Maori great great grand parent you can get a no deposit, low-interest loan, but if you don’t you are not eligible?


And of course it is not costed. That would require someone to actually do some work, rather than just open the mouth.

Housing Minister Nick Smith said the Mana policy would cost more than $3 billion a year and put New Zealand “seriously in the red”.

The Mana policy is outlined here:

  • Only Maori first home owners would be able to apply
  • There would be no deposit
  • Interest rates would be no higher than the rates government pays on money it borrows
  • Applicants can either build new or buy an existing property
  • Applicants will be able to negotiate mortgage arrangements that suit their circumstances


Tony Alexander’s eight housing fixes

June 16th, 2013 at 12:00 pm by David Farrar

BNZ Chief Economist Tony Alexander has eight proposals for helping with housing problems. They are:

  1. Initiate a large builder training programme targeting not just youth but low skilled migrants. Yes, the migrant gates would need to be opened. Just the signalling of strong intention to boost builder numbers would make investors think twice about their capital gain assumptions. 
  2. Ban councils from imposing any development fees and allow developers to install their own infrastructure. 
  3. Create an SOE whose sole purpose is to undercut existing building materials suppliers through bulk purchases from offshore, nodal warehousing and distribution from just three or four locations in the country, with a separate agency responsible for monitoring the quality of materials sourced. 
  4. Initiate a new large state house building programme relying largely on the to be created new carpenters etc. Constrain new state houses to more efficient building systems including containerised modular housing (this doesn’t involve shipping containers), central and screwed in foundations, etc. 
  5. Ban house sales to non-residents (even new houses given the ease with which special developments could arise targeting solely folk offshore and soaking up construction sector resources). 
  6. Impose a tax on all houses owned by Kiwis offshore with the aim of encouraging them to sell them. 
  7. Put in place a capital gains tax on second properties and farmland and immediately payable stamp duty for all second house purchases. 
  8. Rezone all land within 10-20 kilometres of existing city boundaries as residential

Nice to have some radical thinking in this area. Tony predicts the chances of hos policies being implemented:

Low, zero, zero, mild, mild, zero, low, zero. 

Which ones do you agree with?

I like 1, 2, 6 and 8. I support a CGT but on all properties, not just some.

Labour and Greens propose a state monopoly for power purchasing

April 18th, 2013 at 12:24 pm by David Farrar

Kate Chapman reports:

Labour is promising to cut the average Kiwi power bill by up to $330 a year if elected to government next year.

It plans to do so by setting up a single buyer, NZ Power, to purchase all electricity generation at a fair price.

Announcing the plan today, leader David Shearer said it would create 5000 jobs.

The Crown would forgo dividends and tax revenue from the power companies at a cost of $60-$90 million a year.

“I’m not prepared to sit back while power companies cream super-profits at the expense of households and the economy,” Shearer said.

As a single wholesale buyer NZ Power will set electricity prices ensuring power companies get a fair prices but not super profits.

The sums here look as dodgy as with Kiwibuild. A cost of $90 million a year is meant to translate into $330 for 2 million households? That’s a 500% difference.

Secondly the history of NZ is that state monopolies do the worse for consumers and prices.

I await the policy to make it illegal to sell houses, except through the state. I mean houses are just as essential as electricity.

What this effectively means is that politicians will set the price of electricity. Remember when Muldoon decided what the interest rates will be? And the Government decided what rents you could charge, and price and wage freeze? All decided by politicians.

A monopoly crown buyer of all electricity will get to unilaterally set the price of electricity and MPs will decide who sits on it and effectively tell them what price they want electricity to be at.

UPDATE: Readers should be aware that this policy is a de facto nationalisation of the privately owned Todd Energy and Contact Energy. it is almost a confiscation without compensation of their assets. Because Labour and Greens are saying we will pass a law to make it illegal for you to sell power to anyone except the Government, and only at the price we unilaterally set.

Think about that, and the precedent it is setting.

This is a policy out of the 1970s and some sort of socialist nirvana state.

Imagine you set up a business, and one day the Government came along and said we are going to make it illegal for you to sell your product or service any more – to anyone but us. And you get no say in what the price will be – we will unilaterally determine that.

This is akin to theft from the shareholders (and if you are in KiwiSaver you are probably an indirect shareholder) of Todd Energy and Contact Energy.

Surprised it isn’t 95% in favour

January 10th, 2013 at 1:00 pm by David Farrar

The Herald reports:

The Labour Party housing policy for first-home buyers has struck a chord despite the Government’s attempts to write it off as expensive and unrealistic.

Just over 70 per cent of the 500 respondents in the Herald-DigiPoll survey approved of Labour’s promise to enter the housing market to build 100,000 low-cost homes over the next 10 years.

I’m surprised it isn’t 95%. Who is against a political party saying they can wave a magical wand and produce houses  $150,000 to $200,000 cheaper than normal.  The problem is their numbers simply do not and can not add up. It is a con.

Labour’s housing plans – houses for everyone

November 18th, 2012 at 2:18 pm by David Farrar

As bribes go, this is one of the bigger ones. Labour are promising 100,000 new cheap houses and all you have to do is vote for them. Let’s look at the speech:

The start-up cost of the building programme will be financed through issuing government stock called Home Ownership Bonds.

The money we make from selling the houses will go back into the pot for building more.

The houses will be compact in size. Some will be stand-alone dwellings and others apartments. All of them will be good quality and energy efficient.

The homes will be sold to first home buyers who’ve saved their own deposit, like with KiwiSaver.

We estimate that the maximum needed to be raised for a kick-start will be $1.5 billion.

It will quickly become self-funding though. And because it’s a capital investment, it won’t affect our commitment to balance the books and return to surplus.

Labour don’t seem to understand about this concept called interest. When you borrow money (unless you print it as Russel wants) then you have to pay interest on it.

Now let’s think about this 100,000 house bribe. The average sale price of a property is $410,000. with 100,000 houses that means around $40 billion of capital to be outlayed in advance. The NZ Super Fund say the risk free rate of return is 5.16% on average. Let’s say the Government can borrow at 5%. That is already $2 billion in interest if there is only a year between borrowing the money and selling the house. I am not a property developer but I suspect it takes much longer than that.

But now consider that the Government just selling then at the median price will not help families much. So presumably the Government will sell them at a discount. How much? We don’t know. Say it is a 10% discount or $40,000 per house. That is another $4 billion.

But here’s the sad thing. Unless we do something about the supply of land in Auckland, the increase in house prices will be greater than any discount from the Government selling homes cheaply. Rodney Hide sums this up in the HoS:

There are many reasons why Auckland house prices are high. A lack of tax isn’t one of them.

One reason is that Auckland councils have for years run a deliberate policy to hike house prices. The council doesn’t put it that bluntly, calling it “smart growth” or a “compact Auckland”. But the policy works by hiking house prices.

The policy’s purpose is to get us to live in apartments over train stations. That way we will be more likely to take a train and the mountains of cash that councils have sunk into trains, stations and rail lines over the years won’t look such a waste. …

The policy works by the council running a planning fence around the city, a fence called the Metropolitan Urban Limit. Inside the fence houses can be built; over the fence, not so much. It’s the fence that has us piling on top of each other.

It’s said that the housing market isn’t working. Actually, it’s working perfectly. The council is artificially holding down the quantity of land supplied and people are bidding up the price of the precious little that is available. That’s how a market works when there is a shortage.

The result is easily seen. Average section prices in New Zealand account for 40 per cent of the cost of a new house. In Auckland it’s 60 per cent. There’s a 20 per cent council planning tax on Auckland houses.

It’s not hard to make houses more affordable in Auckland. Just loosen the fence. Land over the planning fence costs only 12 per cent of land inside the fence.

Unlock the planning fence and house prices would tumble. At the very least, the heat would be taken out of the market. Auckland families and couples would once again be able to afford a house

And best of all you won’t need to borrow $40 billion to do it!

UPDATE: Labour say they will sell the houses for under $300,000. I’d say the cost to the taxpayer has just exploded. This is the biggest bribe since Think Big. When the costs of construction exceed what they think it should be, the taxpayer will be left footing the bill.

Labour on housing

July 16th, 2012 at 9:00 am by David Farrar

John Hartevelt at Stuff reports:

Labour is urging a “hard look” at the accommodation supplement, amid claims landlords are pocketing a $1.2b “subsidy” despite providing substandard housing.

Housing spokeswoman Annette King said the Salvation Army had warned in the 1990s that the supplement to support low-income people would turn in to a subsidy for landlords – and that had happened.

Where is the proof for this claim that it has turned into a subsidy for landlords? Is Annette King saying that landlords are charging more to someone who is eligible for the accommodation supplement?

“It is a major subsidy for landlords but it hasn’t produced better housing or more access to housing or an ability for people to buy housing,” Ms King said.

It is not a subsidy for landlords. It is a subsidy for low income tenants who are renting.

“If we just let it keep growing year after year as more and more people struggle to pay rent, then we are doing nothing in terms of changing the ability to house people and it’s time that we had a highly focused look at how do you turn that into something that is a whole lot better.”

The supplement is paid in addition to other welfare payments at varying rates, depending on circumstances. It is meant to help cover rent, board or home ownership costs.

In 2007, the Government paid $877m through the supplement, but it is expected to top $1.2b this year.

If Labour is proposing abolishing the accommodation supplement, then they should say so. You could divert the $1.2b a year into new state homes through Housing NZ, which are then provided at 25% of people’s incomes. I suspect this is what they want to do.

The problem with this though is those low income families who get into a Housing NZ home get massive state support, while those low income families who do not get into a Housing NZ home would get zero, nil, nothing.

Ms King said the supplement supported people in rental accommodation but a lot of the houses were “incredibly poor quality”.

“Some of it is absolutely appalling housing and landlords take whatever the accommodation supplement is and add it to their rent,” she said.

Again, proof? Labour are smearing tens of thousands of landlords with this allegation.

“I think we need to take a hard look at how we could turn some of that accommodation supplement into providing affordable, decent, warm housing and how we could turn some of it into people being able to own their own housing.”

She did not know exactly how that might work but said it should be discussed.

So Labour actually has no alternative. They just wanted to smear evil landlords.

The Christchurch rental drought?

June 14th, 2012 at 12:00 pm by David Farrar

The Press reports:

An “immediate” solution to the housing crisis that has crippled some Christchurch families and created a new “working poor” has been delivered to the Government. …

She founded the Canterbury Affordable Housing Trust to carry out her plan and hoped the Government would provide funds to help.

Working families who were not eligible for Government support had been the hardest hit in the rental drought, she said.

Obviously rental prices have gone up in Christchurch. Personally I don’t think much of landlords who have massively hiked rents. But the issue is whether or not there are affordable houses for rent in Christchurch.

Trade Me has the following rental properties listed:

  • Up to $300/week – 167
  • $300 – $350 – 140
  • $350 – $400 – 148
  • $400 – $450 – 108
  • $450 – $500 – 69
  • $500+ – 195

And no they are not all or even mostly one bedroom places. Around 70% are three or more bedrooms.

Eight months dead in a council house

February 23rd, 2012 at 7:33 am by David Farrar

Clio Francis at Stuff reports:

A second pensioner lay dead in a Wellington council flat for at least eight months – and was found the same year as fellow tenant Michael Clarke died.

An investigation by The Dominion Post has revealed that Wiremu Whakaue died in his one-bedroom flat in Adelaide Rd in 2009, but his body was not discovered until March 2010.

I do not believe the City Council should be a housing provider. I do not think it is their role, and further more they seem to be very bad at it.

Assistance with housing needs is the responsibility of central Government, not local. City Councils should not be building hospitals or schools, they should not be providing welfare benefits and they should not be providing housing.

Their apartments should be sold to Housing NZ, where tenants would enjoy subsidised income related rents, or to community housing providers who will keep rents at the same level. Both would ensure, I am confident, that tenants are not lying dead for almost a year in their properties. The City Council should focus on the responsibilities it has that no one else has, rather than try and be a landlord.