English right about ridiculous house prices – Banks
"Both Labour & National have failed to address adequately NZ's housing crisis, so it is a bit rich coming from English when they are part of the problem."
Featured commentACT Leader John Bank welcomes Finance Minister Bill English’s comments at a weekend business breakfast that "house prices are ridiculously high" and that housing affordability was a "turn off" for young Kiwis.
“These statements echo ACT’s belief that unless we take action to resolve the housing affordability issue, we will have a whole generation of New Zealanders who grow up as tenants in their own cities,” Mr Banks said.
“We would like to see National heed the advice of the Productivity Commission by removing restrictions on land supply for residential housing.
“The cost of land has been identified as one of the major factors behind increasing house prices. In Auckland, land now accounts for 60% of the total cost of a home, as opposed to 40% elsewhere."
Mr Banks said radical reform of the RMA is also required.
"The original intention of this legislation was to make development easier. It has done everything but. The vague language has turned it into a bureaucratic nightmare.
“ACT’s preference is for a full review of the RMA, starting from the presumption that you should be able to use and develop your property as you see fit, so long as you are not directly harming others. This might include something similar to the Germans’ 'right to build' clause"
“But, the adoption of the Technical Advisory Group’s recommendations to amend sections six and seven of the legislation would be a very good start.
“These sections, as they stand, give too much power to those who like to interfere with the property of others, and not enough rights to property owners.
“Adopting the Advisory Group’s recommendations would get councils focused on real economic and environmental costs and benefits, instead of the current sea of fluff that is the principles of the RMA.
“The housing affordability issue we face today is not a result of market failure, but of poorly drafted legislation and government interference. These changes would go some way to resolving this," Mr Banks said.
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Comments and questions22
Absolutely correct and far, far more important than the incessant trivia the media focus on.
Well said!
Check out this for an answer to the problem in Chch - sections from $50K
http://christchurchsupercity.wordpress.com/
Agreed, it is totally correct. Lack of supply of sections is driving up particularly Auckland but other cities house prices too. Construction costs and council development levies mean that the cost to build combined with section prices is above current house prices. The only way to reduce the cost is to reduce council levies and the cost of sections.
Increasing the supply of sections in Auckland means altering existing zonings to allow redevelopment for higher densities, the main residential zones should have a minimum lot size/density of one dwelling per 300m2 with higher densities for townhouse/apartment development along bus routes, close to train stations etc, of one dwelling per 100m2 or 150m2, this is what will provide affordable housing.
In addition it will kickstart our economy and the struggling construction sector.
Providing more sections in Christchurch within areas not affected by land instability will also assist in getting the economy and construction sector going again. However by the time all this gets debated, RMA reconsidered etc I despair that the country will continue to lose out to Oz.
I remember as an IT manager at the ARWB (part of the ARC) the first budget we did after RMA came in. The staff had prioritize every task with those required by statute having the highest priority and the user pays discretionary taks at a low priority.
The aim was if the proposed rate was too high we could lop off lower priority tasks.
They did this but the income required from rates went up not down!!
Until I pointed out that the low priority tasks were user pays and if you remove these then you are removing money that helps subsidise other tasks and that you have to add more lower priority user pays tasks to spread costs and keep the rate down. (sorry everyone)
and since then they have taken to user pays with a vengeance.
Until the economy is rebalanced away from consumption and the stupidity around housing toward the productive sector this will be an ongoing problem
The United States is successfully rebalancing now and one of the casualties is housing and that is what we need here
Impose rent controls and then the attraction of owning rental properties will go away. Impose capital gains on all rental properties to do everything possible to reduce the attraction of being a slumlord.
Total lunacy. Even if it could be done, which it can't without insane inequities, it would simply turf renters out onto the streets.
Both Labour & National have failed to address adequately NZ's housing crisis, so it is a bit rich coming from English when they are part of the problem.
More inland housing approvals (say, 375 m2 per house) in major cities like Auckland should be given top priority to reduce any shortage of housing land plots....thus, more housing supply indirectly helps lowering house prices.
very well said!
liberte
Legislate deposits on housing. 25% this will eliminate speculation, housing under a peged price for the first home buyer be eligible for government assistance . Yes totally agree land be made readly available , reserve contributions ,council, fees need scrutiny , To end this I think it's prity rich that John banks wades into this when He and his council were one off the worst perpetrators of this problem , I actually shook my head in disbelief when I read this article .
All very well to make land more readily available but urban sprawl is bad enough now. With the exception of Wellington most of the land around our cities is highly productive farmland. The more that is eroded the more constraint is put on our top export earner. Particularly now we need all the agricultural exports we can get our hands on.
The worst kind of urban sprawl is create by town planners with minimum plot sizes and the mad idea of 10 acre blocks. Left to the market there would be a lot more productive land around and more intensive housing at much lower costs.
Deluded town planners have caused 99% of the housing affordiblity and land use problems - anyone wanting to live the the countryside MUST have 10 acres - most might be happy with half an acre for the dogs and a couple of chooks.
Dead right! Lunatic counterproductive environmentalism has caused these problems and continues to obstruct fixing them.
People buy houses as investments because they don't trust. Fund managers or those in control of the companies they invest in to act in their best interests, and why should they? Would you trust Perpetual?
There should be major disincentives for investors and speculators to enter the housing market. People seem to think that if investors left the market, then suddenly tenants will be thrown into the streets.
Those houses do not disappear. An owner occupier will move in.
Investors and speculators do not buy new houses, they only buy existing houses and do nothing for the housing stock except push up prices.
John and Bill, you've hit the nail on the head. Now get of your butts and do something about it. Unlike housing, talk is cheap.
Most have missed the point completely. Current house price rises are simply driven by shortage of supply, NOT speculation. This is not another bubble but simply a response to an economic fundamental. Imposing further costs on landlords and developers etc will only reduce supply further. The core issue around affordability is the fact that the average income for Kiwis is not increasing. In some areas the accommodation shortage has very little elasticity - they either pay the price or they live under a box. Is anyone complaining about the price of food saying how 'evil' and speculative the supermarkets etc are? Same theory. People will adjust their budgets according to what they can afford and, at the moment, some foods are increasing horrendously due to the supply shortage driven by US drought. If my income hasn't increased then I have to settle for rump instead of fillet! All this bluster and media frenzy about the "need to tale the steam aout of the property market" is just a side-show to distract from the core issue re average incomes. If people are serious about afforability then Kiwis MUST soften their stance on mining and oil exploration etc because whether we like it or not those resources are the key to future prosperity. Otherwise Kiwis end up running the risk of having a clean green country that we can't afford to enjoy!
Not so. A lot of the spectacular price rise in property all over NZ during the past three decades and especially since the mid 90s has been due to growing confidence in property as not just a store of value but lately a way to make money and even get rich . In other words, the opposite of companies listed on the the NZ Stock Exchange, which have been great destroyers and transferrers of wealth.
The long run up in property prices in NZ and abroad has caused the belief that "property always goes up" to become a widely and tightly held article of faith and so higher prices have become a self-fulfilling prophecy. It has led all manner of speculators, both Kiwi and foreign, to jump aboard the train and play pass the parcel and it has created a new breed of wealth seekers called "property investors" or landlords or, more honestly, rentiers. Banks have bought into this belief and allowed bigger and bigger loans to be created for ordinary properties, including farmland, that are out of all proportion with most NZ incomes (which have been stagnant for a long time), NZ's high taxes, its anaemic GDP growth, the increasing job instability in NZ as well as NZ's relatively modest population growth during this period.
When confidence in higher prices suddenly disappears, as tends to happen when high-priced assets run out of buyers, expect fear to begin to take hold. NZers alive today have never lived through a sustained period of property price deflation as Japanese property owners have, so the opinions of most people, including real estate salesmen and other so called experts don't count for much.
NZ's cities don't need more urban sprawl taking over productive agricultural land and all the associated problems it causes, from traffic-clogged roads to yet more investment in utilities and government services. What is needed is higher density housing that meets the needs of rapidly growing mobile demographic groups that are not interested having a huge debt plus interest owed to Australian banks on a house and garden in the suburbs miles from anywhere.
so "what" and "when" will somthing be done about it [enough talking]
The current housing supply issue (post 2008 GFC) has nothing to do with a lack of available land and it will not be remedied by opening up swathes of additional greenfield land on the edges of our city.
There is plenty of greenfield land that has already been consented for residential development but the developers have either gone bust or are struggling to raise finance.
The leaky building syndrome has also left a lasting impact: no one wants to buy a plasterboard house/unit and banks require massive deposits for terraced housing or apartments.
This has shrunk the options for homebuyers, so there's now an even greater demand for standalone brick or timber houses in the central suburbs. The astronomical prices being paid for houses in the central suburbs has pushed up Aucklands average house price even though the prices on the edge are stable.
Unfortunately councils like Auckland regard ratepayers as hostages, not customers.