Thursday, 9 August 2007

Cactus is wrong

Cactus Kate uses this snippet from the Sydney Morning Herald to make a point:
"In 2003-04, 77 per cent of households had one or more spare bedrooms and nearly all (97 per cent) of couple-only households had one or more spare bedrooms. At least 85 per cent of solo dwellers also had empty bedrooms in their homes. The figures show that many Australians are renting or paying off mortgages on houses that are too roomy for their needs".
This proves her notion, she claims, that there is no problem with housing affordability--the problem she argues is not that houses are unaffordable because of land regulation and zoning, but simply that whiney people have eyes bigger than their incomes.

Well, talk about avoiding the evidence.

There are whiney people all over the place; they're everywhere--in every city of the world--but as Demographia's worldwide housing survey shows, housing is not unaffordable in every city of the world, but only in those cities which planners have zoned to hell and back. Cities like most most of those in Australia and New Zealand, which the Demographia survey puts into the "seriously unaffordable" category. (Auckland, for example, ranks as more unaffordable than world cities such as Atlanta, Houston, Boston, Dublin and Melbourne, and more unaffordable even that London's outer suburbs, and New Zealand is rated the fourth most unaffordable housing market, ahead of both the UK and the US. Figures here [pdf].)

Sure, there's plenty of whiney people with four-bedroom tastes and a two-room shoebox income both here elsewhere, but the problem with land regulation as it's presently set up both here and in Australia is that within the 'urban fences' that planners have thrown up around our cities, building four-bedroom houses is effectively what most urban district plans mainly require.

Outside of the CBD (where apartments are permitted), erecting anything in a residential zone other than the four-bedroom norm-- something that is perhaps more innovative or more suited to what people actually need--is just far too difficult and far too time consuming, which is precisely why there are so many many Australians and New Zealanders who are renting or paying off mortgages on houses that are too roomy for their needs: because the market is being restricted by zoning regulations to delivering what the planners make possible rather than what the market wants.

The evidence is clear enough: that runaway regulation is feeding runaway housing costs; that so-called sustainable cities are unaffordable cities; that sprawl is good, but regulation is not; that 'smart growth' is not green; that NZ housing affordability is in crisis, and the dream of home ownership is now just that: a dream. The fact is that the average house in one of NZ's major cities costs from 6.5 to 6.9 times the average income in that city whereas in cities like Houston, Atlanta, Quebec, Dallas and Ottawa it is less than 3.0.

Blaming NZers for complaining about that is somewhat missing the point, don't you think.


  1. "This proves her notion, she claims, that there is no problem with housing affordability--the problem she argues is not that houses are unaffordable because of land regulation and zoning, but simply that whiney people have eyes bigger than their incomes."

    I don't think she claims that at all, at least regarding zoning. Her argument is one against govt intervention in housing, such as with subsidies to first home buyers etc, not that current regulation doesn't artificially inflate house prices.

    Her argument is complimentary to yours.

  2. PC

    I don't disagree with you regarding the supply of land, RMA etc...and in the past I have brought these arguments up as well.


    All things constant (ie. that politicians will do the inevitable which in this case is nothing) then people should downsize their expectations.

    As an aside, I sense some hostility between us PC based on your rumoured veganism.

  3. CK - hostility is not a common aliment of the vegetarian - they are usually so malnourished they don't have the energy. PC must be cheating - that's right he does eat fish!

  4. For someone who spends his days churning out negative bile spat from between clenched teeth at the abject stupidity of the rest of the human race, calling other people whiney is kind of missing the point is it not?

  5. People should downsize their expectations! Yeah right.

    In other words, do not exepct to purchase a decent house (or even a slum). You're expectations are to high.

    And one shouldn't expect to get a decent car or two. Your expectations are too high, remember.

    And don't expect any overseas vacations. That's just expecting too much.

    And don't be thinking about a decent home entertainment centre! You're expecting too much there.

    And don't ever be expecting that the dollars you are paid your salary with will ever be backed by any reserves. No specie, only fiat. Too expect otherwise is to expect too much.

    Never expect that you're savings will be allowed to accumulate without the ravages of inflation removing much of their purchasing power. You're expecting too much again!

    Next thing the bitch will start telling everyone to wear the same clothes every day. After all having more than one set of clothes means one's expectations are set too high. One should accept the poverty and deprivation that comes as a result of government coercion and fraud.

    Don't expect to get ahead in this life. That is you expecting too much again.

    Do expect to loose much of what you could have attained to government consumption, rules and regulation. That's OK though. Must just accept it. Blame the people who'd like to have something decent for themselves. Yes, blame the workers, blame them. Save the wreckers in govt from scruitiny.


  6. Cactuspoison

    You are expecting too much if you can't afford these things.

    Yes, I would really like a $20 million mansion witha view of Rangitoto.

    Thing is - I can't afford it. So I don't expect anyone else to give it to me.

  7. Thing is, while there probably are whiners who want wealth, riches and expensive real estate given to them by others--there's always wankers who want to vote themselves rich--the more rational complaint here is not that govt should be giving whiners everything they desire, but instead that they should be getting the hell out of the way of people who are trying to earn it.

    Simple really. Rational complaints about govt getting in the fucking road of wealth production are not whining. They're deserved.

    PS: Hostility? Veganism? Moi?! Quel horreur!

    The defining characteristic of vegans is that they're ill and sexually impotent. Not me. I'm vegetarian and virile. ;^)

  8. Cactuspoison - by your name may I assume you see yourself as Cactus Kate's nemesis? You flatter yourself wildly.

  9. Cactus Kate

    How about you try reading what was written and address that, rather than what your imagination happened to vomit up? You raise red herrings and miss the substantive point entirely.

    Quoting: "You are expecting too much if you can't afford these things".

    As it happens, I can afford all of them if the government and its associated parasites don't steal away my wealth. Also, I could afford a lot more besides. I just calculated what government has cost me in income and lost opportunity over the last ten years... Incredible. All wasted. Consumed. Gone. Nothing to show for it.

    If anyone should be doing without it is government parasites and the political class, not the workers!

    Death to Cactus! Weed out govt apologists.


  10. Holy fuck! PC's a vegan? Good Lord. I knew he was a bit warped, but that's just taking it a bit far.

    Say this to yourself, PC, and make it your mantra: "VEGETABLES IS WHAT FOOD EATS!"

  11. No, IP, not vegan and vegetal--vegetarian and virile.

    There's a difference.

    One's impotent and ill. The other is vigorous and long-living.

  12. No, there isn't a difference, PC.

    I think your attempt to have a go at Cactus has back-fired big-time. She has completely body-slammed you with the public revelation that you're secretly a limp-wristed, wowserly tofu-turner.

  13. Well, yes there is -- the difference is eggs, dairy products and (in my case) beer and fish -- so unless differences aren't important to you, then yes, there is a difference.

    And since it's been public knowledge for at least twenty-five years now that I'm a vegetarian tofu-turner, I struggle to see the relevance between Cactus' flawed views on housing affordability and her flawed views on tofu, except perhaps that they're both flawed.

    But as least Cactus isn't a John Boy apologist. ;^)

  14. Here is a question many of us would like answered, but we will no doubt be disappointed since you have an ideological knife to hone, irrespective of the FACTS.

    In the mid 1980's capital was hard to get hold of through a tight mortgage market. Therefore the ability to buy a house was difficult as the level of deposit required was much higher than it is now. Interest rates were much higher too. As capital has become easier to get hold of, access to buying houses has become easier. Does this mean affordability has got worse as they say (based only on % salary and property cost) or better?

    Don't hold your breath for an answer ppl.

  15. Anon

    I lived through the 80s, working in banking and involved in real estate development, so I'm qualified to answer that question.

    For a starter-family it was easier to get into a house then, harder now. Things were difficult in the 80s, sure. Affordability is worse today.

    The cause of much unnecessary struggle and impoverishment remains the same now as it was then- government.

    There's your answer.


  16. Check out Hargreaves research -

    Homes were more expensive in 1988 relative to purchasing power.

    Home affordability was 55% or so in 1988, bottoming out at 20% in 1992. Affordability is now at 40%.

  17. Anon

    That's statistics for you. You can make the numbers do all sorts of things.

    Try buying a house in a central district on an average salary (as I did in the 80s). You won't get much now.

    The issue remains that it is the policies and actions of government/s that makes houses far less affordable than they should be. That's the real source of the trouble.


  18. Regardless of RMA or other policy, the truth of the matter is that it is comparatively no more difficult to buy a house today than it was in your parents time, or their parents time. In fact I get calls from banks almost every week with offers of more money -- which I don't want.

    If the RMA or whatever was consigned to the rubbish bin I still seriously doubt house prices would plummet. A new wave of foreign investors would invest... the smart ones are already doing so after the dollar drop. I can't give you a price that foreign investors would cap our median prices at, but NZ housing is cheap compared to the rest of the world... most likely the cheapest for a secure Western country.

    In every type of investment you have winners and losers. The losers bleat on about 'what if', and are normally that bloody lazy they will fail at everything in the end. They don't make that effort, don't have the ambition or lack the willpower to even live within their means let alone accumulate capital.

    Most people will say buying their first property took sacrifices, and that is still true today. If it is important to you, you can find a way to do it.

    So when I hear people moaning and groaning and telling young people how they will never get the chance to own their own home because of the gummint, I'm afraid it falls on deaf ears.

  19. Anon

    Such generous sentiment you express there!

    I sympathise with the young ones starting out. They have such potential and to waste much of their productive years struggling, merely to pay for a place to live and sleep after work, is a tragic waste. It need not be like that.

    If the RMA and certain other government regulation was consigned to the round sewer, then it is very likley that prices would fall. Law of supply and demand applies. Costs would fall due to the extra supply of land for building new stock. There would also be substantial cost savings for new construction, redevelopment and building alterations.

    I've just blown $14k on consents for redevelopment of a property in a central district- this is all dead money that should have been invested elsewhere. Consider that this is money that would need to be borrowed should someone purchase the property from me (it will be factored into the strike price). So that's another $14+k at the margin that requires finance- that is, a mortgage. Consier the extra amount of interest this will require over, say, a 25 year term... Remember, it's just an extra that need not have been consumed in the first place. That represents a whole lot of disposable income that could be directed elsewhere over a lifetime. Think on that.

    The main point is that government causes massive and unnecessary overhead to accrue. To support the government's continuing consumption is a luxary that few can really afford. Unfortunately we all are forced to.

    In a choice between the welfare of government or that of young starter families, I go for elimination of governmental parasitism. that leaves more wealth with thise who earned it. Hence they can afford to do more in their lives.


  20. Bravo, Banker!

    Your blood is worth bottling.


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