Monday 19 May 2014

Housing: Crisis, What Crisis?

The OECD has released a new report suggesting the most unaffordable housing market in the developed world, measured as a proportion of both wages and rents, is our own. Little old New Zealand. See:

ScreenHunter_2478 May. 19 10.05

In an election year this news there is a clearly evident housing crisis is about as welcome to the Prime Minister as a fart in an astronaut suit.  His response:  Crisis, what crisis?

"Well, it’s not a crisis. A crisis would be one to indicate that you couldn’t buy a home, well that’s not true – there are houses in quite a wide range of prices – if you go on to Trade Me now and have a look at say houses say for $350,000 or less in Auckland and quite a large number of listings will come up.1

So there’s no crisis, and the researchers are wrong.

This is puzzling, since his own Deputy Prime Minister Bill English wrote in the foreword of the 2013 international Demographia survey, released in January last year, that:

Last year’s New Zealand Productivity Commission report on housing affordability, relying in part on Demographia affordability data, showed a substantial worsening in housing affordability in New Zealand in the last thirty years. … We may be seeing the beginning of a repeat of the mid-2000s demand shock.

Despite a lot of noise in the fourteen months since then, little has changed to alter the figures of the 2013. If anything, things have only got worse since then.


So, the Deputy Prime Minister at least appears to realise we have a problem. His boss, however …

1. Actually, do the exercise and you discover you can’t filter for $350k. But I can tell you that across the Greater Auckland area, a city of nearly1.5 million people, there are presently 373 houses available for sale on TradeMe at a price of less than $300k, and 924 for sale at $400k or less. And that’s with several gallery items included above those prices.


Anonymous said...

Don't forget that a lot of the lower priced houses will be on leasehold land.

There is sweet FA beneath 400k in Auckland at the moment. It is soul destroying for young people. Frankly, I can't see why people would stay here unless they had real prospects.

Not sure that Labour's Santa solution is much good either. 10k houses/year, with no costing? Give me a goddamned break.

Angry Tory said...

NZ has no housing crisis. NZ has a relatively open economy and is part of both an international jobs market and international housing market. Bludgers who don't earn enough don't deserve a house.

More to the point, perhaps, NZ has one of the highest rate of womens participation in the workforce. The statistics are in terms of average wage, not average household income, certainly not average household income of two-income families. Considered from a perspective of household income, the average house price remains roughly three times the average family income for a two-income family where both parents are middle class (have a degree).

in other words: if you want to buy a family house, and you're a two-income middle-class family, you'll have no problem. If you're below that, you don't deserve to buy a house. This is absolutely fine from both a Conservative and a Libertarian perspective.

Anonymous said...

There is a housing crisis in NZ. It has happened because the currency is surely and gradually being inflated. The people with low income are the first to suffer and eventually drop off the bottom. Then the next layer of slightly more wealthy fall and so on it goes.

That Angry Tory thing is a vitriolic hater. Here is something he ought to consider. "The freedom and the security of the richest among you are related to those of the poorest."


paul scott said...

Yes thats right PC, our brother here in Christchurch Hugh Pavletich knocked his good head against the wall, while the media scorned him. Now if you wish you can rent my home in a nice area, but called earthuake prone and scorned but the same price as a caravan on the street of Mount Eden

Mr Lineberry said...

Interestingly enough at the weekend I was having a flick through Sir Robert Jones' book "Jones on Property" - written nearly 40 years ago - where he describes (and debunks) similar hysteria.

Back then there was a talk of a housing crisis, and housing shortage when, of course, there wasn't one - nor is there one today.

When everyone talks about "a housing crisis" what they really mean is "I can't afford to live in Ponsonby, Grey Lynn, Mt Eden, Westmere, Newton or Herne Bay and they aren't building any new houses there"

It is simply a sense of entitlement from 'The Usual Wankers' who feel they are entitled to live in the central part of Auckland cheaply.

Trademe shows plenty of houses in Invercargill for sale (all but one for under $350,000) and plenty of work opportunities on dairy farms and rural serving companies, but everyone turns their nose up at such suggestion... "Oh no sweety darling, no beautiful people down there muh muh!"

If these people were serious (and they are not) they would move to Invercargill and buy their first home cheaply and easily, AND find employment in about 5 minutes - I was down there last week and had lunch with 3 businessmen friends all moaning how they had plenty of work but no applicants, so I am not exaggerating about the ease of finding employment.

If you are not prepared to go where the work is, and where the houses actually are - then don't complain.

Anyone who thinks I am being a bit harsh should consider this - when the houses get built they will be in places 'way out West' or Bombay or similar areas which 'The Usual Wankers' consider Siberian outposts - and you can guarantee they will moan about that too!

What is the bet that between 2015 and 2020 a large number of houses will be built on the fringes of Auckland, and what is the bet that in 2020 we will have talk about 'a housing crisis' which actually means "I can't afford to live in Ponsonby, Grey Lynn or Herne Bay"

This is very similar to absurd claims about high unemployment ....which generally means "I have a BA in Media Studies and Peter Jackson won't employ me dammit!"

MarkT said...

Brother Hugh has the right principles but the wrong figures. The media wouldn't scorn him as much if he kept the same principles but corrected his figures to something realistic in the NZ context. I've repeatedly encouraged him to do this, providing figures that can't really be disputed, but it's fallen on deaf ears.

MarkT said...

I think there are valid points being made above by both sides. The two are not mutually exclusive. Yes, there are a lot of things the govt has done to encourage inflated house pricing, and if they rolled back the bureaucracy and made things easier we'd see a definite and significant improvement. At the same time I agree that a sense of entitlement and inflated expectations of many (typically Gen Y or younger) is behind a lot of the "crisis" claims. Whilst house pricing relative to income has surely risen, people's expectations of what is acceptable in both size and quality has also risen.