Posts by James Butler

  • Speaker: House prices and the "Magic Money",

    This is probably the right place in the discussion to push LVT and UBI. Subsidise low income buyers, and penalise high-income rentiers.

    Auckland • Since Jan 2009 • 811 posts Report Reply

  • Speaker: House prices and the "Magic Money", in reply to BenWilson,

    Then we don’t have to have these futile discussions about which cause is most important. Instead we acknowledge that we should be both increasing supply and controlling demand, and then we do both at the same time.
    [...]
    The levers we can then tinker with are pretty clear. For supply, natural technological change is always a upwards driver, but it’s not controllable. Increasing the speed of approvals is a tap that can be turned up or down. For demand, interest rates are a lever we already use. Limits on foreign capital flows are another, and they could free up the other lever considerably. Trying to do it all with interest rates is like trying to swim with one arm. Then there’s the obvious possibility of redistribution through various subsidizations. I’m sure there’s others.

    Minor quibbles with two of your levers. Restricting foreign investment is a tool you might consider using, but I suspect that if you can keep price growth down other ways then it simply won't be needed - why would anyone who doesn't want to live here want to invest in an asset whose value grows slower than wages? And subsidies have to be used very carefully - for example in the current situation, giving more money to buyers might help equalize the relative buying power of some groups but overall it would push prices up even faster.

    Auckland • Since Jan 2009 • 811 posts Report Reply

  • Speaker: House prices and the "Magic Money",

    I think I've worked out what frustrates me most about this discussion. We're talking about the difference between housing value and housing debt, and trying to work out where the "extra" money is coming from; but I'm sure most of us have seen first-hand this missing money being created. Someone who bought a house in Auckland for $200k in 2005 now has a $700k asset, but no-one's lent them that money, and unless they sell then no offshore investor has swooped in to give it to them.

    This is trivially obvious, which is I guess my point. We know that housing prices are rising dramatically, and we can argue all day about why that is (and I'm sticking with "Auckland's run out of all the easy places to add a dwelling" until I see good evidence that it's not the case); but the "magic money" gap only tells us that it has happened, and I can't see what it adds about why.

    Auckland • Since Jan 2009 • 811 posts Report Reply

  • Speaker: House prices and the "Magic Money", in reply to BenWilson,

    I can see that constraining land supply will mean that rising demand will lead to rising prices. What I don’t see is where so much demand came from. If land supply were rising at the same pace as demand, then prices would remain stable.

    Are we seriously suggesting that Auckland is meant to grow at roughly the rate that it’s property prices have been rising? So 26% in the last year alone? We’re meant to build a whole quarter of the city in one year?

    No. Why would that follow? If the problem is that demand has exceeded supply - and that doesn't mean that there's suddenly more demand, just that the demand curve has crossed the supply curve - then you would expect prices to increase at a greater rate than before, as the value of the existing dwelling stock increases.

    Also please let's talk about dwelling supply rather than land supply, it's less prone to being misinterpreted.

    Auckland • Since Jan 2009 • 811 posts Report Reply

  • Speaker: House prices and the "Magic Money", in reply to Russell Brown,

    Also, what form of demand would cause an increase in Auckland land prices so tremendously out of proportion to population increases in the past five years? If demand for land is driving up prices, where is that demand coming from?

    Remember price isn't driven just by demand; it's the combination of demand and supply. In the case of a finite resource, if there is still demand for the resource after the finite source is used up then prices will increase. It's trivial to say that land is a finite resource, but the real case of a city with new developments opening and new dwellings being built on old land is more complicated. But it's not unimaginable that if a city passed the point where new development and intensification was easily keeping up with population growth, then it might see a great increase in prices as the supply tightened, even if the population growth was more steady.

    Auckland • Since Jan 2009 • 811 posts Report Reply

  • Speaker: House prices and the "Magic Money", in reply to Swan,

    After the change point, the rise was more about revaluation of existing assets, and specifically increases in the value of the underlying land. We know land values have increased hugely in our cities over the last decade.

    Incidentally this fits in perfectly with the argument that land supply is the main culprit when it comes to housing affordability.

    With the caveat that "land supply" is shorthand for something like "excess dwelling capacity" - let's not forget that we could build more dwellings on our existing land - I think I agree.

    Consider Lucy's case, except the village is on a tiny, crowded atoll with extensive viewsheds of the neighbouring volcano. What happens to the total value of houses in the village when someone new needs a home, whether they arrived from another island or are the grown-up child of existing villagers?

    Auckland • Since Jan 2009 • 811 posts Report Reply

  • Hard News: Deep Dream: Looking at clouds,

    Vice’s Motherboard channel was quick to answer that question

    So this is what porn images look like through mostly animal-trained networks; what I haven't seen yet is a porn-trained network looking at non-porn pics. Cocks everywhere! I'm sure there are legions of volunteers who'd be willing to sit for hours teaching a neural net what is porn and what isn't...

    Auckland • Since Jan 2009 • 811 posts Report Reply

  • Hard News: Whakamomori: Raw, open and honest, in reply to llew40,

    Understanding something and being able to talk about that something and share your experiences is surely the first steps towards being able to cope/deal with it?

    Exactly - by being too scared of normalising suicidal behaviour perhaps we make it harder to normalise suicidal feelings. If you can't put your own despair into the context of others who have had the same experiences then surely it's that much harder to deal with.

    Auckland • Since Jan 2009 • 811 posts Report Reply

  • Hard News: This Anzac Day,

    People use the word 'sacrifice' a lot to refer to the war dead. The defining feature of true sacrifices, to me, is that they achieve nothing. No one says that though.

    (I've spent yesterday and today sitting through rehearsals for tomorrow's ceremonies in Wellington. If I'd known how cartoonish parts of it would be, well, I still might have come - I'm comfortable with my own remembrance - but I would have been more prepared for the cognitive dissonance.)

    Auckland • Since Jan 2009 • 811 posts Report Reply

  • Hard News: The other kind of phone tapping,

    IIRC there's a working, cutaway electromechanical pulse exchange at MOTAT where you can dial a number on a phone and watch the workings clunk away selecting the correct line. I could watch that for hours.

    Auckland • Since Jan 2009 • 811 posts Report Reply

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