Well he did kick some arse on the affiliate vote. When 2 out of three groups show tepid preference for one character, but the third group has a very strong opinion the other way, well...I guess that's how they set their system up. The affiliates really didn't like Robertson.
No I don’t. I’m saying there’s 3 times as many people needing to buy or rent those properties, than there are properties available for rent.
It's not really true, though, or should I say it's not very precise. You mean there are 3 times more people inadequately housed than there is housing currently offered for rental. I don't dispute that. But you don't seem to get that the pool of demand for housing is quite literally everyone, not just unhoused people, and that housing offered for rental is not the only housing that could be offered for rental, it's just the only housing that the owners want to rent out at the current likely prices. If rentals are much higher, then more houses and rooms will quite likely be made available, as the income from rentals looks more attractive. If you can only charge someone $100 a month for your house you might consider it not worth the trouble to even have them in there. If they have a lot more money, then rentals can be higher. Also, they can probably afford to commute further, so property further from their place of work becomes viable.
Yes it’s a function of price, but if supply increases and demand remains the same, price falls, so relatively the people buying/renting are better off.
There are two main points to make there:
1. Demand is a function of price. If price falls, you're talking about a different demand point along the curve. It will usually be higher, the lower price gets. So if price falls, demand will probably not remain the same.
2. Quibble 1 falls into insignificance in light of the point that the supply of houses here is 1.5 million, and the demand is the entire population of people who could viably buy a house here, including people not even in the country. Can you quantify at all what the effect of adding x houses to the housing supply will do to the price? Beyond identifying that there are some forces at work, can you put any kind of figure on how hard those forces push? After all, I can exert a force with my hand on a 10,000kg truck coming at me at 100km/h. It's almost certainly true that I'll slow it down. But will it be even noticeable, apart from the bang?
So while that might help some individual families, it’s just going to move underprivileged families around the bottom end.
That entirely depends on how much money we are talking about, and who it is given to. If it's amounts anywhere near the order of the cost of building tens of thousands of houses, it would go a heck of a long way to rentals. It could be extremely stimulatory to private house building to the extent that thousands of houses get built privately anyway, not to mention that places currently unoccupied might become viable to rent out, or the commute from them might not be financially crippling.
Which, again, should not be taken to mean that I don't think we should build houses. I'm just disputing that we'll get prices under control that way. Or even, for that matter, have a measurable impact on them. And without directly subsidizing people into houses (by, perhaps, offering them at a considerable discount to market rates), building them might not help the poorest people at all.
People living in substandard housing aren’t just doing so because they don’t have enough income.
No, but it's the single most important factor, by a long way.
If the Reserve Bank doesn’t take action, we may be stuck with the status quo.
Well both they and the government could do a lot to change things. But I don't think they will. The reasons are different, but connected. The government won't because they're inherently mean. The Reserve Bank won't because they're inherently deluded.
If there’s 20,000 rental properties available in any one month, and 50,000 families/groups of people looking for rental accommodation, then demand is 2.5 times supply.
You need to say the price you're talking about to make that comparison. Supply and demand are both functions of price. You are also equating the rentals in that formula, like they're a widget you can buy off a shelf, each the same as the next one. But property is inherently not like that, because their location is fixed, and the willingness of people to move into them is a function of their preferred location too. Basically, you can't talk about them in that way at all. It's not a helpful analysis. It quite literally does not mean that the rentals don't exist, that there isn't enough housing stock anywhere. It means there's not enough at the right prices in the right places.
Trying to sum that all up with a single number isn't going to work. A person does not have a single number that they are prepared to pay for a single property, as the totality of their demand. They have a desire to take a particular property that is a function of the price (usually monotonically decreasing), and they have another one for every other property they could buy, and it could be a very different curve. And every person has a different collection of these curves.
I know what I'm saying is hard to understand, I'm struggling myself. It's basically that the lack of housing is not simply a function of the amount of housing. It goes to the way that the housing that exists is distributed too. It's quite possible for people to be homeless when there are plenty of houses empty.
We’re looking for them to affect the situation of overcrowding and families sleeping in garages and sleepouts who need to get in at the bottom end of the market.
For sure, and I think state housing is a good way to help with that. So is giving the poorer families more money so that they could afford to move into houses that are actually available. There also might be a lot more incentive to rent places out if a lot more people have a lot more money to pay for them. What I don't think is a good idea is building state housing in the hope that it will drive prices down. It won't work.
We need private money and public money to be going into building new housing, not private money to be tied up buying existing housing stock that is already available.
Yes, new houses should continue to be built. But that's not going to alleviate poverty. That's what I'm saying. Only a policy of actually housing those in need will house those in need. Hoping that increasing supply will drive prices below demand (without even understanding what those ideas mean) will not help at all.
Our political parties have had more than a decade to get their heads around the issues yet not a lot seems to have happened.
Well to be fair, they are extremely complex issues. I wouldn't expect our political parties to have got their heads around dark matter either. But at least on dark matter we can be pretty sure what kind of people are going to crack it, whereas I don't have the least confidence that those charged with solving economic issues have either the skills or even the intention to actually come up with anything useful to anyone but those they perceive as their allies.
I don't think it's something we should just hand over to experts, any more than I think we should do that with questions of morality. Indeed, economic fairness IS a question of morality, rather than a question of science. It goes to what you actually believe is fair, not some objective facts about what is fair. There are no such facts. We decide what is fair, we don't discover it.
We may not, even if we understood it perfectly, have the power to significantly reduce house prices. But we certainly do have the power to build houses and give them to people who are in need. As a society, the question should not be around what effect that will have on house prices, and be found wanting if the effect is not enough. It should be around whether we think that kind of poverty alleviation is righteous and efficacious. It should be about who should get that alleviation and why, and who shouldn't and why. Of course it should be about how much it costs, and how the money could be better spent to the same ends.
But it should also be about the ends themselves.
I think we do have the power to affect prices, but only through measures that are quite extreme. They're macroeconomic, and they're just not on the table. We could seize control of the money supply itself. But this would be an extraordinary move, not something that any need short of catastrophe could motivate the public to back. Our conversation is limited to the tiny incremental movements possible under our inherently conservative system. Which means that we will never move beyond our local extremum without crisis.
As an analogy, we progress by moving uphill in small steps. But we reach the top of a hill, and there's nowhere up to go, only down. But we can see a bigger hill some way off. Unfortunately, the move to get to it is much more than a single step. So we're trapped. This is my problem with incrementalism as a complete solution. As a partial solution, it's great. Get us to the bottom of that other hill, and incrementalism will get us to the top very efficiently.
As soon as you tell someone you sold the house they all start saying ,you could have got more than that now, meaning this week.
Yeah, never look at the prices just after you buy or sell. What's the point? And I'm sure the money will be nice to have - so you're retiring to the north?
As Graeme Wheeler implies in the article, discouraging residential property investment may be an important part of the solution to the housing crisis.
Pity he won't give even a hint of what he thinks ought to be done. That would be committing to something and soothsayers are very careful about that. So long as he can talk about vague unquantified pressures, then he can't go wrong. You can explain everything with "but this pressure was too high, that too low".
"We have been thinking quite deeply about whether we need to introduce measures to discourage some of those practices", he said.
Thinking deeply huh? Who knew that you could just think the economy better. How many more decades will this Deep Thought go for?
Money is essentially printed into existence by a borrower’s future income and repayments, not by an equivalent deposit within the financial system.
It is indeed time to change the housing market, to create and provide affordable rental and owned homes, so that more investment goes into other activities, that produce stuff that earns a better, more secure living for the future. The state can play a major role in this, also able to afford lower credit interest rates, and in state housing take advantage of large buying power, to obtain cheaper building materials.
I think we should at least try. I'm not, however, optimistic about the ability of the state to do anything fast. I doubt their ability to even dent house prices with concerted building activity, within anything like our current expenditure parameters. There are 1.5 million households in NZ. How many places do you have to build to drive prices down 1%? Does anyone even know the answer?
All we get is the old chestnut that increased supply puts downwards pressure on price. But the pressure isn't quantified. It sounds meaningful, like it's analogue in physics. In physics it's force per unit area. Pick your force measure, pick your area measure. You get some choices - SI or imperial(ist), choose Pa or PSI. In prices it's what?
I really want to know. Is there even a unit for this word that is constantly bandied about like they really know what it means. Because I don't and it's not leaping out from any searching on the net.
However, your narrative is based on an assumption of property price inflation every 10 years. Why has that not happened in the case of Japan considering the country’s productivity and “developed nation” status?
Don't know. They operate in a very different way. It's quite a different economy. How do you even compare something of that magnitude with NZ? They reached a dizzying level of wealth and then pretty much flatlined. Flatlining sounds bad, but I'd be happy to flatline with that kind of wealth. Maybe affluence maxes out or something? I don't really know. We're a long way from being anything like Japan.
we do not have a property bubble as house price inflation was less than 20% over a recent 12-month time frame. What is he trying to tell us? Surely he has a quantitative framework to make this claim
I'd be amazed if he did. It's all vague bullshit - they pull on a bunch of strings and then make qualitative statements with some numbers to make them sound quantitative. A bubble can only really be clearly recognized in hindsight. If it doesn't burst, then in hindsight, he's right.
There’s quite a big market for stories about Bad things being done to Good people
Yes, Fair Go has been around since I was a kid. Was it even the same guys?