Hard News by Russell Brown

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Hard News: Housing, hope and ideology

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  • Jack Harrison,

    The exception is those who managed to land with a mortgaged home, but don’t have the income to service it

    That transaction can not be serviced by the state. That is a stupid purchase.

    wellington • Since Aug 2014 • 296 posts Report Reply

  • Sacha, in reply to steven crawford,

    Poverty sucks. And by the way, it has almost nothing to do with children rocking up to school in barefoot.

    That is however one of the official measures in the ELSI living standards survey.

    Ak • Since May 2008 • 19686 posts Report Reply

  • steven crawford, in reply to Sacha,

    You really need to put the books down and get some fresh air:)

    Atlantis • Since Nov 2006 • 4316 posts Report Reply

  • Jack Harrison, in reply to steven crawford,

    Yellow card.

    wellington • Since Aug 2014 • 296 posts Report Reply

  • Kumara Republic, in reply to Marc C,

    I wonder whether Key and English read from the same (song-) balance sheet.

    Apparently not.

    RadioNZ - Key, English at odds on State housing

    The southernmost capital … • Since Nov 2006 • 5418 posts Report Reply

  • Marc C, in reply to Kumara Republic,

    The media reports quoting what English and Key say change by the day, at present, and it seems that Bill English, who I think was the first to mention the target of up to 20,000 state houses up for sale, was a bit ahead of himself. But then again, Key has at times defended the sales of up to 20,000, and at other times denied any such large number of planned sales.

    Key also claims, selling a third of Housing NZ stock is "not asset sales". Here some news stories:
    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11344052
    http://www.3news.co.nz/nznews/state-housing-sell-off-worth-5b-2014100618
    http://www.radionz.co.nz/news/national/258382/'too-many-gaps'-in-state-housing-plan

    I think that English got a bit overly bold after the election win, and made an announcement, while they have not really got their grips about it yet, what exactly they will do, and how they will go about it. This is an opportunity for the opposition to attack, as National is showing all these contradictions and a serious lack of reliable planning ahead.

    Akl • Since Oct 2012 • 437 posts Report Reply

  • Jim Cathcart,

    The model for income-based rental housing exists in Japan. But the issue of affordable housing is confounded by that NZ's private savings has been heavily invested in the existing housing stock. The problem with this is that with so much of the country's wealth wrapped up in houses, any social housing initiative is going to potential stymie the whole mechanism by which NZers have lived and saved for financial independence. House prices relative to income are so high now that people will feel aggrieved if the "price" of their houses fall or go through a period of deflation as witnessed in countries that have suffered through property crashes.

    The irony is that investors often suggest that negative gearing is a subsidy for renters as opposed to a tax benefit for the landlord (no evidence exists to suggest that it is. Rents cannot rise above the ability to pay).

    To blame Key and the National Government for this mess is short-sighted. Sure, their support base is likely to be negatively affected by a large-scale social housing initiative, but the problem started with the liberalization of finance for people to invest in the existing housing stock. There is little to incentive for the private sector to build new housing. It doesn't make economic sense. The Labor Government was aware of what was happening in the 2000s, but it was far to easy to keep the punters happy with rising house prices and shifting the onus of debt burden from the public to the household.

    Since Nov 2006 • 228 posts Report Reply

  • linger, in reply to Jim Cathcart,

    What is this “Labor Government” of which you keep speaking? NZ has no such party. (It barely has a functional Labour Party at the moment.)

    That aside, you’re probably right that National don’t want to build state houses at least in part because they don’t want property prices to fall. But they’ve already had six years in charge; it’s no longer “short-sighted” to blame National for the worsening problem.

    Tokyo • Since Apr 2007 • 1889 posts Report Reply

  • Jim Cathcart, in reply to linger,

    The 5th Labour government (1999-2008). You know, the ruling power that sat through one of the most destructive credit bubbles in human history and let the FIRE industry fuel the fire without any thought to how it might impact NZ into the future.

    Since Nov 2006 • 228 posts Report Reply

  • Jim Cathcart,

    The damage had already been done by the time the GFC hit. QE, the pervasive carry trade, and the freewheeling banks have enabled the scenario to get worse.

    In Australia, the major banks hold about $10 of equity capital for every $100 of business loans they make (so they are circa 10 times leveraged) For housing, they can have as little as $1.50 of equity for every $100 of home loans financed (thereby permitting 67 times leverage). I cannot quote for NZ but you should expect the same.

    Can you seen an issue here if property values fall and we experience an external shock to the banking system?

    Since Nov 2006 • 228 posts Report Reply

  • steven crawford, in reply to Jack Harrison,

    Yellow card.

    Sacha started it, by linking to that survey, as if it equals a point, rather than giving his point of view.

    By the way, the ELSI survey counts children, only as appendages of the household. And yes, it does include shoes as a measurement of wealth/poverty. More bizarrely, the survay places shoe ownership as an important poverty assessment tool. Its right up there with being unable to afford overseas holidays or an automatic washing machine.

    Atlantis • Since Nov 2006 • 4316 posts Report Reply

  • Sacha, in reply to steven crawford,

    by linking to that survey, as if it equals a point, rather than giving his point of view

    Fact, not opinion. People here can follow sources themselves. We all get things wrong from time to time, no need to get defensive about it.

    Ak • Since May 2008 • 19686 posts Report Reply

  • Sacha, in reply to steven crawford,

    the survay places shoe ownership as an important poverty assessment tool

    Decisions like that are professionally statistically validated and compared with similar government hardship surveys around the world (fact, based on having done some work with the people who made that survey).

    I reckon they get some things wrong, but that's not one of them (opinion).

    Ak • Since May 2008 • 19686 posts Report Reply

  • WH,

    Great post Russell. Phil Twyford's reaction was spot on as well.

    Since Nov 2006 • 784 posts Report Reply

  • Lucy Telfar Barnard,

    On the poverty front, I would see the lack of shoes being included in the index as being a way of measuring extreme poverty. Poverty isn't a on/off thing, it has degrees, and I would see all three of those questions (overseas holidays, automatic washing machines, shoes) as being useful clues to where on the poverty continuum people sit.

    The problem with this is that with so much of the country’s wealth wrapped up in houses, any social housing initiative is going to potential stymie the whole mechanism by which NZers have lived and saved for financial independence.

    That depends on how you manage it. At present unmet housing need in Auckland alone is measured at about 30,000 houses now, and 13,000 houses a year subsequently. Meeting that need should mean house prices just stop going up so bleeding fast, rather than dropping in value. You can deal with the high prices by letting time and inflation reduce the real value of property.

    If people are living in the houses they own, any drop in real value won't make a difference to them. If they're not living in them, then it's too bad. Every bit of financial advice over the decades has warned property investors that they're not immune to changes in the market: they made their investments knowing that risk, and if that risk is to a small extent realised and leaves them with a smaller nest egg than they were counting on (though it's still likely to at least be the value they originally invested plus inflation), they'll still be better off than people who had their retirement savings in anything-corp in the 80s, or finance companies in the noughties.

    Wellington • Since Nov 2006 • 580 posts Report Reply

  • steven crawford,

    A pair of leather school shoes, cost ruffly $60. They are mandatory at uniform schools.

    Fact, your average policy analyst gets paid more than that per hour. And from what I know anecdotally, your average policy analyst places a more than average emphasis on there own personal shoe collection, amoung other symbols of status.

    Atlantis • Since Nov 2006 • 4316 posts Report Reply

  • Lucy Telfar Barnard,

    I’m not quite sure what your point was there steven, but your “fact” is a bit off.

    The average salary of policy analysts in June 2013 was $88,912. If we assume 37.5 hours/week, that's 1950 hours over the course of a year (including paid holidays), which is $45.60/hour. Before tax (relevant because shoes are not tax deductible).

    Wellington • Since Nov 2006 • 580 posts Report Reply

  • BenWilson,

    I doubt shoe-less kids in this country refers to high school kids at all. Seems more likely to be about primary schools, which mostly don't have uniforms.

    Auckland • Since Nov 2006 • 10633 posts Report Reply

  • steven crawford, in reply to Lucy Telfar Barnard,

    OK, my point was that people have different priorities. People who work in offices prioritize shoes. People who live in rural provincial towns, have different prioritys. It would be easy to make inacurate assumptions about people’s economic well being by simply looking at there feet.

    I have said this before, in regards life jackets on boats. When we place to much emphasis on one thing, life jackets, we forget about hypothermia and dehydration.

    Mabe we should be paying pollicy analysts a bit better.

    Atlantis • Since Nov 2006 • 4316 posts Report Reply

  • Joe Wylie, in reply to steven crawford,

    It would be easy to make assumptions about people’s economic well being by simply looking at there feet.

    Missing or discoloured adult teeth seem to be a reliable indicator of social caste. NZ dentistry is pricey, and WINZ doesn't offer much by way of assistance.

    flat earth • Since Jan 2007 • 4591 posts Report Reply

  • Jim Cathcart, in reply to Lucy Telfar Barnard,

    So, off the top of your head, you believe that micro-managing supply "should mean" that you can control price rises keeping everybody happy. You would be popular in a Len Brown regime, but I think that's an unrealistic claim, even if you have the econometric modelling to support you. In fact, it is that mentality that has got us to this point that we're in now. And I will call you on it.

    Since Nov 2006 • 228 posts Report Reply

  • steven crawford, in reply to BenWilson,

    I doubt shoe-less kids in this country refers to high school kids at all. Seems more likely to be about primary schools, which mostly don’t have uniforms.

    When I was at primary school in Mt Eden during the 1970s, there was this rule. We could arrive at school in bare feet so long as we wore short pants. Most kids chose the short pant option, a lot of the time.

    Atlantis • Since Nov 2006 • 4316 posts Report Reply

  • Ian Dalziel, in reply to Joe Wylie,

    a plaque on their house...

    NZ dentistry is pricey, and WINZ doesn’t offer much by way of assistance.

    I got the impression they were heading WINZ towards
    an 'indentured worker' model...
    ;- E

    Christchurch • Since Dec 2006 • 7889 posts Report Reply

  • Lucy Telfar Barnard,

    I spent my childhood in a rural provincial village. Everyone there prioritised having a pair of gumboots pretty highly, and would also have prioritised having a pair of "good" shoes (for weddings and funerals and dances and trips to Auckland) and a pair or ordinary shoes (possibly jandals if they were feeling poor) for going into town when it was too warm for gumboots. . At school we were in gumboots in the winter and barefoot in the summer, but we did aim to own a pair of shoes that fit - though occasionally poverty prevented that aim.
    The survey doesn't make assumptions about people's economic well-being by looking at their feet. It makes assumptions based on what people have, or have done. I have yet to meet anyone who has no shoes out of choice (and if I did, I'd be wanting to know whether they could afford shoes if they wanted to). Even the guy at work who goes barefoot all the time out of choice has a pair of shoes that he keeps in his car because it's illegal to drive in bare feet. Of course you may know someone who is an exception to this, but that's why surveys ask lots of people rather than just one - and also why there are questions later in the survey about what people think are important, which would help identify whether not having an item on the flashcard list was a choice/priority rather than a question of affordability.

    Wellington • Since Nov 2006 • 580 posts Report Reply

  • Joe Wylie, in reply to Ian Dalziel,

    I got the impression they were heading WINZ towards
    an ‘indentured worker’ model…
    ;- E

    Last I checked, which was back in the St Helen era, WINZ might help with a no-interest loan for repairs, but you buy your own.
    ;-€

    flat earth • Since Jan 2007 • 4591 posts Report Reply

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