Polity by Rob Salmond

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Polity: House-buying patterns in Auckland

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  • Steve Barnes, in reply to Swan,

    Nailed?
    I think what he has nails is the real problem with the foreugn investmet problem. Property is not a good investment for the country. We need real investment in industry and technology, not property, unless you want to be a tenant in your own country like Maori have mostly become.
    At the real risk of being called a racist or worse? Xenophobic. I really think foreign ownership of land is the wrong way to go,for any sovereign state.
    We need more housing in Auckland for sure but perhaps we should be looking for foreign investment in the provinces to create employment and wealth for more than just the “well heeledThia needs a forward looking Government,not the financial clowns we have to put up with until the next election.

    Peria • Since Dec 2006 • 5521 posts Report Reply

  • BenWilson, in reply to Swan,

    Except that one fundamentally affects housing costs (i.e. rent), the other merely affects asset prices.

    When you own a house, or aim to own one, those are the same thing. The cost of owning a more expensive house is a larger mortgage. You’d have to be an economist not to realize this. Furthermore, if you buy a larger asset, it’s usually on the expectation of larger future gains, so asset prices do fundamentally have an effect on rents too. Which kind of explains why it costs more to rent more expensive houses. Again, this is not something I would expect an economist to understand. To them, it’s all in the wash, and money doesn’t really exist. Bankruptcy is just pre-greatness.

    Auckland • Since Nov 2006 • 10633 posts Report Reply

  • Alfie,

    Meanwhile, whole milk powder dropped another 13.1% in last night's GlobalDairyTrade auction. That will drive the NZ dollar lower making NZ property even more appealing to overseas investors.

    And so it goes on.

    Dunedin • Since May 2014 • 1386 posts Report Reply

  • Alfie,

    John Armstrong has a (rather brief) peek at restrictions on land sales to foreigners in seven other countries.

    Dunedin • Since May 2014 • 1386 posts Report Reply

  • BenWilson, in reply to Alfie,

    It's amazing, really. A Herald reporter who actually did a little bit of research. I came away from the Armstrong article a little better informed than I entered it. If only that could be a model for the rest of the Herald's commentary team.

    Auckland • Since Nov 2006 • 10633 posts Report Reply

  • BenWilson, in reply to Steve Barnes,

    I really think foreign ownership of land is the wrong way to go,for any sovereign state.

    I think it should be limited at the least. In the long run, there's no way that gradual racial integration can happen if foreigners are blocked from owning at all. And in bringing money here, something good is being done. But it can't be without limit or caveat. The rate at which we accept foreign capital ownership should roughly coincide with the rate at which we accept foreign immigration of their physical bodies. Then we have people that are investing a whole lot more than speculative hot money into the country. They're bringing their whole selves with it, their labour, their knowledge, their skills, their willingness to work, their culture. At a gradual rate, it gives everyone a chance to keep up.

    We do have limits on the total number of possible immigrants for a reason. The nation would quite simply not cope with unlimited bodies coming here. But when it's happening economically, the damage is harder to see. It shouldn't be hard to see, it should be utterly transparent, and controlled to reasonable limits.

    Auckland • Since Nov 2006 • 10633 posts Report Reply

  • BenWilson, in reply to Steve Barnes,

    I think you probably meant "non resident foreign ownership" anyway, right? Because it would be pretty hypocritical thing for an old Pom with multiple property assets and a Mexican mistress in NZ to be saying shouldn't be allowed :-)

    Auckland • Since Nov 2006 • 10633 posts Report Reply

  • Alfie, in reply to BenWilson,

    If only that could be a model for the rest of the Herald's commentary team.

    Agreed. And bingo... the Herald has a very informed commentary from Rodney Jones -- Principal of an Asian macro advisory firm based in Beijing.

    China is looking to implement a programme called QDII2, which will significantly expand the number of Chinese residents eligible to invest abroad in both financial assets and property.

    To express concerns about the potential impact of these flows is not racism; it is sensible macro prudential management. We need to ensure that the capital flows into the property market do not prove destabilising, or create the risk of financial or asset shocks in New Zealand. Moreover, there are very real distributional effects that as New Zealanders we should be very concerned about; inequality matters.

    Fortunately, Singapore and Hong Kong - and some cities in China - have been down this path before. We can draw on their experience. Singapore imposes a 15 per cent stamp duty on non-resident purchasers of residential property, as does Hong Kong. In China, in order to restrain the property boom in 2011 cities such as Beijing and Shanghai - amongst others - imposed a blanket ban on non-resident purchases of residential property, which in practice blocked purchases by Chinese residents from other provinces.

    I believe we should take the lead from Singapore and Hong Kong and impose a 20 per cent stamp duty on non-resident purchases of Auckland property. Moreover, we should use the measures announced at the last budget on IRD numbers and NZ bank accounts to ensure that any resident purchaser is the beneficial owner.

    This is not an anti-Chinese policy, in the same way that the Singapore, Hong Kong and Beijing property measures are not anti-Chinese. It is a macro-prudential measure, designed to prevent a property bubble.

    Dunedin • Since May 2014 • 1386 posts Report Reply

  • Sacha,

    Editorials from DominionPost and Otago Daily Times.

    Ak • Since May 2008 • 19686 posts Report Reply

  • Rob S,

    Overseas money from non-residents is driving up prices, all you need for a bidding war is 2 keen buyers i.e. one local and one from overseas with access to cheaper money and more of it and the local guy is stuffed. So the next auction he goes to, rinse and repeat.
    The banks are loving it as more people commit themselves to increasingly higher mortgages where they cream the profit for a very long period.
    Look at their profits which are at record levels.
    The real estate industry love it as they are usually on a percentage basis for their profit. Note that as house prices have tracked at a vastly higher inflationary rate to that of the country as a whole their cut has gone up exponentially in dollar terms with little downward fall. If they charged a standard fee as a set sum it almost certainly not cost as much to sell a house. All it does is to encourage more people into an essentially non productive business.
    To an extent the damage is already done. The fallout from this has the potential to stunt NZ’s growth for a generation as our nations youngest overpay for a house for the next 10-20 years, sending the money overseas to the banks.
    Same deal for our farmers who are now finding that what goes up comes down.
    The country is being bled white on a real estate ponzi scheme as our politicians, especially those in charge right now point the finger of blame whilst simultaneously sitting on their hands.
    National were happy to jeer down any attempt at controlling the property speculation industry whilst seeking election it is now time for them to show some spine and sort it out. If we could afford to build state houses previously why not now? It had a successful outcome for Mr Key.
    Encourage growth in the regions, improve public transport, admit that the Government can have a serious role to play in this mess. Something better than Nick Smith wandering around pointing at land he doesn’t own.
    The money spent on the flag debate has a whiff of Nero fiddling while Rome burns.

    Since Apr 2010 • 136 posts Report Reply

  • BenWilson, in reply to Rob S,

    The real estate industry love it as they are usually on a percentage basis for their profit

    Yup, which is why they can't be treated as impartial commentators, and it's also why they're crucifying the leaker. Not the only reason, of course - issues of confidentiality come up in data mining, even if they had agreed to it. It's their data and stealing it is illegal. It exposes them to risk, especially of reputation loss with a big client base. But I can't help but feel that they are also extremely pissed off that an insider would be leaking about what a massive, massive gravy train they're on. If the public debate leads to a lockdown of foreign capital, that's the end of the ridiculously good golden weather for them. We're not talking small potatoes. This leak could have cost them hundreds of millions in the long run.

    Auckland • Since Nov 2006 • 10633 posts Report Reply

  • steven crawford, in reply to BenWilson,

    I'd expected the police to have been involved in the data theft.

    Atlantis • Since Nov 2006 • 4316 posts Report Reply

  • Katharine Moody, in reply to steven crawford,

    I’d expected the police to have been involved in the data theft.

    It would be an interesting case - as I think the data eventually becomes public once the title transfers are registered by LINZ? Not sure what bearing, if any, that has on it - but would be interesting to see how the courts interpret it.

    Wellington • Since Sep 2014 • 798 posts Report Reply

  • BenWilson, in reply to steven crawford,

    Civil matter, surely? Someone broke their confidentiality agreement or something like it? Hardly a police matter. This is an insider...they didn't have to hack anything to get the data, presumably.

    Auckland • Since Nov 2006 • 10633 posts Report Reply

  • BenWilson, in reply to Katharine Moody,

    The name on titles is public data? Then why was a leak even needed? Surely it could have been purchased from QV or scraped off a website or something like that?

    Auckland • Since Nov 2006 • 10633 posts Report Reply

  • steven crawford,

    Theft as a servant?

    Atlantis • Since Nov 2006 • 4316 posts Report Reply

  • BenWilson, in reply to steven crawford,

    Probably summary dismissal and being slagged off around the entire industry and getting no reference is a severe enough punishment already. Must have been someone that felt passionately about the issue to risk that.

    Auckland • Since Nov 2006 • 10633 posts Report Reply

  • Katharine Moody, in reply to BenWilson,

    The name on titles is public data? Then why was a leak even needed? Surely it could have been purchased from QV or scraped off a website or something like that?

    Sure it is – QV sell access to the LINZ database – $5.95 for the Certificate of Title on any property – which gives you ownership details (names), references and interests (whether there is a registered mortgage against it and with whom).

    https://www.qv.co.nz/property-info/property-reports

    But the public cannot specify/customize their own query on the database, to my knowledge. So for example, if you wanted a query of say, all title transfers within a specific timeframe for all of the Auckland Council area – I don’t think that type of search option is available to the public directly with LINZ. And then many titles are in the ownership of trusts, giving no indication of country-of-origin of the beneficiaries of the trust. Also, ownership does not necessarily determine purchaser (I could buy anyone I want to a property and have the title registered in their name).

    Hence the need for a register/recording of country-of-origin at point of sale (as opposed to point of title transfer) if you want to understand country-of-origin for all foreign direct investment of capital in our residential housing market.

    At least that’s my understanding.

    Wellington • Since Sep 2014 • 798 posts Report Reply

  • Dismal Soyanz, in reply to BenWilson,

    According to the LINZ website you get:

    Property title records show a property's proprietors, legal description and the rights and restrictions registered against the property title - for example, a mortgage, easement or covenant.

    So the owner's name would be there. Obviously if you want thousands of records doing this legitimately costs a lot.

    Wellington • Since Nov 2010 • 310 posts Report Reply

  • BenWilson, in reply to Katharine Moody,

    OK…which seems to contradict the point you made:

    I think the data eventually becomes public once the title transfers are registered by LINZ

    You’re pretty much saying the data isn’t all public, ever, and even what is public is at considerable (at least for a lot of data) cost, which you’re meant to pay to get it?

    Hence my point, it’s probably technically some kind of crime to just hand over the database the real estate agent had built up without permission. Not only does it probably contain some information that couldn’t be got any other way, but such public information as it does contain has still been compiled at their cost into a convenient database. The data may not belong to them, but the database does.

    Not that we know what Salmond got, and I don’t expect him to divulge it. I doubt pursuing the leaker legally is a good idea – that carries even more risks of reputation loss than letting it slide. Do they really want their customers to know just how unsafe those records on them were?

    Auckland • Since Nov 2006 • 10633 posts Report Reply

  • Katharine Moody, in reply to BenWilson,

    You're right - that point was initially an over simplification.

    Wellington • Since Sep 2014 • 798 posts Report Reply

  • BenWilson, in reply to Katharine Moody,

    'sall good btw. I'm enjoying your contributions. It's on my to-do list to understand what the RB is going to do if property crashes out, since you indicated that there actually is some kind of plan.

    Auckland • Since Nov 2006 • 10633 posts Report Reply

  • Swan, in reply to BenWilson,

    When you own a house, or aim to own one, those are the same thing. The cost of owning a more expensive house is a larger mortgage. You’d have to be an economist not to realize this.

    If you own a house, changes in the prices of houses obviously dont make a difference to your cost of living. If you dont own a house you have the option of purchasing housing directly (renting) or "growing your own" housing (buying a house to live in). If the pricing of growing your own housing increases, this doesnt mean the cost of housing increases, even if you want to grow your own housing. The cost of transportation is in a city is not affected by the sale price of helipads in the CBD, no matter how much you want to fly a helicopter to work.

    Furthermore, if you buy a larger asset, it’s usually on the expectation of larger future gains, so asset prices do fundamentally have an effect on rents too.

    You have got causation wrong. Expectations of future rent increases affect house prices (at least in certain models of market behaviour), but that doesnt mean house prices cause rent rises. That makes as much sense as saying expectations of rent rises cause rent rises. And even if that were true, house prices would be a sympton of the underlying cause that is driving expectations.

    Birkenhead • Since Feb 2011 • 86 posts Report Reply

  • Lucy Telfar Barnard,

    I only just saw the break-down of sales by "name ethnic origin". The bit I found particularly depressing was the percentage of sales to "Pacific" names. It's true that plenty of Pacific people have "European" names, but still. 11% of the census population, but under 2% of sales speaks volumes about inequity, income disparity, and access to capital and/or tenure security. I know the Pacific population is relatively young, but I don't think the difference in age distribution comes anywhere close to explaining the difference in property purchases.

    Wellington • Since Nov 2006 • 580 posts Report Reply

  • BenWilson, in reply to Swan,

    If you own a house, changes in the prices of houses obviously dont make a difference to your cost of living.

    It made a difference to me when the change in house prices meant my equity got bigger and I didn't have to pay "low equity insurance" anymore. It also made a difference when I wanted to make minor improvements. I didn't have to wait years to save up the money, doing without it in the meantime. It was, quite literally, like having more money, and it still is. Until a crash of the magnitude you suggest, that is. Then it will be, quite literally, like having no money. Because I won't be able to go to an ATM and withdraw those paper things that I pay people to do things with any more.

    You have got causation wrong

    I'm not sure what this argument is about any more, this is a response to a response to a quibble or something. I was saying that modeling property prices involves a lot of factors and that it's babyish to present only a couple of them and try to boil the whole argument down to which one it is. I simply gave an example of two factors that could be so babyishly disputed. I don't intend to then get into a babyish dispute over which one is more important because that would defeat the purpose of my whole point.

    Auckland • Since Nov 2006 • 10633 posts Report Reply

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