Polity by Rob Salmond

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Polity: House-buying patterns in Auckland

521 Responses

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  • Alfie, in reply to Kumara Republic,

    And if Tiwai Point shuts down... we’ll probably have cheaper electricity...

    Unfortunately that's unlikely, unless you live in Bluff. The Manapouri power goes direct to Tiwai and there are no high capacity lines to ship it north when (not if) the smelter closes.

    Meanwhile, Steve Braunias opens The secret diary of ... A non-resident foreign investor for a bit of light relief.

    Dunedin • Since May 2014 • 1392 posts Report Reply

  • Rich of Observationz,

    The Manapouri power goes direct to Tiwai and there are no high capacity lines to ship it north when (not if) the smelter closes

    There are lines - the current problem is that they don't have capacity to ship power South, not North. Obviously, power doesn't have to be transmitted all the way from a generator to a user. If Tiwai Point closes, Manapouri will (e.g.) supply all the power to Dunedin and points south, so they won't sink power from Christchurch, which will mean there'll be more power for the North Island, etc.

    There's also a difference between peak power and continuous energy - even if the lines are at full capacity at peak times, they won't be at off peak times and it will be possible to export power north, avoiding the use of water in the Clyde and other dams.

    Also, the system is already being enhanced, both in the lower South Island and the Cook Strait interconnector:

    http://www.nbr.co.nz/article/if-tiwai-point-smelter-shuts-no-problem-getting-power-auckland-ck-138278
    https://www.transpower.co.nz/sites/default/files/plain-page/attachments/LSI%20Reliability%20GUP%20Attachment%20C%20-%20Power%20System%20Analysis_1.pdf

    Back in Wellington • Since Nov 2006 • 5550 posts Report Reply

  • Kalka River,

    <i>Well, we have a good comparison case to test this idea: the ethnically Indian population in Auckland. It has 8% of the population, 6% of the high-earning population, and it is growing even more quickly than the ethnic Chinese population, including through immigration at similar rates. That means the Indian population is subject to similar dynamics of incoming capital for new residents, and has the same need to find new places to live.</i>

    Effing stupid that is....the Indian age, earning profile is heaps different. For example Indians are allowed large families. Quite possibly for every one productive Indian investor in the country there are more kids, and brothers and sisters here through chain migration.

    Whereas for every one Chinese there are hardly any kids, brothers sisters etc.

    Does Twatford not know that not only in China where it is enforced, but most East Asian places including Hong Kong and Taiwan have the lowest friggin birthrates int eh world? Whereas the subcontinent has much higher birthrates.

    You need to consider the age profile, the earning potential, and the average net worth.

    By the way this analysis is bullshit.

    Don't want foreign buyers of land. Just friggin ban it then. Probably won't make a difference to prices.

    Banning land sales to foreigners is not racist.

    But Twatfords pathetic little stunt is.

    Auckland • Since Jul 2015 • 18 posts Report Reply

  • David Hood, in reply to Kalka River,

    Where are you getting your evidence for that from, because from what I could find in the public census Chinese nfd and Indian nfd are actually pretty similar?

    Dunedin • Since May 2007 • 1445 posts Report Reply

  • Katharine Moody,

    In relation to getting accurate data - here is a source/method suggested by a poster on another site;

    http://www.interest.co.nz/news/76601/latest-roy-morgan-poll-sees-national-suffer-sharp-fall-their-main-rivals-benefiting-first#comment-821036

    Wellington • Since Sep 2014 • 798 posts Report Reply

  • David Hood, in reply to Katharine Moody,

    I think it is missing the murky world of trusts (and that is something to look out for in whatever figures the government eventually releases form the information it is going to start to collect in October), but I would agree with the general idea that there are a bunch of ways the government could get reasonable data if it really wanted to.

    Dunedin • Since May 2007 • 1445 posts Report Reply

  • Katharine Moody, in reply to David Hood,

    Yes. I’ve been thinking that this wish to conceal by the government goes way beyond simply wanting to protect an ideological position (i.e., foreign investment is good). I actually think that if a major correction is on the cards (meaning the likelihood of our Aus banks foreclosing on a big chunk of the local private debt), then the last thing the government wants is any restrictions/disincentives toward direct foreign investment.

    Presently, offshore purchasers are competing with kiwis, but what if there are no kiwis to compete (i.e., virtually no local credit and little local cash) – we are a very, very indebted nation (private debt levels that is – public debt less a worry, but we still rely in that regard on foreign masters as well). And the bond markets will punish us based on sentiment and opportunity - little guys are lovely to pick off.

    Wellington • Since Sep 2014 • 798 posts Report Reply

  • Kalka River,

    "But can Labour conclude on the preponderance of all available evidence from the aggregate data that there is likely a large impact of offshore investment from China in Auckland’s real estate market? Yes."

    No.

    What a effing stupid conclusion.

    All you can conclude, is that people of Han Chinese ethnicity are disproportionately involved in house buying, relative to their percentage of the population in Auckland.

    You then cannnot simply jump to the conclusion that this is is “likely a large impact” on the market—–cause the market is affected by a whole lot of other factors.

    What has the large impact requires a far more fine grained analysis - not this babyish crude shit that you and Twatford put out.

    Auckland • Since Jul 2015 • 18 posts Report Reply

  • David Hood,

    In the last quarter REINZ reports about an increase of 4 billion dollars in house price sales compared to the previous quarter. The reserve bank reports that the total value of mortgages loaned by banks increased by about 1.5 billion in the same quarter. That is a rather large difference to account for without overseas money. Note: I am purely working with increases here.

    Dunedin • Since May 2007 • 1445 posts Report Reply

  • BenWilson, in reply to David Hood,

    Nice digging! That is more than just indicative. It does presume that mortgages are the main way that residents buy houses. They could buy outright from other assets they sell. But that's a heck of a lot of money. If they were switching from, say, shares, then you'd expect to see the sharemarket take a 2.5 billion hit.

    Auckland • Since Nov 2006 • 10647 posts Report Reply

  • David Hood,

    Going and looking at the share market, it looks to have been pretty flat in the grand scheme of things this year, in what measure the index is calculated by. Wages have also been pretty flat, Particular since only a few people's wages contribute to buying a particular price, the magic money didn't come from true remarkable wage growth either.

    Dunedin • Since May 2007 • 1445 posts Report Reply

  • Katharine Moody, in reply to BenWilson,

    Exactly. But mortgages (I suspect) are also the way most foreigners buy houses as well. So, I'd say, that's one heck of a lot of highly leveraged QE/ZIRP created money finding its way here.

    Wellington • Since Sep 2014 • 798 posts Report Reply

  • BenWilson, in reply to Katharine Moody,

    Would we even notice 4 billion in debt increase in the Chinese banking sector? Especially since shadow banking there seems pretty big?

    Auckland • Since Nov 2006 • 10647 posts Report Reply

  • Katharine Moody, in reply to BenWilson,

    Would we even notice 4 billion in debt increase in the Chinese banking sector? Especially since shadow banking there seems pretty big?

    One cannot discern anything of any size amidst smoke and mirrors :-).

    Wellington • Since Sep 2014 • 798 posts Report Reply

  • David Hood,

    Coincidentally, the Reserve Bank Foreign exchange monthly turnover is up about 4 billion over the latest three months I have house prices for compared to the previous 3 months. I need to note that I think the 4 billion in house sales numbers being about the same is a coincidence, as mortgage lending did go up in the period by 1.5 billion.

    Dunedin • Since May 2007 • 1445 posts Report Reply

  • nzlemming, in reply to David Hood,

    Where are you getting your evidence for that from

    "Evidence? He don' need no steenken evidence, meesta..."

    Waikanae • Since Nov 2006 • 2930 posts Report Reply

  • Katharine Moody, in reply to David Hood,

    Agreed - sounds like a coincidence. Just a note, any questions you have about RBNZ data will (normally) be responded to quite promptly by RBNZ in any email request. Every written inquiry is treated as if it were a request for official information under the OIA - even if you don't stipulate that it is a request under the Act.

    Wellington • Since Sep 2014 • 798 posts Report Reply

  • David Hood, in reply to Michael Homer,

    p.s. Michael, thanks for the info about the Linz data. I don't think it should be used for too exact time matches- looking in the Closed Access Group at the history of the property titles table, there were around 30000 rows updated on may 30th alone, and about 10000ish rows for all of June. So I suspect the title information gets updated in batches as the information comes through. This means snapshots would need to be over a fairly broad period for comparison purposes.

    Dunedin • Since May 2007 • 1445 posts Report Reply

  • William Ray, in reply to David Hood,

    Apologies if the question has already been asked but couldn’t the "magic money" gap be accounted for by pre-bubble homeowners in Auckland who haven't jumped on the property ladder? I mean there must be a decent proportion of owners who took out a mortgage in the mid 90s-early 2000s and have then seen their house valuation skyrocket without increasing debt.

    Wellington • Since Aug 2009 • 18 posts Report Reply

  • steven crawford,

    Random statistic: over 30% of Auckland homes where owned without being mortgaged in 2013.

    Atlantis • Since Nov 2006 • 4356 posts Report Reply

  • David Hood,

    Random statistic, fresh from the data. 8% of owners of property titles through all NZ have the characters "trust" somewhere in the name. at lot more of this is trusts of various kinds than people with the surname "Trust.."

    I'll ballpark the urban Auckland Area sometime when I have time, but this is the percentage of "grey area" when government starts collecting details.

    Dunedin • Since May 2007 • 1445 posts Report Reply

  • Katharine Moody, in reply to David Hood,

    And isn't the word "limited" also of interest in terms of the data? Many properties I imagine are owned by a limited liability company for one reason or other.

    Wellington • Since Sep 2014 • 798 posts Report Reply

  • David Hood,

    William, it hasn't been discussed here, but this is the reason I have focused on increases- If a house changes hands one person gets money and one person pays money. The person getting the money often pays off the mortgage and has some more beside, the person paying the money often needs to get a mortgage. But in the long term, it balances out in terms of total amounts of mortgages and house value if there is no extra money coming into housing (becoming mortgages were being created as well as destroyed). And this was the pattern from 2001 back to as early as I could find numbers for (early 80s for good numbers, but the trend seems much the same with more limited earlier numbers). From the early 2000s the amount of money being spent on increasing house prices is not being payed for- either from selling old houses, selling other asset classes, or loaning more from banks.

    Pre-bubble homeowners may individually do rather well when they sell their houses, but someone needs to buy the house, and that person (if they are part of the New Zealand Economy) needs to get the money to pay for the house from somewhere. It isn't coming from other household assets, it isn't coming from wage increases, and while household mortgage borrowing has increased, it has not increased to match the amount that house prices have gone up by (it looks more like it is being dragged along).

    Dunedin • Since May 2007 • 1445 posts Report Reply

  • David Hood,

    22.5% of properties have "limited" owners, given there are about 1.8 million private dwellings in the census and 2.15 million property records, there are about 16% of properties that are not houses, so even if limited was all the non-houses it is still nearly as many houses as the trust on top of that, so yes "being a company" could also very much obscure the governments record keeping of the market.

    Dunedin • Since May 2007 • 1445 posts Report Reply

  • Katharine Moody, in reply to David Hood,

    Yes, the more one looks into it - if one really wants reliable data on offshore foreign ownership of residential dwelling units, then a register is perhaps the best the way to go.

    Wellington • Since Sep 2014 • 798 posts Report Reply

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