Posts by Rich of Observationz
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It's nothing to do with immigration.
It's not a supply and demand thing. If it were, then at some point (as with out of season tomatoes or imported Japanese cars) a price level would have been reached where people weren't prepared to buy Auckland properties any more. By any rational standard, a shack in Avondale is not worth over a million dollars.
It's a bubble, pure and simple. If you bought a house in Auckland on a mortgage at any point in the last 15 years, you've gained a flow of tax free money, often in excess of what you could earn by actually working. It's got politicians re-elected (first Clark and then, when it slowed a bit, Key) and distracted people from the increasingly precarious nature of their actual earnings from work. It's unsurprising that half the world wants to join in - the demand to actually live in shacks in Avondale might be limited, the demand for free money is infinite.
And a crash *will* help. Prices will re-align with earnings as speculators are forced to bail. Hopefully, a government will be forced to implement radical policies to reboot the economy (e.g. building a bunch of high-density housing, a la Hong Kong). Either that or we'll get a Trump (one way to avoid that is to ensure National is in power when it all goes pear shaped).
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Hard News: Behind those Herald…, in reply to llew40,
There are actually two related structural biases:
- firstly, property inflation gains are undertaxed
- secondly, leverage is available to ordinary individuals on property purchases and not on any other asset class.This is not widely understood, but if I buy a house on an 80% mortgage and it appreciates by 10%, I make a 50% gain on my equity. Less the mortgage costs, plus the rent, but it works out at a yield way above the bare gain.
If it consistently depreciates, then my equity can be wiped out, but if I can still keep up interest payments, I'm unlikely to have the bank demand additional security.
Compare this to shares (or anything else). It's "possible" to borrow on "margin", but only for a short time, difficult to arrange and the moment the price drops, the broker will want an additional margin payment.
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Hard News: Behind those Herald…, in reply to Matthew Poole,
But if you're a CBD person, you *want* to work in a place with shops and bars and coffee and non-suburban people.
And if you're an inveterate suburbanite couple you get jobs in Takapuna and Albany with a sweet commute from your North Shore house, then one of your companies moves to Manukau and the other one out by the airport and suddenly you're both doing the commute from hell.
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Hard News: Behind those Herald…, in reply to Bart Janssen,
Did I explain why I'm voting National this time?
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Also, notice they were getting $470 in rent. A $640k mortgage costs about $800 a week to service in interest costs alone (plus obviously you have rates, maintenance, etc to take care of). So if they were actually fully financed, they'd be losing over $300 a week in real cash. Because they are spending their parents gift, they are only a convenient $10 in the hole before rates, etc.
Of course they hope to make enough of a tax-free gain to offset this. Taxpayers without rich parents, please note that the government is taking money out of *your* pockets to subsidise the kids in white T-shirts. I guess everyone's ok with this?
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Can anyone name a single instance where a politician or senior military officer has been successfully prosecuted for a war crime other than after their government has lost a war/revolution?
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It's quite clever though, the way it parses Wikipedia for collateral. The name "Emily Brown" is probably also chosen as the centroid of the namespace of PAS commenters.
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I'd imagine Jucy and Jetstar buy up lots of cheap space targeted at anyone from NZ - it's probably not more subtle than that. It's a cheap method of advertising, not least because of the low work factor for the advertiser - they don't need to make a business decision as to where they want to place ads or engage with the individual site owners.
And they can easily measure this stuff - when they sell an air ticket or rent a van through a click through from a site, they can see that the customer found them through a web ad and measure how many dollars they spend on ads for each dollar of revenue.
[Of course, this doesn't directly measure people who decide *not* to use them because of a misplaced ad, or people who become aware of their existence through ads and browse to the website directly].
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Hard News: The lessons of Prohibition, in reply to Carol Stewart,
The French got out of that (to some degree) by:
- modernising rapidly. Rural France in 1950 was like a developing country - the change from that to today's autoroutes, hypermarches and nuclear power stations was one of the most abrupt in Europe.
- constructing a political system (the Fifth Republic) that ensured the peasants would have a limited ability to interfere with the programmes of the elite -
Hard News: The lessons of Prohibition, in reply to Kumara Republic,
"according to science"
What is that site, anyway? It's looks like the kind of place one might pick up malware...