Posts by BenWilson
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Polity: A week on from the housing controversy, in reply to Katharine Moody,
Yes, they take for granted that P/E ratios tell the whole story of bubbles. I don't really need a great deal of evidence that Auckland's P/E ratios are very different to the rest of the county. The question for me isn't whether this ratio has "bubbled", but whether this ratio still tells us the story that they think it does. If the fundamentals have actually changed then a time series analysis doesn't shed much light - we're in a situation where the future doesn't resemble the past.
How could the fundamentals change, you ask? Well, if conditions change, then it's not out of the question. It seems like it's pretty hard to model the main condition that might change and massively affect everything - what foreign buyers feel about it, how much money they might have to spend. Which is why they conclude:
Such corrections have occurred in many other countries that have experienced house price inflation in recent years. Yet the New Zealand real estate market has very largely been spared such major corrections over the last two decades. International factors may now be playing a role in the New Zealand market, providing some degree of insulation from downturns as new money drivers from foreigners, immigrants and ex patriates assist in sustaining demand side market pressure on prices and, in the process, bringing the prices of desirable real estate, particularly in Auckland, coastal and island locations, in line with prices of similar real estate overseas. As indicated above, such pressures have inevitable spillover effects on the rest of New Zealand real estate
They don't actually conclude that there will be a correction. They conclude that of the two ways that P/E ratios could return to "rationality", either by rents rising or by prices falling, that prices falling is the more likely option. But whether "rationality" will return is left as the great unknown that it is.
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Polity: A week on from the housing controversy, in reply to Sacha,
That’s novel. Who else has been bidding prices eternally higher?
Well, it is possible that people who are not speculating any more than anyone else who buys a property are buying them. As in, of course they want it to go up, but that's not the main reason they're buying it. They could just want it, and have more money to spend and few other places to spend it.
Put another way, it could be a pool of people with a fundamentally different idea about the value of Auckland property than NZ residents. They need not be just in it for a quick buck. In other words, this might not be a bubble, it might be a boom.
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Polity: A week on from the housing controversy, in reply to BenWilson,
I mean, an obvious candidate to do this research would have been the Reserve Bank itself, this giant body tasked with understanding the drivers of house price inflation. It probably wouldn’t even cost them so much, since their own staff could do it. Even without a government mandate to compulsorily collect residency information, they could still collect it by sampling, as you say. It stretches credibility to think they wouldn’t have even thought to try to obtain such information.
ETA: Then again, we are talking about a body that thinks it already does understand all the drivers. Maybe they are that stupid.
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Polity: A week on from the housing controversy, in reply to steve black,
I’d pick a random sample of names from the list and start contacting people and explain the research being undertaken.
This list was obtained by a "leaker". So you start contacting people on it who dealt through Barfoot and Thompson. I can see a number of problems arising from that immediately - B&T will not be happy, if they get wind, which I think they probably would, pretty quickly.
But say you'd got their buy in, in the first place, then yes, this could be done. It might be a tiny bit redundant to do it, though, because B&T themselves probably have a pretty good idea of the answer anyway - if they actually agree to attempting to collect this information, it would be a trivial matter for them to do it themselves. They'd only have to ask their agents to provide the information if they had it, or ask for it if they didn't.
Presuming it is done without their buy in, though, it would be good to get a feel for just how much such a survey would cost. I don't know if the phone numbers were part of the leaked data. Getting them has to be factored in, if not. We're talking somewhere in the range of 30 to 100 hours? 30 under the ideal condition that you have a list of phone numbers and every single one of the 400 odd in the 10% sample answers and gives you 5 minutes for your survey, in a language you can understand. 100 hours as a number I pick out of thin air to account for the non-ideal conditions. Maybe it's 5 times more, I don't know.
Could be done. Why has no one done it? Not just Labour, but anyone? Winston Peters could afford that kind of survey, probably. Why has this data been so hard to get straight? It's almost impossible to believe that no one has cared enough in NZ to just spend the $20,000 that this sounds like it would cost. I'd be pretty surprised to hear that the major real estate agents haven't collected it themselves anyway, just as part of their own marketing analysis.
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Polity: A week on from the housing controversy, in reply to David Hood,
It's also a lot to expect if there is only limited interest. You've been down the road before of cranking out solid numbers and people not really getting into it much. Where some less solid numbers provoke massive attention. I can't promise anything more than my own attention. Nowhere near as exciting as an ethno-political standoff, nowhere near as easy to form an opinion about, or to pick a side.
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+1 to that Katherine. A discussion reset coming from other directions than just Rob's revelation of a week and a half ago would perhaps shed light on where/how this could have been done instead without getting bogged down in all the moral issues that surround this research. It could be very constructive. It could also free this thread and all others to go for broke on the racial conflict angle. I don't think they should stop at all, so long as people feel they're getting something out of it and they haven't degenerated to a racist shit fight, something we're in dire danger of here atm.
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Polity: A week on from the housing controversy, in reply to Rob Salmond,
It seemed to me that you made a mistake in presuming a lot about the way Keith and Tze Ming were thinking, without consulting them directly on that. That would have been both more polite and more sensible. People are always going to react differently to hearing such a thing for the first time on an open blog post, rather than via private communication first.
Other than that, I'm pretty much sympathetic to what you did with this data. I'm not feeling the debate about racism at all. It should definitely happen somewhere and I'm not surprised a lot of it is happening here, but there's nothing new in any of it to me, whereas what you came out with was actually interesting to me, as yet another piece of evidence of a very serious social issue in NZ.
Naturally it's complicated by virtue of being strongly associated with a powerful political party.
I'm going to take my leave from any aspect of the debate that goes toward the racial conflict angle. I just don't feel it can or will go anywhere further. We all know how we feel about this, and I at least have a pretty good idea about how most other people feel. It would be nice (for me) if there were somewhere the debate could continue in which that angle is strictly avoided from the start as a premise for discussion.
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Polity: A week on from the housing controversy, in reply to Deborah,
Makes interesting reading. I was unconvinced back then that foreign investors were driving prices up. What a difference more data makes. Even getting the info that lots of houses are not being rented out was an eye opener, let alone the probable scale at which money is coming in, from David Hood's insights into mortgages. On Rob's thread from last week, I'm arguing the exact opposite to what I was saying on the Cracker thread, because I genuinely thought that racism was likely to be altering people's perceptions of how much investment was going into property in Auckland from China. Now I'm not sure that it's only racism. It could be both racism and the fact that there's a heck of a lot of Chinese mainland investment going on.
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Polity: House-buying patterns in Auckland, 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?
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Speaker: Identification strategy: Now…, in reply to Katharine Moody,
Such a forever increasing value (intrinsic or otherwise) only doesn’t ‘pop’ provided the QE/ZIRP music keeps playing.
Any real reason to think it can't? Both seem like they could perpetuate the control of the world by the finance system all the way until everything belongs to the tiniest imaginable group, the last stand of merging banks until they are stormed by hordes of the impoverished. That could take a very long time to play out.
I don't think it's a good way for it to go. Better would be money supply intervention by any one of a million other ways that don't involve giving free money to banks so they can lend it at a profit to people to buy houses. But that would involve our understanding of economics NOT being dominated by the word of the finance industry itself. In this day and age that everyone trusts specialists to know what they're doing, because there are so many that do actually know what they're doing, it's going to be pretty hard to convince the world that this particular bunch, in control of basically the most important knowledge for ordering the species that there is, either doesn't know what they're doing, or doesn't want anyone else to know that they do know what they're doing and they're fucking it up on purpose.
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