Home ownership makes difference

August 26, 2014

A young English woman told me that Margaret Thatcher’s policy which enabled people to buy the houses they’d been renting stopped her father striking.

When they lived in a rental house strikes had been regular ocurrances.

Once they bought their home, her mother wouldn’t let her father strike because they’d have got behind on mortgage payments.

Maggie's right. See National's plan here >> http://nzyn.at/firsthomes

Home ownership brings other benefits:

“. . .   National values home ownership.  That’s because it provides stability for families, strength for communities and security in retirement. . . .”

 

Yesterday John Key announced our election policy to double support for first home buyers, and let us access more of our own KiwiSaver accounts for a deposit. http://nzyn.at/firsthomes

 


It’s all about priorities

July 16, 2014

An  imbalance between supply and demand is pushing up property prices in a few places.

But, Glen Herud writes, you can afford a house in most places despite what people say:


This article, about young people investing property got me thinking.

I’ve had a few conversations with people who I’d describe as being middle class New Zealanders. They are earning around $100,000/year, yet they claim they can’t afford to buy a house.

As we talk it over further, it becomes clear that they actually can’t afford a house of the required standard in the desirable area of the major city in which they live.

It’s pretty hard to buy your first house in Queenstown, Christchurch, Auckland or Wellington, especially if you are not prepared to live in the cheaper suburbs.

But if you are prepared to live in the cheaper suburbs and start on the bottom rung of the ladder rather than several rungs up it’s possible.

Priorities

It occurs to me that people have priorities in their lives and when they say “we can’t afford to buy a house”, they really mean that they are not prepared to make the sacrifices required to get into home ownership. . .

He gives some examples of people who were prepared to make sacrifices and concludes:

Money gives you options

When you are young you have no money and I think all money does is give you options.

When you have no money you have limited options and you have to focus your limited resources.

It’s totally possible for young families to buy a house in New Zealand. The question is are people prepared to make the sacrifices required?

When I look at the people who tell me they can’t buy a house, I notice that they all eat out at restaurants regularly, there’s lots of money being spent of manicures and salons & plenty of nights out on the town & shopping trips to Melbourne.

The same thing applies to farming. I saw my parents move from Zimbabwe with nothing in there 30s, working as farm workers to buying their first farm 11 years later.

My first employer started dairy farming at 17 and was sharemilking 400 cows at 28 and at 40 years of age owns a large dairy farm, among other things.

These are all examples of ordinary people with ordinary intellect just getting on with it and getting ahead.

It’s all about priorities, attitude & peoples willingness to do what is required. . .

Too many people want to start where their parents finished and aren’t willing to work their way up to something better than what they can afford nor go without while they save so they can afford something better.

At least part of the housing ‘crisis’ is really a problem with priorities.


Incomes up, poverty down, inequality flat

July 9, 2014

The left tried to manufacture a manufacturing crisis and manufacturing improved.

They’ve declared a housing crisis and are particularly critical of the government’s social housing initiatives.

But Lindsay Mitchell reports good news on that front too:

. . . On the positive side,  in March 2008 the HNZC waiting list stood at 9,935. Now the number is 5,840 and includes those waiting for other social housing. A good news story for National. . .

And there’s improvement on two other problems on which the Left has been critical of the government – child poverty and inequality.

Social Development Minister Paula Bennett has welcomed the latest Household Incomes Report showing child poverty has fallen three percent.

“Today’s release shows we are making progress.  From a survey conducted between July 2012 and June 2013, findings show that median household incomes rose four percent in real terms in the two years since July 2011,” says Mrs Bennett.

“While the gains since 2011 were shared reasonably evenly across incomes, the global recession in the two years previous impacted slightly more on lower incomes.  The report also shows that trend-line inequality has remained flat.

“This latest research shows New Zealand households have bounced back.  In the past year 84,000 more jobs have been added to the New Zealand economy, 8,600 sole parents have come off benefit in the past year and there are nearly 30,000 fewer children in benefit dependent households compared to two years ago.

Moving from welfare to work is one of the best ways to address poverty for adults and any children who depend on them.

Yet the opposition have opposed and criticised every move National has made to help people get off benefits and on to wages.

“Nevertheless the Government recognises more needs to be done to support our most vulnerable families. 

“Which is why, on top of free breakfasts to all schools that want it, a social worker in all decile 1-3 schools and warming up nearly 300,000 homes, we are in this year’s budget investing nearly $500 million over four years in services and support for families. 

Initiatives include:

  • $171.8 million to boost the paid parental leave scheme. Paid leave will be extended by four weeks – starting with a two-week extension from 1 April 2015, and another two weeks from 1 April 2016. The eligibility of paid parental leave will also be expanded to include caregivers other than parents (for example, permanent guardians), and to extend payments to people in less-regular work or who recently changed jobs.
  • $42.3 million to increase the parental tax credit from $150 a week to $220 a week, and increase the entitlement from eight weeks to 10 weeks, from 1 April 2015.
  • $90 million to enable GPs to offer free doctors’ visits and prescriptions for children under the age of 13, starting on 1 July 2015. Over 400,000 more children will benefit by including six- to 12-year-olds.
  • An additional $155.7 million to help early childhood centres remain affordable, meet demand pressures and increase participation towards the Government’s 98 per cent target.
  • $33.2 million in 2014/15 to help vulnerable children, including eight new children’s teams around the country to identify and work with at-risk children and their families, to screen people who work with children, and to support children in care.

“Recognising that housing costs are a significant issue for low income families, the Government is investing $95.7 million of new money into social housing over the next four years.

“There’s more financial assistance to help people into private rentals to free up social housing for those who need it most, there’s new funding to grow more social housing in partnership with NGOs, and easier social housing assessment processes with the transfer of responsibility to Work and Income

“This Government is determined to improve the lives of children in low income families by targeting resources to services and support that are guaranteed to make a difference for those children,” says Mrs Bennett. 

The Household Incomes Report for the 2012 calendar year can be found at: www.msd.govt.nz

Lindsay Mitchell notes:

Using MSD’s Economic Living Standards Index (ELSI), hardship rates for children rose from 15% in the 2007 HES to 21% in HES 2011, then fell to 17% in HES 2012. The trend finding is robust, though the actual levels at any time depend on a judgement call on the threshold used.

 Poorer people will always be hardest hit by hard times.

But the government borrowed to take the hardest edges off the GFC for the most vulnerable and has put a lot of effort into addressing the causes of poverty – one of the biggest of which is benefit dependence.

There’s still a long way to go but the trend is in the right direction – inequality is stable, benefit dependency has reduced and poverty is declining.


Why not make it permanent?

July 1, 2014

Import tariffs on a range of building products will be temporarily suspended from today – a measure which is expected to reduce housing costs and increase competition in the residential construction sector, Housing Minister Dr Nick Smith and Commerce Minister Craig Foss.

“The building materials covered by the tariff suspension comprise about 90 per cent of the cost of the material in an average new house. Currently, these materials attract tariffs and duties that add an estimated $3500 to the cost of a new home. These will be cut to zero per cent tomorrow for at least the next five years,” Dr Nick Smith says.

“The scheme includes a comprehensive list of materials such as roofing, cladding, framing, windows, doors, insulation, plumbing and electrical components, fixed cabinetry, paint and builders’ hardware and fixings,” Dr Smith says.

“New Zealand is a small market for building materials. While we would prefer as much content as possible is locally manufactured, we need the competitive pressure of imported products to ensure we are getting best value for money,” Mr Foss says.

“It is through competition and choice for consumers that we keep costs down.”

The tariff suspension comes off the back of the Budget 2014 initiative to temporarily remove anti-dumping duties for building materials, for which legislation was passed under Budget urgency in May. The temporary suspension of tariffs on building materials will reduce Crown revenue by $5.5 million each year, which was provided for in Budget 2014.

“Suspending import tariffs on building materials is consistent with this Government’s strong public commitment to address housing affordability, particularly given the need for building materials for the Canterbury rebuild and increased construction activity across the country,” Dr Smith says.

“There is no single magical solution to improving housing affordability. We are freeing up land supply, reining in development contributions, cutting compliance costs and investing in skills and productivity in the construction sector. It is about making a whole lot of changes like removing tariffs and duties that aggregate together to make homes more affordable.”

I have just one problem with this – that the removal of tariffs is temporary.

When we spend a lot of time and energy extolling the benefits of free trade to other countries we have to be open to imports ourselves.

Tariffs protect inefficient producers and add costs to everyone who builds something new or repairs something old.

Why not make the suspension of tariffs permanent?


What about the provinces?

May 22, 2014

The debate on immigration and the pressure it might place on house prices is an Auckland and Christchurch centric one.

The demand for houses in those two cities is outstripping supply and the inevitable result of that is pressure on prices.

The sadly inevitable result of that is dog-whistle anti-immigration politics.

That’s a triennial hardy for New Zealand First leader Winston Peters as he tries to convert xenophobia into votes each election year.

To his shame, Labour leader David Cunliffe is echoing that dog whistle.

. . . The annual figure has plummeted too, from 34,100 to 11,000, but the immigration debate is now central to the political fight over house prices.

Because as well as more New Zealanders staying home than ever, more foreigners are moving here too – 71,210 in the last year, the highest in 11 years.

Labour leader David Cunliffe says their arrival comes at the expense of New Zealanders.

“Extra heat on our housing market drives up interest rates and exceeds the capacity of our education and health systems to cope,” he says.

Net migration is the crucial overall figure, which shows population growth is also at a decade high, up to 34,400 in the past year.

Treasury has predicted it could blow out to 41,500, and ANZ economists go higher, predicting 45,000.

Labour says the past ideal was just 5,000 to 15,000. . .

Auckland and Christchurch might not want many more people, but what about the rest of the country, in particular the provinces?

After several successive censuses showing the population declining in our district, last year’s census recorded a very small but very welcome increase.

That it was small in spite of the big increase in jobs that have come in the wake of irrigation means had it not been for that development we’d still have been going backwards.

That the debate on immigration focuses on Auckland, and to a lesser extent Christchurch, shows that the provinces aren’t on Labour’s radar.

If immigration is really a problem in some areas – and that is debatable – why does it have to be limited in areas which would welcome more people?

Why should the provinces pay the price for the poor planning decisions which have meant that the housing supply in Auckland hasn’t kept up with demand?

Why should we lose out on immigrants who could provide investment, workers and a population boost where they’re needed?

The xenophobes are quick to point out problems with immigration.

This picture shows the upside in the UK – is it likely to be different here?


English: Govt shouldn’t be business risk

May 21, 2014

Finance Minister Bill English gets it – the government shouldn’t be one of the risks businesses have to manage:

. . . “Governments need to create an environment of stability and good incentives for [businesses] to grow the economy. Businesses need confidence the rules will not shift and the Government is not one of the risks they have to manage,” English said.

It was also important for the Government to run a counter-cyclical fiscal policy which, right now, meant running surpluses, paying down debt, and limiting future initiatives in spending and tax cuts to what would not push interest rates higher than they need be.

Keeping a rein on its own spending is a far better government strategy for keeping pressure off interest rates than meddling with the Reserve Bank Act and Kiwisaver payments which Labour is proposing.

What had driven mortgage rates over 10 per cent on the eve of the last recession was the combination of runaway government spending and runaway house prices.

There was no single answer to “ridiculously expensive” house prices, he said, especially as councils made many of the decisions about land availability and other regulatory imposts.

“They need to understand that decisions planners in Auckland make about the minimum size of balconies will affect returns to a cray fisherman off Fiordland.” . . .

Steep increases in property prices are primarily a function of supply not keeping up with demand.

Council policies and nit-picky actions by planners over minor details slow new builds.

The housing price issue isn’t a national one.

The problem is mostly an Auckland and Christchurch one but by putting pressure on interest rates it affects the whole of the country.

Council there have a big role to play in solving that by making it much easier to increase the supply.

Meanwhile the government must continue to play its part by keeping a tight rein on its spending.


Rural round-up

May 5, 2014

Luxury lifestyle pays milksolids dividend - Heather Chalmers:

The middle of the Mid-Canterbury plains is an unlikely place to find two massive barns housing milking cows.

Unlike New Zealand’s typical outdoors pastoral grazing system, the 950 cows from Pannetts Dairies’ herd at Mitcham, near Rakaia, spend most of their milking season inside the purpose-built barns.

While cows are free to wander out to paddocks if they wish, it is no wonder they prefer the indoors life, where their every need is catered for. As well as having a nutritionally complete feed available at all times, cows can rest on one of the 940 individual beds lined with rubber mats and make use of an automated back scratcher resembling a carwash brush. Using the barn system, cows will be milked and calve year round, rather than the more typical spring-calving seasonal production. . .

Living at the mercy of milk prices – Lyn Webster:

Being a non-shareholding supplier, my only vested interest in Fonterra is my cows and machinery.

In the perfect world I should be raking in enough cash to pay my lease, increase production and start buying my own shares.

But at the rate I’m going with drought and drying off early and doing eff-all production, it seems like a bad joke and I continue to rely on the farm owners’ shareholding to supply milk.

I am in a strange position as most dairy farmers own both cows and company shares, but I am also not alone because I bet there are many sharemilkers out there whose contracts changed after TAF and they are receiving milk price only and no dividend. . .

 Truffle season ready to delight – Ashley Walmsley:

THEY probably aren’t going to fill the winter fruit bowl of most kitchens but Australian black truffles are now in season.

One truffle expert is doing her best to educate Australians on exactly what to do with the highly prized delicacy.

Sara Hinchey of Melbourne’s Truffle Hound said even those without royal (French or Italian) blood can revel in the rich yield of black truffles from the colder regions of the nation.

Ms Hinchey’s expertise has led her to team up with several leading Melbourne restaurateurs in a series of special dinners and workshops to showcase a range of ways to prepare and consume this extraordinary and little understood subterranean mushroom. . .

An affinity for the rural sector – Sally Rae:

When David Paterson started work as a rural valuer more than 30 years ago, things were very different.

A day could be spent walking over a farm using rudimentary equipment, as there was no such thing as digital cameras or GPS units.

”When I started in 1981, you’d sit on top of a hill and look down and try and draw on the map where a gully was. Nowadays, of course, technology really has taken control,” Mr Paterson, the Dunedin-based national manager for Rural Value, said. . .

Interest in 9 dairy farms ‘positive‘ – Simon Hartley:

The likely multimillion-dollar sale of nine Southland farms owned by debt-ridden state-owned enterprise Solid Energy appear set to be concluded.

In what was considered one of the largest multi-farm offerings in the country, tenders closed a month ago on the more than 2000ha of the combined nine farms, which covered millions of tonnes of low-grade lignite coal.

PGG Wrightson real estate general manager Peter Newbold had been confident of interest in the farms, given recent demand for dairy land had exceeded supply. . . .

Budget 2014: New funding for rural and Māori housing:

The Government has announced new funding of $16 million over four years to support the repair and rebuild of rural housing, the improvement of housing on the Chatham Islands and the development of Māori social housing providers.

“New Zealanders living in remote rural areas face a number of unique and often difficult challenges, including the cost and availability of decent housing,” Associate Housing Minister Tariana Turia says.

“That is why the Government has allocated funding to improve housing in rural New Zealand, including the Chatham Islands. Compared to the rest of the population, significantly more Māori are experiencing housing deprivation and are more likely to be state tenants or renters than home owners.

“Iwi are incorporating housing into their long-term planning and the Government currently has accords with at least five iwi. Budget 2014 will take major steps to help iwi and the Crown achieve these housing aspirations. . . .


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