It’s not all bad

March 25, 2020

The tourism slump could provide an opportunity for would-be renters:

Property investors are pulling properties from Airbnb to offer as long-term rentals instead.

New Zealand’s tourism industry has come to a standstill as the country responds to the spread of coronavirus.

A spokeswoman for Trade Me said usually 6 per cent of Trade Me rental listings were offered furnished. But since March 14, when the self-isolation rules were first announced, that number had increased to 11 per cent.

“This puts the total number of fully furnished rental listings at double what they were at the time last year,” she said. . . 

Economist Benje Patterson said huge number of Airbnb units had been put back into the rental market in Queenstown in particular. . . 

One reason for a shortage of rentals and homes to buy has been the number of properties being used for holiday rentals.

Landlords have been able to make more money with fewer hassles using the likes of Airbnb than they could with renting longer term.

“There are also large numbers of houses becoming available as people who have lost their jobs have moved out of rentals or have left New Zealand to head back to their home countries. I have seen reports of landlords throwing their hands up in the air and letting people break leases, rather than being stuck with someone who can’t pay rent. In other cases, there is evidence that tenants have done a runner.”

He said it was worrying because a big drop in yields for investors would push some to sell.

“A flood of forced sales, at a time when confidence to purchase a home is low, could cause severe instability to pricing. There is likely to be moves by the government over the next week or two to implement mortgage relief in order to prevent such forced sales. The last thing the government wants is for a mass rush to the exit push other homeowners into negative equity and compromise financial stability in anyway.” 

There probably wouldn’t be a lot of argument against mortgage relief for homeowners.

There might be more argument if it is extended to property investors especially when so much has been said about escalating property prices and the difficulty people have buying their first homes.


Why not more of what works?

February 24, 2020

Leilani Farha, UN Special Rapporteur on the right to housing, visited New Zealand and left us with several recommendations including a rent freeze and capital gains tax.

I have yet to see or hear what the visit cost us, but the government that invited her, could have saved all that by asking Steven Joyce who has much better recommendations

. . . Before we embark on another “housing crisis” complete with politically partisan policy ideas that turn out to be mirages (come on down Kiwibuild), let’s have a look at all the housing policy changes that have occurred over the last decade and assess what practical lessons they provide about the New Zealand housing market.

The first is that land supply is hugely important if you want to build more houses.  . .

The price of houses is a reflection of demand outstripping supply and one of the reasons for that is restrictions on where people can build and the cost of developing new areas for housing.

The premier case study on land availability is post-earthquake Christchurch. Pre-earthquake the local councils developed a “smart growth” plan where they agreed what land around the city would be released for housing progressively over the next thirty years. Then, alongside the lives tragically lost in the earthquakes, massive numbers of houses were made uninhabitable virtually overnight.

After the quakes, amid dire predictions of skyrocketing house prices, Gerry Brownlee took the radical decision to release the whole thirty years of land at once. There was much sucking of teeth at local and central government, but it was the right call.

As the result of competition amongst developers tens of thousands of Christchurch families were able to use their insurance payouts and reasonably priced new home and land packages to successfully re-establish themselves. Christchurch house prices have since been some of the most reasonable in New Zealand. 

The second lesson is about the availability of finance. The Global Financial Crisis dried up bank finance and laid waste to non-bank lenders. The lack of finance for new builds crippled the building market and it took years to recover. That’s a cautionary tale for the Reserve Bank, whose heroic new bank capital ratios will reduce available bank finance, albeit more gradually than previously proposed.

The more banks have to hold, the less they will have to lend and the more expensive the lending will be.

The third, and arguably biggest lesson from the last decade is the now obvious role low interest rates play in driving high house prices, and indeed all asset prices. Every time interest rates have got ridiculously low, house prices have shot through the roof as people bid up prices to the limits of the mortgage they can now afford. This price inflation seems fine if you already own a house, but it perpetuates the wealth gap between those that own houses and those that don’t.

Lower interest rates allow people to afford bigger mortgages, that enables them to pay more for houses and that feeds price increases.

Ultra-low interest rates are driven by governments worldwide contracting out wider economic management to central banks, which then have to compensate for poor microeconomic policies flattening growth. You might not think an oil and gas exploration ban, poor quality government spending, and backward-looking employment policies lead to ever higher house prices, but indirectly they do.

There are lessons out of the rental housing and social housing markets. It is crazy to persist with a single monopoly state housing provider when it has never in its history managed to successfully meet the demand for social housing. It’s also not sensible to let one person have the same state house for life irrespective of changes in their family and personal circumstances. The rapidly growing social housing waiting lists compared to two years ago provide the evidence there. . . 

How can a government that cares let a couple or single person occupy a house with multiple bedrooms while families with several children are homeless?

Then there’s the added compliance requirements and accompanying costs that lead to fewer rentals.

That’s not to say never change anything about residential tenancies, but perhaps don’t whack landlords with a dozen negative changes over, say, three years.

To make housing more affordable, the last decade’s experiences tell us to greatly increase land supply, ensure a ready supply of build finance, put less pressure on the Reserve Bank to lower interest rates to keep the economy going, enlist community and NGO help in supplying social housing, and stop treating the vast bulk of residential landlords like they are pariahs. Oh, and forget a more punitive capital gains tax – countries with one of those have the same skyrocketing house prices as we’ve had.

There are valid arguments for a capital gains tax but reining in house prices isn’t one of them.

If CGTs haven’t worked anywhere else, there is no reason to expect they’d work here.

The high cost of housing is a major factor in poverty and all the problems that stem from that.

Why did the government waste money on the UN expert whose recommendations wouldn’t work, when a local one has a much better recipe that would work?


Govt shouldn’t be competing with private sector

February 18, 2020

Attempts to get onto the property ladder are being made more difficult by a government agency:

A first-home buyer has been left disappointed after Housing New Zealand, now called Kāinga Ora, bought out the apartment development she was purchasing a unit in.

The woman, who did not want to be identified, signed an agreement to buy a one-bedroom apartment in the Onehunga Bay Terrace Development, being built by Avanda.

She paid a 10 per cent deposit, of $54,200, at the start of August last year.

But in November she was told by real estate agents selling the development that the developer had entered into a conditional agreement with Kāinga Ora for it to buy the unsold units in the development. 

She said she was told if that happened she would be given the chance to cancel. She said she requested more information through her lawyer but was told there was no requirement to tell her anything further.

On January 16, she was sent a deed of cancellation by the developer, cancelling her agreement. She was told she would get her deposit back, plus the expenses she incurred in the deal, such as legal fees and the cost of a valuation. . . 

Housing is supposed to be one of the government’s priorities.

It won’t solve the shortage if its own agency is shutting out private buyers.

That’s unfair competition which does nothing to solve the problem of over demand and under supply.

The government should not be competing with the private sector in the housing market.

It should address the underlying reasons for the housing shortage, chief of which is the difficult and expense consent process.

 


Rural round-up

January 2, 2020

Henry’s letter proves a hit – Murray Robertson:

YOUNG Tairawhiti farmer Henry Gaddum penned an open letter through The Herald in mid-November that has gone ballistic as readers nationally picked up on his concerns around the theme of Carbon Credits and Pine Trees.

It has been viewed more than 14,800 times on The Herald website since publication, and has been shared widely on Facebook and Twitter.

In it, Henry voiced his deep concerns, and the concerns of others, about the future of the region when it comes to land use and he wants to do something about it. . .

Year in Review: Hawke’s Bay farmer’s heartfelt Facebook post goes viral :

Year in Review: This heartfelt social media post from Hawke’s Bay farmer Sam Stoddart went viral in September. In it he pointed out the strong connections New Zealand farmers have with the communities around them. It was one of The Country’s most popular reads of 2019.

In September Stoddart told The Country he was surprised by the strong reaction to his post, which at that point had nearly 6000 reactions and nearly 3000 shares.

“For a vent to mates out of frustration on Facebook it certainly has gained some momentum.

I can’t believe the positive feedback though. For over 700 comments only about five are negative. Maybe the rural urban divide isn’t as big as we think. . .

Central housing demand prices worry fruit growers – Tess Brunton:

Central Otago fruit growers say housing could come under more pressure as their industry expands.

A recent Southern DHB report found a lack of housing availability was driving up housing prices in Central Otago, forcing some to live in crowded homes or even sleep rough.

While many orchards have staff accommodation available, some businesses say they’re losing good staff who can’t find a permanent place to live.

Sarita Orchard manager Matthew Blanch said he was not sure how fruit growers would find enough staff if big orchard proposals went ahead. . .

Reflecting on our rural past and building for the future – Nikki Verbeet:

Hope. It’s fundamental to our psychology to have something to look forward to, writes Nikki Verbeet.

It would be fair to say that hope hasn’t been in abundance in our rural sector of late.

There is no doubt the sector is experiencing rising costs, environmental pressures, public perception issues, shrinking price margins, cash flow challenges and pressure to meet compliance obligations – all of which impact confidence.

Research around mental health indicates that to have hope we need three things: . . 

Rodeo ‘great thing for the community’ – Hamish MacLean:

After more than three decades in Omarama, rodeo is alive an well in the Waitaki Valley town.

Under sunny skies, the 33rd annual Omarama Rodeo drew hundreds to Buscot Station for the penultimate Christmas series rodeo on Saturday.

“You can see by the crowd — people still enjoy it,’’ Omarama Rodeo Club president Jamie Brice said.

“And this is a great thing for the community. It brings money into the wee town.” . .

High country cattle grazing by Victorian family – Stephen Burns:

Grazing cattle in the Victorian high country has been a practice extending over 150 years, but very few families now take advantage of the summer pastures on the Alpine plains.

But the McCormack family from Mansfield, Victoria proudly continue the timeless trek taking three days to drove their Angus cows with calves slowly along the Buttercup Road over Mountain Number Three to the flats alongside the headwaters of the King River. 

Other Mansfield district families have long had an association with the High Country and include the Lovicks, Stoney’s and Purcell’s. . .

 


Labour pains, National delivers

December 18, 2019

National promised eight policy papers this year and they’ve delivered.

The government promised this year would be their year of delivery and they haven’t.

You’ll find National discussion documents here.

You’ll find the government’s broken promises here.

They include: child poverty heading in the wrong direction, the level of homelessness is appalling, elective surgery numbers have dropped, economic growth has dropped from 4% under National to 2.1%; job growth has fallen from 10,000 a month under National to just 3,000 under Labour; per capita growth is only 0.5 per cent a year compared with average of 1.7% a year during the last five years under National; the number of people on the dole is up by 22,000, the number of New Zealanders heading overseas has increased by 10,000 a year, the billion trees promise isn’t being delivered and won’t be, not a single cent of the the $100 million Green Investment Fund that was supposed to kick-start $1 billion of investment in ‘low carbon’ industries has been invested, the  commitment this year to making the entire Government fleet emissions-free by mid-2025 was dropped, the government hasn’t been able to find a credible way to introduce a royalty on bottled water exports without trampling all over trade and other agreements with countries New Zealand does business with, yet another working group was set up to address waste minimisation but hasn’t come up with anything yet, the bold goals for housing have been dropped, The 4000 new apprentices target has been quietly dropped. Only 417 have started the Mana in Mahi programme and 32% of them dropped out . . .

Rodney Hide sums it up saying the year of delivery got lost in the post:

This was supposed to be the turnaround year. Prime Minister Jacinda Ardern declared 2019 her Year of Delivery. Nothing has been delivered. Her promise has proved, like her government, empty and meaningless. 

The tragedy is that we accept it. It’s enough that politicians feel and emote; there’s no need to do or achieve anything. We should perhaps rename the country New Feel-Land. . . 

That’s the Year of Delivery done and dusted.

But there’s always next year. The prime minister has plastics again in her sights. She says it’s what children write to her about most. There are news reports she’s planning on banning plastic stickers on fruit.

I scoffed when we had government by focus group. We now have government by school project. . . 

Garrick Tremain sums it up:

What’s all that hot air doing to our emissions profile?

Reducing those is another failure, in spite of the commitment to reducing them being the PM’s nuclear-free moment, they’re increasing and will continue to for the next five years.

A new government ill-prepared for the role might have been excused a first year finding its feet but there’s no excuse for failing so badly to deliver in on its promises in what was supposed to be its year of delivery.


Home and away

November 4, 2019

More than a third of New Zealanders think the Prime Minister is too focused on overseas.

The latest Newshub-Reid Research Poll asked New Zealanders: “Is the Prime Minister too focused overseas?”

    • Most said no: 55.3 percent
    • But more than a third think Ardern is too overseas-focused: 35.9 percent
    • Even some Labour voters agree: 14.3 percent. . .

One of a PM’s roles is international relationships and overseas travel is part of that.

My criticism isn’t the time she spends away and her international focus per se, it’s that there are too many problems at home on which she doesn’t appear to be focused and which she either isn’t addressing or is addressing poorly.

Here’s just one example:

All her year of delivery is delivering is disappointment.


Red tape rules

October 18, 2019

Louis Houlbrooke tweets:

 

Anyone seeking causes for New Zealand’s poor productivity, housing shortage and high cost of building should start here.


Making more houses more expensive

October 16, 2019

Retirement Commissioner Peter Cordtz is suggesting people could be allowed to withdraw KiwiSaver funds to buy investment properties:

Home ownership has been declining for the past 30 years, from a high of about 78% in the 1980s, to about 55% today.

Māori and Pasifika have fared the worst – today only 35% of Māori and 20% of Pasifika own their own homes.

About 12% of New Zealanders aged 65-plus are renting, making them eligible to apply for the Accommodation Supplement if they are struggling. The cost to taxpayers of the accommodation supplement paid to people 65+ has already increased 92% in the past six years, from $88 million in 2013 to $170 million in the year ended March 2019.

This is on top of the cost of NZ Super, currently $39 million a day and forecast to rise to $120 million a day in 20 years due to the ageing population.

“Super wasn’t designed to cover rent – it currently pays $411 for a single person; $632 for a couple. At that rate, it assumes you have housing sorted,” says Cordtz.

“The cost of declining home ownership is a problem that affects all of us, and we need a circuit breaker,” says Cordtz. “If we can get more people on the property ladder earlier, there may be less liability to taxpayers later.”

One idea open to public submissions is to loosen the KiwiSaver rules related to withdrawing savings for a deposit on a first home. Currently, the KiwiSaver member has to live in that property, but high house prices in cities like Auckland, Wellington and Tauranga mean it is difficult for members who work in those cities to purchase a home there to live in.

“If they could buy a property in a more affordable part of the country, they could use it as an investment to progress on the property ladder or simply to retire to one day,” says Cordtz.

He says the idea originally came from a Māori mortgage broker who was trying to help clients buy property near whānau in areas other than where they worked.

“We see this as an idea that could help a lot of New Zealanders get on the property ladder and create a long-term investment to aid retirement,” says Cordtz. . . 

I see this as an idea that could make it harder for a lot of other New Zealanders get on the property ladder.

High prices in several places is a problem for people wanting to buy their first home or upgrade an existing one, and not just the cities mentioned. Wanaka and Queenstown are at least as expensive.

The root cause is one of supply and demand.

Allowing people to use KiwSaver funds to buy investment properties will give people a bit more to spend but do nothing to increase the number of properties available.

Won’t that spread the problem of rising prices fueled by demand outpacing supply to other places, many of which have lower wages than in the places where people are already struggling to buy a first home?

The last thing would-be home owners in smaller towns and less densely populated cities need is buyers from other places competing with them and spreading the problem of property inflation wider.


Property rights matter to all

September 24, 2019

Who’s standing up for property rights?

The Government’s handling of Ihumātao has shown it has no respect for property rights, Leader of the Opposition Simon Bridges says. 

“It’s been eight weeks since the Prime Minister told Fletcher Buildings it had to stop developing much needed houses on land that it owns. Since then, Fletchers has not been invited to be part of negotiations. It’s had to sit on the side-line as others have tried to take away its rights.

“It has set an appalling precedent for a Prime Minister to insert herself into the business of a private company and prevent it from building 480 much needed houses.

Does the Prime Minister even have the right to tell a company it can’t go about its lawful business on its own land?

“No wonder business confidence has plummeted when the Prime Minister shows such blatant disregard for businesses and property rights.

“It doesn’t matter where in the world the Prime Minister is, it’s time for her to set the record straight. She needs to tell the protestors to go home, make it clear that the Government won’t be spending taxpayers’ dollars on buying the land and rule out any sort of deal.

“This matter doesn’t concern her. It’s time to butt out and give Fletchers back the land they legally own.”

Jacinda Ardern’s interference has done nothing to solve the problem. It’s made it worse.

If the government gives, or loans, the Iwi anything at all towards purchasing the land, it will open up the opportunity for every other iwi to renegotiate what were supposed to be full and final Treaty settlements.

Worse than that, it has sent a very clear message it doesn’t respect property rights which are a fundamental building block of democracy.

Private property was exempt from treaty settlements for a very good reason. The wrongs treaty settlements were to compensate for were started when Maori property rights were ignored in the past and could not be righted by infringing other people’s, including those of Maori, in the present and future.

Property rights matter for everyone and it is well past the time when the Prime Minister’s interference in Fletchers’ right to exercise theirs must stop.


Water woes not just rural

September 19, 2019

It’s not just farmers who are facing huge costs from the government’s proposed freshwater strategy.

. . .Rural residents are showing up in their hundreds to public meetings about the scheme, despite it being the busiest time of year for them. But on the whole townies don’t seem to be so aware of the proposals, Federated Farmers environment spokesperson Chris Allen said.

“This package affects urban – our city cousins, as much as it does farmers. This is going to be huge, this is not just a farming package.

“The fact that it affects councils [means] everyone needs to understand that it’s a big undertaking and it’s going to cost a lot of money, so expect rates to go up.”

The package announced on 5 September includes plans to improve the health of waterways, such as national standards for managing stormwater and wastewater, and tighter controls on urban development. . . 

What will this do to the government’s purported aim of solving the housing shortage? Tighter controls on urban development will add costs to building and reduce the supply of new houses.

Engineer and clean water advocate Greg Carlyon has previously told RNZ the changes were likely to cost “many many billions”.

These costs include those from what has to be done to meet new standards and loss of production; the army of advisors who will be needed as well as more compliance officers and council staff.

Anti-farming activists have highlighted the impact animals and chemicals can have on rural waterways. There’s been very little attention paid to urban run-off . The more concrete and tar seal, the more people and pets, and the more vehicles there are, the more run-off there will be and the more detrimental the impact on water quality.

A lot of towns and cities also have inferior sewer and stormwater systems the upgrading of which to meet the proposed standards will be very, very expensive.

We all want clean water but the answers to the questions of how clean and at what cost won’t just impact farmers. They will add constraints and costs to urban activities and increase council rates for us all.

If any candidates for council elections are promising no rates increases, ask them have they taken into account the cost of meeting the requirements of the freshwater policy and if so what services will they be cutting to ensure rates don’t rise.


Counting down

June 30, 2019

David Farrar has been doing a regular count-down on what’s required for the government to keep its KiwiBuild promise:

I don’t usually gamble, but am confident to wager they’re not going to make it, even with all the new ministers.


Labour pains National delivers

January 31, 2019

The National Party will put an end to tax bracket creep:

A National Government would link income tax brackets to inflation, ensuring income taxes are adjusted every three years in line with the cost of living and allowing New Zealanders to keep more of what they earn, National Leader Simon Bridges says.

“New Zealanders’ incomes are struggling to keep up with the rising cost of living because this Government is imposing more red tape and taxes,” Mr Bridges said in his State of the Nation speech in Christchurch today.

“Over the next four years, New Zealanders will be paying almost $10,000 more per household in tax than they would have been under National. The Government is taking more than it needs, only to waste billions on bad spending.

“On top of that, by 2022 New Zealanders on the average wage will move into the top tax bracket. That’s not right or fair. So in our first term National will fix that by indexing tax thresholds to inflation.

“We will amend the Income Tax Act so tax thresholds are adjusted every three years in line with the cost of living. That will mean that within a year after every election, Treasury will advise the Government on how much the thresholds should be adjusted for inflation.

“This would prevent New Zealanders from moving into higher tax brackets even when their income isn’t keeping up with the rising cost of living. It would ensure New Zealanders keep more of what they earn to stay on top of rising costs of living such as higher prices for necessities like petrol, rent and electricity.

“We will include a veto clause so the Government of the day can withhold the changes in the rare circumstances there is good reason to. But it will have to explain that decision to New Zealanders.

It would take a very serious change in economic health, or a very stupid government, to do that.

“The changes would make a real difference. Assuming inflation of 2 per cent, someone on the average wage would be $430 a year better off after the first adjustment, $900 after the second and $1,400 after the third.

“A family with two earners – for example, one earning $80,000 and the other $40,000 – would be $600 better off a year after the first adjustment, about $1,300 after the second and $1,900 by the third.

“That’s more of their own money in their own bank accounts.

“The first adjustment would prevent Kiwis from paying an extra $650 million a year in tax based on today’s estimates. We can afford that by managing the books prudently and spending wisely.

“We will also do more on tax – but add no new taxes – and I’ll continue talking about our plans between now and next year’s election.

“National is committed to helping New Zealanders get ahead. This step means that as well as cancelling new taxes this Government has piled on, we won’t allow future governments to use inflation as an annual tax increase by stealth.” 

This is a very positive start to the political year from National and a stark contrast to Labour’s which featured what amounts to an admission of failure on their flagship policy:

KiwiBuild’s “interim” targets for this electoral term have been scrapped as the Government recalibrates the programme.

Prime Minister Jacinda Ardern and Housing Minister Phil Twyford told media from their caucus retreat on Wednesday that their commitment to building 100,000 affordable homes over the next decade remains intact, but the interim targets for this term did not.

The Government has been dealing with the fallout from an admission by Twyford that the Government would not be able build 1000 of the homes by July 1, its first interim target. Instead it expects to build just 300.

The KiwiBuild policy aims to build 100,000 affordable homes for first-home buyers over 10 years, half of them in Auckland. . . 

They expect us to believe they can build 100,000 affordable homes in a decade when they can’t build 300 in the first year?

Labour is planning to waste money on houses for a relatively few people earning well above the average income. National has committed to letting people keep a bit more of their own money.

It gives voters a very clear choice – Labour pains over housing or National delivering clear policy to end bracket creep.

 

 


KiwiBuild is KiwiFail again

January 24, 2019

A report from the New Zealand Initiative calls KiwiBuild Twyford’s tar baby:

  • Relative to income, dwelling prices in New Zealand are among the highest in the OECD. This is New Zealand’s housing affordability problem in a nutshell.
  • High population-driven demand growth has collided with inflexible supply-side constraints.
  • Land prices have sky-rocketed, but construction costs are also too high.
  • KiwiBuild cannot hope to materially increase home ownership proportions – the original 2012 objective. Additional housing, if achieved, will likely lift renting and ownership more or less in tandem.This report explains why KiwiBuild – defined as the government’s pledge to build or deliver 100,000 homes within a decade – fails against all the objectives set for it:
    • It is not about social housing to help those at the bottom.
    • Nor is it about helping struggling first-home buyers. They cannot afford KiwiBuild homes at current costs. KiwiBuild is for the relatively well-off.
    • It is intended to be subsidy free, since wealth transfers to the well-off are hard to justify. But its inducements to attract private developers are subsidies.
    • Even more paradoxically, if there were no subsidy, there would be no gap for KiwiBuild to fill. Private developers will meet unsubsidised market demand.
    • It cannot hope to increase the housing stock sustainably. Only enduring lower property prices can induce people to own more dwellings than otherwise. KiwiBuild reduces neither land values nor construction costs at the margin.
  • The enduring effect of the policy is a changed composition of the housing stock by decree rather than by public demand.
  • KiwiBuild is floundering having no clear public interest objective. It constitutes a massive political and bureaucratic distraction from what is really needed – direct action to reduce land values and construction costs.

The government should not be in the business of subsidizing property developers and people on well above average incomes.

It purports to be focused on helping the poorest and most vulnerable.

Instead, policies like KiwBuild and fee-free tertiary education waste millions on people who aren’t poor, many of whom are or will be wealthy.

Not only is it a bad policy, it hasn’t a show of meeting its target to build 1000 houses by July.

KiwiBuild is KiwiFail again.


KiwiFiasco

December 10, 2018

Last month we learned only seven of Wanaka’s KiwiBuild houses sold.

Last week we learned Housing Minister Phil Twyford hadn’t bothered to run his decision to substantially reduce the penalty KiwiBuild rule breakers would face face for flipping homes past the Prime Minister or cabinet.

We also learned five Auckland KiwiBuild houses failed to sell off the ballot and the runners-up didn’t want them either.

Mike Hosking sums it up:

• A housing scheme that doesn’t have enough money put in, in the first place. That’s Treasury’s assessment.

A housing scheme that won’t contribute anywhere near what the Government said it would to the market. That’s from Treasury and the Reserve Bank.

• A housing scheme that isn’t even close to getting people locked out of the market into a home, given the prices.

• A housing scheme in parts of the country that’s actually more expensive than the open market prices already in play.

• A housing scheme that doesn’t actually have any real demand, given they extended the ballot in places like Wanaka.

• A housing scheme with some homes in Auckland now on the open market, due to the fact the people who won the ballot didn’t want the property, and the runners up didn’t either.

• A housing scheme that is unilaterally being fiddled with, with our money, by a bloke whose head is so big it can’t get through a door.

• And now, a housing scheme that because they changed the rules unilaterally, now needs a dedicated team to monitor who is selling their houses for the profit they’re allowed to keep due to the changes of rules, and that team costs upwards of half a million dollars a year.

That was before Saturday when we learned that the chief executive of KiwiBuild, Stephen Barclay, had resigned a month ago, after just five months in the job, but no-one bothered to let the public know.

KiwiBuild is turning into KiwiFiasco.

 

 

 


KiwiCon lottery gets better for lucky few

November 8, 2018

KiwiBuild – or as it should be KiwiCon –  isn’t popular in Wanaka:

The South Island’s much-heralded first foray into KiwiBuild home ownership has been a bit of a fizzer — at least so far.

So few prospective homebuyers have entered the ballot for 10 KiwiBuild house and land packages in the Northlake suburb of Wanaka that the developer has asked to extend the ballot period by 10 days.

The ballot was due to close on Thursday.

KiwiBuild senior media adviser Mark Hanson said yesterday 20 ballot entries had been received.

‘‘Some houses have received no entries and the developer has asked us to extend the ballot to Sunday, November 18, to allow for people who they are working with more time to work through their pre-qualification process.’’ . . 

And Housing Minister Phil Twyford has backed down on penalties for those who flip KiwiBuild properties early:

Documents obtained by Newshub show owners will no longer have to give up all capital gain they make on the house if they sell it within three years. . . 

When Labour announced the policy in 2016, its plan to stop buyers reaping windfall gains was they must not on-sell their home for five years – or else they had to hand all the money they made to the Government.

That’s now changed to if buyers sell within three years, they must give up 30 percent of their profit. . .

There is big money to be made. Based on the last three years, the average price of a home in Papakura has risen from $569,000 to nearly $700,000, meaning house owners could have made $130,000 in the last three years.

That means even after the 30 percent penalty applied by the Government, they’d still pocket more than $90,000.

A $90,000 profit for selling up after three years – that’s very easy money.

But you don’t have to wait three years – you will get to keep 70% of the profit it you sell the very next day.

This is not the first KiwiBuild backdown we’ve seen. Since being in government, Mr Twyford has changed the price caps, the eligibility criteria and now this – a change which has the potential to leave KiwiBuild open for abuse.

With each announcement the KiwiBuild lottery gets better for the lucky few who win.

The government keeps saying KiwiBuild houses aren’t subsidised but if the government isn’t putting money in why would the owners have to hand over any profit if they sell?

At the very least there’s an opportunity cost with money spent on this policy not available for spending on the many areas of much greater need – and that’s people on well below the income level for those who qualify for the KiwiBuild lottery.

You can follow progress on the scheme here – so far only four houses have been sold.

 

 


Growing middle income welfare

November 1, 2018

Housing Minister Phil Twyford says KiwiBuild houses aren’t for the poor:

​KiwiBuild isn’t intended to help low-income families, Housing and Urban Development Minister Phil Twyford says, in the face of criticism about some of the scheme’s first buyers. . . 

To qualify for a KiwiBuild house, buyers must have joint income up to $180,000 as a couple, or $120,000 as a single person.  Buyers must be first-time purchasers or in the same financial situation as first-home buyers.

KiwiBuild houses sell for up to $650,000, for the largest homes in Auckland.

Twyford said KiwiBuild was aimed at building affordable houses because market failure has led to only 5 per cent of houses being built in this price range in recent years. 

“KiwiBuild is aimed at those families who years ago would have expected to own their own home but have been locked out of the market because of the national housing crisis,” he said.

“It is not a programme aimed at low-income families because they may not be able to service a KiwiBuild mortgage.” . . 

If the houses aren’t for the poor, why are taxpayers’ paying for them?

Houses that are only affordable for people on well above average incomes are affordable in a very limited definition of the word.

People earning that much ought to be able to afford a house without taxpayer assistance.

It might not be brand new. It might not be in the best condition. It might not be in a really desirable suburb. But it would get them on the housing ladder which is a big step above anything low income people could afford.

Labour purports to be the party that helps the poor but its policies increasingly use taxpayers’ money to help people who aren’t poor, boosting the growth of middle and even upper income welfare.

 

 


KiwiCon

October 29, 2018

The new owners have moved into the first KiwBuild house.

. . .”It feels amazing, it feels like we have won the Lotto,” said Jayne, who at 25 and about to graduate as a doctor, was thrilled at winning a ballot for one of the first 18 KiwiBuild homes at McLennan Park.

Jayne and her 24-year-old partner Ross, an online marketer, were on the verge of giving up hope of getting on the property ladder in Auckland before “getting lucky” with KiwiBuild. . .

This is Lotto at the taxpayers’ expense.

The new homeowners have won but Auckland Action Against Poverty isn’t impressed:

 While the Government prioritises its flagship home-ownershp scheme, tens of thousands of people continue to be homeless in Aotearoa, with no hope of being able to ever afford living in one of these Kiwibuild homes. Auckland Action Against Poverty warns that the focus on building so called affordable private housing, subject to market speculation, will further exacerbate the housing crisis, instead of fixing it.

“KiwiBuild homes are out of reach for the working poor and the unemployed, who are the ones facing the real brunt of the housing crisis. With a price-tag of half a million dollars, KiwiBuild homes are a future speculator’s dream”, says Ricardo Menendez March, Auckland Action Against Poverty’s Coordinator.

We echo the concerns of Monte Cecilia Housing Trust’s Bernie Smith, who called KiwiBuild a ‘community trainwreck’. Displacing thousands of public housing tenants in order to build private housing in public land is a form of partial privatisation of public land, and will cause distress for the tenants evicted.

“The planned net increase to the social housing stock will only be marginal. In South Auckland, the Government is planning to build 10,000 new homes, 3,000 being state homes, which will be built after demolishing 2,700. This means that altogether only a few hundred additional state homes will be available for our fast growing homeless population.

“The Government needs to recalibrate its priorities and instead focus on building far more permanent social housing than it is currently planning. For that to happen, Housing New Zealand needs to be properly resourced and public land needs to be used to house people in public housing, not unaffordable private houses.

“In a few years time we’ll have state led gentrification, with middle and high income earners being able to access some of the KiwiBuild homes while those at the bottom continue to struggle with fast rising rents and lack of social housing.

“We are calling on the Labour Government to get its priorities right and focus on the creation of social housing, instead of entrenching housing unaffordability”.

The price of the house and the age and occupation of the new owners make KiwiBuild look like more middle to upper income welfare.

If this young, professional, childless couple fit the criteria for a brand new home subsidised by taxpayers, then the criteria is wrong.

Yes it’s hard for people to buy any house in Auckland, and lots of other places. But why is helping people earning well above the average income into their own home a higher priority than meeting the needs of poorer people?

Mike Hosking calls it a con:

We may have discovered the crux of the KiwiBuild problem through some new figures from CoreLogic.

The median price paid by first home buyers for a home, for example, in Auckland, is $699,000. KiwiBuild do them for $650,000, so yes a saving, but not a lot.

What we are discovering here, is that the Government doesn’t appear to be able to do anything the market already isn’t. . . 

The real issue here – and this has become clearer and clearer with time and experience – is not the price of the KiwiBuild home, but the affordability.

At $650,000, you can call these homes anything you want. But affordable, for most, they are not.

Affordable for higher earners, a struggle for middle income people and the poor would need to win Lotto to afford them.

It’s called KiwiBuild, it should be KiwiCONstruction with the empahsis on con.

I don’t blame the couple for playing the game but do blame Labour for bad rules and bad policy.

 

 


Perverse consequences

August 29, 2018

Doing something is not the same as doing something useful and can often have perverse consequences.

Exhibit 1:

I used to take bags to the supermarket most of the time.

Now I know they’re being canned, I never take them so I can stockpile them to use to line bins, hold shoes and dirty clothes while travelling, and the myriad other uses I find for so-called single-use bags.

Exhibit 2:

Two friends who own resthomes say they support the increase in caregiver earnings after last year’s pay equity settlement, as do I, but it hasn’t made it any easier to recruit and retain caregivers.

It has also made it harder to recruit and retain nurses who say the difference between their pay and that for caregivers doesn’t make the extra responsibility worth it.

Exhibit 3:

Proposed changes to tenancy law is designed to make renting more secure for tenants.

It will have the perverse consequence of reducing the stock of rental housing when landlords opt for Airbnb or other arrangements which give better returns with fewer hassles.

Exhibit 4:

Home Start grants were supposed to make it easier to buy their first house. But giving people more money without increasing the supply merely pushed up prices.

If government doing something has perverse consequences would it be better if they did nothing?

 


More welfare for well-off

July 6, 2018

KiwiBuild is yet more welfare for the wealthy:

KiwiBuild promised to deliver 100,000 affordable houses to help first-home buyers realise the Kiwi dream.

It promised to help average Kiwis into their first home.

But the income test is anything but average. The income caps are so high they may as well not exist.

KiwiBuild promised to deliver 100,000 affordable houses to help first-home buyers realise the Kiwi dream.

It promised to help average Kiwis into their first home.

But the income test is anything but average. The income caps are so high they may as well not exist.

A solo buyer can earn up to $120,000 a year. A couple can earn up to $180,000.

The median income in New Zealand is just under $50,000, and median household income is just over $82,000. . . 

If the government was serious about helping people buy houses it would address the underlying causes of the shortage – the RMA and zoning constraints; the consent requirements and processes; and the high cost of building materials.

Buying houses that would have been built already, selling them to anyone but the top 8% of income earners, regardless of their asset backing and allowing them to sell again and pocket the windfall gain after only three years is economic and political stupidity.

If the well-off can’t afford to buy houses without assistance there’s something wrong with their money management and/or the housing market.

Providing more welfare for the wealthy won’t solve either of those problems.

As the Taxpayers’ Unions shows, the government promised a masterpiece and has delivered a doodle.


KiwiBuy Kiwi Beg KiwiFail

May 15, 2018

KiwBuild was supposed to add 100,000 houses for those struggling to get into their first home.

But KiwiBuild has turned into KiwiBuy or even KiwiBeg.

The government buying houses that were going to be built anyway will put public money at risk without adding a single extra dwelling to the nation’s housing stock.

The housing shortage is caused by an imbalance between supply and demand.

There are several reasons for that including a consent process akin to trying to run through a river of treacle in gumboots.

Not PC gives some examples of the hoops that add time and cost to the process:

. . .In recent months, for example, and like every regular applicant for building consents, I’ve spent many, many hours replying to council’s Requests for Further Information (RFIs). These days it’s often less about being a designer than it is about being a lawyer, explaining the building code clauses to the processor at the other end of an email.

The simplest RFI responses are to tell the questioner where precisely in the document set they can find the answer to their question, already addressed. But in recent months it’s been getting worse. Among other things, in order to keep things moving I’ve been required to tell council the make and model of a shower and the finish of a bathroom cabinet; the colour of bedroom carpets (accompanied by a calculation to show they’re bright enough); the normal process by which to pour a concrete footing in engineered soil, to abandon approved details because the territorial authority has decided they don’t like them, and to replace them with those they’ve now decided they do; to discuss the acoustics of polystyrene sheets (that are not being used for acoustic purposes); to resupply calculations and statements that the processor has already received, but lost; to explain why handrails are not required on steps with fewer than two treads, and how an opening window into an open lightwell allows light and air into a room; to draw up a list of a project’s “construction and demolition hazards”; to provide mechanical ventilation rates for areas we’ve shown will use natural ventilation; to draw up simple diagrams because processors are unable to read fairly standard plans; to confirm the use of smoke detectors (when they’ve already been clearly placed and labelled on drawings); and (in the absence of council finding anything else to ask about) to draw a detail of a bathroom splashback — just some examples of recent Requests from processors, all of which have wasted my time and theirs, unnecessarily dragging out the consenting process, and all at the time and expense of clients who were once very eager to build. . .

The worst example that I’ve come across was an applicant being asked to draw on a plan where the furniture would go.

If the government was really serious about a long-term solution to housing it would be addressing problems with the Resource Managment Act and building regulations.

It would also ensure council staff stop playing silly beggars with the consent process.

Until that happens KiwiBuild, KiwiBuy and KiwiBeg will be KiwiFail.

 

 

 


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