"However much it offended the sensibilities of design snobs and planners, we were there because our shoebox apartment was better than the alternative."

"[I]n 2005, Auckland city was ... dotted with cranes, many standing up so-called 'shoebox apartments.'
   "The phrase was not meant as a compliment. They were derided as 'future slums' ... [which] ultimately led to a rule change ... making the minimum size of a two-bedroom apartment 70 square metres. ... [T]he change had a profound and lasting impact on apartment construction. ...

Chart by Apracitis Economics, from The Spinoff

"In 2005, I was only dimly aware of the furore, of the disgust shoebox apartments aroused. In 2005, I was living in one. ... In retrospect that apartment was where I started to get my shit together, started to have a sense that I could be something more than a fuckup....
    "The apartments were objectively ugly, though not so bad as they were made out at the time.
    "But the upside overwhelmed all that. I was right there in the city. ... It was what I needed at that time, however much it offended the sensibilities of design snobs and planners. I feel confident in saying many other residents, transient as we often were, felt the same way. We were there because it was better than the alternative. ...
    "Another characteristic of the inner city when I lived there was that homelessness barely existed. I remember vividly an extraordinary double-page feature in the 'NZ Herald' which looked at life among the unhoused then. It mapped specific characters, and if you spent a lot of time in the inner city, it seemed a near-complete survey.
    "The idea that you could now map the scale of human misery that a lack of housing has brought to Auckland is unimaginable. As the ’00s wore on, the GFC hit and the next decade began, the city acquired its current reality, with hundreds of people making lives on the streets of downtown and its fringes. It’s now a countrywide phenomenon.
    "That’s the backdrop of the reforms announced last week by housing minister Chris Bishop. I travelled into the city to see him deliver a speech about housing last week ... He spent long periods wading through the thickets of regulation, through the acronym soup of the MDRS and the NPS-UD, and paid compliments to Auckland’s groundbreaking 2016 unitary plan, which started the process of unshackling land for development and finally saw us surpass the heady mid-00s for construction of multi-units.
    "But the part which leapt out for me was not technical, it was moral. He announced an override of the minimum dwelling size standards – a return to plausibility for the kind of place I lived in 20 years ago. In front of a room full of people involved in construction and leasing, with tables for Colliers and CBRE and Crockers, he made a simple case. 'You know what is smaller than a shoebox apartment? A car or an emergency housing motel room.' That’s our current plan for dealing with people who don’t have a house, and it’s indefensible.
    "The rest of the reforms he announced are big. They are a continuation of an enormous body of work which started with Auckland’s unitary plan, was driven forward by Phil Twyford’s revolutionary NPS-UD which created a huge potential for urban density, and now reaches a powerful climax with Bishop’s 'Going for Housing Growth' package.
    "It’s not beyond criticism ... But to me those issues are less material, and likely to be less impactful, due to the return of the maligned shoebox."

~ Duncan Grieve from his post 'I lived in a shoebox apartment. I’m glad they’re coming back'

"Does that mean the annhilation of Israel?" "Yes, of course." [updated]

 

Hamas's "useful idiots" were out in Auckland's Domain over the weekend. In a month or so, they will be in Parliament. 

"Useful fool" was Lenin's phrase for his western dupes -- those shallow thinkers in the West whom the Communists manipulated.

On the weekend's evidence, the Green Party of Aotearoa New Zealand is officially Hamas's useful fools.

Let me give you some context.

On Saturday's pro-Palestine rally, Labour's Phil Twyford was granted a speaking spot by organisers, the NZ Palestine Solidarity Network. He condemned the violence. But he made the mistake of condemning Hamas's violence as well as the IDF's. The crowd turned on him, organisers asked him to leave, he was booed off, and without a police guard his escape from the grounds would not have been guaranteed.

Immediately after -- immediately -- the increasingly shrill Chloe Swarbrick got up to speak. She began by making "absolutely clear," in front of a gaggle of cheering new Green MPs and co-leader Marama Davidson, that "just after what we've witnessed, I want to say strongly, clearly and vehemently, the Green Party of Aotearoa New Zealand stands for a free Palestine.... From the river to the sea, Palestine" she chanted, "will be free."

"Free free Palestine!" they shouted. "Free free Palestine!" they chanted. But I have a question: Free Palestine? From what? for what? of what? of whom? 

"It's not complicated," shouted Swarbrick.

And it's actually not.

In the end, what really matters is what matters to Hamas, who rule the geographically-western strip of Palestine, their launchpad for their attacks on October 7th. And all the fools, tools and useful idiots should be absolutely clear what Hamas's own "Leader Abroad" Khaled Mashal means by "freeing" Palestine, about with he is abundantly clear. For him, it is not at all complicated. Speaking from the safety of his multi-million dollar apartment in Qatar, he makes it absolutely plain of whom he wants Palestine to be freed:

" ... We will repeat the October 7 massacre time and again, one-million times if we need to, until we end the occupation. 

Q: "Occupation where, of the Gaza strip?"

No, I am talking about all the Palestinian lands.

Q: "Does that mean the annihilation of Israel? 

"Yes, of course."

Annihilation.

All the way from the river -- that's the whole Jordan Valley on the east-- right down to the Mediterranean Sea on the west.

Annhilation.

From the river to the sea.

UPDATE: 

Just to be absolutely, pellucidly clear here .. it cannot be Gaza of which they say "the Israeli occupation" must end. Because rightly or wrongly Israel stopped occupying Gaza 18 years ago,

QotD: "Current planning structures encourage a land speculation industry more than a housebuilding industry"

"Current planning structures encourage a land speculation industry more than a housebuilding industry ... FIX IT!"
~ Matt Thomson from the Campaign to Protect Rural England, describing (whether he knows it or not) the identical problem, and identifying its identical source, in every western democracy ...

3 questions for Labour's housing minister

In August 2017 Labour's Phil Twyford and his boss Jacinda Ardern told an electorate "fired up about housing issues" they would "remove barriers that are stopping Auckland growing up and out."

Labour [said Labour] will remove the Auckland urban growth boundary and free up density controls. This will give Auckland more options to grow, as well as stopping landbankers profiteering and holding up development. New developments, both in Auckland and the rest of New Zealand, will be funded through innovative infrastructure bonds [said Labour]. … 

Eight months on there has been no action on either of these very important fronts. There is apparently, no urgency now their feet are under the Treasury benches.

Instead, the only action at all on the housing front has been  a xenophobic and ultimately destructive anti-immigrant ban on buying existing or funding new housing. Which was announced with an unseemly degree of urgency.

You can ask yourself what that says about this Labour-led Government's values. ("On this one," says one commentator who has answered the question for himself, "they have out-xenophobed Trump by miles.")

So there are three quetions that need to be answered urgently by this un-housing minister:

Q1. When are the Auckland Urban Limits being abolished ? 

Q2. When is bond financing for infrastructure to be introduced nationally ?

Q3: When will you remove your xenophobic and patently destructive anti-foreigner housing policy.

I think we should be told. Urgently.

[Hat tip Hugh Pavletich]
.

The ingenious Phil Twyford

The new minister for housing and transport has found a way to pay the unaffordable bill for Auckland's new public transport infrastructure, and that's to help make Auckland housing even more unaffordable.

What could be more ingenious!

He'd already signalled that Labour's faithful promise to voters neither to raise taxes nor to introduce a capital gains tax was going to constrain him -- he'd already announced plans to get around that simply by raising the 'bright line' period for paying National's own tax lie (the 'capital-tax-in-drag' introduced just because lying governments can) from two years out to five. Because there's no politician like a money-hungry politician, is there.

And with Auckland's council having already borrowed way beyond what it can reasonably repay (in political-speak this is known as the Council being "up against its debt limits," as the new minister is quick to acknowledge) and the new Government having no spare cash to throw around after funding all of their promises plus those of Winston and James, Twyford now has the job of filling the $6 billion black hole in Auckland's transport bill that Len Brown and Phil Goff have helped dig.

But he has "big plans" to do that, he tells faithful recorder Bernard Hickey. "Big plans" to fill the black hole. "Big plans to change the way Auckland's multi-billion dollar light rail projects will be paid for," he says. Which means: big plans about who he is going to soak to pay for all the monuments, of which "light rail" is only the most ill-defined. And the answer in four words, dear reader, is: "motorists and property developers."

Now that smokers have slunk away quietly, motorists are the new lepers. Hitting them with new fuel taxes is only the starting point. He has an endless stream of new ideas about how to soak anyone who drives a car. Lock up your wallet now, while you can.

He also plans to sock property developers, hinting he will hit them with a new super-rates bill on developments. This appears to be in addition to "targeted rates" to repay infrastructure bonds (and in addition to the almost already crippling rates rises that Mayors Len and Phil have been exacting to pay for their grandomania and Rodney Hide's super-sized stuff-up.).

At this stage these are only just hints about his big plans. But any added tax burden on the developers who build Auckland's houses will only make it even more difficult for developers to make a margin on building those houses, making it more likely rather than less that lots more affordable housing for would-be first-home buyers will ever easily be built. (Every single change from every single housing minister has made this hope less likely rather than more, so he does at least follow in a grand tradition.)

But motorists, vendors, and property developers and their erstwhile first home-customers will not be left to suffer alone. Mum and dad and several kids already happily home-owning anywhere near any part of Auckland's expensive upcoming light rail- and rapid transit-building orgy will also be hit with something special too, in the shape of extra special "targeted rates" -- Mr Twyford's favourite new phrase, it seems -- all the better for him "to capture the value uplift in property prices" mum and dad might otherwise enjoy.

What he may miss out on with his 5-year capital gains levy on mum and dad if they don't sell their house within that time frame, he'll claw back from them anyway with his "targeted rates" if they stay put.

And if they don't enjoy any value uplift at all? Fear not. They and everyone else will still receive their share of the disingenuous Mr Twyford's $6 billion bill anyway.

TANSTAAFL.

.

Let’s rain on Phil Twyford’s parade

Two big announcements were made yesterday in relation to building and housing. In New Zealand terms they don’t get too much bigger, yet they were totally at odds with each other.

The first was by Fletcher Building, the darling of the former government yet who contrived to lose a fortune on two large government projects, and several other smaller ones. The primary reason, Ralph Norris told disgruntled shareholders, was that "Our project management resources became stretched, impacted by the labour scarcity of the broader sector and our own rapid growth."

To break that down: as they took on too many projects they discovered

• their own resources are too few to cover them all; and
  
•  local labour was too hard to come by.

Keep these points in mind as you read Phil Twyford’s announcement yesterday, repeating in somewhat amended form his pre-election pledges, that he is going to build 100,000 homes in the next decade.

How can that be done with the severe local labour shortage? Easy, said Twyford.

The just-announced Housing Minister told the Herald labour, skills and land shortages in the over-stretched, under-delivering, under-resourced high-priced housing market were planned to be resolved by his regime which will change immigration laws and form public private partnerships with business like Fletcher Residential and Mike Greer Homes.

Do you see the problem?

I’ll make it easy for you:

PROBLEM ONE: Fletchers is already overstretched.
PROBLEM TWO: Local labour is hard to come by.
PROBLEM THREE: Mr Twyford will solve problem #2 by calling on the folk already struggling with problem #1

Tell me how he will square that circle.

Could you?

Could anyone?

Add to that his further and still unsolved problem, which is that his whole scheme to build and/or finance 100,000 houses in a decade within his stated fiscal envelope of $2 billion is financially untenable (i.e., that his numbers simply don't add up, as he himself admitted three years ago when I asked him) and you have a new minister flying a flagship policy with very real problems.
.

Nick Smith & Phil Twyford are both right, and both very wrong

 

The major party’s various spokesthings have all been arguing through the media over how many “affordable” homes have been built in the last three years, yet none have bothered to ask whether that tag in the context over which they’re arguing means anything.

The story first. Looking for a headline, Labour’s Phil Twyford “released official Auckland Council figures that showed in the past three years, only 18 houses built on special housing areas were declared to be an affordable dwelling.” Which sounds damning. In response, “Housing Minister Nick Smith said more than 500 homes from two special housing sites have been completed and cost under $650,000” – 190 homes at Weymouth, and 327 at Hobsonsville. Which sounds better.

But which one’s right? And does it actually matter?

Well, they’re both right, because they’re both talking about different things – one about houses for which a “statutory declaration” of being affordable has been made as part of a so-called Special Housing Area (SHA) developement, the other about houses in the SHAs a cabinet minister might call affordable.

But does it matter?

Well, let’s ask the Prime Minister who, in 2007, said

I think it’s dangerous for the Government to pretend that developments such as that [government-promoted scheme] at Hobsonville are some sort of panacea to the housing affordability crisis…

And he was right. Still is. Because as he went on to say, “Well, let’s get real here.” Which is to say, if we’re to speak with the bark off, either 18 or 500 – that’s a drop in the fricking bucket compared to the thousands of houses needed to break the ever-spiralling cycle upwards! The only solution, as the Prime Minister understood in those halcyon days before he actually took office and became a wind-up Smile-and-Wave Doll, “If we want to make houses more affordable for first-home buyers, we need more houses to be built as cost-effectively as possible.”

Which, to be blunt, means him and his cronies getting the fuck out of the way.

If they did, we wouldn’t need to be arguing about how many houses with the government label “affordable” on them had been built, because builders would be able to get out there and build by the thousand the houses that would make the overheated market actually affordable again.

They wouldn’t need to build them on Special Housing Areas or make goddamn “statutory declarations” about how many alleged affordable units were in each development if both the RMA and the Building Act were properly euthanased. Instead, we could simply rely on the ability for builders to make a fair profit on their spec houses and the age-old mechanism of “churn” – the housing version of The Double-Thank You Moment.

Churn?

“Churn” in this context refers to the chain of purchasers who “trade up” after a new house is bought and folk move into that house and out of their old one—leaving their old house empty for someone else to move into, which leaves their house empty for someone else to move into, which leaves their house empty for someone else to move into, and so on and so on right on down the line.

In a healthy housing market, one house purchase by one family can start off a chain reaction of up to ten, twelve or even twenty moves further down the line as each family moves out of their old and up to their new home.

Why do I say “move up”? Because this is the housing equivalent of the weird double-thank-you moment we talk about in economics:

How many times have you paid $1 for a cup of coffee and after the clerk said, "thank you," you responded, "thank you"?
There’s a wealth of economics wisdom in the weird double thank-you moment. Why does it happen? Because you want the coffee more than the buck, and the store wants the buck more than the coffee. Both of you win.

Equally, when you decide to sell what you’ve got now to move into a new place, it’s because you want the new place more than the old place—and your new buyer wants your old place more than their old place, and so on down the chain. You each want the new place because in your minds your new housing situation is going to be better for you than your existing housing situation.

It’s just the same for every buyer in the chain.

So every time a new house is built and purchased, of whatever value, that opens up opportunity for many other families to make their situation better. 

So while the buyer of the $300,000 may not know it, that new $485,000 house is what just made his own life better. He’s at the end of a chain of churn created by that first purchaser and his vendor saying “Thank you!”

This is what happens when the housing market is not broken by regulation, as it is now.

Here’s something else that seems contradictory until you think it through a little: It turns out too that in a healthy housing market a new more expensive home creates more openings down the line than a cheaper more affordable home does—up to twenty housing moves for an upper-quartile home as compared to less than five or six for one in the lower price quartile--meaning, strangely enough, that the more expensive houses that are built the more folk actually benefit.*

If that idea makes your head hurt, then consider this question: is it better in general to build better houses or lesser houses? Wouldn’t we all agree that better quality is far better than lesser? So as better houses costing more are built and folk move up to what in their own view are better houses, the overall housing stock for everybody is improved.

Isn’t this better than flooding the market with houses of lower cost and lesser quality, which actually produces fewer moves helping fewer people, and resulting in the end only in having created the slums of tomorrow?

The real answer to affordable housing then has been provided neither by the Blue Team nor the Red Team.

The answer is to fix the broken market.

And how do they do that?  They stop pretending they know what they're doing and just get the hell out of the way.

..

Housing: Some sanity in the House [updated]

 

As many of us have been saying for some time, this government has no interest in solving the housing crisis. Instead they single out scapegoats (foreigners, immigrants, land-bankers, NZ’s alleged prosperity) and just tinker while home prices burn. They tinker while pretending to solve things – and they hope the marginal voters see the tinkering while their voting core sees their home prices continue to rise.

So while Nick Smith tinkers, offering no answers beyond making several specially-designated Housing Areas more Special (including the power to confiscate people’s land if the minister feels like it), others at least have retained their focus.

“The big threat,” reckons the writers at Making New Zealand, “is the public not knowing what will and what won't deliver true affordable housing.”  This of course is what Nick the Dick is relying on. At least, in their speeches to the House this week opposing Nick’s tinkering “Phil Twyford and David Seymour are doing their best to not allow this issue to get confused.”

David Seymour:

Overwhelmingly, the market works. If you want to question that, then ask yourself why the cost of goods, whether it be cars, electronics, clothing, or food, has gone down relentlessly for decades and decades.
    There is one commodity that strangely enough has not gone down in cost, and that is housing. What is different about the housing market from every other commodity? I will just give you a suggestion that no other market has more intervention by councils and the government than the housing market.

Phil Twyford:

So three years ago this [present tinkering] was some kind of interim measure. But now they need another three years while they desperately hope that the Special Housing Areas will deliver some kind of results. Will this minister ever do anything more than the chronic piecemeal tinkering that passes for a housing policy?

Well, given that the minister himself acknowledges that “land-use policy is the single most important public policy issue affecting housing supply and affordability,” and he’s had the opportunity as minister many times to drive a stake through the heart of the Act that most regulates land-use policy, the Resource Management Act – even as far back as the late-nineties when as minister he refused reform and called the thing “far-sighted environmental legislation” – then we can be absolutely certain that chronic piecemeal tinkering is the very most this pathetic lying turd of a human being will ever do.

Watch their short speeches. They’re good.

David Seymour:
http://www.inthehouse.co.nz/video/45116

Phil Twyford:
http://www.inthehouse.co.nz/video/45128

UPDATE: Eric Crampton explains the parliamentary insanity that ended with Phil Twyfords’s life-saving amendment to abolish rural-urban boundaries losing out by by just one vote, that vote being David Seymour’s:

Parliament can be a confusing mess. I still don't quite know what happened last night, but it does look like a substantial missed opportunity…

 

.

Labour’s affordable housing plan is seriously unaffordable

 

There's a simple question that explodes Labour's just-made announcement to build 100,000 houses -- a staged build, they say, with the later stages built on the back of profits made the sale of early stages.

There's a simple question, and that question is this: If it were all that easy, then why isn’t everyone already doing it? 

It’s not like there isn’t plenty of money around to borrow: banks are lending money into existence for mortgages at an ever-increasing rate (two-thirds of all new money borrowed into existence, at an eight percent increase in quantity year on year; just one reason for this bubble.)

And land keeps getting “released” by council, making it available (in theory) for anyone to build on who can afford to buy it.

So what could a Labour Government do that a whole welter of speculative builders aren’t able to?  Because if there were profit in building and selling homes at $500,000, including land, then we and those speculative builders and land bankers would already all be doing it, wouldn’t we?

But we aren’t, because we can’t.  The affordable end of the market for speculative builders, the people who built this city and most major western cities, is dead. They can’t make a profit on a home at that price – not with the cost of land + building (see below) + external works and external services + borrowing costs + council costs + delays + …..

So the Labour Party promises $2 billion for this plan – $2 billion for 100,000 houses, plus theft. That’s just $20,000 for every house, or $200,000 for each one if they build just 10,000 in the first tranche to get the money to pay for the next.

But if there’s no profit in that first tranche, then there’s no next tranche, is there?

And if there’s no next tranche, then there’s no real plan, is there.

And there is no plan that’s worth a damn, is there, because if there were any profit in building affordable houses, then everybody would be out there doing it.

And they’re not doing it because with their ever-increasing gold-plated rules and regulations and Resource Management Act, successive governments have made building affordable homes just too damned expensive – and not one of the damned parties who’s done all of that what’s to do anything at all to arrest that, i.e., to fix the market to make the model for affordable spec profitable again.

Instead we just get more bullshit announcements like this one – an unaffordable way to attempt to make housing affordable.

NB: Think it’s cheap to build a house? Andrew Little does. The big home-builders know otherwise. Here below the average cost in 2015 for a home from NZ’s top ten group-home builders, not including the price of land + external works and external services + borrowing costs + council costs + delays + drapes and coverings and on and on and on. And if you think you can get hold of reasonable land inside Auckland for anything less than $250,000 … you’re dreaming. Let alone on the scale he’s dreaming about. So do Andrew’s sums for him, and see how much profit they would have to pay for their second tranche…

RELATED POSTS:

• “Do you see the problem already? Even excluding the rocketing price of land – about which Labour pledges to do precisely nothing -- the Labour Party’s maths requires thousands for homes to be built for well under $300,000, or  as Labour’s housing spokesman Phil Twyford concedes, the Labour Party's Kiwibuild policy ‘will quickly run out of money.’
      “Yet the very room full of actual experts in which Twyford made that concession – at a conference on affordable housing filled with people talking honestly rather than talking their book -- had already established that homes by the thousand, or even by the dozen, could not be built for well under $300,000 or anything like that, leaving the Labour Party's Kiwibuild policy as little more than a wet rag to wave around on the election trail that will quickly run out of money if they ever get a chance to try it.”
  Labour’s Kiwibuild policy "will quickly run out of money" – NOT PC, 2014
• “Housing crises? They’ve been with us for decades – and the answers to them are no secret. It’s not that the solutions that are in short supply, it’s the political will.
      “I have in front of me a book that’s been on my shelf for more than thirty years…
      “Every answer to this present housing crisis in there, and has been known for decades. You can see just from the chapter headings that that because the causes of virtually every housing crisis are political, the solutions to every housing crisis are the same…”
  A housing crisis, four decades on – NOT PC
• “So a theft of property rights now to ‘fix’ a crisis almost wholly caused by their previous and ongoing theft of property rights! What could be more ingenious!!
  Nick Smith’s government land-grab - NOT PC
• “The key to making Auckland liveable is to make it affordable—a fairly complicated and heavily politicised subject, so let’s try to make it simple: we won’t have an affordable Auckland until the model for ‘spec’ building  is viable once again.
      “Spec building being ‘speculative’ building—a builder buying land, building a house and ‘speculating’ he can sell it to a buyer for a reasonable profit. This is how the vast majority of NZ’s cities have been built, by small builders hoping to make a modest profit.
      “But in recent years this model has broken… The problem is that even while housing prices have rocketed, both land and building costs have skyrocketed.”
  Fix spec building to make Auckland affordable again – NOT PC, 2013

End carpet-sprawl by removing the city limits [updated]

 

Ever since Labour’s housing spokesman came out yesterday in favour of removing the planners’ ring-fence around Auckland, otherwise known as the Metropolitan Urban Limit, there has been any amount of ill-informed commentary in response – most of it opposed to “sprawl.” [UPDATE: One of the ill-informed is the present housing minister who in his two-faced way says ‘It would be counter-productive to ditch [his present] work at this time with a simplistic approach of just abolishing city limits.”]

There is a great deal of ignorance over urban sprawl, much of it on display in an interview this morning with Gary Taylor of the Environmental Defence Society (the luvvies’ favourite NIMBY group).

Taylor purported to recognise the need for more housing, but reluctant to allow it on his watch. He eventually conceded he could be happy with “shifting the currrent limit” rather than removing it, but insisted he remained unhappy with “untrammelled urban sprawl.”

Duh!

Is he not aware that the very best way to encourage speculative land-banking and encourage untrammelled “carpet” sprawl –two things to which Taylor is adamantly opposed -- is precisely to keep shifting the current limit bit by bit by bit, each time rewarding those who had landbanked just beyond the boundary, and filling up the newly-“opened” land with the very carpet sprawl he claims to despise.

This has been precisely the policy followed by enthusiasts for the misnamed Smart Growth school of planning, and precisely the result.

Owen McShane explained the process in a presentation delivered a few years before he died (pdf), of which this the briefest of excerpts:

WHY SMART GROWTH DELIVERS CARPET SPRAWL.
Smart Growth delivers Carpet-Sprawl because even the most rigorous Smart Growth city eventually has to extend its Metropolitan Urban Limit (MUL) to provide more land for residential, commercial and industrial use.
In [2006] the Mayors of both Waitakere City and Manukau City have pleaded for extensions to their MULs. Even Smart Growth planners acknowledge these “adjustments” will be necessary from time to time.
The sequence of events is as follows:
• The MUL is initially set to allow for the next period of growth to take place within the existing “urban form”.
• Eventually this enclosed area fills to the point where there is essentially no zoned land left for further growth or it has become so expensive that no one can afford to use it.
• In the meantime many activities have simply leap-frogged into territory outside the Smart Growth planners’ jurisdiction, which is why Northland Region is now growing so rapidly.
• Open space inside the MUL is sacrificed to high density carpet development to “save” open space outside the MUL.
• At some point the situation becomes intolerable and the people and their representatives demand an extension of the MUL to enclose some piece of surrounding rural land.
• Once this “bulge” is made legal then development and intensification begins again until the new “bulge” is also full of high density carpet development and some relief is allowed in some other part of the city.
Obviously, as this process is repeated the city expands into the rural area as medium or high density “carpet sprawl.” The only difference from the post-war sprawl is that there will be a greater variety of housing types because the market demand is more varied and regulations covering section sizes and housing types have been relaxed since the sixties, and the overall density will be higher.

I'd be interested in hearing from supporters of planning, zoning and so-called 'Smart Growth' how they feel about producing the very thing they say they oppose.

In the meantime, perhaps they might contemplate that the effect of removing the ring-fence altogether (as Twyford proposes) rather than just to shift it (as Taylor reluctantly allows) is not to deliver sprawl at all, but to open up the possibility of a network of small satellite “rural hamlets” or “managed parks” appearing around the outside of the present city limits in areas of most value to those who might live there, with low-impact land engineering and onsite water treatment reducing the impact and encouraging plant growth, and the reduced infrastructure needed paid for by the Municipal Infrastructure Bonds Twyford proposes, and that have worked so well overseas.

A Managed Park (Green Growth) Hamlet designed by
Owen McShane for the Mangawhai Catchment

 

Couldn’t that be exciting!

Much more than a combination of carpet sprawl, ten-acre blocks, and land-bankers being handed risk-free profits.

.

Twyford proposes ending city’s ring-fence [updated]

 

Very rarely do politicians deserve berating in the morning and praise in the afternoon. So take a bow Labour Party – in calling for the Goverment to abolish Auckland’s city limits, your housing spokesman Phil Twyford has kicked a major goal for your team:

Labour wants the Government to abolish Auckland's city limits to get people out of cars, caravans, garages and tents.
    Labour housing spokesman Phil Twyford said the urban growth boundary had to go because it has fuelled the housing crisis and people would not be forced into bad circumstances if the Government acted.
    "The Government should rule out any possibility of an urban growth boundary in Auckland Council's Unitary Plan if it is serious about fixing the housing crisis," Twyford said.
    "Over 25 years the urban growth boundary hasn't prevented sprawl, but it has helped drive land and housing costs through the roof. It has contributed to a housing crisis that has allowed speculators to feast off the misery of Generation Rent, and forced thousands of families to live in garages and campgrounds," Twyford said.
    "Labour's plan will free up the restrictive land use rules that stop the city growing up and out. It will stop land prices skyrocketing, and put the kibosh on landbankers and speculators."

All very true, and all of a piece with what Twyford said back in November: that the cause of this housing crisis is planning rules. (Yes, he’s been improving fast.) He has other thoughts as well, that

the Government use its upcoming National Policy Statement on housing and urban land use to … free up density rules to accelerate Auckland's ability to grow housing supply both out and up.

And…  

to use new methods of funding infrastructure so that Councils don't have to lump costs on all ratepayers and on developers, who are stuck paying high development contributions that they pass on to home buyers in a lump sum.

So, all good and thoughtful stuff!

Mind you, National’s housing spokesthings said much the same good things when they were in opposition, and we’ve seen how little they’ve done since. And Twyford’s preferred solution is still, somehow, commissioning the building of unprofitable state houses that will somehow show a profit pay for them.

And just freeing up the boundary in the new Plan isn’t going to immediately open up land anyway; not until the planners contempate the zoning for the newly “released” land.

So perhaps, in the interim, given this emergency we could resurrect the presumption that anyone with any site anywhere (both up and out) should have the automatic right to build at least one (or one more) house on any given site, provided only that rights to neighbour’s light and air and sunlight are protected.

And in the longer term, it’s to get rid altogether of the failed planning regime and the Resource Management Act that is their talisman, and repair to the common law it has long buried.

And in the meantime, at least, give thanks that one politician at least is prepared to contemplate solutions to his portfolio that might not seem to fit his ideological persuasion, but will actually help those he claims to represent.

[Hat tip Hugh Pavletich]

UPDATE: You can sign a petition here (from the Taxpayers Union) calling on the Government to adopt Labour’s policy on abolishing the Auckland Metropolitan Urban Limit. The more people who sign the petition, the more pressure on National to do the right thing and sign up to Labour’s policy:

ABOLISH URBAN LIMITS PETITION ... TAXPAYER UNION

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Housing facts dissolve “foreign-buyers” bollocks

 

For months now we’ve heard from apologists for the status quo that what’s goosing NZ house prices is not the central planners but foreign buyers, that without these nasty foreigners buying our homes all our central planning would otherwise have delivered nirvana instead of hell.

As you’ve possibly already heard, a report out yesterday puts the lie to that “narrative.”

Information released by Land Information Minister Louise Upston shows initial data from the Government's property tax measures indicate overseas tax resident buyers are behind 2 to 3 percent of New Zealand property transfers.

Now it’s true that even one buyer with a very high valuation on her purchase can sometimes skew a market. But the claim made over virtually the whole of this latest political cycle has not been the amounts they’ve paid but the number of these foreign buyers filling our auction rooms and bidding our houses away from our young couples trying to get into the market. Fix the foeigners, say the status-quo merchants, and all will be well.

The data (including the pie chart above) says that this is bollocks.

Over the six months from March 31, 97,800 property transfers of all kinds were registered with Land Information New Zealand.
Of those:

• 1692 (1.7 percent) involved at least one of the buyers declaring an overseas tax residency;
• 1695 involved non-resident sellers, so no net change in tax residency of property owners;
• 38,061 (38.9 percent) of transfers involved only a New Zealand tax residency;
• 27,333 (27.9 percent) were where buyers were exempt from reporting requirements, mostly because it was their main home.

Of the remaining transfers, buyers declared an overseas tax residency for just below 3 percent in the March quarter. For half of transfers, buyers only gave a New Zealand tax residency.

The numbers for Auckland are very similar:

The responses to the data have been salutary.

The Herald doubled down on its bullshit. For weeks has been running the line that those bloody foreigners have been buying us out of our homes. Their response is to focus on the 60% of the 4% of overseas purchasers who buy Auckland homes, and point out this 60% of the 4% 9 (i.e., just 2.4% of purchasers overall) is Chinese. That’s the large purple part of that very small wedge in the pie chart above. That’s just 276 buyers! Peversely, the Herald calls this travesty of reportage “the truth about foreign buyers.”

This is of course just rank dishonesty. Which tells you all you need to know about both the Herald and its alleged journalists.

Others have attacked the data. Bernard Hickey, always at the wrong end of a problem, claims there could still be “up to 45%” of houses sold to foreigners—foreigners “hiding” within the NZ numbers..  Even Labour housing spokesman Phil Twyford snorts at Hickey’s response. He instead just damns the data as “shonky” ‘—truly ironic for a man who created a list of buyers with “Chinese-sounding names” just to wave the Yellow Peril flag

But the data is not “shonky.” If there is any issue at all it is not with the data, it is with the problem of defining “foreign buyers”: does it mean folk with foreign passports (and many NZers hold more than one), or folk with foreign tax residency (and many NZers also enjoy this boon). And how many “foreign buyers” are buying throught trusts (which aren’t captured here) or also have NZ tax residency,

All these problems are raised in the report itself, as every good report writer should do.

Nonetheless, on the basis of these figures alone there is no basis for holding that either a large majority or a major plurality of NZ homes have been “bought by foreigners”—the excuse used by upholders of the current planning system for the out-of-control house-price inflation Auckland especially is experiencing—and no other credible figures have been raised at all by any of the report’s critics.

Now, it seems we can put aside both the Yellow Peril (Labour’s claim) and a Land Tax (National’s threat) and return to putting under the microscope the three real causes of house-price inflation:

• money has become too cheap
• planning rules have become too numerous, and
• it’s in the interests of the political elite to keep them that way.

More (non) news at six.

RELATED POSTS:

• “The LINZ report does a good job explaining the real limitations of `tax residence’ as a criterion, but it’s a lot better than any previous data we’ve had.
      “There were also questions about actual residency and intention to occupy a home, but these were harder to interpret because of property bought by companies or trusts, where the questions didn’t have a good answer.
      “I’d suggest starting with the report rather than the news coverage.”
  Foreign real-estate investment – Thomas Lumley, STATS CHAT
• “The concept that House Price Inflation (HPI) is strongly affected by money supply is not a new concept and brings to light many other related issues:
  * “Expansion of the money supply is in fact wealth transfer from holders of cash to debtors, holders of hard assets, holders of equities and the government (as a debtor). This wealth transfer could be viewed as theft.
  * “Governments use the expansion of the money supply (and the ensuing inflation) to reduce the real value of national debt. In the West governments are refusing to deal with debt in the traditional manner but prefer to inflate away the capital component.
  * “In many countries around the world inflation is partially hidden and price rises are attributed to GDP growth.”
  The Real Reason for House Price Inflation in New Zealand – Simon Knudsen, DATA SCIENCE
• “’The solution to the housing crisis is lower prices. What politician will stand for that? They daren’t let this market fail because too many people’s wealth is dependent on the value of their home – and homeowners vote more than renters…
      “’The collapse of UK property prices between 1989 and 1994 made the Tories unelectable for half a generation. No party wants such a fate. Indeed if interest rates reflected 10% house price inflation, homes would become affordable pretty quickly, but then the whole financial house of cards would come crashing down too. Those responsible for that would become [totally] unelectable…
      “’However this ends – falling house prices or a generation even more excluded – it is going to be painful. But the sooner we recognise the causes of high house prices – our systems of money and planning – the sooner the problem can be properly dealt with.’”
  “Why younger people can’t afford a house” – Dominin Frisby, NOT PC
• “My own position is that to promote affordability the city needs to grow both out and up – which recognises home-buyers have the right to choose, and land-owners have the right to build.
      “‘Out and Up’ should be the mantra.
      “But at least one mayoral candidate is loudly saying ‘out.’”
  Mayoral candidate says housing should grow ‘out’ – NOT PC

All our houses are belong to #YellowPeril

In the 1800s ethnic Chinese living in New Zealand were taxed simply for being Chinese. On Saturday, you would be forgiven for thinking there were a modern move afoot to tax ethnic Chinese for living in New Zealand homes.

On Saturday the Weekend Herald splashed bungled Labour Party “research” across the front page – declaring on basis of foreign-sounding surnames from a single unnamed real-estate agent that foreigners should be banned from buying “our” houses.

I’m sure you’ve already heard that. And I’m sure you, like I did, wondered how desperate Labour must be to want to tap Winston Peter’s racial smears to slither back up the greasy pole.

Your best two go-to responses are Keith Ng’s at On Point, and Thomas Lumley’s at Stats Chat. First, Keith, whose last name sounds Chinese:

..as if people whose “last name sounds Chinese” can’t be a hard-working Kiwi, as if we are taking their houses.
    And if I became a property investor, I hope that I’d be judged like every other property investor, and not hung up as a political scapegoat as if we were some kind of foreign parasites, but they are wise stewards of property reaping the rewards of thrift and hard work.
    I hope they wouldn’t treat us as if we were not them, based on whether our “last name sounds Chinese.”

But they have. They already  have. Just one problem:

You can’t magically MATH your way from a last name to a residency status. They have one piece of real data: “39.5% of last names in a list of house sales sound Chinese”. All the assertions that Labour are making beyond this are complete bullshit. …
    What [Labour’s] Phil Twyford has done is just a sleigh-of-hand with percentages:

• 39.5% of house buyers are ethnically Chinese…
• …but the resident Chinese population in Auckland is only 9%.
• 9% of residents can only buy 9% of houses…
• …so 30.5% must be non-residents! Ta da!

Here are the same numbers, in absolute terms:

• 3,500 house buyers are ethnically Chinese…¹
• …but the resident Chinese population in Auckland is 126,000².
• 126,000 residents can only buy 126,000 houses…
• …so, uh, yeah.

It is entirely plausible that 126,000 people can buy 3,500 houses …

There’s a lot more wrong with the “research,” but as Keith says, “Twyford is doing this because all he has is “39.5% of last names in a list of house sales sound Chinese.” Not a lot of hard fact there. An awful lot of stew from one small ill-begotten onion. Twyford “wants it to mean ‘a lot of houses are bought by overseas Chinese.’ But equally, it could mean a lot of other things.

There’s a long list of possibilities, but in the absence of evidence, that’s all they are: Possibilities. Wanting to believe in one doesn’t make it true.

That’s never stopped a politician before. Not when they see poll numbers on the horizon.

Read on here for more of Keith’s take-down. And also digest the points made by the very polite Thomas Lumley at Stats Chat, who asks "So, how much of this is supported by the various data?" Main answers:

• “we have fairly good evidence that people of Chinese ancestry are over-represented as buyers from this particular agency, compared to the Auckland population.”
• “there is fairly good evidence that people of Chinese ethnicity are buying houses in Auckland at a higher rate than their proportion of the population.  The Labour claim extends this by saying that many of the buyers must be foreign. The data say nothing one way or the other about this, and it’s not obvious that it’s true.  More precisely, since the existence of foreign investors is not really in doubt, it’s not obvious how far it’s true.”
• “The simple numbers don’t imply much, because relatively few people are housing buyers: for example, house buyers named “Wang” in the data set are less than 4% of Auckland residents named “Wang.” There are at least three other competing explanations, and probably more.”

Uncomfortably simple explanations the Herald and Twyford ignored as being irrelevant to their scare story. Read them here. Basic problem:

One of the repeated points I  make on StatsChat is that you need to distinguish between what you measured and what you wanted to measure.  Using ‘Chinese’ as a surrogate for ‘foreign’ will capture many New Zealanders and miss out on many foreigners. The misclassifications aren’t just unavoidable bad luck, either. …
    But on top of that, if there is substantial foreign investment and if it is driving up prices, that’s only because of the artificial restrictions on the supply of Auckland houses. If Auckland could get its consent and zoning right, so that more money meant more homes, foreign investment wouldn’t be a problem for people trying to find somewhere to live. That’s a real problem, and it’s one that lies within the power of governments to solve.

After all, they –both Labour and National – have caused it. Neither want to properly address it. And one party, it seems, would rather smear than solve.

PS: So, should you be allowed to buy a house?

TRY OUR KIWI-METER

Fun fact: “Cresswell” sounds 11.1% foreign, so that’s me cooked.

Labour’s Kiwibuild policy will quickly run out of money [updated]

Surprise, surprise, house-builders raise their arms in the air about government paying house-builders to build 100,000 houses.
Hardly even worthy of a headline. Except it got one: Labour's housing plan 'achievable,' says Master Builders.

Labour says the scheme to get the rate of new homes being built up to 200 per week is realistic and has been devised in consultation with experts in the building sector…
    Master Builders spokesperson Brendon Ward says the scheme could be a positive step towards addressing New Zealand's housing issues, as well as an exciting opportunity for the building and construction sector.

That wooshing sound you hear is the expectation of taxpayers’ money rushing into Master Builders’ accounts. That’s the “opportunity” Mr Ward is talking about.

And what about these “experts”?

Labour’s housing policy requires homes by the thousand to be built for well under $300,000 which, when sold, will provide the wherewithal for the next tranche of houses to be built for well under $300,000 which, when sold, will provide the wherewithal for the next tranche of houses to be built for well under $300,000, etc.. etc., until the next election.

Do you see the problem already? Even excluding the rocketing price of land – about which Labour pledges to do precisely nothing -- the Labour Party’s maths requires thousands for homes to be built for well under $300,000, or  as Labour’s housing spokesman Phil Twyford concedes, the Labour Party's Kiwibuild policy "will quickly run out of money."

Yet the very room full of actual experts in which Twyford made that concession – at a conference on affordable housing filled with people talking honestly rather than talking their book -- had already established that homes by the thousand, or even by the dozen, could not be built for well under $300,000 or anything like that, leaving the Labour Party's Kiwibuild policy as little more than a wet rag to wave around on the election trail that will quickly run out of money if they ever get a chance to try it.

So much for Mr Ward’s “opportunity.” But then, he cares little as long as the project’s seed money ends up in his members’ pockets.
The harsh truth is that Labour’s housing policy relies on a figure the industry can’t produce.

Square-metre costs for the very cheapest slums-of-tomorrow produced by your average builder are presently around $1450 to $1550 per square metre, plus GST. (This is a 90-130sqm house with particle-board floor, fibre-cement weatherboards, galv steel roof, el cheapo fittings.) To that you have to add the price of land.

The top-ten group home builders, who pride themselves on using efficiency, standardisation and their buying power to keep their prices down, can barely manage a home at $300,000. (Check the second left column for this years prices to May; compare them to their prices to Jun last year.)

Cunliffe Waves Hands, Brings House Prices Down [updated]

Last week the Labour Party’s “finance team” floated their new boat, a “new tool,” a  variable-compulsory savings rate tool which can be tweaked when necessary, they say, to assist the Reserve Bank in keeping the inflation genie under control.

Yet the boat they floated already looks holed beneath the water line.  Responding this morning to claims that his "new tool" just isn’t a big enough lever for the Reserve Bank governor to pull – suggestions that compulsory savings rates of 15% or more might even be necessary to have anything like the effect on inflation claimed for it^1,2 – Cunliffe waved his hands at the criticisms. This “new tool” he said is but a part of a “suite” of tools – making the variable-compulsory savings tool they said last week was a “big tool” not the big tool at all, but just a tool.

Got that?

It turns out, in Cunliffe’s mind at least, that the the variable-compulsory savings tool is but a “complementary” tool to his real big tool. The complementary variable-compulsory savings tool is going to act in the short-run, stabilising monetary policy (how? somehow!) while the “real big tool” will bring down housing prices over the long run, so that even low-income folk will be able to make the high and higher compulsory Kiwisaver contributions that Cunliffe all but conceded might be necessary.

So what’s this real big tool? No, it’s not his spokesman for finance David Parker. Their real big tool, it turns out once the hand waving subsides, is their old friend the Capital Gains Tax which, he insists is going to “cool” house prices and rents so markedly – by up to a third, he told Radio NZ’s Suzy Ferguson this morning! – that this will leave ample room for folk forced to save to afford the forced-saving his little “complementary” tool of a variable-compulsory savings rate will still require.

Do you see a problem here?  It’s called a reality gap – a gap that no amount of hand waving can massage.

It’s a little like the realty gap with Labour’s housing policy itself. …

Down to the Doctor’s: Making home ownership more difficult

This week, Libertarianz leader Dr Richard McGrath has been watching home ownership made more difficult.

John Key, former scourge of communists, leads a government whose central bank now wants to nationalise this country's private banks. State-owned Radio NZ News, of course, gets it arse-about-face, claiming that "[U]nder the proposed changes, the Reserve Bank would require trading banks to increase their loan-to-value ratios". In actual fact, the Central Bank wants to make it harder for people with little cash on hand to purchase their first (or any) house by decreasing loan-to-value ratios, apparently to a level below 80%.

Labour's housing spokesman, Philip Stoner Twyford—who, incidentally, supported the Misuse of Drugs (Medicinal Cannabis) Bill when it was before Parliament in 2009—quite rightly labelled this heavy-handed intervention as a form of governmental dentistry: "a kick in the teeth... for first home buyers," and said it would "lock out thousands of low-to-middle income first-home buyers."

I'm glad the Blue Socialists hadn't nationalised banks when I purchased my first four homes, as in each case I had less than 20% of the value of the properties available as a deposit. And I never defaulted on my loan obligations. Yet PM John Phillip Key, Housing Minister Nicolas Rex Smith and Reserve Bank boss Graeme Paul Wheeler want to stop me, and other New Zealanders, from being able to easily purchase real estate.

Should the government be allowed to manipulate the property market by fixing interest rates or making arbitrary rules about the required deposit for home purchasers? If your answer to that question is yes, then what's to stop the required deposit from being raised to 50%? Or 80%? Or to completely outlaw home loans altogether?    

Governments have certainly done things just as stupid in the past.

Fortunately, there is a political party in New Zealand which opposes moves by the Blue Socialists to nationalise the private banking system, while also opposing corporate welfare for banks. That party is Libertarianz. At a local level, Affordable City candidates will be attempting to make house ownership more affordable by reducing property taxation via reductions in the cost of running district councils.

So if you want more government, John Key's the man for you; if you want less government across the board, you might want to back the party described by Tumeke as "far, far, far right"—this being the same party that supported legalisation of prostitution and supports the legalisation of all drugs and separation of church and state. Does that sound "far, far, far right" to you? 

See you soon!
Doc McGrath
LEADER, LIBERTARIANZ PARTY

Fresh blood?

Labour's likely newcomers in next year's intake includes Andrew Little, Phil Twyford, Grant Robertson, Connor Roberts, Kate Sutton, Clare Curran, Stuart Nash, Paul Chalmers, Don Pryde, Jordan Carter and Hamish McCracken. As Cactus observes:

Oh dear, she's really recruiting in the Primary Schools now.

Meanwhile fresh blood has been spilled on the clean streets of Takapuna outside the Labour Party conference, overshadowing whatever momentum the poor dears hoped to generate from a weekend of speeches. (MSM bloggers Colin and Vernon have the stories.)

It's looking more like the ill-fated Democratic Convention of '68 than it is of one on the eve of an historic fourth term.

UPDATE: Russell Brown offers a measured reflection on the violence and the protests, including some video links.