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The title of this blog-post might sound like a Cleo article about finding the perfect free knotts berry farm travel brochure man, but actually it's about housing affordability in Auckland. I know, a lot less interesting but still important…
The other night I went to an Auckland Conversation public meeting which involved three economists discussing housing affordability in Auckland. Shamubeel Eaqub (from NZIER), free knotts berry farm travel brochure Dominick Stephens (Westpac) and Arthur Grimes (Motu Economic and Public Policy).
In particular, I was interested free knotts berry farm travel brochure to hear their views on the government's recent policy announcements around housing affordability. While they didn't discuss these policies directly too much, they did talk a lot about what causes increases in house prices. This is obviously quite relevant as if you don't understand what makes house prices go up you are not likely to have much luck reducing them.
Dominick Stephens pointed out that the really big spike in property prices in NZ happened in the period from 2002-2007. During this period house prices rose about 100% everywhere in the country, even in areas like Dunedin and Invercargill, which had extremely low population growth and lots of available land during those 5 years. This suggests the increase probably wasn't caused by physical factors.
This is not to say that physical factors don't also have some impact. For example, all the economists agreed that house prices are going up in Auckland right now partly because the rate at which we were
Dominick Stephens argued that, if this is true, then the government's recent policy announcement isn't likely to actually have much impact on house prices. That is because it is mainly focused on changing
I think he's probably right. Obviously, a really dramatic change to physical factors would change free knotts berry farm travel brochure house prices. For example, if the council got rid of all minimum parking requirements or the government built
But unless we tackle the financial factors as well, we're probably not going to stop house prices in NZ climbing in the long term. The government made a good start on that in 2011, when they removed the
One factor not mentioned in your list above, free knotts berry farm travel brochure is the effect of financial benefits for first home buyers, such as the first home subsidy. In the absence of a capital gains tax and cheap money, the only impact of a subsidy for first home buyers is to drive up the average house price by the amount of the subsidy. It drives speculation by investors who know that free money is going to enter the market and inevitably sets the bar even higher still, driving further well-meaning initiatives that further increase property prices.
It would be funny, if it wasn t so depressing. Everyone knows that CGT really is the magic bullet. And yet, we re so geared up that we (well, the vocal upper-middle classes) have got too much to lose in the short term to actually implement it.
Can you explain more how CGT is the magic bullet? Are there examples where it has worked and hasn t worked to improving housing free knotts berry farm travel brochure affordability in other similar countries, eg Australia, UK, Canada, USA, Ireland? Should personal home be exempted, wont it encourage over capitalisation in personal property if it is exempt, wont it hurt low income families if it isn t exempt.
The only other financial mechanism we have to move house prices is interest rates. But if we lower interest rates to promote economic growth, we make speculative property even more attractive, and if we raise interest rates we suppress economic growth. Until we stop signalling to the market that speculative (and unproductive) property ownership is easy money, the cycle will continue.
Whether or not the personal home should be exempt, I find largely irrelevant (although, as a home owner, it s pretty attractive). It s probably politically expedient, but that s about all. Certainly free knotts berry farm travel brochure can t see how it could hurt low income families lower monthly interest payments would have far more benefit than an untaxed future pay-off.
That s my question too. The size of the current housing stock is fixed. If you tax housing investments then you ll drive investors out of the market. That ll make it cheaper to buy-to-own, but that in turn will squeeze renters who will have less chance of finding a home. Which is a bad outcome if you want to rent. So will a CGT increase the size of the housing market? No it will do the opposite by discouraging investors from buying houses to rent.
The issue I have with CGT is the complexity of it. My parents bought their current home in about 1990. They ve improved it since then. If my sister and I inherit it after they die, then do we pay a Labour Party CGT on the value since purchase or the value since inheritance? Will the values be inflation adjusted? Will the values take in to account improvements and how do we value them? What if we improve it before sale? What if I didn t sell it, but decided to keep it as a beach house? So I retire, sell my primary (city apartment) residence do I escape CGT on my beach house which is now my primary residence, AND my apartment? If I die in 40 years time and leave my beach home to my nieces, then what CGT do they pay? They live in Australia, by the way, so probably don t pay any NZ tax. This seems a boon for lawyers free knotts berry farm travel brochure and the people who set up trusts, but I can t see how it ll make homes more affordable.
first, property is the default investment for small investors, they ve been stung by shonky investment companies (even apparently sound ones), all the reasons you mention above and property is something tangible, you can (but don t have to) manage it yourself without a funds manager taking a cut and the returns are reasonable
second, we have an influx of migrants who see this favourable property environment and have the readies to invest, the house next door went to auction after the 80 something owner (who built it with her husband) passed free knotts berry farm travel brochure away, it is shabby inside, but two flats and good views, it sold to a recent migrant for $852k, around $150k more than I anticipated
so really we need to address the investment area to switch the focus from property to productive enterprise that creates sustainble jobs and wealth for the country, captial gains tax, banking policy etc, also we need to change the immigration laws so that migrants who come in on a financial threshhold basis must invest in production, not property, it s a win/win
You are exactly right and this has been going on for years, so interesting that only really in the news recently! People seem to think they are suddenly wealthy, but for those with one house, unless you do what Bernard Hickey has done (sell up and then move to another city) or downsize, you are simply going to have to pay more for the next one. When you have a global housing market with localised wages, of course it is not going to work for average/low income earners trying to compete with Hong Kong wages. Vested interests however mean the obvious demand free knotts berry farm travel brochure solutions are ignored and land, permits etc are the suggested answers, seems a bit like preventative health care v surgery!
I believe that, apart from the CBD, some nearby suburbs free knotts berry farm travel brochure with name schools and the beaches along the North Shore, housing affordability in Auckland is not too poor. Agreed it could be better but there are actually quite a few areas that have affordable housing already. This is no different s situation to what my parents had to cope with over 40 years ago. Their first place was a 2 brm unit in Mt Roskill, which at the time was deemed to be a long way out of the city. In recent times, growth has caught up with Mt Roskill and it no longer is seen as being that far away so the title goes to another suburb further free knotts berry farm travel brochure out. If we could create good transport links from greater Auckland to towns away from the main isthmus then people will be attracted to these areas. These areas already have much cheaper property free knotts berry farm travel brochure than Auckland central. Once people start moving there, there will be a need for more shops / business etc and it will create it s own centre. In my mind the transport must come first. Electrifying to Pukekohe is the first step. Where else you may ask? Well, if we could break up the toy farm culture out West then Kumeu / Huapai would be another key area as would Waimauku. Spend the money and create a fast, electrified rail link to these towns (expensive but so are motorways) with some changes in town planning free knotts berry farm travel brochure more intensive housing around the town centre rather than spread out around the next 15km s would be a good start. I think SH16 needs to be re-routed around the towns (with minimal connections 2 or 3 roundabouts or similar) in order to make them people places. Heading North, well Silverdale has already started. There must be more alternatives (other than Warkworth free knotts berry farm travel brochure which I think is actually a poor choice as a satellite town). Wellsford with high speed rail would be just an hour out of town. Plenty of good land and with rail and good road access. It s the access to these towns and town planning more intensive and close to shops etc that will make a difference. In the end, for me, it is a physical problem. The only real financial change I would like to
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