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  1. #436
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    Quote Originally Posted by Bjauck View Post
    Residents seeking a house to live in should be prioritised and non-residents seeking an investment should pay stamp duty or be restricted to building new houses. Otherwise people who work in the city will be increasingly excluded from owning a house here. For example:
    Cost of Auckland living forces police officer to quit
    http://www.nzherald.co.nz/nz/news/ar...ectid=11877760
    Pretty sure that he can move to another city and still get paid the same. Yeah sure he may be away from family and friends, but life happens. I think his letter i a bit of a cop out (just going by his letter). I earn around the same as him and through a fairly stable budget I am definitely not living paycheck to paycheck (live in Auckland) and saving (investing) for my future.

    I also believe the government needs an accommodation supplement for the police depending on the location where they work, like what the NZDF is about to roll out in July. Auckland needs to retain there police force and the cost of living in Auckland isn't getting cheaper.

    Disc: don't own a house...and with the market, not looking... unless mortgage rates sky rocket forcing people to default on their mortgages losing their homes and flooding the markets with houses.

  2. #437
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    Quote Originally Posted by Blackrose View Post
    If some one else could explain the great housing disconnect to me that would be lovely.
    If by disconnect you mean the disconnect between the price and what you actually get. I would suggest you have been fooled by central banks and inflation. Although it doesn't translate well below is a copy and paste from the nz reserve banks own inflation calculator.

    Housing
    that cost $100,000.00
    in quarter 4 of 2012
    would have cost
    $146,890.16
    in quarter 4 of 2016
    Total percentage change
    46.9%
    Number of years difference
    4.00
    Compound average annual rate
    10.1%
    Decline in purchasing power
    31.9%
    Index value for 2012 quarter 4 is
    1586.9
    Index value for 2016 quarter 4 is
    2331.0

    So over the last four years your deposit has lost 31.9% housing purchasing power. Although if you owned a house you would be quite happy with this.
    So what is the reserve bank doing about this situation http://www.rbnz.govt.nz/monetary-pol...rate-decisions
    Well today they did sweet FA and will probably continue on that path because all other developed nations are following the same playbook.
    For comparison I show below wage price inflation.

    Wages
    of $100,000.00
    in quarter 4 of 2012
    would have been
    $110,210.57
    in quarter 4 of 2016
    Total percentage change
    10.2%
    Number of years difference
    4.00
    Compound average annual rate
    2.5%
    Decline in purchasing power
    9.3%
    Index value for 2012 quarter 4 is
    25.2
    Index value for 2016 quarter 4 is
    27.7

    I see a disconnect between a 9.3% and a 31.9% decline in purchasing power.
    Last edited by Aaron; 22-06-2017 at 05:07 PM.

  3. #438
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    I guess the next question is what is causing the house price inflation. The underlying cause of inflation is usually that too much money is available to purchase too few goods and services, or that demand in the economy is outpacing supply. House hold debt has only risen about 21% over that period but not sure where RBNZ gets its stats http://www.rbnz.govt.nz/statistics/k...household-debt Also I don't understand M3 money supply so can't see if this has grown over the same period.
    Possibly immigration is a small part of the problem from a demand perspective. http://www.stuff.co.nz/business/indu...-holidaymakers. I don't really know but I suspect that low interest rates and QE internationally are playing some part.
    Last edited by Aaron; 22-06-2017 at 05:08 PM.

  4. #439
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    I know I shouldn't stray from mainstream commentators but I have a confirmation bias so need to look to the fringes to find it. Albert Edwards has been wrong for a long time but in case your like me and angry at central banks and central bankers.
    http://www.zerohedge.com/news/2017-0...entral-bankers

  5. #440
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    Quote Originally Posted by Aaron View Post
    I guess the next question is what is causing the house price inflation. The underlying cause of inflation is usually that too much money is available to purchase too few goods and services, or that demand in the economy is outpacing supply. ....
    House price inflation...perhaps boosted by:
    1. Recent low interest rates allow servicing of bigger mortgages.
    2. Financial market and security bias towards lending for real estate rather than for business.
    3. Taxation system bias towards investments with capital appreciation and negative gearing capability rather than income production.
    4. Small stock exchange (possible because of tax system and poorly developed superannuation scheme which would have invested in NZ companies) which would allow investment diversifcation
    5. Housing market open to overseas investors, who can bring in overseas money which competes with NZ residents relying on NZ money.
    6. Limited land in the places where people want to live.
    7. RMA
    8. Small market for building product suppliers.

    any other factors?

  6. #441
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    Quote Originally Posted by Tweak View Post
    Pretty sure that he can move to another city and still get paid the same. Yeah sure he may be away from family and friends, but life happens. I think his letter i a bit of a cop out (just going by his letter). I earn around the same as him and through a fairly stable budget I am definitely not living paycheck to paycheck (live in Auckland) and saving (investing) for my future.

    I also believe the government needs an accommodation supplement for the police depending on the location where they work, like what the NZDF is about to roll out in July. Auckland needs to retain there police force and the cost of living in Auckland isn't getting cheaper.

    Disc: don't own a house...and with the market, not looking... unless mortgage rates sky rocket forcing people to default on their mortgages losing their homes and flooding the markets with houses.
    He could move to another city but then that begs the question...Auckland still needs to attract police who can afford accommodation in Auckland, and raise families and settle in Auckland.

    Why should Auckland-raised police feel obliged to move away from Auckland to be able to afford to buy a house? I don't think people in good careers should have to become involuntary "exiles" just to be able to afford to buy a house. That is a sign of a broken residential housing market.

    Is the cost of housing and accommodation in Auckland making recruiting staff difficult?

  7. #442
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    Hi hi, yes I'd add the not so subtle recommendations that potential first home buyers crack open their kiwi saver and use that as a deposit on a home.

    I can't say annnything wrong with that one don't worry about retirement naaaah....

    Aaron - pretty much what you said. I've been "Bubble girl" for the last couple of years reading from ZH, and your excellent analysis not with standing, mine was a much simpler one.

    Are Auckland's house prices extremely unaffordable by any metric you want to use? -
    Yes. 950K to 1.4 million for a house is not sustainable.
    Has mortgage fraud been going up? Yes a google search reveals plenty of bad behavior fueled by an over priced market.
    Is it because of hot money from Asia top tier cities and lax regulation? - it doesn't help.

    We are at low interest rates now as RBNZ has done FA with them leaving them at 1.75% even though the US Federal Reserve has hiked rates and wants to hike again, even during the crazy reign of the orange one, and as the big 4 banks on orders from their Australian masters have upped their rates.... how can bubble house prices in Auckland not be affected?

    So far no one else can really give me an answer on that one.

  8. #443
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    any other factors?
    How about the obvious one of supply not being able to keep up with the influx of population to Auckland. Record immigration being just one sub-factor of that.

  9. #444
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    Quote Originally Posted by Blackrose View Post
    ....... .. Are Auckland's house prices extremely unaffordable by any metric you want to use? - Yes. 950K to 1.4 million for a house is not sustainable. .....
    Well how about using the median price metric? $865k based on REINZ actual sales in May.

    By that metric half of all sales were under that price last month.

    Of course they might not be a 3 bedroom standalone house with garage but plenty of people step onto a low rung of the property ladder, pay down principal as fast as poss, upskill for better income and trade up in a few years.

    'Twas ever thus.

  10. #445
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    1 Monaco $60,000 a sq metre
    19 NZ Auckland $7000 a sq metre
    World's most expensive cities | Global Property Guide

  11. #446
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    Quote Originally Posted by artemis View Post
    Well how about using the median price metric? $865k based on REINZ actual sales in May.

    By that metric half of all sales were under that price last month.

    Of course they might not be a 3 bedroom standalone house with garage but plenty of people step onto a low rung of the property ladder, pay down principal as fast as poss, upskill for better income and trade up in a few years.

    'Twas ever thus.
    Affordability is sometimes calculated taking the median price of the lowest quartile of residences. Studies have shown Auckland is grossly affordable. Raising a deposit from after tax income for even a $650K dwelling would takes some saving even with a frugal lifestyle. Denying yourself latte and crushed avocado and feta lunches would not make a material difference!

  12. #447
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    Quote Originally Posted by Joshuatree View Post
    1 Monaco $60,000 a sq metre
    19 NZ Auckland $7000 a sq metre
    World's most expensive cities | Global Property Guide
    NZ income/pp $38k
    Monaco's $164k

    What percentage of Monaco's workforce commute in from Italy and France each day?
    What percentage of Auckland's workforce commute in from Hamilton and Tauranga each day?

  13. #448
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    Quote Originally Posted by Bjauck View Post
    Affordability is sometimes calculated taking the median price of the lowest quartile of residences. Studies have shown Auckland is grossly affordable. Raising a deposit from after tax income for even a $650K dwelling would takes some saving even with a frugal lifestyle. Denying yourself latte and crushed avocado and feta lunches would not make a material difference!
    I guess we should read this as: "grossly unaffordable."

  14. #449
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    Quote Originally Posted by macduffy View Post
    I guess we should read this as: "grossly unaffordable."
    Thanks Macduffy....if only it did not need correcting! However with current policy and investment settings, accommodation costs and land values are destined to continue to comprise such a large part of NZers income and wealth.

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