A random collection of thoughts on the housing market

  • I remain of the view that “home ownership” isn’t the be all and end all, but a short-cut to the values of a stable and secure place to live, and a means to a comfortable retirement, and a way to establish community. But certainly under our residential tenancy legislation, it’s effectively impossible to have long-term security in a rental. 
  • I lived in Auckland for all my life bar the past 4 years in Wellington. Whenever I go back for a visit, I’m struck by how much scope there is for simple intensification. All these huge flat sections on the isthmus! Compared to Wellington where sections are often small and steep. So much scope for subdivision in Auckland! And so many single story dwellings! It’s not just big developers who are landbanking, it’s everyone on section bigger than about 600m2. Which is a helluva lot of people. 
  • Auckland carries the lead stories about housing prices, and it’s focused mainly on the cost of buying. But there are other housing issues, including the cost of renting in all areas of the country where there is also scope for employment. High rental costs in turn have implications for home-ownership: making it harder to save a deposit for renters who want to buy, and making it more attractive for investors to buy property, or for people to rent out their houses rather than sell them when they move to a different area. 
  • In Wellington, house prices aren’t Auckland-level crazy, but they’re still very high. The averages are pulled down because there are proportionately a lot of small apartment sales, but to buy a family home (even a townhouse), the prices are out of the reach of many. And there are very few listings. And lot of the houses are in terrible condition. Many of them – at least half that we’ve looked at – are currently rented, and the rents are high enough to service a mortgage; which is another way of saying that they are too high for the occupants to save for a deposit. 
  • When my parents bought their first home in Auckland, it was a do-up, an ex-state home that hadn’t been renovated. But it was only 40 years old. The same houses are now 70 years old. Huge difference in condition. There was no massive building project in New Zealand in the 70s and 80s, and then the terrible leaky building clusterdisaster of the 90s and early 2000s means that the current building stock has decades of shortfall from not keeping up with population growth in metropolitan areas. 
  • It’s difficult for buyers to behave rationally in this market. If we lived in central Auckland still, we probably would have taken a punt on ongoing increases and bought anything, no matter how bad, just to get a foot in. 
  • That said, there’s a limit to how far things can sprawl. We would happily live in Blockhouse Bay, but frankly we would rather rent forever than shuttle back and forth from Papakura. That’s not a snobbishness thing, it’s a desire to live all in one place, rather than have a life split in half by a long commute. 
  • It’s difficult to renovate a home if you’re mortgaged to the hilt. This probably partly explains the terrible condition of some of the places we’ve seen at open homes. It’s also a factor that we need to take into account when deciding how much to bid. If we stretch ourselves to the limit on the house alone, then there’s nothing left to pay for putting in insulation or double glazing, and if we end up in another ice-box like this one we might as well keep renting. 
  • I’m puzzled why all the discussion of capital gains tax assumes that the family home should be exempt. We pay tax on our savings in the bank, even though they’re going to be used to buy a house. The tax is only on the gain, after all! So why the special treatment?
  • Ah, the “too picky” criticism… If you’re spending hundreds of thousands of dollars on something, surely you have every right to be picky? 
  • The whole idea of the “first home buyer” is an interesting construct. The idea is to buy something, live in it for a few years, sell it, and use the gain to get into something better. So this assumes that there will be gain, first off. And it also assumes that people are getting their first home early enough that this set of steps is viable. But if you can’t afford to buy until your kids are in primary school – which is pretty common – you’re going to want to go straight into the “forever house”.
  • A mere 300 years ago, the entire country was held in common. The idea that it has always been difficult for people to own homes is steeped in capitalist ideology. Land doesn’t have to be treated as a fungible good. 
  • Not everyone needs to live in Auckland. Where’s the regional development? Instead of sprawl, why not have other cities? Whangarei has a nice climate and a nice harbour and a nice ring of hills, but not many jobs. New Plymouth is nice too. And then there’s a whole island down to the south – plenty of land there!
  • Because Auckland is so extremely expensive, it seems that the public discourse forgets that the rest of the cities in the country aren’t doing that well either. The only areas with cheap houses have few or no decent paying jobs, so they’re not viable alternative places to live.  
  • The whole system of social services is premised on high levels of home-ownership. With home-ownership falling, the Government is paying more and more in the accommodation supplement, and there is a potentially scary situation coming in 30 years when a huge group of people retire without owning their homes.
  • I just checked some stats on the point above. Look at those graphs! Check out the drop between 2001 and 2013! Whoa.  
  • But back to Auckland – speaking only anecdotally, and I would be interested in seeing data on this, there are heaps of people who grew up in Auckland, or studied in Auckland, who have left. Often for overseas. If you’re going to be paying high rents and have no prospect of owning, you might as well bid farewell to NZ. 
  • Homeownership is strongly linked to ethnicity. Pakeha have the highest ownership rates. Maori and Pacific Islanders have the lowest. Put another way, Pakeha are still directly benefiting from colonisation. 
  • Foreign investment in Auckland is likely to be a factor because the gains are so stratospheric, and they’re not taxed. So duh. Of course it’s an attractive investment for anyone with spare money. 
  • But it’s not just foreign investment, it’s also the lay-landlords, the thousands of couples who have one investment property, or two, because it’s considered the safest investment. 
  • In Wellington, lots of properties are marketed at first home buyers but bought by investors. We’ve put bids in on houses only to lose out and see those houses listed as rentals a few weeks later. 
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