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  • Why Tony Alexander is wrong

    If you're looking to buy a house, now's the time
    By Tony Alexander

    The Southland Times
    Last updated 17:36 08/04/2009
    http://www.stuff.co.nz/southland-times/business/column-tony-alexander/2324420/If-you-re-looking-to-buy-a-house-nows-the-time

    So say he!

    “…Here in New Zealand the fundamentals have never added up to large declines in average house prices. For a start we have accelerating population growth courtesy of rising net migration inflows. When times get tough Kiwis come home, foreigners shift here and fewer Kiwis leave to seek their fortunes elsewhere…


    As a Kiwi who lives overseas: I think I speak for most of us; we are professionals who cannot find similar opportunities or compensation in New Zealand. Quite frankly, I’m offended by your statement that implies that we cannot cut-it overseas and need to, on mass, come running home to New Zealand with our collective tails between our legs.

    “…We have a fundamental shortage of accommodation. We now have collapsing construction with the number of consents issued at the lowest levels in perhaps half a century near 12,500 per annum. We need about 24,000 consents per annum just to meet population growth and that doesn't take migration into account…”


    The key to finding the underlying wrongness of this paragraph is your assumption that one Resource Consent equals one new Dwelling. It does not. A Resource Consent may be required from everything from outside plumbing to minor exterior alterations or even building a fence.

    I took this from the Wellington City Council web-site:

    http://www.wellington.govt.nz/services/reconsent/index.html

    Activities that may require a resource consent are, for example:
    ·building a new deck close to a boundary
    ·planning a new multi-level apartment building
    ·setting up a work-from-home business
    ·subdividing a property


    “…Speaking of maths, investors are increasingly finding they can make their properties cashflow positive. Imagine what will happen when rents start rising…”


    Tony rents are down and falling still – no secret here – so by what economic mechanism do you expect rents to start rising? Ahh… the rapid growth in population vs. the lack of homes available to house them.

    I beg to differ:
    Numbers derived from Statistics NZ

    The Average Yearly Total Live Births are, 1992 – 2008: 57,615
    The Average Yearly Total Deaths are, 1992 – 2008: -27,613
    The Average Yearly Arrivals (permanent and long-term) are, 1992 – 2008: 73,805
    The Average Yearly Departures (permanent and long-term) are, 1992 – 2008: -61,946

    Adding these together we can surmise that New Zealand’s population has grown at an Average of 41,861 each year between 1992 and 2008.

    Actual Growth in Population per Year

    1992 37,200.00
    1993 40,600.00
    1994 48,000.00
    1995 54,200.00
    1996 58,100.00
    1997 48,700.00
    1998 33,200.00
    1999 21,500.00
    2000 22,800.00
    2001 26,900.00
    2002 64,200.00
    2003 76,500.00
    2004 61,000.00
    2005 47,300.00
    2006 50,900.00
    2007 43,800.00
    2008 40,400.00

    However, as you can see the current trend is a decreasing trend. The influx of “new” New Zealanders either by birth or by migration is falling. This abrogates your theory even without broaching the broadening unemployment figures.

    To conclude:
    Until New Zealanders admit there is a problem this thing will not get fixed. Encouraging people with marginal incomes (to say the least) to jump feet first into an overvalued property market during a recession is nothing less than irresponsible – regardless of how low your bank and others have lowered their interest rates.
    Last edited by exnzpat; 10-04-2009, 05:39 PM.
    Erewhon is still erehwon, I don’t see it changing anytime soon.

    http://exnzpat.blogspot.com/

  • #2
    Although I have never been a fan of Alexander and have much more faith in his counterparts Stephen Toplis and Craig Ebert, he is right.

    That does concern me as he is usually horribly wrong; but there is NO oversupply of housing in the main centres of NZ, there is in Florida, California, Spain and other parts but not so here. How can there be a massive drop if there is not an abundance of housing and that 35% of houses in NZ have no mortgage at all.

    All nonsense!

    Gareth Morgan owns no investment property and never has. That is like expecting a top Curry Chief to critique a great Greek meal. Him and his ilk have a vested interest in running housing down to promote their paltry returns on their pathetic managed funds.

    The head of the NZX is the same, has no clue and has a vested interest in poopooing the housing market to stop his company's share price slide which will continue due to his ineptness.
    Last edited by Perry; 12-04-2009, 08:28 PM. Reason: fixed typo

    Comment


    • #3
      Originally posted by exnzpat View Post


      The key to finding the underlying wrongness of this paragraph is your assumption that one Resource Consent equals one new Dwelling. It does not. A Resource Consent may be required from everything from outside plumbing to minor exterior alterations or even building a fence.

      I took this from the Wellington City Council web-site:

      http://www.wellington.govt.nz/services/reconsent/index.html

      Activities that may require a resource consent are, for example:
      ·building a new deck close to a boundary
      ·planning a new multi-level apartment building
      ·setting up a work-from-home business
      ·subdividing a property

      The key to finding the underlying wrongness of this paragraph is that you are confusing resource consents with building consents. The original article is referring to building consents. Resource consents are for exactly what you quote above. But you don't generally need resource consent for building a house unless you are wanting to do something that is outside the district plan for that zoning.- e.g putting two houses on one section.

      So when the article talks about "consents" - they are talking about building consents, building a house - not subdividing a property, or building apartments.

      In my area rents are rising - what I rented out for $320 per week, 9 months ago I am now getting $345. My area is not the only one that this is happening.

      Its fine for you to be overseas and think you know what is happening here - but I personally don't think you do know.
      Last edited by rueben; 10-04-2009, 08:41 PM.

      Comment


      • #4
        1992 37,200.00
        1993 40,600.00
        1994 48,000.00
        1995 54,200.00
        1996 58,100.00
        1997 48,700.00
        1998 33,200.00
        1999 21,500.00
        2000 22,800.00
        2001 26,900.00
        2002 64,200.00
        2003 76,500.00
        2004 61,000.00
        2005 47,300.00
        2006 50,900.00
        2007 43,800.00
        2008 40,400.00

        However, as you can see the current trend is a decreasing trend. The influx of “new” New Zealanders either by birth or by migration is falling. This abrogates your theory even without broaching the broadening unemployment figures.
        Quite possibly some of the worst analysis of data I have seen on this site. Unbelievable.

        As a Kiwi who lives overseas: I think I speak for most of us; we are professionals who cannot find similar opportunities or compensation in New Zealand. Quite frankly, I’m offended by your statement that implies that we cannot cut-it overseas and need to, on mass, come running home to New Zealand with our collective tails between our legs.
        Thanks for the stunning hubris, but I very much doubt you can claim to talk for anyone... actually you do claim that... but you are wrong.
        The article is quite right, NZers do return in recessions, Alexander does not say they cannot hack it, he says when the going gets tough many come home. That is normal, worldwide for any nationality, you return to where your best support structures are, where you know the lay of the land.

        Comment


        • #5
          Agree, today I overheard some guy say that he got laid off in London last Friday and caught the plane home Tuesday. Reckons a lot of kiwis are doing the same thing due to the extreme high living costs of being unemployed in London.

          Comment


          • #6
            Originally posted by rueben View Post
            The key to finding the underlying wrongness of this paragraph is that you are confusing resource consents with building consents. The original article is referring to building consents. Resource consents are for exactly what you quote above. But you don't generally need resource consent for building a house unless you are wanting to do something that is outside the district plan for that zoning.- e.g putting two houses on one section.

            So when the article talks about "consents" - they are talking about building consents, building a house - not subdividing a property, or building apartments.

            In my area rents are rising - what I rented out for $320 per week, 9 months ago I am now getting $345. My area is not the only one that this is happening.

            Its fine for you to be overseas and think you know what is happening here - but I personally don't think you do know.
            Hmmm…

            Then perhaps he should have said so. Reread it. He said “consents” nothing more.

            But thanks for correcting me – a fence does actually need a Building Consent if you live in Kapiti. But, maybe I would rather put in a wood burning stove instead. Guess what? Building Consent needed!

            http://www.kapiticoast.govt.nz/Templates/Content/GeneralFull.aspx?NRMODE=Published&NRNODEGUID=%7b6B 196A1E-CEBB-495B-A568-21575FB58924%7d&NRORIGINALURL=%2fDistrictDevelopme nt%2fBuildingConsents%2f&NRCACHEHINT=NoModifyGuest #WhyGoThroughtheBuildingConsentProcess

            By Kapiti Coast District Council
            Examples of Work that Requires a Building Consent:
            • structural building - additions, alterations, re-piling, demolition
            • plumbing and drainage [except repair and maintenance of existing (using comparable) components]
            • relocating a building
            • installing a woodburner or air-conditioning system
            • retaining walls higher than 1.5 metres
            • fences or walls higher than two metres, and all swimming pools and their associated fences
            • decks, platforms or bridges more than one metre above ground level
            • sheds greater than 10m² in floor area.

            Maybe Tony was referring to both Building and Resource Consents. Think about it, if the two combined fell to the number he stated, “…12,500 per annum…” then the New Zealand building industry is actually in for big layoffs. Not a smart time to be buying a house, don't you think?

            Tony also said “…Over there they have fallen "only" 29 per cent in spite of massive over-building, huge excess lending and borrowing when mortgage rates were down near 2 per cent, and now the biggest credit crunch in the US since the 1930s Great Depression…”

            Over where exactly?

            This is a weak article written for weak minds -- do not question the man behind the curtain – indeed!

            Lastly, I’m here in New Zealand. Why would you assume to know my location? Do you know me?
            Last edited by exnzpat; 10-04-2009, 10:30 PM.
            Erewhon is still erehwon, I don’t see it changing anytime soon.

            http://exnzpat.blogspot.com/

            Comment


            • #7
              Originally posted by exnzpat View Post



              As a Kiwi who lives overseas: I think I speak for most of us; we are professionals who cannot find similar opportunities or compensation in New Zealand. Quite frankly, I’m offended by your statement that implies that we cannot cut-it overseas and need to, on mass, come running home to New Zealand with our collective tails between our legs.


              I agree I emailed Tony some time ago stating that I found it hard to understand why Professional NZers would give up the quality of life they have outside of NZ, For a lower income and less cosmopoliton way of life. My email to him was "tongue in cheek" From the resultant discusion All I can say is tony and I have different views.

              As I see it most of the immigrants to NZ are "economic" seeking a better way of life, and most leaving New Zealand are "economic" seeking a better way of life. The result is a feedback loop that ensures medocrity in NZ.
              The mission of any business enterprise should include the aim to develop economic conditions rather than simply react to them.

              Comment


              • #8
                Originally posted by Austrokiwi View Post
                I agree I emailed Tony some time ago stating that I found it hard to understand why Professional NZers would give up the quality of life they have outside of NZ, For a lower income and less cosmopoliton way of life. My email to him was "tongue in cheek" From the resultant discusion All I can say is tony and I have different views.

                As I see it most of the immigrants to NZ are "economic" seeking a better way of life, and most leaving New Zealand are "economic" seeking a better way of life. The result is a feedback loop that ensures medocrity in NZ.
                Quite simply, if you can't find a job in London you will blow 8-10k $NZ a month just surviving, not possible for most kiwis that are over there so they come home.

                Comment


                • #9
                  Originally posted by Commercial Dan View Post
                  Quite simply, if you can't find a job in London you will blow 8-10k $NZ a month just surviving, not possible for most kiwis that are over there so they come home.

                  My living expenses in the States are about NZD20,000 per month. My living expenses in New Zealand, twelve months per year, whether I’m here or not is about NZD5,000 per month.

                  What is it that you think a professional does for a living? Work at the local chip store?

                  As professionals in the real world we face incredible competition by some of the world’s smartest people, and yet we still stand tall. Be proud of us. We make you look good!
                  Erewhon is still erehwon, I don’t see it changing anytime soon.

                  http://exnzpat.blogspot.com/

                  Comment


                  • #10
                    Originally posted by exnzpat View Post
                    My living expenses in the States are about NZD20,000 per month. My living expenses in New Zealand, twelve months per year, whether I’m here or not is about NZD5,000 per month.

                    What is it that you think a professional does for a living? Work at the local chip store?

                    As professionals in the real world we face incredible competition by some of the world’s smartest people, and yet we still stand tall. Be proud of us. We make you look good!


                    Anbody else starting to suspect that expat does actually work at a chip shop?

                    Comment


                    • #11
                      Originally posted by Baron Silas Greenback View Post
                      Anbody else starting to suspect that expat does actually work at a chip shop?

                      OK. You got me; I am a “chippy.” Fat, greasy and lazy -- the only exercise I get is typing on PT or spitting in the fryer.

                      My point was, if such a New Zealander, with expenses like I pretended to have, did exist, he or she would have responsibilities far beyond that of the norm. In fact, instead of running back to NZ wouldn’t he/she just go out and get another job? Or failing that start a business or a new business if the last one failed?

                      You see, the way I understand it (from my “chippy” perspective) if you lose your job, or your business fails, your debts don’t suddenly drop away. In fact, coming back to NZ where there are far fewer opportunities and smaller pay packets would be the worst thing you could do.

                      But, then what do I know – I am just your humble “chippy.”

                      One last question: why do you sell your fellow New Zealanders short? Do you believe that we are all so inept that the best job any of us could get is to be an “All Black” or some other kind of sports star? Because, from my fat, lazy and greasy position in front of this computer screen (my mum’s, by the way), shows me that there are some very successful New Zealanders out there doing interesting and important things the world over.

                      I may be a humble “chippy” but I’m proud to be a New Zealander because of them.
                      Last edited by exnzpat; 11-04-2009, 12:22 PM.
                      Erewhon is still erehwon, I don’t see it changing anytime soon.

                      http://exnzpat.blogspot.com/

                      Comment


                      • #12
                        Originally posted by Austrokiwi View Post
                        I agree I emailed Tony some time ago stating that I found it hard to understand why Professional NZers would give up the quality of life they have outside of NZ, For a lower income and less cosmopoliton way of life. My email to him was "tongue in cheek" From the resultant discusion All I can say is tony and I have different views.

                        As I see it most of the immigrants to NZ are "economic" seeking a better way of life, and most leaving New Zealand are "economic" seeking a better way of life. The result is a feedback loop that ensures medocrity in NZ.
                        Only for the mediocre

                        Comment


                        • #13
                          Originally posted by exnzpat View Post
                          OK. You got me; I am a “chippy.” Fat, greasy and lazy -- the only exercise I get is typing on PT or spitting in the fryer.

                          My point was, if such a New Zealander, with expenses like I pretended to have, did exist, he or she would have responsibilities far beyond that of the norm. In fact, instead of running back to NZ wouldn’t he/she just go out and get another job? Or failing that start a business or a new business if the last one failed?

                          You see, the way I understand it (from my “chippy” perspective) if you lose your job, or your business fails, your debts don’t suddenly drop away. In fact, coming back to NZ where there are far fewer opportunities and smaller pay packets would be the worst thing you could do.

                          But, then what do I know – I am just your humble “chippy.”

                          One last question: why do you sell your fellow New Zealanders short? Do you believe that we are all so inept that the best job any of us could get is to be an “All Black” or some other kind of sports star? Because, from my fat, lazy and greasy position in front of this computer screen (my mum’s, by the way), shows me that there are some very successful New Zealanders out there doing interesting and important things the world over.

                          I may be a humble “chippy” but I’m proud to be a New Zealander because of them.
                          You doth protest to much.

                          Comment


                          • #14
                            Baron,


                            You know what you remind me of?

                            Think: the commercial with the woman and the Beaver; running on NZ TV right now.

                            Like the add says: You only have one – and Baron you’re it!
                            Erewhon is still erehwon, I don’t see it changing anytime soon.

                            http://exnzpat.blogspot.com/

                            Comment


                            • #15
                              Originally posted by Austrokiwi View Post
                              ...most of the immigrants to NZ are "economic" seeking a better way of life, and most leaving New Zealand are "economic" seeking a better way of life.

                              The result is a feedback loop that ensures medocrity in NZ.

                              An outstanding analogy of New Zealand.
                              Erewhon is still erehwon, I don’t see it changing anytime soon.

                              http://exnzpat.blogspot.com/

                              Comment

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