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What We Need is Another Report

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  • Perry
    Alert! Poll in the offing?!

    If you're so inclined, please have a read through the
    issues paper. Isolate the criteria that the Commission
    or you consider to be important. E.g.
    • RMA constraints on land availability
    • Decreasing availability of house builders
    • Increasing reduction in the average NZ wage
    • Council Compliance Costs and Related Difficulties
    • Eroding purchasing power of the NZ dollar, caused by government-driven inflation
    • Other Things, etc., etc.

    I think I have a magic wand that allows me to add
    a poll to this thread. 10 is the max. options number.
    Last edited by Perry; 22-06-2011, 09:53 PM.

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  • Perry
    Here's Your Chance, Folks

    Housing Affordability Canvassed In Study
    Catherine Harris - The Dominion Post
    A government-backed inquiry into housing affordability is asking for
    public feedback on everything from why Kiwis invest in houses to
    population growth and landbanking. The inquiry is the first task
    allocated to the new Productivity Commission. In a just-released
    ''issues paper,'' the commission lays out the areas it will explore
    and invites public submissions.

    Initial public submissions are open until August 3, and the commission
    plans to release a draft report in October. It hopes to make a final
    report to the Government in February next year.
    Note the "lays out the areas it will explore" comment. Don't, for
    goodness sake, point out anything too cogent, compelling or too
    obvious, if it's outside the terms of reference set to achieve the
    answer that the government wants, OK?

    Click here to view or download the Issues Paper.
    Last edited by Perry; 22-06-2011, 07:47 PM.

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  • Bluekiwi
    My yields are around 8.5%, good full site houses, but in South Auckland.

    But I wouldnt mind getting into a better quality area, if I can find the yields, I am having a go at flips right now.

    But will look to buy a few holds in 2012, but only if the deal stacks up.
    My properties have to pretty much pay for themselves.

    Leave a comment:

  • Davo36
    BK, I wont' copy your post here because it's long but I basically agree with all of it.

    The thing is though, I'm not sure I'm going to race out and take on a whole lot more debt to buy houses/apartments. And the reason is it would be based on a forecast.

    And my last go at forecasting went horribly wrong. I thought (like many others) we were going to have a sizeable property downturn in NZ and so sold all my commercial properties and waited for the bargains...

    But many unforseeable and one off things happened and the crisis was largely averted. The OCR was slashed like never before, the government puts in rental guarantees, overseas banks are bailed out, governments start printing money and so on.

    So while your plan to buy up large for the next boom sounds entirely plausible to me, there could be many things which come out of left field to change the situation. And if one is carrying lots of debt then you can lose the lot.

    What could happen? Who knows? It could be something no one has really thought of, or something like China/Aussie property markets going pop and credit tightening up again.

    So I think the capital prices of residential properties in this country are attractive (way lower than new building costs), the returns are still too low. Can you imagine someone like Buffet going into debt to buy assets returning 4->8%?

    I think the investments have to make sense TODAY, and if they get better with a housing shortage, then great.

    Leave a comment:

  • Perry
    It'll be interesting to watch the CERA in Christchurch
    play out. The most watched part may be to see how
    much Council bureaucracy and costs gets chopped by
    this particular and odd-ball hatchet gang. Will it 'take
    to' needless and expensive red tape?

    Earthquake Recovery Authority Head Named
    Mar 29, 2011
    The Prime Minister has announced details of the new body in charge of the Christchurch earthquake recovery effort. The Government has created a new, stand-alone authority - the Canterbury Earthquake Recovery Authority, or CERA.

    John Key says it will provide leadership and coordination of the ongoing recovery effort. CERA will have a life-span of five years and its operations will be reviewed annually. Its interim chief executive will be Deputy State Service's Commissioner John Ombler.
    Christchurch earthquake: No, Minister - Shaky Start To Quake Plan
    By Adam Bennett
    Mar 28, 2011
    Gerry Brownlee's Canterbury earthquake recovery authority has struck difficulties even before it is officially launched - the man tipped to lead it has reportedly turning down the job because of issues with Mr Brownlee's involvement.
    This Is An Official New Zealand Government Website
    This is a temporary website providing information about the Canterbury Earthquake Recovery Authority. The Authority is currently being set up and the necessary support systems, including a permanent website are still being put in place.
    Brownlee's Authority Looks A Catastrophe
    Mar 30, 2011
    Why didn't the Government have the guts to appoint a truly standalone statutory authority chaired by a high-powered individual to drive the Canterbury earthquake recovery effort?

    It's instructive that fully five weeks after the February 22 earthquake that rocked Christchurch to its core, that Minister for the Canterbury Earthquake Recovery Gerry Brownlee's "authority" will launch without even having a permanent chief executive in charge.

    This is not simply bizarre it is bordering on irresponsible given the harsh realities that Cantabrians face as winter approaches.

    State Services Deputy Commissioner John Ombler is standing in as chief executive for the interim. But a quick look at Ombler's CV does not disclose the sort of attributes that those running disaster recovery operations usually have: experience in the command role where chief executives have to "get things done" in constantly changing environments; let alone logistical abilities and so forth.

    Leave a comment:

  • Keithw
    You are Wrong BK

    but only about the perfect storm brewing.

    I think it will be good times but not a huge Boom.

    What you left out was the bit where the surge in interest rates in a couple of years time will reduce demand from those thinking of buying.
    As you note, Joe public has lost the desire to buy investment property, so that leaves a few investors and owner occupiers.
    Yes there is/ wll be a shortage of property for those wanting to buy.
    Yes the current prices are being held because owners dont want to drop too low (because of borrowings or just perceived value) and at present they dont NEED to sell.

    With a surge in interest rates, some who are currently managing will be forced to sell.
    While those owner occupiers wanting to buy will lower their sights.

    So there will be a bit more of a balancing

    New places will continue to rise in price simply because of increasing build costs (recent 15% increase in steel, something similar in timber, anything plastic increases as oil increases) and over zealous council fees.
    This leaves mainly owner occupiers as house builders, not "speculators" or developers.

    But then there is also schemes being looked at where council land is used to build cheap housing, or HNZ/ council buy the land & lease to new home owners.

    As you note, all this will happen too slowly to prevent the undersupply, but I think the increases will be moderate, not Booming.

    Leave a comment:

  • Bluekiwi
    The Perfect Storm - the next boom ??

    I have been thinking a lot about auckland recently.

    It may not happen overnight, but there does appear to be a perfect storm brewing off the coast.

    And I am not sure exactly when it is going to strike.

    But if you think about the vastly increasing cost and complexity to develop new housing, and the resultant reduction in supply of housing.

    A lot of which can be linked directly to the lack of planning and stupidity of local and central government.

    Edit: my spelling is crap, but another point, with this strategy and for all investors, you will get hammered about 3 years out with high interest rates eventually coming through, ideally house prices will have lifted by then and you can revalue and take some of the interest rate burden from a R/C from the capital growth.

    The ceaseless attacks on property investors and developers, leading to a massive exit on the average joe blow who loved it when it was all rosey 2003 to 2007.

    The publics loss of apetite into property investing and housing with prices flat for so long.

    You have the perfect storm for the hard core property investor to step in where others are not:

    A. The perfect time to buy: yields high, rates down, lock in a 3 year rate towards the end of the year, bank lending quite free.

    B. The perfect storm of critical short supply: as discussed above, in the next 2-3 years.

    Now in my view you can "buy well" a whole heap of property right now at quite good yeilds and fix for 3 years under 7%.

    The critical short supply of housing will kick in over the next year or so, BUT, the issue is the catch up !!!!!!!!!!

    The stupidity of local and central government, works nicely with their lack of speed to react, and the inability to build houses in auckland (poss Wellington works here also), as usually construciton lags a boom by about 6 months.

    But times have changed, there is a whole new discussion why the catch-up wont happen, in time, and hence the perfect storm.

    THE NEXT BOOM !!!!!!!
    2013 to 2015 ????

    You have leaky buildings to fix, rebuilding in christchurch, tradesmen off to ausie to rebuild there.
    Even when all the supply issues above are resolved, who is going to build the houses Auckland needs and what is it going to cost.

    Its massive, the cost to build new, new land cost and council cost and build cost, for many reasons all these costs are sky rocketing.

    This can only drag current house prices up, with high rents supporting this due to the lack of supply.

    Economics 101 tells you:

    Critical Short Supply + Strong Demand = High Price.

    I could be wrong, and many things can change, but I dont think I am.
    Last edited by Bluekiwi; 03-04-2011, 08:13 AM.

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  • speights boy
    Originally posted by Bob Kane View Post
    Next year it will be ignored - and the govt will have 3 more years.
    Excellent Smithers; now... release the hounds.

    Leave a comment:

  • Bob Kane
    I don't think this report will be acted on.
    It's just been commissioned to allow the govt to say 'We're doing something about this issue'.
    Next year it will be ignored - and the govt will have 3 more years.

    Leave a comment:

  • Perry
    Oh, you cynic!

    Leave a comment:

  • flyernzl
    Originally posted by artemis View Post
    plenty of 'evidence' to support the favoured options, little serious risk analysis and a once-over-lightly to 'other options'.
    It all depends on what conclusions they are told they must reach at the time they are appointed.

    Leave a comment:

  • Perry
    Originally posted by artemis View Post
    And using a group with broad expertise, who will certainly
    draw on research and experts is not a bad thing either.
    One of the few bright spots in Comrade Commissar Clark's
    views on such things was what she referred to as:
    "the baggage of experts."

    On the face of it, a 'panel of experts' seems like a good
    thing. What's likely to be more helpful is a group of sound,
    common-sense-endowed ordinary people, who listen to
    all the experts' views and weigh them.

    This in no different to a jury trial. The jury is not required
    to have expertise in any specialist field. Rather, to present
    a common sense perception of the peers of the accused.

    However, as Keithw put it:
    Oh great, another committee with no members on it
    that actually relate to the subject
    Experts, anyone?

    Leave a comment:

  • artemis
    Actually, I don't have a problem with a report per se. Taking an in depth look at an issue and proposing recommendations can be an excellent way of initiating change. And using a group with broad expertise, who will certainly draw on research and experts is not a bad thing either. The likely alternative is to get the public servants in the field to do that work. Do we really think they will be clear thinking? OK, a few will, but most will be entrenched in a point of view and a long term job.

    I've worked extensively in the public and private sectors. Advice [reports] was often astonishingly bad, plenty of 'evidence' to support the favoured options, little serious risk analysis and a once-over-lightly to 'other options'. I blame the managers mainly, who accepted the reports unquestioningly for the most part. The reports made good doorstops though.

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  • Viking
    Here is a question.
    What part do you think developers covenants play in creating expensive housing.

    Reason for asking. Can anyone tell me of a new subdivision that is not covered with covenants that require builders to build a mansion.

    Leave a comment:

  • Perry
    Well, Yet Another One

    A great time of revelations, eh what?

    Cut Tax And Spending Says Treasury
    A Treasury paper out today argues for lower tax and less government spending.

    The paper - Government and economic growth: Does size matter? - said
    the size and the structure of government played an important role in
    economic performance.

    ''There appears to be scope to lower the tax take as a share of the
    economy or, alternatively, to better position the Crown to deal with
    long-term expenditure pressures without increasing the tax take,'' the
    report said.

    ''This could be achieved by reducing or limiting growth in
    expenditures that do no measurably contribute to raising the economy's
    potential economic growth rate.''
    Doubtless Treasury will take the lead, suggesting
    internal attrition via sinking lid policies.

    Makes one wonder, when a perusal of this thread is pondered.

    Govt To Axe Non-Essential Services
    The squeeze on public spending will mean service cuts,
    Finance Minister Bill English has warned in a speech that
    has mapped out years of austerity measures.
    Report writers in W'gton need have no fear, it seems.
    Last edited by Perry; 01-04-2011, 10:33 PM.

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