Housing Crisis What Housing Crisis?

[SuperDad]

Nearly every day now I read in the NZ Herald stories about the "housing crisis" in NZ. (The Herald has a series entitled "Housing Crisis".)

What exactly is the crisis? Are houses mysteriously spontaneously combusting - no. Are houses myteriously shrinking by 5m2 per day, before disappearing in a puff of smoke - no. Are there people sleeping on the streets because we have run out of houses for them to sleep in - no!!!

The so called "housing crisis" is, we are told, an affordability crisis. People can't afford houses because house prices are rising faster than wages. This is coupled withhigh consumer debt, whereby people have too much consumer debt to be able to also service a loan.

My question: Why is this called a "housing crisis"? By calling it a housing crisis, it is all to easy to point the finger at those who already own houses, especially those who own more than one. "Tax the greedy buggers", cry some. "Limit the number of houses the capitalist pigs can buy" screech others.

Why not rather call the problem of housing affordability a "wages crisis" (wages are too low) or a "lifestyle crisis" (people's spending habits are preventing them from entering the property market)?

There is no housing crisis!!!!

Rant over.

Paul.

[No Regrets]

Or a "Government Crisis"

[whitt]

I thought one of the comments in the Herald yesterday was pretty good.

A well known investor said if people wanted to get into there first house they should stop going out and buying Latte's etc.

It does seem the media has changed it's tune on housing though.

I guess this is another sign of where we are in the property cycle.

[Skeptic]

I love the family in the North SHore that say that can't afford to buy even though they earn $95000.

Have these people never heard about saving?

[Gatekeeper]

And I think you are right Superdad. I've quoted our population growth versus housing permits many times on this site, and we seem to have enough houses.

What we do have is the creation of money streaming in at 14% pa, puffing up assets like real estate, and wage growth at close to 3%.

If I was waiting to buy my first home, I'd be saving like mad, while my landlord subsidised my living arrangements. Times always change, you just have to be patient.

[David_W]

Your right Superdad - there is no crisis. Sadly another examply of the media using Housing Crisis to get people interested. We don't want more Government interference, otherwise a Capital Gains Tax and harsher definition of Associated Persons (to see through trusts) could eventuate to hurt property investors. So I wish those in the media stating there is a Housing crisis would instead focus on the "lack of savings in NZ" crisis, and the "I want it now, ease of getting into bad debt" crisis that cripple so many NZers.

[keleri]

I agree with all of the above. Also a disciplin crisis as you spend it as you get it mindset. There is no incentive for some to save or to get educated or to own their own home as we all know that the government will look after you The dole, benefits, state rentals, community services cards, etc. Credit cards also mean you can spend what you dont even have yet. Just my imput !

[green as grass]

Sorry but I'm confused here

A well known investor said if people wanted to get into their first house they should stop going out and buying Latte's etc.

So if all first home buyers stop buying lattes etc won't we end up with more ppl with more money trying to buy the same houses (on the north shore)
Someone's still going to miss out and the net result is a lower standard of living (no lattes)

[PeterEmpowerEd]

It's just part of the cycle

Nearly every day now I read in the NZ Herald stories about the "housing crisis" in NZ. (The Herald has a series entitled "Housing Crisis".)
Paul.

Hey Paul,

The changing attitude of the headline writers is all part of the property/economic cycle. From breathless positivity, and gushing headlines exulting price rises, the tone switches to negativity.

It’s hard to improve on Olly Newland’s analysis:

It would be easy to spend several lifetimes ‘analysing’, in a rigorous statistical fashion, the factors that drive the Economic or Property Clock. Pointy-heads can and do bury themselves in statistics, rows of data, multicoloured charts and graphs, finally emerging triumphant at having weighed all the macro-economic factors (interest rates, money supply, immigration, etc) and coming up with a theory to ‘explain’ what happens as the cycle moves around the clock. ... But the real driver is emotion or ‘market sentiment’. What emerges in markets is a scaled-up version of ‘group think’, where the pervasive mood switches (and I mean switches) from negative to positive, then gradually becomes super positive and hyped-up. In other words, hysterical.
Unfortunately, the reversal of sentiment happens a lot more suddenly. There’s an old saying from the sharemarket: ‘The bull climbs up the stairs, but the bear jumps out the window.’ (And I’ve lived it.)
The climb towards high market mania happens regularly.
— from The Day the Bubble Bursts.

[NZGEMS]

There is no housing crisis the crisis we have is a crisis of PERSONAL DEBT that is the only crisis, people buy into this no deposit and no payments for 2 years then suddenly find themselves lumbered with huge bills that they had forgotten were coming so what do they do? GO out and get another credit card and refinance the debt onto that.

As people have already said it is the Lattes that cause the trouble.

I heard a great saying from one of my mentors and I am sure he heard it somewhere else. "small leaks will sink a great ship" so the people who bleet they cant get a house need to try and block up the leaks.

We do live in a society where we want it all now. Even having kids. I made up my mind I wouldnt have them till I was financially secure, and knowing what I know now I should have waited till I was financially free as then I wouldnt have had to miss out on the first few years of my kids schooling because i was working full time. Still at least I was able to make up for it. And so can these people who are crying poor if they start saving as someone said, beats me why people earning that wage couldnt easily save $20000 a year.

Still in time the house prices will come down as now that interest rates are starting to rise that will hurt alot, but I guess the next complaint from mr and mrs $95k a year will be now I cant afford the high interest rates.

People are fighting a loosing battle unless they will stop and take some responsibility for where they are in their lives and stop blaming everyone else for their problems.

Happy house hunting folks.

[toby]

It's all habits. Some people have good money habits and some don't.
The ones that don't, put money in my bank account every week. They call it rent, I call it cash flow.

[Perry]

Well, I disagree!

There is is no housing crisis;
no personal debt crisis;
no latte crisis;
no wages crisis;
no exchange rate crisis;
no savings crisis;
no lifestyle crisis;
And so on.

There is a leadership crisis and . . .
. . . a government policy crisis.

All the former are caused by the latter.

[Gerrard]

If anyone has missed it, the links to articles posted by Gatekeeper in this thread are well worth a read. Long, but very well explained.

Gerrard

[Glenn]

It all boils down to peoples WANTS being greater than their needs.
I did like the one liner in the article that said Horrors "no over seas trips since the kids have come along". whats the bet these good people would have lived the good life before the kids came along never thinking of the future.
I must however admire them for not expecting the Govt to provide for the kids, being good parents, and wanting to stay close to their familiy and church.
I think their best plan would be to buy a cheap rental and house somone elses poor kids who are not as well off as they are.
Perhaps it is time the Govt thought about having a similar tax sytem to the USA. I understand there you can write your home loan interest off your tax.
This surely would be a good way of helping first home buyers get into their home and placing home owners on the same level playing field as investors who are currently permitted to write off interest on IP loans.
Just a thought or two

[LondonKiwi]

Well, I disagree!

There is is no housing crisis;
no personal debt crisis;
no latte crisis;
no wages crisis;
no exchange rate crisis;
no savings crisis;
no lifestyle crisis;
And so on.

There is a leadership crisis and . . .
. . . a government policy crisis.

All the former are caused by the latter.

Perry

Sorry to split hairs but if you say there is no crisis above and then say that the government is to blame for all of the former by definition aren't you confirming there is a crisis?

LK