Greens want 50% house price drop

On RNZ this morning Metiria Turei said she supported up to a 50% drop in house prices.

Auckland house prices need to drop 50 percent – Greens

Auckland house prices should be deliberately reduced by up to 50 percent over a period of time to make the market affordable again, Greens co-leader Metiria Turei says.

Ms Turei said the only way to reverse that was to slowly bring prices back down to three or four times the median household income.

She told Morning Report the Green Party was considering what timeframe would work without crashing the market and hurting people who already owned homes.

“The only way to prevent a bust, and to protect families in the short and long term is to lay out a comprehensive plan, which means using every comprehensive tool that we’ve got so that we can slowly bring down house prices so that they’re reasonable.”

She backed this up (without the numbers) with this:

Responsible house price reduction needed to avoid bubble bursting

Auckland housing is unaffordable and a responsible Government would have a sensible plan to reduce house prices over time, while protecting families with mortgages, the Green Party said today.

“The simple fact is that housing in Auckland is totally unaffordable and if we don’t take action to bring house prices down, we will have a whole generation of people locked out of ever owning their own home,” said Green Party Co-leader Metiria Turei.

“In around 10 to 15 years’ time, we’d like to see families on the median household income buying their first home for about three to four times that income – not 10 times like it costs now.

“I want to be very clear that we are talking about a responsible, carefully managed reduction in house prices over a period of time like 10 to 15 years.

“The Green Party is putting together a plan for how to reduce house prices responsibly and gradually, and that will include making sure people who’ve recently taken out big mortgages to buy a home are safe and secure.

“We know housing isn’t affordable for families now, so the only way to protect people from market instability is to lay out a plan using every tool we’ve got to slowly bring down house prices to a reasonable level.

“Nobody, including the Green Party, wants to see the housing market crash and equally nobody thinks the current situation can go on like this.

“It’s a fundamental part of Kiwi values that people who work hard should be able to afford their own home.

“Our plan for more affordable housing will include building more houses, a capital gains tax (excluding the family home), and restricting non-resident foreign buyers,” Mrs Turei said.

Back to RNZ with Labour’s reaction:

The Auckland Council’s chief economist had suggested bringing prices down to five times the median household income by 2030, she said.

Labour leader Andrew Little said Ms Turei’s declaration that Auckland house prices should be deliberately reduced was irresponsible.

There was no way a Labour-led government would consider the idea, he said.

“We have a very clear plan. It’s not about crashing house prices. It’s about stabilising prices.

“We don’t want to cause undue economic harm to those who – in good faith – have bought homes, entered into mortgages. That’s not a responsible approach.”

Labour and the Greens recently struck a co-operation agreement, including a no-surprises policy.

This seems like a planned announcement by the Greens, and they are likely to have known it would be a bit of a surprise to Labour.

So who is right?

I don’t think a 50% reduction in values is a sound target. Too many risks.

For a start it’s probably impossible to plan house prices over the short term let alone over a decade or two. There are too many factors that are hard to control, and major ones of those are international.

I think if house prices drop by more than  20% it  starts to put recent purchasers at risk of going into negative equity, so dropping much more than that must be highly questionable.

Perhaps there needs to be some middle ground – some drop in values, limiting increases in values by ensuring adequate land supply, and and working more towards raising wages to meet somewhere in the middle.

Ideally. If that were at all possible.

 

Labour will ban all foreign property buyers

Labour housing spokesperson has sparked a twitter storm after he used highly questionable data based on Auckland house sales and the ethnicity of purchaser’s names based on how they looked.

And he used this to try and justify stating that Labour would ban all foreign purchases of property in New Zealand, despite also saying “we have a policy review underway”.

Mr Twyford, people listening to this will think to themselves, ‘There’s only one thing certain here, which is that Labour is prepared to play the race card.’
I’m speaking out on this issue because, like most New Zealanders, I believe that the Kiwi dream of homeownership is worth fighting for. Rampant property speculation in Auckland is driving house prices higher and higher and out of the reach of young, hard-working first-home buyers. Offshore speculators are a major part of this picture. That’s what this data suggests. I think it’s as plain as day, and I think that so many Aucklanders will wake up this morning, they’ll look at these numbers, and they’ll say, ‘I told you so.’

Okay, if it is such a big issue, what would Labour do about it?
We would ban foreign buyers from buying New Zealand houses, end of story. That’s what the Australians have done. Look, there’s a reason—

So long-term residents can buy, and if you buy, what, a new build, you can buy? But otherwise no?
If you’re not a citizen or a resident, you’re sitting on the other side of the world, and you want to buy a house, come and live here. That’s the way to do it. Or, if you want— as the Australians allow, if you want to build a new house and add to the supply, we don’t see any problem with that. But, look, there’s a reason that so many countries around the world – Singapore, Hong Kong, Australia, and a dozen others – have enacted laws and restrictions that put limits on the ability of foreign speculators to trade local housing. Juwai.com, the preeminent Chinese website that specialises in marketing international real estate to Chinese investors in China, they reported recently that the Chinese government’s plans to free up capital controls, so that their citizens can move money in and out of the country more easily—

(Source: Scoop)

So Australians, Samoans, Tongans, English, any non New Zealander would be banned from buying property in New Zealand?

What other policies do you have that would make a difference? Because the thing is, Labour ditched capital gains tax, which arguably would have made a difference, because it wasn’t popular with voters, but you’re happy to give the old foreigners a kick, because that doesn’t lose you votes?
We’re going to crack down on speculators generally, and we have a policy review underway. There are a myriad of different tax and policy approaches that we can do to level the playing field away from the current incentives for property speculation in our economy. So we’re going to do that. We’re going ban foreign buyers.

They have a policy review under way but apparently Twyford is in a position to announce this policy now.

The criticism of the data and the ban has bee fairly vigorous from across the political spectrum.

Full transcript: Lisa Owen interviews Labour’s housing spokesman Phil Twyford

Video: Interview: Labour’s housing spokesman Phil Twyford

And it turns out that Rob Salmond did the data analysis based on surnames of property buyers, he defends his analysis at Public Address: House-buying patterns in Auckland

Auckland to replace homes with carparks and playground

A warped Auckland council priority pointed out by Housing shortage…what housing shortage?? with eight properties including blocks of flats are to be demolished.

The NZH is reporting, that Auckland City Council has sent eviction notices to about 40 residents of council-owned properties in a quiet Royal Oak cul de sac..

Reason: so they can be demolished to make way for 44 carparks beside a park!!

And to make way for a playground.

The Herald on Sunday report: Kicked out of home for carparks

About 40 residents of Auckland’s council-owned properties face being kicked out of their homes to make way for 44 carparks.

Residents of a quiet Royal Oak cul de sac in Auckland have been told their council-owned flats and houses backing Monte Cecilia Park could go, possibly by December.

Eight properties – including blocks of flats – will be cleared to make way for 44 carparks to access a new playground, shown on plans for the reserve. Currently park users have to rely on streetside parks.

Letters have been sent to residents in homes and flats in Korma Rd telling them their properties will feature on park maps.

“Inclusion of this property on the map does not imply the public has access to your property but as the land has been purchased by Auckland Council and will become part of the park in the future it has been included in the map,” said the letter.

“We don’t have a firm date for the house removals but it is likely to be at the end of 2015 or during 2016.”

Auckland Council sports and parks manager Mark Bowater said the council had bought homes in Korma Rd between 2006 and 2011 under a strategic plan to develop the park. He said it could be some of the properties would be needed for carparking and a new playground.

A warped strategy.

Mangere Budgeting Services CEO Darryl Evans said losing housing for carparks was disgraceful. “Where are these 40 people going to go? Len Brown and the council need to rethink this one. There has not been enough thought into this decision.”

They could start their rethink by looking at this to see if they think the area is short of park space and play areas:

AucklandHomesforParkAt least if the council includes enough park benches in their strategic park development the people thrown out of homes will have somewhere they can sleep at night.

I guess people will have places to park their cars when they sleep in them. If they have cars.