House prices were only rising at 13 per cent in Auckland, and were fairly moderate in the rest of the country, Mr English told TVNZ’s Q & A program on Sunday.
The government is continuing to work on increasing the supply of housing to deal with rising house prices and won’t “get distracted” in trying to control demand because it’s not effective, he said.
He said there were both physical and procedural limits to how quickly new houses could be built on bare land. “We’re trying to short-cut them. We’ve got the special housing areas, we’ll have further legislative short-cuts coming. “The government’s cranking up the development of its own estate, because we’re a big landholder.”
Mr English said supply of housing would soon meet demand in Christchurch but it would take longer to get the balance right in Auckland.
He would not be drawn on whether the Reserve Bank of New Zealand should make it more expensive to borrow money to buy investment properties to quell the hot property market.
“I think they’re going about as fast as they can to make sure they understand all the issues, because bear in mind, every time you intervene like this, it has some unexpected consequences or consequences you’re trying to minimise.
“So the LVRs, for instance, made it harder for first-home buyers, and so the government’s got a scheme coming out.”
I have to laugh at “only 13%”.
And Bill, you are intervening- with immigration policies that drive the whole housing market and make it a sure fire winner for anyone with cash to spare. In fact its not really a housing market as much as a share market boom without the share market. Forget about housing as a basis for establishing a family and raising them, its all about getting rich as quickly as possible.
Here’s a clue. Stop immigration and house prices will plunge overnight.
And of course so will your smoke and mirrors economic growth predictions.
13 thoughts on “Bill English- Auckland house prices “only rising at 13%””
Agenda 21 in action – the National/Labour oneparty State wants to turn NZ into a crowded island state with people living in cities like sardines with no sense of nationhood. One of the few countries in the world that could have avoided this, but that is obviously against their plan for us.
EAD, I’d be interested to know, whether the 9th plank of the communist manifesto is a match to what you’ve just mentioned. The 9th plank mentions gradual taking out the distinction between town and country, and more equitably distributing the population.
Mikhail Gorbachev was the one who wrote up the earth charter which is Agenda 21. Of course the earth charter’s language is to take care of the environment, children, minorities etc so that people would fall for it.
Thanks EAD, a good read. Except that Delingpole could be wrong on one point and that is his claim we are stuffed because all parties have the same policies. We just have to stop supporting those parties. Political ideas seldom start big. They usually start small and gather momentum. (like UKIP) The way out of this mess is to stop supporting mainstream parties. We simply must use whatever means are available to break the stranglehold of the Progressives.
I saw that to. Only 13%
Only inflation is running at near 0%
So we Only have a Big Problem.
Am I the Only one with a problem on our Politicians putting a “Happy Face’ on every problem, without facing the reality.
No Mr Blobby. Our politicians are not facing the real issues. They aren’t giving us real, high value jobs. High property means high rates. When money is put in a bank, the majority gets lent to the government or on property. And again high property prices mean high rates. So the majority of bank loans help the government. Very hard to get a loan to start up a factory.
So these people can talk about how committed they are about the economy, but they aren’t dealing with the real issues. Its only a decision of do you want Cunliffe’s guilty till proven innocent just because you are a man, or do you want National’s not deal with the issues party. Which one do you want in power. Yeah their are other minority parties, but that’s just it, they are the minority vote.
So no one understands this better then me. I’m really ticked off with David Cunliffe, if it wasn’t for him, I’d have written a letter saying I’ll only vote for the party which is going to create the right environment for new high value good’s industries, and world class jobs. But because of David Cunliffe, that didn’t happen.
National have been talking up their smoke and mirrors economy for some years. The truth is if it wasn’t for the excess immigration (their key policy, excuse the pun) they would be exposed as the same old worthless socialist crap we’ve had governing the country for decades.
That’s just it, we are a low wage economy, and we need low wage earners to make us go. And that’s their solution. They aren’t talking about the high value industries, and how to do that. They just want simple, cheap easy solutions. And people wonder why their earnings are not that great no matter what happens. Because their promises are completely empty.
NZ is being set up for a fall that makes Humpty Dumpty look lucky by comparison.
What has made our housing boom longer and will make matters worse when it crashes is that property investors are given the advantage of having an income, claiming depreciation and also claiming the operating loss as a tax deduction which puts them at a huge advantage to first home buyers.
It is a frenzy that will inevitably cause a crash, a loss of competiteveness for NZ as combined with all the government regulation means we have become too costly a place to do business and will also kill the economy as people have less and less to spend on other things.
Chinese money is coming in by the truck load and what this does is inflame the market because by overpaying for a handful of houses in an area they immeditely raise exectations of what everyone else should pay.
The correction will be deep, painful and sobering. The chicoms will buy up NZ for cents on the dollar
EAD, about the depreciation, that used to be true, until one day, one of my accounts clients mother’s had a question. Every year, their tax rebate got higher, until that particular year. Their was no longer a rebate. So I asked further and found they were talking about property, and they were referring to depreciation which went up every year. If property goes up by say 10%, and depreciation is a percentage of the value of your property, the depreciation amount goes up. I noticed this change in 2003. It used to be that you depreciate an asset. But in 2003, they would allow assets to be revalued on their market value, and then depreciated as a percentage of that market value.
But then they eliminated that loophole. So landlords not getting the depreciation allowance forced them to raise the rent or sell. And that’s when the place I was renting got sold, with an immeiate rent hike. So they’ve said your maintenance costs are tax deductible, but no longer do you get a straight two percent on the value of your property. But that’s just one thing I don’t quite agree with you on. The rest sounds great.
To clarify re depreciation: up until 2011 landlords were required to depreciate buildings at 4% DV, and to declare this as depreciation recovered upon sale (provided the sale price exceeded the purchase price). For example, I’ve just sold a rental property and will need to declare approx. $20k of depreciation recovered as income, ie pay $6600 tax out of the proceeds. But this is simply a timing difference as it was previously deducted. My only gain was the use of this $6.6k over time.
BTW, depreciation was based on the original cost, not on revaluations, so it reduced each year. I suspect the government changed this rule on the assumption that some, if not many, landlords were failing to declare depreciation recovered, and IRD were not proactively chasing it. I’m pleased that the rule was changed as it’s one less item to keep track of and didn’t add significant value.
Chattels, eg heatpumps or stoves, are still depreciable as they do in reality reduce in value over time. In short, a rental property is no more or less a business than anything else, be it retail or manufacturing or services, so it’s perfectly reasonable to treat it in the same way. Capital gains on residential property are relatively visible, less so on commercial property and other businesses, but there’s no difference in principle.
But back to RB’s original point: the rise in Auckland residential values is indeed a response to market forces driven by government and council policies, and is not the result of some dark conspiracy by landlords. When you buy and sell in the same market, as I have just done, it’s only the relative prices that matter, which is exactly the same for an owner-occupier.
jonno1, if this is of any help. Yes I know some things wear out, a building and a house do not last forever without at least something spent on maintenance. However land doesn’t deteriorate. Because it doesn’t deteriorate, then with inflation land has to go up in value. Anyhow I didn’t know what the depreciation rate was for property as it was a few years back, and none of my clients deal in property.
But I do remember in 2002 studying financial reporting standard 3, which said that some things do go up in value like land, and you can revalue upwards if it really has gone up in value before you depreciate, the wear and tear. Of course FRS 3 no longer exists as we have International financial reporting standards as of 2007.
So, what I’m saying is the house doesn’t necessarily get revalued upwards, but the land does, but if you do want to revalue it upwards you have to pay a fee for someone to independently revalue it. So revaluing upwards is only if you want to, and its worth it. Oh yes FRS or IFRS only apply to company’s with shareholders. And shareholders want to know that their investments have gone up.
Fair enough, commercial property is treated somewhat differently and is revalued from time to time to better reflect the owner’s equity, although the market value is ultimately a multiple of yield.
Getting back to residential, what is interesting is that CVs comprise assessed market value and assessed land value, with the value of improvements simply being the arithmetic difference. This means that improvements (eg the house) are often ridiculously undervalued, whereas in reality it’s the land that is overvalued. This in turn is a direct consequence of urban limits (among other factors including immigration, although I suspect the latter tends to be overstated).
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