The crazy myth that more land will fix Auckland’s real estate problems

Real estate prices in Portland Oregon, USA.

Real estate prices in Portland Oregon, USA.

Cameron Slater has gone full left wing. He’s flat out like a lizard drinking trying to smear Labour as “racists”. Blissfully using the same old “call your opponent names” tactic the left have used for years and also aligning himself politically with many of the far left within Labour.

Another tack he is taking in this crazy political battle is to advocate for the release of more land. This is the “free market” solution he trumpets, along with the usual collection of cloud dwelling Libertarian fruit cakes.

Slater’s adopting of left wing tactics on one hand and flawed Libertarian solutions on the other examples so well the confused and directionless thinking of National party supporters.

I’m a Conservative, not a Libertarian, or a die hard National Party supporter, and this gives me the ability to look at the problem without my vision being blurred by impractical semi-religious doctrine or the need to support crony capitalist socialism.

More land will not fix this problem.

Those suggesting this as a solution are completely detached from the reality of billions of dollars of capital being moved out of the People’s Republic of China. They can’t seem to get the magnitude of what is happening.

Millions of Chinese are buying real estate now in Western cities all over the globe and these numbers are going to increase again once the effects of China’s stock market crash come into play. Auckland is not some isolated event. It is part of a global phenomenon and the “release more land” advocates seem woefully unaware of this fact.

Doubt this is true? Well here’s what the Guardian had to say on it yesterday-

Brian Ward, president of capital markets and investment services for the Americas at commercial property company Colliers International, said Chinese investors had already sunk around US$5bn into US real estate in the first six months of 2015, more than the US$4bn they invested in the whole of 2014.

In London, Alex Newall, managing director of super prime residential realtor Hanover Private Office estate agents said he had seen an increase in interest from Chinese investors at the top of the market, although no transactions yet.

“They’re wanting to try and park large sums of money – I’m talking from £25m [US$38.5m] to £150m,” Newell said. “They’re looking to park that capital into London homes.”

Australia and Canada are also increasing in popularity, gaining an edge from their weakening currencies.

“Property prices are still cheap in RMB [yuan] terms,” said Timothy Cheung, a principal of Morphic Asset Management in Sydney.

The rush by Chinese investors into foreign property has not been without criticism, with some in London, Sydney and Vancouver blaming them for pushing up already spiralling prices.

There is just no way that more land will satisfy the immediate and growing appetite for investment in Western real estate. Furthermore if more land is made available, and if there is ever a bursting of this bubble, then it will become surplus land and lead to massively increased losses once demand dries up and (as in all ponzi schemes), the last players are left holding the parcel.

When the bubble bursts, those with mortgages will suffer serious losses. The economic impact will be so great in NZ it will be similar to on a gobal scale a billion tonne meteorite crashing into Wall street. The myth that National are good economic managers will be shattered like glass. The shyster John Key’s love affair with the gormless and drooling govt addicted NZ voter will likewise be shattered beyond repair. The National party’s popularity will be similarly damaged as NZ’s weak and artificially inflated economy spirals into a Greek like depression.

NZ is on a treadmill it can’t get off.

The real tragedy is this all could have been avoided if National had shown some guts and intelligence from day one rather than just accepting the socialist baton from Helen Clark.



Categories: NZ Politics

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17 replies

  1. I have no idea what your solution is. You have stated the problem. But what is the conservative solution?

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    • Well that’s just great isn’t it Peter? Socialist governments National and Labour have opened the floodgates and now a huge tumult of water is rushing down the canyon, one that will sweep everything away, and you’re asking a Conservative to provide a solution.

      What shall I do? Stand in the path of the raging torrent, put my hand up and yell “Stop..!!”. I’ll just end up swept away myself.

      The fact is this train of events was set in motion long ago. National should have done something when first elected but they didn’t. Now its completely out of control and if its ever stopped will have devastating effects. As I said above, we’re on a treadmill and how the hell to get off at this late stage is a hard question.

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    • Hi Peter

      We have gone to far down this road to turn back.

      We have very little choice but to ride the train to the inevitable train wreck.

      At some stage the market will correct itself, there will be winners and losers.

      The question is who will be the winners and who will be the losers.

      The next question is how bad. Best case a 10% correction because there will always be somebody that has to sell and an assert is only worth what somebody is willing to pay for it the day you have to sell. Followed by about 10 years of zero house price inflation and about 3% normal inflation. Dropping the real value.

      Worst case, let your imagination run wild. Look at history what has happened in the past. An immediate 40-50% drop, as happened in the US and elsewhere, a lot of people would be under water, owing more than their house is worth. Interest rates going to 22.5% + as happened here in the 80’s after the Muldoon led National Government shagged the economy. Try funding a $500,000 mortgage at 20% on a $100,000 income before TAX. The inevitable flow on affect to the rest of the economy.

      This will all end very badly for most people.

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      • Magnitude for sure.I don’t feel the majority have a grip on the magnitude of what is happening and if more land is opened up it is likely all houses could be snapped up by Chinese buyers.It is that huge.
        There must be something that can be done to protect this country from being totally sold off because we are so small we will be over run in a blink of an eye.

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  2. Welcome to our world. USA is in the same boat and it’s got a great white shark bite in the bottom. They are moving here but for years it’s been the Saudis as well. Citizens are beginning to ask just who owns our country. It sure isn’t the average Joe or Jane.

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    • In case you missed it Uriel, the message to Europeans is that although your culture is based on a regard for liberty, rights of the individual, small govt, low taxes, and these are the ideas that built the countries that are being submerged by immigrants, these ideas and their heritage and culture are now worth nothing and in fact are to be denigrated and despised.

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      • Great article and great comment.

        The article sums up the delusional bubble so many National brown nosers live in.

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        • Yep, its amazing that they can’t see the reality in this issue, but their blindness also explains why they support the Helen Key government. Such excellent examples of the boiling frog syndrome.

          Funny thing is, I really didn’t ever give that syndrome much cred, as at the back of my mind was the idea that average intelligence levels would counter it, but its sadly apparent I was very wrong.

          There are even dromgools over on Kiwiblog callng me a lefty because they perceive what I have written as supporting Labour, and they conversely perceive what National is doing as “right wing”.

          Such a large collection of partisan idiots, hopelessly uncomprehending and politically as thick as two short planks.

          National and Labour are peas in a pod, and both make the same mistakes because they both believe in Keynesian socialism.

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  3. Good post actually. I find libertarian types hard work for the most part.

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  4. “Cameron Slater has gone full left wing”

    You finally get it.

    Re Read his posts from a closet Gay/Labor supporter perspective.

    Then remember that he, by his own admission, is a dirty despicable little worm.

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  5. Bloke is on the take. The bloke cries wacism like a punk-b*tch then turns around in the next sentence and calls the Chinese people ‘chows, slopes, pingers, chinks???’

    http://www.whaleoil.co.nz/2015/07/shouldnt-the-headline-read-locals-with-chinky-sounding-names-snap-up-sections

    “A newspaper continues their wonky jihad against people with chinky sounding surnames this morning, but they’ve dressed it up a bit by using a reporter with a chinky sounding surname.” Cameron ‘cockroach’ Slater

    Then he goes on to run the Hitler argument…

    “I’m waiting for the Labour party to suggest that chows, slopes, pingers, yellow peril, chinks and the like all have to live in the same suburb, and wear an identifying arm band so we can keep an eye on them.”

    “You may laugh at my suggestion but if you are compiling data and making value judgments on a person’s surname then you really are just a step away from measuring noses and requiring armbands.”

    Ridiculous!!!

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  6. Bloody hell, this country is in a political mess with no real parties to vote for.

    “NZ is on a treadmill it can’t get off.”

    While this accelerationism will hurt in the short run, it could be very beneficial in the long one.
    What usually happens in these types of situations are phoenixes rising from the ashes, all we need is a trustworthy right-wing party with integrity to lead our way.

    Like

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