New Zealand seeks to avoid “generation rent”

ScreenHunter_02 Jun. 14 21.43

By Wendell Cox, reproduced with permission from New Geography:

The political leadership and others in New Zealand are talking about the consequences of its land use policies. Under the “urban containment” land use policy (also called by terms like “smart growth,” “growth management,” and “livability”) in effect in every urban area, house prices have doubled relative to incomes over the last 25 years. The principal causes have been the restrictions inherent in urban containment policy, such as making most suburban land off limits for housing development, (which raises its price, like rationing oil raises the price of gasoline), and requirements for upfront payment of large development impact fees (which can also be higher than they need to be). The association between urban containment policy and unaffordable housing is consistent with both with both economic theory and also considerable economic research. The title of a report by Paul Cheshire, Professor of Economic Geography at the London School of Economics best indicates the reality: Urban Containment, Housing Affordability, Price Stability – Irreconcilable Goals.”

New Zealand Housing Unaffordability and Consequences

According to the 10th Annual Demographia Housing Affordability Survey, Auckland, the nation’s largest city is now the 7th least affordable out of 85 major metropolitan markets rated. Auckland’s median multiple (median house price divided by median household income) is 8.0, approaching triple the level that prevailed before the adoption of urban containment policy. The other largest cities, Christchurch and Wellington have seen house prices relative to incomes double since they have adopted urban containment policy (which were 3.0 or less). Obviously, when houses cost more than necessary, households have less discretionary income. This leads directly to two consequences with respect to affluence and poverty.

The first consequence of these policies is that households have less discretionary income (income after paying taxes and for necessities) to spend on other goods and services. Obviously this means a lower standard of living. This generally leads to a weaker economy, other things being equal, because households with less money are not able to purchase as much in goods and services as they would be able to afford if house prices had not been distorted.

The second consequence is greater poverty. When the price of housing rises, discretionary incomes can fall enough to force lower income households into poverty.

Land Use Policies Blamed for Poverty and Greater Inequality

Recently, Deputy Prime Minister and Finance Minister Bill English said in an October 7 press conference that New Zealand’s land use policies have led to higher levels of poverty and increased inequality: “Inequality in New Zealand would have been improving had it not been for growing housing costs. So our planning processes have probably done more to increase income inequality and poverty in New Zealand than most other policies.” Finally, the Deputy Prime Minister noted that house price increases have impacted the lowest income households most.

Minister English had previously expressed concern about the extent to which land use policy had driven up house prices, in his preface to the 9th Annual Demographia Housing Affordability Survey: “It costs too much and takes too long to build a house in New Zealand. Land has been made artificially scarce by regulation that locks up land for development. This regulation has made land supply unresponsive to demand (see: “Unblocking Constipated Planning” in New Zealand“).

There was “pushback” on the Deputy Prime Ministers comments from the city of Auckland and the Green Party. Others saw it differently the well-read national blog, Whale Oil, however, opined that the Deputy Prime Minister “is onto something.” Whale Oil continued “The squealing in unison means English is putting the pressure in the right places.”

Housing Minister Nick Smith has decried the situation in Auckland:  “We’ve got a rigid Metropolitan Urban Limit (urban growth boundary) prohibiting any new housing developments beyond the artificial line drawn 15 years ago.” At the same time, he said that resulting land cost increases had been more responsible for higher house prices than any other factor. Auckland accounts for approximately one-third of the nation’s population and has been growing rapidly, accounting for more than one-half of the nation’s population growth between the 2006 and 2013 censuses.

On the government’s website, the Housing Minister expressed the government’s interest in reforming the Resource Management Act, which governs land-use planning. “It is the price of land and sections that has gone up so rapidly in unaffordable housing markets like Auckland, and it is the Resource Management Act and how it is implemented that is largely responsible for this cost escalation. The new law allowing Special Housing Areas is a short-term fix but we must address the fundamental problem with the Resource Management Act if we are serious about long-term housing affordability.”

Business Concerns

Business interests are also raising concerns.

The Property Council (similar in its advocacy function to the Urban Land Institute in the United States) has indicated support for the reforms.

Other business support comes from ANZ Bank New Zealand Chief Executive Officer David Hisco. In expressing concern noting that “The elevator of economic progress in New Zealand has always been home ownership for everyone – right across the socioeconomic spectrum. But at the current pace of house price rises we risk creating a generation of disenfranchised, second class citizens – ‘Generation Rent.’” He continues: “The housing affordability issue is a housing supply issue, pure and simple. In 1974 there were 34,400 new homes built. Last year there were 15,000 – less than half. It’s no wonder houses doubled in price in under a decade in Auckland. The solution is simple – urgently build more houses. To do that in places like Auckland we need to build more suburbs and allow intensification in existing areas.”

In noting that the poor are the “biggest victims” of Auckland’s land use policies, Eric Crampton (on Kiwiblog) says that Auckland should be allowed “to build both upwards and outwards: which would be a great step in reducing child poverty.” Moreover, the Prime Minister, John Key, has expressed a particular interest in reducing child poverty.

Building upwards and outwards is not an option under the urban containment dictum favoring intensification and prohibiting greenfield suburban development.

A similar connection between housing costs and high rates of poverty is indicated by California, which has the highest poverty rate, adjusted for housing costs, of all states as well as the District of Columbia. California’s major metropolitan markets have severely unaffordable housing costs, with a median multiple of 7.1. This is lower than Auckland (8.0), New Zealand’s one major metropolitan market, but higher than Australia’s (6.3). Dartmouth economist William Fischel and others have associated California’s high housing costs with its land use policies. Fischel further noted that before these policies were implemented, house prices were about the same in California as in the rest of the nation, which have since more than doubled relative to incomes.

New Zealand: Land Use Policy Leader

There is virtual consensus among the world’s governments that the standard of living should be improved and poverty eradicated. Yet, many governments have adopted land use policies that raise the price of housing, which has the inevitable effect of lowering standard of living and more poverty. New Zealand’s government is seeking to restore an appropriate policy balance.

Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is co-author of the “Demographia International Housing Affordability Survey” and author of “Demographia World Urban Areas” and “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.” He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He was appointed to the Amtrak Reform Council to fill the unexpired term of Governor Christine Todd Whitman and has served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

Unconventional Economist


  1. Good read!

    Although I dont always aree with the emphasis of Hugh and the demographia guys (or anyone else really) about viable solutions and causes, I dont think there is any getting away from the fact that there is a far more developed discussion about real estate prices and the positive and negative consequences of creating and propping up a bubble on the other side of the Tasman than in Australia.

    The sort of thing which will presumably see New Zealand beocme an increasingly attractive migration location for Australians over coming decades as Australia grinds to a slow economic halt with only a population ponzi to prop the economy up at the GDP growth parapet.

    • Harmindersingh … and read also …

      Report: housing affordability out of sync with incomes … Sydney Morning Herald

      … and too …

      New Zealand’s Bubble Economy Is Vulnerable | Hugh Pavletich | Scoop News

      If housing exceeds 3.0 times annual household income or about 1.5 times GDP, it is getting in to dangerous bubble territory. New Zealand and Australia are currently about 5.5 times incomes (Ireland collapsed from 4.7 to 2.8 wiping a quarter trillion euros out of itys housing market, putting its Banks down) and about 3.3 times GDP.

      Could you let them know at Transport blog please ?

    • Yes, it would seem Demographia, along with Hugh Pav and PhilBest, willfully ignore the ratio of rent to income, so as to perpetuate claims of a housing shortage and to further their developer interests. The trend is the same in Oz as NZ, indicating no genuine shortage.

      Longer-term readers would know that the supply side has be obliterated many times over, most recently by Cameron Murray (, but it just won’t die. But then again, developers are only interested in building more houses and making more money, not cold hard facts.

      Fair play to them I guess, it’s just particularly nauseating when they use serious issues such is child poverty to push their barrow.

      • Correct me if I’m wrong but this is the central argument for supply being a non-issue:

        Rents must rise relative to household income (the rent to income ratio), for if fewer homes are built, tenant bidding wars for scarce shelter must result in a higher ratio.

        In the last 3 years, the proportion of investor loans has increased relative to owner occupier loans. This implies an increase in the supply of rental properties and would thus keep a lid on rents. Hence why there’s no increase in rent/income ratio.

        See bottom graph of Housing Loan approvals:

      • Moderatemouse … Your comments with Cameron’s, illustrate just how much you both need to learn about markets and property industry politics / realities.

        To say I have made myself unpopular (as a former industry leader) with the protectionists in the property industry would be a serious understatement. They detest me as much as I detest them.

        After initiating the Annual Demographia Surveys in 2004 and generating 10 of them with my colleague Wendell Cox of Demographia, I have spent some 30,000 hours of voluntary time as an advocate on these important issues … following earlier work as outlined within my brief biography at the tail end of the Annual Demographia Surveys (access via ).

        Amusingly, I was never a residential developer … but instead a commercial / industrial property developer !

        Cameron would be well advised to “escape” the University environment and spend a few decades working as a developer, to learn market / industry realities.

        “Doing” is the best way to learn.

      • “Obliterated” – rubbish.

        It is Cameron’s theoretical contortions that are rentier-class smokescreen “baffle ’em with BS” stuff.

        The economists in NZ now are mostly well beyond being taken in by this theoretical charlatanism that bears no resemblance to anything in the real world.

        The “rents should rise” argument is nonsense that has been dealt with repeatedly. There is only so much people can pay in rent. They can’t borrow to pay rent.

        Rent to house price ratio is an EVIDENCE OF distorted supply. Affordable, median multiple 3 cities have the closest ratios. Divergence indicates a supply problem, NOT the absence of a supply problem!!!!

        The longer the racket in land supply is perpetuated, the more you will see of the kind of outcomes now visible in the UK. How far down that track does Australia have to go? Will people like you still being arguing that supply is nothing to do with it, when you have a “generation rent”, overcrowding (the only way renters can try to cope in the long term as the increasing ground rent bites), and a quantifiable shortage of housing units?

        You could argue that “rents have not risen as fast as house prices” in the UK too – but the fact is that the renters have steadily crowded tighter and tighter so that the rent that would get you a 2 bedroom family home in a median multiple 3 city, in a city like Manchester, will get you a 1/4 share with 3 flatmates, in an approx. 400 square foot apartment.

        I am predicting this for Australia the longer denial is perpetuated. Meanwhile some disastrous crashes can be expected; what I am saying assumes that no lessons will be learned and the cycle will continue to repeat as it has in the UK. With housing “supply” response weakening with each cycle, shortage of homes increasing, employment in the construction sector tanking, a crisis of social exclusion, a crisis of overcrowding, and all the rest of it.

        Of course the UK may have been kept afloat as a national economy by advantages that Australia does not have – such as having been the first into the industrial revolution, and having had an empire, and having the world’s most powerful global finance and media agglomeration. Aussie of course has rocks it digs up.

        Maybe the Aussie economy will tip into economically unsustainable conditions long before the actual “housing” phenomena the UK now demonstrates, is triggered. It has required about 4 cycles in the UK since growth containment; Aussie has not yet had its first proper crash since growth containment. 2008 was the right time in the cycle to have one, but it dodged that one. Therefore when the next timing point is reached, it will be a biggie.

    • Harminder Singh:

      There are some interesting discussions indeed on those links to Transport Blog NZ, but the most light is shed on the subject by some of the commenters, not from the original blog posters. In a way it shows how much further ahead the discussion is in NZ; even some MSM article comments threads show that there are people out there “getting it” – especially in Christchurch. You won’t find this in Australia. Macrobusiness is more of an outlier in Australia for the intellectual rigour of the discussions.

      I have also heard of complaints of heavy-handed moderation regarding comments that are inconvenient to the Transport Blog NZ forum. The forum is accordingly taken with a pinch of salt for its biases. It also provides a platform for the Auckland planning bureaucrats to peddle their own theoretical charlatanism, which is considerably shallower than Cameron Murray’s (I credit Cameron with his ability to baffle ’em with BS!). Of course you have the same shallow charlatanism in Aussie too, like this piece riddled with factual errors and based on primitive cargo-cultist assumptions about urban form and directions of causation:

      • ‘Rent to house price ratio is an EVIDENCE OF distorted supply. Affordable, median multiple 3 cities have the closest ratios. Divergence indicates a supply problem, NOT the absence of a supply problem!!!!’


        In simple terms, a divergence of rent and prices indicates that population and price have DECOUPLED, rendering simplistic supply-side analysis utterly useless. Should we be building more to meet the ravenous demand of the specufestors who don’t care about yield and are just chasing capital gain on their 3, 4 or 10 IPs? In Phil’s world, yes. Absurd.

        Stagnant rents indicate there is no shortage of shelter and any talk of a shortage outside of that parameter is meaningless. Supply-side is the Intelligent Design of housing market analysis. It has a deceptive elegance, and is intellectually appealing to a certain type of mind, but ultimately, it is neither the cause nor the solution to high house prices. When the banks are telling us it’s a supply problem, you just know that’s not the solution.

        As for Cameron Murray being a ‘charlatan’….just because you might be baffled Phil, doesn’t make it BS. Followers of Intelligent Design are baffled by evolution. Complexity is not everyone’s cup of tea.

      • Rents might be “stagnant” while property prices rise, but what has happened in the UK is that the space per person in rental accommodation has fallen.

        Actually, rents have not been stagnant at all, either in the UK or Australia, they just have not risen explosively like house prices. The amount they have risen, and will yet rise, is bad enough if we had any sense of right moral outrage on this issue.

        I stand by what I am saying, and stand by my predictions. I believe from something you said once before, Mouse, that you would be prepared to change your mind one day.

        I believe that you do support in principle, the devising of policy actions to stabilise urban land markets; such as a CGT, macroprudential policies, and some others. And I have stated my own position as predicting that these will NOT address the “cost of housing” issue, or reverse the decline in democratisation of home ownership, or reverse the blowout in household debt.

        So maybe we can agree to differ and wait and see who is right.

        I have also explained repeatedly that you can have oversupply in housing over a long term simultaneous to a price bubble, due to the existence of a quota mechanism in housing supply, and the willing chasing of a share of the spoils by government. Spain proves the point. The willful misinterpretation of this by numerous charlatan “experts” misses the point that the “supply chain” in Spain was 7 YEARS LONG and in Texas it is 6 WEEKS. You can easily mis-engineer an oversupply 7 years late, but you can’t do it in 6 weeks.

        It is short-term supply elasticity that determines prices, period. “Supply” quantities actually don’t. All that supply quantities determine when they are anything up to 7 years LATE, is downside volatility when the bubble bursts. We will know after Aussie’s bubble bursts, just how much oversupply has occurred. Certainly far too many apartments in Melbourne CBD, for a start. Overbuilding in these inelastic-supply distorted markets, where only the chasing of MASSIVE “planning gain” creates any decent supply quantities at all, is usually also marked by the WRONG kind of housing being supplied, and in the wrong places.

        I call “utter BS” on all these trendy nurbies and utopians and “we know what’s good for you” crypto-totalitarians claims that “people now WANT high density inner city living” and “suburbs are dead”. Australia will pay dearly for letting these idiots and their speculator bedfellows utterly corrupt the body politic.

  2. NZ’s most-visited blog by a wide margin is this one:

    A classic illustration of “new media” doing the investigative journalism and carrying the commentary that is contrary to “the establishment”, that the MSM won’t. I could provide a lot more links too. Check out this, and have a browse of the site for yourself:

  3. It is this sort of thing that finally gets the public storming the barricades:

    by Cameron Slater on October 9, 2014 at 8:00am
    Yesterday we posted about housing prices and who was to blame for the situation, especially in Auckland.
    It prompted this email from a reader:
    Dear Cam

    This whole discussion about housing in Auckland aggravates me because it’s not just the RMA, or the availability of land that is ramping up the price of existing homes and discouraging development. It’s more the power of the mafia council and its ability to squeeze every last drop out of homebuilders that is the big issue.
    The ‘new streamlined’ Auckland Council is actually more of a bureaucracy with a capital ‘B’ than its composites, irrespective of the duplication of tasks. It’s a heaving, monolithic, Stalinist leviathan, long since irrelevant in the post-colonial era but with the statutory authority to dictate what use you may put your land to and to gouge you for the privilege.
    Try just getting their consent to build a house. We did in 2012, on 3200 square metres of bush in Titirangi, Auckland. We selfishly thought we might (gasp) construct a home for our family there but the thought that someone might purchase a section for such a nefarious purpose was obviously something the West Auckland chapter of the Auckland Council Mafia was prepared for.
    We were barely owners of the property for a day before the council weed-fascist was onto us. We had a ginger infestation that needed taking care of immediately or we’d be put in stocks and/or executed. We did the environmentally-friendly thing and approached the Waitakere Weedfree Trust. The guy there sold us a plastic tub and told us to dig out the ginger and put the bulbs in it to rot. A day later, and barely one percent of the ginger removed, I hit the local hardware store and bought the most toxic weedkiller I could find. Six months later, it was all still alive and the council guy was threatening court action.
    In the interim, we hired an architect and got him planning our dream home. He prepared a resource consent submission, which we took to lodge at the Henderson office. The architect had warned me that there may now be a charge for the pre-lodgement meeting. What he’d heard anecdotally, and no one since has been able to verify this for me to a legal standard, is that since the formation of the ‘Super City’, whichever ex-composite council charged the most for any particular service was now the going rate for all. What was once free in Waitakere now cost $200.
    First shock. A development levy would apply upon the successful lodgement of our consent. Approximately $10,000. I pointed out that our property was within an enclave of seven properties, six of which had been built on many years ago, but not ours. All utilities were already on site: water, power, phone, storm-water and sewage. Nothing needed to be provided, we merely needed to tap in to the pre-existing infrastructure which we had paid for as part of the purchase price. No matter. The levy was for other things, added pressure on the local libraries and such. I thought about saying I had a Kindle but doubted that would have gone down well.
    The council worker also informed us that Watercare would be punching the ticket for up to $8000 as well. A council spin-off organisation that now collects water rates independent of property rates, they would also need their taste.
    I rang them to find out why. A brusque South African woman who spoke barely decipherable English, seemed bored with my queries when I explained that I already had water to the property, and sewage away from it. She kept talking about a ‘Grolsch’ charge. I refused believe I was being asked to pay for an imported beer so I had to ask her to spell it. It turned out to be a ‘growth’ charge. So what do I get for my eight grand? Five seconds passed. ‘Nothing,’ she said. ‘Nothing?’ I asked again. She hung up. Really, she did!
    Which leads me to another issue, one that I hesitate to raise. I don’t recall dealing with any Kiwis throughout this entire miserable and ultimately fruitless process. I’m no xenophobe but obviously the metropolises of Durban, Mumbai and inner London are such shining beacons of urban sustainability and liveability that the council has seen fit to recruit in such places for people with the right expertise to replicate those civic success stories.
    Anyway, our resource consent was knocked back twice. Our building consent was knocked back two or three times. Or the other way round. I can’t remember as the process still engenders involuntary bowel spasms. The process was needlessly excruciating at every turn. It was almost like a big cull was looming courtesy of the now illusory ‘Super City’ efficiencies and everyone had to justify their existences by finding something wrong with our plans which paying them more money would solve.
    The weed guy, an Englishman, came across so disinterested that I thought he was stoned. The drainage guy, an Indian chap, told us the storm-water trap at the bottom of our section designed for the whole enclave was no longer compliant and that we would need to dig up the common driveway for seven properties and run our storm-water another 100 metres out to the road. By the time our architect had engaged engineers to challenge his findings (ka-ching), he simply added other stipulations to the list.
    Then there was the fire hydrant. Someone in the consent process discovered that our house was too far from a fire hydrant and that we would be required to install one miles away on the road at a cost of around $20,000. When I rang to find out why we were footing the bill for that and whether it could be shared around the neighbourhood, he said no. Last one in’s the mug.
    He did say however that I could ring the fire officer at the Titirangi Fire Station for a dispensation. This I duly did and the bloke was very helpful but utterly baffled by my queries. According to him, the Fire Service had no authority to do any such thing and, on ringing back after talking to his superiors, never had nor conceivably would.
    Here we got onto the mayor, Len Brown. How, in retrospect, he found the time to deal with our inquiry in light of his extra-curricular activities I don’t know but he did and we were informed that the council had made a mistake and could not compel us to put in a hydrant. Umm…sorry for the fuss.
    When the quote came in for the build and was double our budget, we threw up our hands, sold the land and licked our wounds. We ended up about $50,000 out of pocket.
    Debt collectors for the council chased me, and even my architect, for the development levy for over a year before I convinced the council that, as I hadn’t developed anything during my brief but tortuous landholding, that they shouldn’t get to squeeze my teet one last time.
    Every step of the way the council had one hand in my pocket and another on my short hairs, was belligerent and obstructive, communicated its unreasonable dictates through surly, disinterested immigrants and eventually crushed our dream.

    • People in New Zealand really are fed up with the incompetent and rapacious low-lifes in Local Government.

      I set out what needs to happen in Christchurch a couple of years back. What was outlined here applies to most other metro units of Local government as well …

      Christchurch: The Way Forward | Scoop News

      And those Bureaucrats Indoctrination Camps … sometimes referred to as Planning or Environment Schools need to be shut down. “Victims” of these indoctrination camps wreck havoc in local communities … to say nothing of the unnecessary costs involved.

  4. Why is there no law to rein in dodgy ratbag local body politicians? – Whale Oil Beef Hooked | Whaleoil Media

    … extract …

    … “A widespread and systemic lack of compliance for the law exists within Local Government” noted Council Watch back in 2009.

    Not much has changed.

    Local Government is notorious for breaking the laws of our land. A quick look at the RMA shows that much of that Act is about how authorities should function yet you’d be mistaken for assuming local Government has unfettered rights to play judge and jury over anything that occurs within their territorial jurisdiction … read more via hyperlink above …

  5. There are limitations to the law …

    You could post the 10 Commandments to the wall of a whorehouse … but it doesn’t mean they will behave themselves.

    I was well aware for decades, the core problem with Local Authorities in NZ was costs getting out of control. This is the root cause of unaffordable housing. The bigger the units of Local Government … the worse the problem.

    It is simply institutional failure at the local level …

    Suffocating Bureucracy & Failed Institutions | Scoop News

    The best way to fix these clowns is to have …

    (a) post development fringe zoning
    (b) Internal flexi zoning
    (c) Infrastructure financed properly … emulate the Texas MUD system
    (d) Reasonable and clearly understood affordability and mobility performance standards inculcated in to them. If they don’t meet them … send the cavalry in.

    It is a complete waste of time wet-nursing these too often infantile and economic illiterate LG clowns. Back in 2007 the planners supported the Demographia Survey and have not done a thing since …

    Recently I responded to more bland and meaningless media releases from the planners and Local Government New Zealand …

    Not PC: NZ Housing Crisis: Local Government Still Confused

  6. Within the recent article noted above I made the following points …

    Not PC: NZ Housing Crisis: Local Government Still Confused

    … New Zealand economists collaborated in organizing and financing a three-city New Zealand Speaking Tour late July by Alain Bertaud, accompanied by Marie-Agnes, his wife and fellow researcher at NYU Stern School.

    The important tour was a great success, where – on an individual basis – many responsible planners and Local Government employees participated.

    Alas, Local Government New Zealand® and the New Zealand Planning Institute® played no part in this important visit by Alain and Marie-Agnes Bertaud.

    It was no doubt all too “complex” for these organisations to consider collaborating …

    … In getting solutions in place on this “nonsense issue” of housing affordability, Central Government in dealing with Local Government needs to employ the General George Washington Management Method.

    Washington made a point of employing as his servant and valet the thickest person he could find in his army. Washington ran all his draft speeches and orders past this man before delivery. If his valet didn’t understand them, they were re-drafted until he did … read more via hyperlink above …


    As China’s property market cools, the nations property mogels look to Australia … Sydney Morning Herald

    … extract …

    Demonstrating the buying power of cashed-up Chinese investors, Wang says Australia is popular because property prices are perceived as “cheap” compared to what is available in the big cities in China.

    Australia also has lower home loan deposit requirements compared to China, where banks often require around one-quarter of the property’s value upfront, amid tightening lending conditions.

    … is Australia “cheap” ? Is it from one “pump & dump” speculative bubble market to the next ? …

    Housing Affordability in China | Wendell Cox |

    2014 10th Annual Demographia International Housing Affordability Survey

    … in contrast … planning induced speculative “pump & dump” bubble housing markets are history in New Zealand however …

    New Zealand seeks to avoid “generation rent” | Wendell Cox | MacroBusiness

  8. A good read out of Canada … h/t Gunnamatta’s MB Macro Sunday …

    Headed into middle life, Alberta couple need budget help to tackle debt that is swallowing almost half their monthly income | Financial Post

    … extract …

    The couple’s problems centre on the complexity of their plans. They want to supplement the pension Arthur’s employer provides, add to their RRSPs, pay down their mortgage and their car loan and build up savings for their child’s post-secondary education. The problem is to know which comes first, how much to put in each basket, and what the consequences are of each choice. Their present debt service charges add up to $2,688 a month, about 40% of their take-home income, $6,830 a month. “We’re scrimping and saving, but we may not be doing enough,” Arthur says. “How can we improve our budget?”

  9. … again from Gunnamatta’s terrific MB Sunday Macro today …

    Home prices since 1870 | VOX, CEPR’s Policy Portal

    … extract …

    Booming land prices

    Houses are bundles of the structure and the underlying land. In the paper, we study the driving forces of the hockey-stick pattern of house prices. Using an accounting decomposition of house price dynamics into replacement costs of the structure and land prices, we demonstrate that rising land prices hold the key to understanding the upward trend in global house prices.

    While construction costs have flat-lined in the past four decades, sharp increases in residential land prices have driven up international house prices. Our decomposition suggests that up to 80% of the increase in house prices between 1950 and 2012 can be attributed to land price appreciation alone … read more via hyperlink above …


    What house does $48 million buy? An average one in 2064 … Sydney Morning Herald

    … extract …

    To put that into context, Sydney’s most expensive house currently is Altona, in Point Piper, which fetched $52 million last year.

    But if that timeline seems a little too far off, they estimate that in a decade the median will have jumped to $1.84 million, from $844,000 today. In 20 years it will have stormed to $4.17 million and in 30 years more than doubled again to $9.44 million.

    “If our love for property were to continue, such astonishing growth is not out of the question,” said Otto Dargan, the managing director of, who also admitted that it was difficult to say exactly what property prices would do in the future.

    To arrive at these figures they took the 8.52 per cent average rate of house price growth over the 50-year period to 2004 … read more via hyperlink above …

  11. Building boom raises concerns of glut in Melbourne – Business – NZ Herald News

    Australia’s second-largest city is seeing its skyline being transformed at the fastest pace ever by Asian developers building residential towers. Now there are concerns too many are going up.

    Companies including Hong Kong-based Far East Consortium International, Beijing-based Sino-Ocean Land Holdings and Singapore’s Aspial have flocked to build high-rises in Melbourne as lifestyles change and Chinese demand climbs …

    … Melbourne was among the 10 most unaffordable housing markets in the latest report by consultancy Demographia released in January, which compares prices across nine countries … read more via hyperlink above …


    Agents, lenders fill niche as Chinese money floods housing market (of California) – LA Times

    … concluding …

    … But even she’s starting to wonder how much longer this influx of cash from across the Pacific will last. The Chinese government keeps making noise about clamping down on currency leaving the country. The U.S. government is talking about taxes on foreign investors, which could make buying here a little less attractive. Buyers are starting to get a bit spooked. And there’s only so many of these deals she can do.

    All that has Chen wondering what trend might come next.

    “I think I’m not going to be putting as much energy into this,” she said. “I think the next few years are going to be a good time for first-time buyers.” … read more via hyperlink above …


    Government slams (Christchurch) planning changes … Tina Law … The Press

    The Government has attacked the Christchurch City Council’s proposed planning changes, labelling them inadequate and saying they restrict innovation and constrain plans to build more homes.

    In its 401-page submission to the Proposed Christchurch Replacement District Plan, the Government said the council’s proposals required significant reworking because they did not recognise the magnitude of change required to address the scale and importance of rebuilding and recovery.

    The plan, which addresses how land can be developed and how the council proposes to mitigate the risk of natural hazards, failed to emphasise ‘‘positive planning for growth and change’’, the Government said.

    ‘‘Hard decisions are needed now to improve the proposals,’’ the submission said. … read more via hyperlink above …

    Most residents have no pride in city … Anne Pearson … The Press

    … when are Mayor Lianne Dalziel and her team going to follow-up with what they were told by the 4,000+ strong PEOPLES PROTEST 1 February 2012 … some 2 1/2 years ago …

    Christchurch Protest Committee letter to Hon Dr Nick Smith | Scoop News

    Christchurch: The Way Forward | Scoop News

    … Is it now time for this incompetent Council to be replaced with Commissioners ?


    Editorial: City plan must be got right … The Press

    … Pavletich “Paulson” comment … in moderation …

    Christchurch is internationally rated a “severely unaffordable” city at 6.0 times annual household earnings ( Demographia Survey ). Normal housing markets do not exceed 3.0 times annual household incomes with sensible mortgage loads of about 2.5 times.

    Affordability is a critical issue for a sustainable recovery.

    It is now over 4 years since the first earthquake events 4 September 2010 … and the bureaucrats at the Christchurch Council have persisted in treating with contempt the critical need for affordable land and therefore affordable housing.

    Where are the new starter homes on the fringes of Christchurch for about $1,000 ALL UP (serviced section & construction) ? … refer Andrew Atkins THE REAL DEAL …

    The unfortunate reality is that the new Council, elected 12 months ago under the leadership of Mayor Lianne Dalziel, has clearly failed to deal with is dysfunctional structure and culture.

    It is past time for this inept Council to be fired and replaced with Commissioners.

    This intolerable circus has gone on way too long.