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I think it's way too early to say Auckland has fixed house prices. Auckland has made some improvements to zoning through the Unitary Plan, and the New Zealand g
by BirdieNZ 4y ago
I think it's way too early to say Auckland has fixed house prices. Auckland has made some improvements to zoning through the Unitary Plan, and the New Zealand government has 2-3 pieces of legislation which also increase the potential for supply in all NZ cities, but the Auckland City Council still does severely restrict supply, and the fundamentals of property ownership, tax, and landlording haven't changed, so I don't foresee house prices returning to a more sensible price-to-income ratio, even if they improve somewhat.
Hopefully we can implement a land value tax and/or build lots of public housing, to fix the fundamentals.
- teruakohatu 4y agoI agree, in my opinion it is a vast exaggeration to say the high prices of housing in Auckland is fixed, or Wellington and Queenstown for that matter. Construction costs are out of kilter. The fact that we run out of essential materials such as gib (I believe Americans call it sheet rock or drywall) means the high prices are not going away.
- stubish 4y agoThe article doesn't say anything is fixed, which is always going to be subjective. It says rental prices are growing slower than other NZ cities, and prices in some areas has dropped. It theorizes that this is because of the changes to zoning laws.
- teruakohatu 4y ago> It says rental prices are growing slower than other NZ cities, and prices in some areas has dropped I would say rental prices most likely have dropped due to the property bubble in Auckland bursting. The bubble was bigger than almost everywhere else, so I could expect rents to drop accordingly. I really do wish this was not the case, I would love for the problem to be fixed.
- pradyuprasad 4y agoAuthor here, I think that comparing Auckland to other cities is a relevant metric because the property bubble was nationwide but the zoning reform was Auckland only
- EdwardDiego 4y agoHi author, I really have to ask what research you did into the current state of rents / house prices in NZ, because your conclusions don't correlate with the current reality, at all. That rents are increasing slower in Auckland now, compared to other regions, doesn't mean much, because they already spiked through the roof, in far excess of every other region, five years ago. The title is unfortunately out and out misleading, just because Auckland is still the most expensive city to live in (Queenstown isn't a city). And if the best that can be claimed is that rents went up a bit slower than other cities, but the increase began from an already far higher level of rent prices, then has Auckland actually solved the cost of housing? Any New Zealander can answer that in two to three words. Either, "lol, no", or "lol, fuck no"
- ihatepython 4y agoTechnically, lol is not a word, but an abbreviation for Laughed Out Loud, so "lol, no" would be 4 words, not 2. Unless by lol, you meant "League of Legends", which would make "lol, fuck no" 5 words, not 3.
- EdwardDiego 4y agoTechnically, you're correct. The most socially isolating form of being correct.
- aunty_helen 4y agoIt's literally in the title. You don't even have to RTFA... it's at the top of this page.
- robocat 4y ago> a land value tax That is actually a communist idea: let the government take almost the whole value of a property. The whole point of a land value tax is to take the rent. Funnily enough that leaves a property worth a pittance. Everything I have read about land-value-tax seems to just ignore that glaring problem. PS: I have no love for property investors, they often screw up people’s lives: however blanket tax changes screws over the good as well as the wicked. Edit: I’m happy to be corrected. Commercial investment property is valued based the return you get from it. If the return drops drastically (the point of a land-value-tax) then the property value drops drastically. Sucks if you retired and invested your life savings into an investment property, only to have all returns taxed away. Edit 2: discussing property values has become politicalised. Everyone seems to trot out some memetic idea (left example: land-value-tax-for-the-win; right example: state-housing-is-theft-from-productive-members-of-society) but few people seem to actually think through the consequences of an idea.
- darthoctopus 4y agothat is, to proponents of the LVT, a feature, not a bug: it discourages rent-seeking, thereby incentivising other uses (e.g. actually living in the property).
- slyall 4y agoPerhaps you could explain this glaring problem better. "Take the rent" and "leaves a property worth a pittance" makes me suspect you have an incorrect understanding of what a land value tax is.
- ido 4y agoMaking property not a form of investment is a feature not a bug. See the article about Tokyo a few days ago for example (how rent is relatively affordable & Japanese don’t expect home value to hold).
- robocat 4y agoJapan is hardly a great example. “Japanese Government Is Selling Houses for $500”, “There are more than 8 million empty homes in rural Japan”, “Housing stock in Japan. 62.41m”, “Vacancy rate of dwellings in Japan. 13.6%”.
- larsiusprime 4y agoGood article in that vein by Stephen Hoskins, himself a New Zealander: https://progressandpoverty.substack.com/p/land-and-the-liberty-to-build-on https://progressandpoverty.substack.com/p/land-and-the-liber...
- ShredKazoo 4y agoHow can a land value tax be politically feasible if upzoning is not? Wouldn't it squeeze existing owners of property even harder?
- dan-robertson 4y agoHave the fundamentals of property ownership, tax, or landlording changed since the time when house prices were at a sensible price-to-income ratio? I can’t really tell what you’re trying to say with that clause.
- tuatoru 4y agoThe fundamentals of property ownership have indeed changed. Back in the day (1970s?) low-income households were eligible for special low interest rate and low deposit mortgages from a government entity. Tax laws have also changed considerably also since then to make legal vehicles like trusts very advantageous for owning property. Finally, in the same era the central government and local governments were big landlords with the majority of the market between them.
- tzs 4y agoHow does infrastructure work with a land value tax? Consider an area with 100 equal sized lots all with the same land value, and each with a one family home on it, with all the families about the same size. The area uses a property tax that is based on the value of the property including land and buildings. That area needs roads, water, sewer, trash collection, electricity, schools, parks, and emergency services sufficient for 100 families. Each family pays approximately an equal share of that via their property taxes. Now 10 of those lots have their single family houses replaced with 100 family apartment buildings. The area now has 1090 families instead of 100 families, and needs to greatly expand infrastructure. Under the property tax the owners of the 10 lots with apartment buildings pay a much greater share of that expanded cost than do the owners of the lots with single family homes, which presumably gets reflected in the rents of those 1000 apartments. It probably won't end up with each of the 1090 families in the area paying an equal share of the area's infrastructure. I expect the share for the apartment families will be less, but not massively less. Compare to a land value tax. If the tax is just based on the land value won't each of the 100 lots pay the same amount? To pay for the need for 10x as much infrastructure the tax rate will have to up by a factor of 10. The result is that families in the single family homes will be paying per family about 100x as much for the same infrastructure services as those who live in the apartments. And if some people build even bigger apartments, those tenants will be paying less for the same infrastructure than the people in the smaller apartments. What is the justification for different families having to pay such different amounts for the same infrastructure just because some live in denser housing?
- ptspin 4y agoI am certainly no expert on the subject but I would suggest the following points as answers to your question. 1) Most (that I have heard of) plans for Land Value Tax do still include a smaller portion of property taxes. This does not completely solve the problem you pose but does ameliorate it a little. 2) Some of those infrastructure things are paid for via utility payments on utilities used. The 100 families in the apartment building will use much more water than a single family home. Some part of that money should be budgeted and used for improving the utilities available. That doesn't account for things like parks, fire department, etc. but does take up some of the slack. 3) lastly and most importantly those homes will be paying more than their fair share on purpose! If they live in a neighborhood where it is economical to build 100 unit apartment buildings then a lot with just a single-family home is being wildly underutilized. The higher tax costs will encourage owners to redevelop those properties into apartments or other higher value uses to make efficient use of that land. This is the entire point of Land Value Tax! It makes it in the interest of land owners to upgrade and improve their property (whereas traditional property taxes have a negative incentive because building a new building will increase your taxes). edit: formatting
- archontes 4y agoHopefully you can take a multipart approach. Transit needs to improve by an equal measure. The North Shore still doesn't have a train. Most of the trains that do run take too long, and the highways just don't flow like modern highways. That reduces the utility of land. It doesn't matter if you build a house in Helensville if nobody's going to utilize it because it's a 50 minute drive to the city. I get that people do it, but people try not to. And it's not bad bad, but it's bad enough that it disincentivizes utilization.