And nothing but the truth.
We are as I write this, in the middle of a General Election silly season here.
And we recently had a Leaders Debate on TV.
Normally I would have stuck forks in my eyes rather than watch that sort of thing.
However, due to circumstances, I did actually end up watching a fair part of it.
And watched the politicians dance right up to the truth… and then dance away from it again.
So OK – if they don’t want to touch it, I will.
Here is the TRUTH – (whether you like it or not).
- Housing is unaffordable.
- And the trend is tracking worse.
- And it is the result of deliberate government policy.
- And unless that policy is reversed, then housing will continue to get more expensive and unaffordable.
The politicians danced with several facts.
They are allowing and encouraging foreign ownership of land here.
They would like to appear to be doing something about locals being priced out of the property market.
But when asked about whether they were prepared to stand at the end of the driveway of a property owner and say – “you cannot sell your property for what it would reach in an ‘OPEN’ market, and will have to accept less by selling to what a local is able and prepared to pay” – then the ducking and diving began…
BUT – that is EXACTLY the correct answer.
The way to make housing/property affordable – is to make it cheaper.
Not by implementing assistance schemes, etc.
All that is designed to do is prop up the existing price of assists, while hopefully also making it somehow possible for locals to leverage (borrow) into the market.
It is completely arse about face – that cannot and will not work.
The best that could come from that, is to ensure that whatever assistance is offered, will be the amount that housing will next go up by.
And if they can’t see that (or won’t see that) then the politicians are either Lying, or Incompetent.
Either way, they shouldn’t be allowed to run a country.
But the beauty of our “Democracy” is that we get to choose – between Tweedle Dum, and Tweedle Dummer.
And nothing will change – certainly nothing that matters.
And if you can’t afford to buy a house in your own country – Then that means YOU don’t matter.
What matters is propping up the bubblicious price of housing and property.
(and maybe also helping it along with a little ‘gentle’ [sic] inflation of housing too – the survival of the Banks’ depends on it don’cha know…)
And – the Damn truth part:
The price of housing is a consequence of deliberate government manipulation of the structural environment in which the market operates.
It is the whole point of government – to interfere in the market mechanisms. So as to ensure the desired outcome…
If you can’t afford a house – that is the desired outcome.
Just not your desired outcome – but we have already determined: You Don’t Matter.
And finally – here’s the Nothing but the truth part:
To make housing affordable – requires collapsing the price of housing.
Actually, that is pretty easy to do – on the one hand…
On the other hand – it is politically impossible to do.
A reformed policy and structural environment could collapse the housing market pretty much over-night.
Getting such a change made against the monied interests of those invested in the property market is the real trick.
Short of a War or Revolution – it ain’t gonna happen.
Which is why I pay scant attention to the babble of the politicians.
They will try and sooth us with pablum.
But until they come out, stand at the end of your drive, and say:
NO, you cannot sell to whoever you like.
NO, you are not going to be able to sell to the highest (international) bidder.
NO, you are not going to make money out of the sale of your property.
NO, you are going to have to accept a loss of value/price.
No, sorry but property prices are too high and you are going to have to eat the bitter pill…
… then nothing is actually changing – whatever they may try and tell you.
The status-quo is going to continue:
Rising Prices. http://www.nzherald.co.nz
Increased foreign ownership.
Decreased domestic ownership.
A life time of renting and dependance.
Just as a note to all this:
To collapse the price of housing and make it affordable to (all) locals, can be achieved by a pretty easy and limited range of tools.
And they all rely on making property ownership LESS appealing to buyers.
A limited market (smaller buyer pool), and less money chasing assets (no financial return) – equals a drop in prices.
There is no other formula for it – and it is exactly that simple.
Housing has to be for shelter, not for investing purposes.
And these things would do it:
Prevent foreign ownership of property (real estate).
Require foreign (non resident) owners to sell, this includes Corporations/businesses. (But they could lease business premises for example)
Prevent foreign owners from renting out properties.
Require all rental houses to meet a fairly strict “Warrant of Fitness” standard.
Require that any property that is classed as a rental property, must be sold on as a rental property, with the existing tenant holding the right of residency for as long as they choose to stay there. Renters may not legally be evicted, in order to sell a property.
Take away tax breaks for owning rental properties, or any property.
Open up the provision of housing to include a wider range of options. Take away the barriers to offering and building smaller houses.
Increase interest rates.
Let/encourage the exchange rate to float higher.
Work on lowering the cost of the bill of materials for new houses: i.e. taxes, duties, monopolies.
Restrict the lending practises of Banks.
Work to institute “deflation” as a general national policy – not “inflation”.
These set of rules would make it undesirable to invest Capital in property – and so it would flee the property market.
And that is a good thing.
Hot money should not ever have been allowed into Housing – period.
(or the necessities of life generally)
If you are still not happy with how much this set of rules has pulled back the price of real estate – then there are still more radical measures that could be implemented to drop the price. These would restrict further the ability to buy and sell, and the cost of doing so. And also the marginal/incremental cost of owning more land. Larger/additional holdings would be taxed at a progressively higher rate.
Why would you buy property if it is so hard, there is no money in it, and there are added costs for doing so. And that’s assuming you are a local – foreigners would be shut right out.
And if there WERE tax breaks and incentives for moving your money out of Real-Estate, and into commerce and industry (where it COULD actually benefit the Nation and the economy) – – – then why wouldn’t we be doing that instead…??? Just a thought.
(and until the politicians start talking along these lines, then you know for god-damn sure they are talking shit).