Speaker: Generation Zero: Let's Grow Up
132 Responses
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Kumara Republic, in reply to
Hate to break it to you, but even Houston is looking at building upwards.
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Danielle, in reply to
Hey, both Nola and Houston have lots of great things about them (you don't really see the many good bits of Houston by driving on freeways, Bart). Just... not urban planning.
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Threadjack. Sorry but recent posts have not been truly related. Ergo, Housing may fit the bill.
http://www.bbc.co.uk/news/magazine-22751415Add to Green movement suggestion of nurses in schools???
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Angus Robertson, in reply to
so how does Auckland get affordable housing?
By doubling or tripling the interest rates charged on mortgages.
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Russell Brown, in reply to
By doubling or tripling the interest rates charged on mortgages.
Which would be a great way of increasing the number of mortgagee sales among existing homeowners.
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Martin Lindberg, in reply to
By doubling or tripling the interest rates charged on mortgages
Do go on...
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Bart Janssen, in reply to
you don’t really see the many good bits of Houston by driving on freeways, Bart
Oh I agree, they have the most amazing natural history museum, possibly the best mineral collection I have ever seen, I think slightly better than the smithsonian collection!
And other bits of Houston were neat too, but compared to Auckland it was not pretty. Some of that is size but a lot of it was urban planning.
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Angus Robertson, in reply to
The question was "how does Auckland get affordable housing?"
And I'm feeling cynical.
Interest rates are currently at an historic low, they are much more likely to increase than decrease. Doubling them from today will place them just about at historic averages. Tripling them wouldn't be especially unlikely.
And a rise in interest rates seems way more likely than Auckland Council and NZ Government cooperating to solve any issue.
If the question was "how do you want Auckland to become an affordable city?" the answer might be different. And less likely.
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Kumara Republic, in reply to
By doubling or tripling the interest rates charged on mortgages.
Or levying stamp duty on absentee/non-resident house purchasers from abroad.
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Sacha, in reply to
Texas is teeming with flying cockroaches
No wonder they all have guns
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Sacha, in reply to
mortgagee sales
Yes, plenty of those in Houston.
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Russell Brown, in reply to
Interest rates are currently at an historic low, they are much more likely to increase than decrease. Doubling them from today will place them just about at historic averages. Tripling them wouldn’t be especially unlikely.
And a rise in interest rates seems way more likely than Auckland Council and NZ Government cooperating to solve any issue.
Tripling? You're talking about sending mortgage rates to somewhere between 15% and 18% -- higher than they've been at any time in the last 23 years. And in 1990, inflation was eight times higher than it is now.
There would be mass defaults in Auckland especially, the already-torpid economy would go into a coma and the rise in the dollar would wreak havoc on the export economy -- assuming there were any farmers still in business. Government finances would tank.
So, yes. You would lower house prices. But talk about destroying the village to save it. I submit that a working relationship beween central government and Auckland is infinitely more likely than what you're suggesting.
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Russell Brown, in reply to
mortgagee sales
Yes, plenty of those in Houston.
And that's at mortgage rates of 3.8%
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Sacha, in reply to
Heck, even a change in government is more likely. One willing to change our fundamental economic settings away from investing in houses rather than productive export-earning enterprises. Wonder how much longer young folk who haven't left the country will continue to prop up their grandparents' flaccid fantasies?
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BenWilson, in reply to
There's no way on earth interest rates will triple. I'm surprised, in fact, that the Government and Reserve Bank are even talking about raising them at all, since doing so puts an instant handbrake on the economy. Less borrowed money circulating, and a higher dollar making exporters less competitive. It is only possible if they are able to create some kind of counter stimulus to stack against the depressive effect raising interest rates would have. They could, for instance, print money and distribute it directly, which would mean they could stop the dollar going sky high, and keep money circulating. But this has been ruled out so many times that it would take political amnesia to do it. The finance sector would not allow it, nor would the 1%, since it would erode the value of capital, and reduce reliance on debt.
The thing about low interest rates is that they're something the economy gets addicted to. It's often not appreciated that as a rate gets closer and closer to zero, the amount borrowable tends towards infinity. Smaller and smaller movements magnifying into large and larger effects. You can put interest rates up or down a basis point when the rate is 10% without affecting anything much. But when the rate is one percent, then one basis point is a ten percent change in the cost of servicing debt. Anyone maxed out is well over the line immediately. People struggling to pay their mortgage will be in default.
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Angus Robertson, in reply to
I am predicting a change in global economic conditions will have more impact than anything we do. And since almost any change in the global economy would result in higher interest rates, I am predicting higher interest rates.
NZ does not have low interest rates because we have decided in isolation that we need to have low interest rates. NZ has low interest rates because the USA, the EU, the UK and Japan are dumping money into the world economy.
It might be that these places will continue to dump money into the world economy for ever and ever and ever. But I think they won't.
When the Western world ceases its current policy of very low interest rates we will have to do the same only more so, because we are smaller and a much riskier investment.
I suppose we could keep interest rates low even if economic conditions change, but then we'd incur shitloads of debt and have really high inflation.
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Currently most mortgages are financed on fixed terms. These are funded primarily by overseas investors from countries with even lower interest rates (< 0.5% in Japan). This relies on the belief that the NZD won't decline against the investor's currency (a small drop could easily wipe out several years profits).
If those investors went away (because their country restricted overseas investments, their domestic interest rates increased, they needed to withdraw money to live or the NZ dollar became downwardly unstable) then the supply of cheap fixed-term money will dry up.
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Sacha, in reply to
because we are smaller and a much riskier investment
though we've been reliably lucrative for over a decade now
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BenWilson, in reply to
When the Western world ceases its current policy of very low interest rates we will have to do the same only more so, because we are smaller and a much riskier investment.
The reasons I gave why it's difficult in NZ are only more so in the "Western" economy. Until tools are implemented so that debt deleveraging can happen without catastrophic consequences, I expect we will continue to explore the infinity of interest rates between what we have now, and zero. Half the rates, double what people can borrow. Half them again, double borrowing again. You can keep halving a number without it ever reaching zero. Of course "half" is a gross exponential value, it's more like reduce by 1%, get 1% growth. Repeat ad infinitum.
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Sacha, in reply to
so that debt deleveraging can happen without catastrophic consequences
With so many small business loans secured against houses, NZ really has to grapple with this one.
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Matthew Poole, in reply to
With so many small business loans secured against houses, NZ really has to grapple with this one.
Getting the banking sector over its collective obsession with security against homes cannot happen soon enough. We're going to struggle to grow any parts of our economy that aren't primary production for as long as it's easier for growing businesses to seek capital offshore than get it from local banks.
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Rich of Observationz, in reply to
You really think it's a good idea for banks to lend on intangible business equity and bright ideas?
That's venture capital, and the success rate is about 1 in 10. (The model is that perhaps 1 in 30 do really well and compensate for the failures, around 1 in 10 get the money back and the rest sink with little trace). I'm not sure how that works with people wanting to put money in a bank and take it out again.
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Sacha, in reply to
They will lend against savings and less risky financial investments - like mature economies do. Not just against houses.
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Rich of Observationz, in reply to
Why on earth would anyone borrow against savings? That's just gifting money to the bank
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Angus Robertson, in reply to
The reasons I gave why it's difficult in NZ are only more so in the "Western" economy. Until tools are implemented so that debt deleveraging can happen without catastrophic consequences, I expect we will continue to explore the infinity of interest rates between what we have now, and zero.
I've got a few shares so I'd like to take this opportunity to thank the taxpayers of America, the UK, Europe and Japan for paying for my largely unearned capital gains. Indeed if there are any voters from those countries reading this please don't read after this paragraph, you are doing a marvellous job.
Seriously if you live in the USA, EU or UK stop reading now.
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.That said (just between ourselves) I'm pretty sure even those idiots can't be trusted to go for it long term, because their growth is jobless. Their economic policy is to inflate assets, so all local investment is into assets. High asset prices then make foreign investment difficult. Japan has been doing the zero% interest thing for 30 years and in that time the labour participation rate has fallen from 64% to 60%. It kind of works for Japan because they have extremely restrictive immigration and a very low birth-rate - they needed to reduce their workforce.
Try the same thing in places which have more normal demographics and serious social problems will occur around employment. Governments will fall and this will change the policy.
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