Posts by David Hood
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Speaker: House prices and the "Magic Money", in reply to Ianmac,
To be completely clear, I think ethnicity is irrelevant to this discussion- the lift that began in 2001 is part of the same problem, and if it is foreign capital distorting local conditions, it would have been a different set of countries way back then.
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Lucy, I'm focusing on the increase in value, so lets step it through
- the first sale pushes up the values
-everyone sells there houses to each other at the new values. Effectively swapping housesIn this second step, nothing happens that generates an increase in values, it just confirms the status quo. This case does not appear in the figures because the price is not increasing. Only the first event that generated the increase is counted.
If a local wants to push up the price, they need to get the money from somewhere to pay for an increase (rather than the not counted status quo).
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Speaker: House prices and the "Magic Money", in reply to Glenn Pearce,
That is true, however it is not linear- the sold houses form a representative sample that is adjusted by subsequent sales. So if one freakish sale saw a general increase, that would be brought back down again by subsequent sales. The graph of sales prices of REINZ tracks the graph you can make from the housing valuation data, so when looking at the relationship one explains the other.
If you are trying to argue that it could be caused by a freakishly large drop in the number of houses selling (so that the small number is distorting things) I have never seen any evidence of that, and it is the kind of thing that would leave traces in the economy elsewhere. But by all means if you have evidence, bring it.
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Speaker: House prices and the "Magic Money", in reply to Swan,
Try this:
- Housing Valuations are based on house sales.
- House prices going up makes Housing Valuations go up.
- For house prices to go up, people have to pay more money than was previously paid for the house (or similar houses)
- They have to get the money from somewhere
- In NZ historically, and all around the world presently, that extra money comes from banks in a predictable way.
- In contemporary NZ, the money is not coming from banks.
- It is not detectably coming from any other sector of the NZ economy. -
Speaker: House prices and the "Magic Money", in reply to BenWilson,
Those already in property would make a killing.
Up to a point. Some living in NZ presumably does still need to buy a house in the NZ market if they are living here. So they can stay in the game but not leave it to realise the profits. If a NZ resident sold to someone from Gondor, the Gondor housing market they are in may (almost certianly did) see different rates of increase through the same period of time.
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Speaker: House prices and the "Magic Money", in reply to chris,
Some regional breakdowns for you (5 years).
I've tucked that away for when I have the time to extract the graphs back to data. If there is some regional information on debt, that would be just perfect. But even just with this estimating the kind of turnover that is generating the value increases should be possible.
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Speaker: House prices and the "Magic Money", in reply to Glenn Pearce,
The change in the scale of movements on Fig. 2 coincides with the adoption in 2004 of a new methodology for calculating the HPI
I can rerun things with the detached series next week (that will be the first substantial free time I get) but a couple of things make me suspect there won't be any difference (or if anyone wants to substitute in the detached series and run it yourself, go ahead):
- the uptick started in 2001, and I think we can rule out the wild changing inconsistencies from 2004 would imply sudden quarterly changes in housing stock composition as that would have notable effects in other data
- they say on the page that the calculation was back dated to 1989 so all the data has been calculated in the same way "This broader index has been backdated by QV on the new methodology to December 1989." -
Speaker: House prices and the "Magic Money", in reply to linger,
So, some sectors of the market may be valued more or less correctly, and others wildly inflated.
Undoubtably, but without access to the information on where properties are selling, and for how much within each area, and both of those over time, I can think of no way to break it down regionally. So all we can really say is that there is an influence that wasn't showing up before, and at a national level the influence is about 60% of the influence of people who need loans (3/5ths).
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Speaker: House prices and the "Magic Money", in reply to Tat Loo,
Would any clues be gained from examining NZ’s capital account figures.
I last looked at it a couple of years ago, but what I found in that area then is that the inflow and outflow of capital from NZ used to be a really bad predictor of house value, but it has been improving. I haven't gone back to check what has happened lately, though.
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Speaker: House prices and the "Magic Money", in reply to Katharine Moody,
They are but perhaps it also needs mentioning that a great deal of added internal borrowings are likely based on leveraging the capital arising from QV revaluations without any corresponding house sale.
Yep, but if that borrowing was being used to buy houses, both housing value and borrowing should be moving up.