Posts by David Hood
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Speaker: House prices and the "Magic Money", in reply to Che Tibby,
i’m no big-city economist
that's OK neither am I (data handling I know). But it occurred to me that this is where there is supposed to be a relationship and the numbers stopped adding up. I'll describe it as Cuckoo's Egg situation of a discrepancy in the numbers.
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Speaker: House prices and the "Magic Money", in reply to Russell Brown,
what nature of demand are we even planning for?
I don't know what figure the government uses . Based on the past 15 years, a figure of demographic demand from local population + 60% would seem to be an optimal spot (I don't for a moment beleive this is the target figure) but in reality it is somewhere between 0 and 4 billion extra houses needed to stablise demand. And because of the unknowns that is a pretty wide error range.
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Speaker: House prices and the "Magic Money", in reply to Paul Campbell,
I think more you should take out the portion attributable to mortgages, then do something similar for immigration (do people like me coming back from OE even show up on anyone’s radar?) and then look at the remainder
Let's describe immigration and local borrowing as both fairly flat through to 2010.
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Speaker: House prices and the "Magic Money", in reply to Che Tibby,
Could property investment be being made from fund managers?
Perhaps individually, buying an investment property with their management fees, but there is no direct sign of Kiwisaver funds investing in residential property.
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Speaker: House prices and the "Magic Money", in reply to Paul Campbell,
crap, looking at that graph I must have started this, I came back from my OE in 2004 and bought my house for cash, no mortgage …..
seriously though people moving to NZ with money is one cause of this, all in all that’s probably a good thing for the larger economy (wealth transfer inwards) though not so good for the Auckland housing market.
You might individually have been part of that, but the actual immigration numbers are not a match to house price rises- I can go through much the same process showing a lack of relationship between arrivals and house value. So we get to the situation of access to capital (not identifiable within the New Zealand Economy) rather than people.
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Polity: A week on from the housing controversy, in reply to BenWilson,
Their job isn't to police all economic sectors- they have no power over most sectors just banks. The thinking is that things in the economy need to be free to succeed or fail without favouritism, and the banks are only policed so that a failure in one sector of the economy cannot take out the banks (which would then take out everything else).
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Polity: A week on from the housing controversy, in reply to BenWilson,
At the very least, I’d expect them to be attempting to predict the chances, to the limit of their abilities.
What they do is estimate the size of a nationwide shock if it happened, and force that banks to keep reserves to allow for that risk, so without knowing what is driving the housing market or the likelyhood of it suddenly stopping, they are confident that the banks could survive a 30% drop in house prices (individuals might be financially hurt, but that would not bring down the banks so spread to everything the banks touch.
Basically, as I informally understand the reserve bank philosophy is "all lot of things could shock the NZ economy, but we are building in a margin of error to cover that"
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Polity: A week on from the housing controversy, in reply to chris,
I wish I knew how exactly they arrived at their number, because it is about 6% lower in 2006 ownership than the households by tenure data.
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Polity: A week on from the housing controversy, in reply to David Hood,
The New Zealand data
Just reply to myself to note that from the graph of the preceding page, that if nothing dramatic happens in the next four years there will be 1 in 5 fewer people (75ish to 60ish is 15ish which is 1/5th of the original) than a generation ago (measuring a generation by the current typical age of parents of around 29). That is what I would call a fairly big societal change.
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Polity: A week on from the housing controversy, in reply to BenWilson,
I mean, an obvious candidate to do this research would have been the Reserve Bank itself, this giant body tasked with understanding the drivers of house price inflation
Are they charged with that? I thought they were charged with the security of the banking system, and housing only affects that if two many people get out too many mortgages creating a risk. The reasons for house price rises doesn't seem something within that mandate (so wouldn't be funded).