You are being lied to.
Politicians of shades red and green shout and accuse banks, boomers, builders, suppliers, landlords, investors, immigrants, all and sundry, of responsibility for ‘house’ prices and the manifest unaffordability thereof. They do this for reasons dishonest. Because the truth is they want the price barrier in place.
Let me explain: during the last decade of the last century utopian ‘city planners’ decided our larger centres should go up, not out, to prevent an alleged evil they called ‘urban sprawl’ but which the huge number of median income earners called suburban serendipity. That alleged evil was single level (mainly) wooden-framed houses with enough land for a trampoline, a deck and a barbecue patio, and perhaps a place to park the Corolla. Cheap, and cheerful.
Our utopian planners, remembering that one person’s utopia is another’s dystopia, decided to put a stop to this bliss, and intended for future generations a life lived in soulless, sunless apartments, no car, no dog, no trampoline, just walls.
To achieve this the utopians invented ‘municipal urban limits’ – artificial boundaries beyond which development would not be permitted to proceed. Constraining the land supply had the desired result, and just as children learn that pinching a hose increases the water pressure upstream of the constraint, the effect of restraining the boundaries was immediate upward price pressure, and disastrous.
In the first year alone, 1995-96, in the case of Auckland, land prices within the new limits increased 25%, followed by another 25%, followed by another 25% and by the end of that first decade of disastrous land price inflation ‘housing’ (actually land with a dwelling thereon) prices had increased by, you guessed it, 250%. The city planners, apartment-complex developers and moneylenders were thrilled; the average Joe and Ngaire expecting their first child, not so much. Prices became eye-watering, the numbers boondoggling. Dreams became dashed.
Our utopians still, to this day, artificially restrict new builds, artificially increasing land prices. In the case of Wellington the council intends that less than 30% of new housing should be be built on undeveloped land, what they call ‘greenfields’, despite the city being surrounded by thousands of hectares of land suitable for development. They simply don’t care about the effect of their policies on Joe and Ngaire; they only care about their own peculiar ‘vision’. They couch their rationale in cliche: think ‘sustainable’, ‘future-proof’, ‘green’; be very wary when you hear those words.
Look up any property in any major centre in New Zealand and you’ll see the land ‘valuation’ as the major price component. Because your council and their utopian minions want it that way, they are not your friend.
By way of example, look at this beaut do-er-upper in humble Otara, the ‘house’ value just short of $100,000 (2017 rating valuation), about one-third of the cost of a new build and for that you get a solid, but draughty, bog-standard bevel-back weatherboard dwelling Joe and Ngaire and their mates could knock into shape, wash down and clean, throw a bit of paint around and voila, easily transformed into a happy first home in weeks:
But here’s the rub, the house sits on land (artificially) valued at over $400k thanks to municipal urban limits price inflation. Your dream will now set you back well north of half-a-million bucks. You’ll now require $50,000 (at least) deposit, $10k for the house, $40,000 for the land.
Even if municipal urban limits were disposed of tomorrow it would take twenty years for the ‘housing prices’ situation to resemble some sort of sensible affordability, but for every single day they remain in place your dreams are diluted, and that’s not fair.
Get angry, demand change, demand the limits be dropped, don’t get sucked into the lies cast about by smugs responsible for this ridiculous fiasco, and don’t give up.
Please share this BFD article so others can discover The BFD.
