The Dim-Post

June 20, 2016

A vague notion that the Auckland Mayoral campaign might not be such a done deal

Filed under: Uncategorized — danylmc @ 9:39 am

Via Radio New Zealand:

National Party-aligned Auckland Future mayoral candidate Vic Crone is proposing measures to help solve the city’s housing shortage that target unoccupied properties. Buildings sitting empty for more than six months may be in line for rates increases of up to fifty percent.

“While we don’t have a good picture of the numbers, I’m hearing loud and clear there’s a problem and strong anecdotal evidence right across Auckland, including in Special Housing Areas.”

Baches were not the primary target, but those that were not being used would be included in the rates policy in order to tackle the “serious situation” on housing.

“What we’re trying to do is use every single lever that we can to get as many homes and as much land available so that people can get access to homes in Auckland,” Ms Crone told Morning Report.

I have no idea of how the Auckland Mayoralty race is going. Obviously Goff is the presumptive favourite. Maybe he’s out there doing amazing grass-roots retail politics stuff? Yet Crone seems to be running what looks like a traditional media based campaign, and Goff isn’t.

From what we saw of Goff during his tenure as Labour leader he is an incredibly conservative, risk-averse politician. It would be completely characteristic for him to decide to run a ‘small target’ campaign, on the grounds that he is ahead in the polls, and then let his lead steadily ebb and chip away from a refusal to do any actual campaigning.

37 Comments »

  1. Given that Crone’s policy announcement is being framed as “the rates on your bach will go up 50%!”, I’m not sure that this policy will do her much good. Which is a shame, because the intent is good.

    Will be interesting to see how David Farrar and his taxpayer onion pals try and spin their chosen candidate advocating massive rates increases, but.

    Comment by Flashing Light — June 20, 2016 @ 10:00 am

  2. Obviously Goff is the presumptive favourite. Maybe he’s out there doing amazing grass-roots retail politics stuff?

    Goff is endorsing a continuance of Len Brown’s policies that have made rents go up by 30% (with most impact being felt by the lowest income bracket); his grass root campaigning would need to be off the charts.

    Comment by unaha-closp — June 20, 2016 @ 10:07 am

  3. Perhaps Goff was learned from his disastrous 2011 election campaign and the ‘show me the money’ calls where he was made to look a fool as he hadnt costed Labour’s policies. The same applies in Auckland as any opponent/media person just has to ask him about rates and whether he supports rate rises and if he doesnt, then how will he pay for it all. By being risk adverse, it means he doesnt take a position on anything!

    Comment by rjs131 — June 20, 2016 @ 10:20 am

  4. I’m no Goff fan, but he has been fairly visible in Auckland media. He has been less risk-averse, and further left, than his previous persona, as with the ports thing: http://www.newshub.co.nz/politics/auckland-port-must-move-phil-goff-2016060401.

    Vic Crone faces a significant uphill battle around name recognition. I don’t have a lot of confidence in anything she has said, either. I can’t imagine how this policy would get enacted, for instance.

    Comment by Onsos — June 20, 2016 @ 11:03 am

  5. On the biggest issue Goff and Crone seemingly share an admiration for the current RUB policy as endorsed by John Key and Act. This policy is designed to make rents soar and sprawl sprawllier in Auckland.

    Menwhile Palino shares development policies of Phil Twyford and the Greens. To make the RUB non-existent and curtail the rush to sprawl.

    But like you said, Phil Goff is going to win, because he is the “left wing” choice.

    Comment by unaha-closp — June 20, 2016 @ 11:16 am

  6. Palino is not credible, and nor are his policy commitments. The guy cannot be trusted. He is the Trump of Auckland politics.

    Comment by Onsos — June 20, 2016 @ 12:25 pm

  7. Goff is endorsing a continuance of Len Brown’s policies that have made rents go up by 30%

    Yeah, it’s Len Brown’s policies that are forcing John Key’s government into accepting record numbers of immigrants, most of who end up in Auckland. I get sick of hearing that the housing crisis being depicted as a supply issue, as if record of numbers of immigrants have zero impact on the demand side of the equation. Auckland is full, we need to stop importing people.

    Comment by Mikaere Curtis — June 20, 2016 @ 12:29 pm

  8. Auckland is full, we need to stop importing people.

    Yeah, build that wall?

    If we stopped immigration completely, we still won’t be building homes fast enough to keep up with natural growth (the vast majority of growth is people having babies, New Zealanders moving). The only thing that stopping immigrants changes is that we’d suddenly have a lot less foreign money with which to build stuff and rents would go up even faster.

    It is a supply issue, Auckland builds at half the rate of most contemporary cities. We hardly construct any apartments, because we are pushing massive low density sprawl of the type hardly seen in the modern world.

    Comment by unaha-closp — June 20, 2016 @ 12:59 pm

  9. Yeah, build that wall?

    A Trump dog-whistle? Clever.

    The only thing that stopping immigrants changes is that we’d suddenly have a lot less foreign money with which to build stuff and rents would go up even faster.

    Rubbish. If we need foreign capital we can simply borrow some. Nobody needs to move countries in order to lend money. And having less people moving here means lower demand, and lower demand does not lead to higher prices. Do you know nothing of the market economy ?

    Comment by Mikaere Curtis — June 20, 2016 @ 1:11 pm

  10. And having less people moving here means lower demand, and lower demand does not lead to higher prices.

    That is very true, prices would go down. All the nice middle class people who have been locked out of the property market will be able to buy houses. Yay, for the middle class.

    But I’m talking about rent.

    Do you know nothing of the market economy ?

    Reduce Supply and Restrict Demand = Price Falls and Less Stuff is Built.

    Cutting foreign investors out of the market means that New Zealand landlords will have less competition in controlling the rental market. The rents will go up. The New Zealand landlords will enjoy much improved profit to equity ratios on their property. Yay, for the upper class.

    Comment by unaha-closp — June 20, 2016 @ 1:53 pm

  11. Cutting foreign investors out of the market means that New Zealand landlords will have less competition in controlling the rental market.The rents will go up.

    How do you figure this? It shouldn’t make any difference to rents who owns the property if its for rental purposes.
    Or are you saying there is some form of hitherto unidentified virtue of foreign capital in that it seeks lower rents?

    Comment by Gregor W — June 20, 2016 @ 2:21 pm

  12. Crone talks a lot to business groups and the east of the city and is the darling of a certain part of the media; but winning Auckland requires name recognition in the south and the west. The Nats and all their fronts just don’t get that. The right/anti-Goff/anti-Labour/anti-Len Brown vote will be split 3 ways: Crone, Palino and Mark Thomas. Of the three, Mark Thomas is the only one doing region-wide grassroots campaigning, releasing detailed policies, and engaging with the issues instead of talking in soundbites. He is also the only one of the three with any elected Council experience, which is perhaps why his policies are more realistic and workable than the others’. But his name recognition is low and I don’t know if he has the budget for mass mail-outs and billboards needed to raise it.

    (Off course, as a colleague remarked, if you’re talking about right wing candidates, why not add Goff to the list…)

    Comment by MeToo — June 20, 2016 @ 2:27 pm

  13. So, really, this is bad for Goff?

    FM

    Comment by Fooman — June 20, 2016 @ 2:28 pm

  14. Goff has the problem of being a current labour MP, so not much chance of being a full time campaigner like Crone

    Comment by duker — June 20, 2016 @ 2:30 pm

  15. Or are you saying there is some form of hitherto unidentified virtue of foreign capital in that it seeks lower rents?

    Because it is a supply issue, we have a housing shortage and we need to build housing faster than our population increases. We have increasing rents, to get decreasing rents we need more homes.

    It is a quite well known virtue of rising prices, that they will induce more construction. We operate a restricted supply in Auckland, where our prices have to rise further to elicit a large increase in construction. If we reduced the constrictions imposed on supply we would increase the rate at which housing is made.

    Brisbane and Melbourne (which have apartment build rates 4x and 5x faster than Auckland) have consensus forecast of a housing surplus in 2018. Auckland is forecast to have a housing surplus in 2028 and that is by the most optimistic forecast, realistically it could be 2040.

    Comment by unaha-closp — June 20, 2016 @ 2:53 pm

  16. @ CF #15 – yep, I get all that supply choke-point stuff but that doesn’t answer my question.
    As I read your comments, you posited that having foreign buyers as landlords – presumably by investing in finished properties – that this increases rental competition.
    I don’t see how that could be the case so am interested in your logic.

    Comment by Gregor W — June 20, 2016 @ 3:10 pm

  17. Sorrry, unaha-closp rather that Clunking Fist.

    Comment by Gregor W — June 20, 2016 @ 3:11 pm

  18. We have labour constraint issues too – can’t just ramp up supply even if consenting etc is made easier/quicker. And infrastructure. Where I live in Auckland the town has doubled in size in two years, made possible by a sewerage infrastructure investment (in turn only possible because of the new unitary Council). But the roads are falling apart because they were never built for such traffic volumes nor the weight of construction traffic. And the local school has turned into a prefab farm.

    So yeah, you just can’t ramp up supply faster than labour and infrastructure can cope.

    Comment by MeToo — June 20, 2016 @ 3:11 pm

  19. It’s FPP and all the different right-wing factions have candidates ensuring that they’ll probably all lose. I thought only the left did that sort of thing…

    Comment by richdrich — June 20, 2016 @ 3:12 pm

  20. Cutting foreign investors out of the market means that New Zealand landlords will have less competition in controlling the rental market. The rents will go up.

    Rental rates are set by the market (i.e. the number of people looking for homes vs the number of houses available for rent). The more people who move to Auckland, the more demand and the more the rental rates will go up. Factor in the possibility that there is a significant amount of foreign-owned homes that are intentionally left empty until the bright-line test is passed (i.e 2 years) – not that I have seen actual hard data on this yet, but Vic Crone seems to think it is a real problem – then cutting foreign investors is *exactly* what you want to do.

    Also, can you explain how NZ landlords “control” the rental market ? How to they overcome the forces of supply and demand ?

    Comment by Mikaere Curtis — June 20, 2016 @ 3:54 pm

  21. @Gregor W – Higher prices mean more homes are built, which creates downward pressure on rents. Lower prices mean less houses being built, which creates upward pressure on rents.

    As Mikaere points out, getting rid of foreign investors will make property prices fall – which will make rents go up.

    Comment by unaha-closp — June 20, 2016 @ 4:07 pm

  22. Just as a data point, i recently got a robocall asking about my voting preferences, and ending with a speech about Goff, so I assume that was from him.

    Comment by flynnthecat1 — June 20, 2016 @ 5:19 pm

  23. Haven’t been that aware of any of the campaigning so far but I’ll vote Goff.

    Auckland’s got some major problems and he’s has the most experience. Was a competent minister under Clark.

    Comment by NeilM — June 20, 2016 @ 7:10 pm

  24. Also, can you explain how NZ landlords “control” the rental market ? How to they overcome the forces of supply and demand ?

    By getting politicians to restrict supply.

    Comment by Angus Robertson — June 20, 2016 @ 7:19 pm

  25. I;m not quite sure why there is so much focus on the Mayoralty when the real battle is for a majority of seats on the council. It’s very difficult to get a handle on how this is going when our feeble media focuses on thee Mayoralty battle -if you can call it that.

    Comment by Adolf Fiinkensein — June 20, 2016 @ 8:02 pm

  26. @Mikaere: You used to be a Green party candidate, right? How did the party as a whole feel about your views on immigration? Was it hard for you to sign up to a party platform that was, in your opinion, contributing to the housing problem?

    Comment by Ortvin Sarapuu — June 20, 2016 @ 9:07 pm

  27. @ unaha-closp #21 – i think this is treating the housing market a little simplistically.

    Yes, with higher prices, more homes will be built until logically some form of equilibrium is established. But because of the supply side restricted in terms of new builds, this is not happening. Homes are being built (though their not being added that quickly to available inventory) and both rents and prices continue to rise as demand outstrips supply.

    Also, the exit of one set of buyers doesn’t necessarily mean prices will fall that drastically. It might just take the top off the market and allow some renters to become buyers. If renters become home owners rather than investors, then inventory is taken out of the rental market as well as potential renters. With rental supply and demand dropping, there might not be that much of an upward shift in rents. I’ll admit though that this direct substitution is not that likely givrn that investors presumably already have deeper pockets than first home buyers.

    I guess the answer is to have a non-investor (i.e the govt.) to produce a bunch of quality housing that can be offered at decent rents and/or rent to own at OCR interest rates. This would both suppress existing rents and discentivise further investment in what is, apart from the build process, a fairly poor use of capital.

    Comment by Gregor W — June 20, 2016 @ 9:35 pm

  28. @Ortvin Sarapuu: Yes, I last stood for the Greens in 2011. Saying that Auckland is full is not inconsistent with the population policy. In what way are the Greens contributing to the housing problem ? By campaigning for more social housing ? A warrant of fitness for rentals ? Criticising the government for having zero vision for regional economic development (which contributes to Auckland continuing to being the destination of choice for immigrants).

    Comment by Mikaere Curtis — June 21, 2016 @ 7:40 am

  29. I’m not sure what any govt could do to make Auckland less attractive to live in.

    It’s reached that critical point where the population base can now start offering what big cities offer in terms of culture and diversity.

    Sydney, Melbourne, London, Paris, Barcelona – people flock to the big centres. And the more people the more attractive.

    Comment by NeilM — June 21, 2016 @ 7:55 am

  30. @Mikaere: I was more paying attention to their Immigration Policy. Which, I’ll admit, does theoretically allow for restricting immigration numbers. However, I think very few Green voters are voting for the party in the hope it will, in your words, “stop importing people”.

    Comment by Ortvin Sarapuu — June 21, 2016 @ 8:03 am

  31. One the reasons I won’t be voting for Labour, the Greens or NZF is the anti immigration noises they’ve been making.

    Auckland would be a very dull and white place without immigration and it should continue.

    Comment by NeilM — June 21, 2016 @ 8:09 am

  32. @Ortvin Sarapuu: “stop importing people into Auckland which is undergoing a chronic housing crisis”.

    Fixed that for you.

    This is hardly an anti-immigration stance, especially when you consider that we have lots of regions who want to grow their populations and have the capacity to do so. Auckland has finite land, at some point we have to address the demand side of the problem, and the sooner the better.

    Comment by Mikaere Curtis — June 21, 2016 @ 9:35 am

  33. @Gregor W –

    We have a right wing government and even if that changes we have a government which includes NZFirst. There is no chance the government will enter the fray with social housing to explicitly undercut house prices. If supply remains restricted and we cut off foreigners, prices will stop rising and the accelerating rate of house construction will stop. But open up supply, prices will probably continue to rise and we would have an even faster accelerating construction rate.

    Auckland City Council planning has achieved some outcomes:
    – rent increases and a structural housing shortage
    – wage suppression
    – large exurban auto-centric sprawl
    – urban development retardation

    Auckland City Council has had its plan criticised. The right wing thinks that the plan is almost perfect, but just needs to happen 5-15% faster. The “left” (in Auckland) also say the plan is almost perfect, but we need to stop letting in so many foreigners.

    The left (in Wellington) say the plan is horrible and needs to be scrapped.

    Comment by unaha-closp — June 21, 2016 @ 9:43 am

  34. @Mikaere Curtis #32,

    The regions do have lots of land, but since they have low population numbers any town development that occurs there will be lower intensity. Auckland does have finite land, but it also has the population mass to make use of that land in highly urbanised development – which would have a lower carbon impact.

    Unfortunately Auckland Council has decided that Auckland City is not allowed to use its own land to develop. Instead of using the land around Auckland, ever larger areas of land have been opened up around the exurban towns. We are currently indulging in massive exurban sprawl and have slow urban growth,

    Comment by unaha-closp — June 21, 2016 @ 10:09 am

  35. Hmm so now mikaere seems to be promoting a restriction on movement within NZ. Only those with a special stamp can get entry to the fabled north. Where will the wall be placed and how do we get South Islanders (or our new Mexicans) to pay?

    Comment by insider — June 21, 2016 @ 10:35 am

  36. There is no chance the government will enter the fray with social housing to explicitly undercut house prices.

    Agreed – I was being somewhat tongue in cheek. But it is the obvious solution.
    And yes, the plan is not a plan that makes sense.

    Comment by Gregor W — June 21, 2016 @ 11:10 am

  37. Agreed – I was being somewhat tongue in cheek. But it is the obvious solution.

    The obvious solution is to scrap the RUB subsidies of exurban sprawl and instead open up land supply at the boundary of Auckland City to private construction.

    Or put it another way, have the council adopt Phil Twyford’s policy suggestions.

    Comment by unaha-closp — June 21, 2016 @ 12:41 pm


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