Property Investors Federation’s Richard Woodd and Tim Horsbrugh on how runaway house prices hit a brick wall. Or have they?
On the day that the roof fell in on New Zealand’s landlords the president of the Taranaki Property Investors Association Richard Woodd (pictured) delivered a speech on the technicalities of moving houses. Actually of transporting the house itself from one location to another.
Moving house, as in putting them on a truck and then installing them somewhere else, is a peculiarity of the residential side of the New Zealand property sector. Another peculiarity is how in an agrarian nation in which no more than 0.4 percent of the terrain is built on, why even modest residences can now attract buyers happy to pay $1 million or more.
On the day Mr Woodd was scheduled to talk on the technicalities of house moving, the trucking version, the government announced a series of what Mr Woodd described as “disincentives” to ensure that if house prices didn’t actually fall, then they at least hit a brick wall.
Specifically the government announced the end of expensing deductions on bank interest payments incurred by mortgages on rental properties. “We are seeing a capital gains tax,” said Mr Woodd, “and it is arriving by stealth.”
Tim Horsbrugh, president of the Wairarapa branch of the Property Investors Federation, was equally blunt. The government, he declared, was determined to “scare people away from property.”
In terms of leverage Mr Woodd said the government was putting into reverse the traditional gearing of rental residential property acquisition.
He noted however, that in recent times the “mom and pop” class of investor buying a second house to rent out in order to save for retirement or to leave something for their children had tended to be subsumed in the minds of politicians by large-scale professional investors seeking to take advantage of tax concessions originally designed for family home acquirers.
Tim Horsbrugh noted that there was a vacuum in the government’s campaign for getting first-home buyers under their own roof. There was still no solution, he insisted, to the central issue of increasing the supply of houses in order to meet first home acquirer demand.
So the question remains. Why are New Zealand houses so expensive and in a sparsely populated country which has within its borders an amplitude of the raw materials required to build them including timber, cement, steel and quarried stone?
Why, for example, does a subdivision house in the United States or Canada with an in-ground basement, stone paved ground floor, a storey above this, and a dormer storey in addition cost the same as its New Zealand counterpart? This will be a bungalow on supporting piles and a foot or so above terra firma, and with no basement or additional storeys.
Everyone blames everyone else for this anomaly. The building supplies market is said to be in cartel control. Local authorities are said to be impossibly stringent. Lenders are said to be impossibly mean and demanding to first home buyers.
In the background lurks the unspoken fact (by the entire politico-media class) that an emphasis encouraged by all political parties on an abstract university-nurtured education has deprived the nation of the applied productive skills needed to actually build the required houses. People such as carpenters, plumbers, electricians….
The mainstream media is financed in terms of advertising by the property sector. The result is the constant announcement of the latest house price peak plateaux attained delivered in the triumphant terms and tone usually reserved for victorious national sports teams.
Richard Woodd meanwhile traces this new government tax tourniquet-tightening on residential rental property owners to a much earlier determination by the government to empower the tenant side of the landlord/tenant relationship. This resulted in the rental accommodation “Warrant of Fitness.”
Then, he notes, interest rates continued to fall with the cheap money pouring into the obvious destination of property and the consequent frenzied bidding for the limited amount of houses available.
It was now, he notes, that the government switched from the bureaucratic emphasis characterised by strengthened tenancy rights via tribunals and now instead concentrated on legislation.
A feature of the new tax “disincentives” remains that officials concede that they are uncertain of the outcome, he notes.
This in turn translates into the culpability or otherwise of the landlord/property investor aka speculator being revealed as a burden or a blessing. Will the elimination of rental property mortgage tax deduction deter the “mom and pop” rental provider and thus open the way to professional corporate-style investors armed with their tax lawyers and accountants?
When the dust settles will there still be remaining what Richard Woodd describes as an engrained national impression that residential property is a one-way bet, a can’t lose proposition? Is there as Tim Horsbrugh indicates something on the supply side that is the true foundation of the accommodation problem?
Does the supply bottleneck truly reside in town planning regulations, absence of craftspeople, artificially high materials costs, or even in something as abstract as a deliberately choreographed climate of inflationary expectation? Or in some element that nobody has yet considered?
Royal Family, New Zealand, Coronation Street populated by strong women and biddable blokes
New Zealand was cited during the Oprah show as a refuge for the expatriate branch of the royal family. “We had suggested New Zealand, South Africa, Canada,” said Meghan to Winfrey, detailing her proposal for establishing possible residency in the commonwealth.
In court circles Harry remains viewed as being a bit of a chump. How then could this simple soul have been instrumental in igniting the most embarrassing episode to be endured by the Royal Family since the Abdication in 1936 of Harry’s great great uncle King Edward V111?
The reason for the success of Britain’s television saga Coronation Street is that it portrays a reality, a “truth,” as Oprah would say. It portrays strong women and feckless, pliant men.
So it is with the Royal Family. Women run the show. With the exception of the Duke of Edinburgh, the royal menfolk would at some stage simply let bygones be bygones for Harry and Meghan.
There will be no forgive-and-forget from Kate, Duchess of Cambridge, target directly and indirectly of so much of the Harry and Meghan venom. Or, for example, from Princess Anne with her low tolerance of deliberate silliness and pretence, let alone that of premeditated treachery.
In New Zealand women similarly run the show with females as governor general, prime minister, and in most of the power points below.
The Sussexes are a progressive couple. Harry adjusts himself to Meghan’s career which is in films. New Zealand has a film colony in its capital, Wellington, and an equally well defined mogul hierarchy.
New Zealand, and this is still not grasped in the Anglosphere, has its own hereditary royalty, the Maori royal family, a reassuring presence for the diversity-conscious couple.
In the Winfrey show there was much reference to the linkage of titles with the need of the duo for protection, security.
Meghan somehow led to believe or picking up the impression that in marrying a prince she would become a princess chimes with the Oprah topic that Palace courtiers had kept Meghan in the dark about procedures and protocols from precedence to curtseying. An office-bound Harry seemingly had neither the time nor the inclination to bring his bride up to speed.
It was the failure of the Palace to accord the Duchess of Windsor the title of Her Royal Highness that rankled most of all with the exiled Duchess and the Duke of Windsor, formerly Edward V111.
Those who wished to remain in the good books of David, as the Duke was known to his family, or even wish to see again the Duke and Duchess were careful to introduce the Duchess as HRH.
Royalty had its ancient beginnings in tribal warrior chiefs who successfully led their people in battle. Harry who served in Afghanistan with the British forces is in this valiant tradition.
It is also the most compelling reason why only remote New Zealand with its non-porous sea-girt border is the only Commonwealth country, indeed, only country anywhere, that can offer the physical security that the couple told Oprah that is their priority.
The royal family treats everyone the same way regardless of their birth or station. A continuation however of the campaign to destabilise the monarchy could see the rebel royals frozen out of a commonwealth country officially or unofficially.
Diana hovered like a wraith over this most recent and bizarre episode of the renegade royals with their determination to vindicate Harry’s mother by embarrassing the Palace. This rules out as a refuge France, a republic in which breathed their last the Duke and Duchess of Windsor and Princess Diana (pictured with her sons.) History, Harry reminded Oprah, repeats itself.
New Zealand South Seas Switzerland revisited role needs selective electronic niche selling
A global specialist in niche marketing has described focused selling as the most overlooked area in New Zealand climate preparedness. Mathew Collins said that with the era of bulk commodity exporting fading now looming in its place is a new epoch of selective, high process and high value product selling.
This new specialised premium era of exporting is imminent as a direct result of the New Zealand government’s determination to include food production restrictions in a rigidly-enforced regime of conformity to international climate change standards.
Mathew Collins founder of DigitalXMarketing said that in New Zealand he was surprised to find climate change enforcement the centrepiece of political and academic conversation and conducted as if New Zealand was a service economy instead of a primary one.
Why was there so little planning of the marketing techniques required to make up the difference for lost revenues? He asked
The topic he discovered was instead treated as one of ethical righteousness rather than as a three-dimensional commercial threat reality. The commercial priority now was to set in place alternatives to lost revenues through the reduced pastoral grazing capacity.
Mr Collins said he had gathered an “unsettling” impression that planning for the era of regulated climate change and thus lost productivity was what he described as “faith-based.”
This “other worldly” treatment of the nation’s self-imposed export income shrinkage contrasted with the last era in which New Zealand had faced a seismic scale shift in its export pattern when Britain announced it was joining the EU.
Confronted with the EU, he said, in this externally-imposed export shift in contrast New Zealand officials had “grasped the nettle.”
Planners then had adopted the notion of New Zealand becoming the “Switzerland of the South Pacific” in gearing the nation to use premium niche marketing to “get more from less.” In the event the nation had discovered alternative markets for bulk exports in the Middle East and Far East.
Farmers, according to Mr Collins, sought collectively to soothe themselves by believing that climate impediments and restrictions on output in the form of stock number reductions were in the category of “it can’t happen here.”
Agriculture in this ostrich-like attitude he said had collectively absorbed an impression from the oil and gas industries.
There was though a big difference in that the oil and gas sector was international and could cap its wells, tow away its rigs, re-deploy staff, and simply re-assemble somewhere else.
Farming though was tied to the land by its very definition. Therefore for farming there was no escape from the productivity restrictions imposed in the name of climate.
Discussing the replacement of grazing pasture by pine trees Mr Collins said that there would here also be a need for digitally-driven niche marketing for timber products and thus training which should be started now.
Timber exports in order to compensate for lost pastoral income also needed to be streamlined with a digitally-driven emphasis on by-products.
He cited pharmaceuticals, cosmetics, disinfectant and cleaning products, along with hospital-grade disposables such as latex gloves as among the standard by-products of the pine tree.
Pine by-products should be a much-evaluated response to the loss of jobs caused by the “officially-desired” closure of the coal and oil and gas sector.
Ignoring this timber output diversity opportunity is another example of the failure to face the reality of the climate movement, insisted Mr Collins pictured (above) at a conference in Dubai.
Sino Sting Robbed New Zealand of home grown computer base
Forty years ago New Zealand’s Hutt Valley was a mini Silicon Valley as a world research and development focus for information technology.
This was not realised in New Zealand, but it was grasped in China which sought to transfer ground-breaking technology to China, and do so without paying for it.
The computer technology developed in the Hutt Valley (pictured) was a breakthrough in that it speeded up computing to the point at which it seemed to behave like the human brain.
For many years there was a coordinated operation centred on Beijing to lift the technology without being seen to do so and at the same time to avoid paying for it.
The scheme involved Chinese governmental organisations presenting themselves as bona fide buyers and requiring more and more and still more insights into the technology in order to make the hoped for decision about an eventual purchase.
In order to give this verisimilitude the operation was surrounded by demonstrable very high level involvement of the Chinese governing elite.
The technology so sought after by the Chinese was capable of smashing through what at the time was known as the von Neumann bottleneck, the constriction through which must stream the digital symbolic instructions which the machine, the computer, understands.
In the Hutt Valley there had been developed an accelerator device to push through this stream of machine language symbols at an ever faster rate in order for the computer to do the heavy lifting required by increasingly complex demands.
The Chinese had correctly perceived that that the Hutt Valley developers had identified an early solution to revving up computer capacity and thus capability, and which could be copied given enough access to the prototypes and systems.
This whole technique was based on computer programmes compiling other computer programmes which in turn created other programmes and in this compounding power bestowing the human effect on the project at hand.
This is the accelerator process that underlies today’s artificial intelligence which among other things recognises peoples’ faces.
The Hutt Valley pioneering work was taken very seriously by the Chinese.
Their active interest in it started in the late 70s and continued through to the share market and financial collapse of the late 1980s when the by now New Zealand government -sponsored funders of the technology were themselves bailed out.
In the intervening years there had been much toing and froing with among other actors state-controlled Chinese banks lending their name as somehow standing behind the project.
This finance had been talked about. But never appeared in liquid form. There had at one stage even been floated a counter trade, bartering, scheme one of which involved importing Chinese bicycles.
Why didn’t the Chinese simply pay for the programme automation technology at the outset?
The short answer is that this would have run counter to parting with cash for technology and management processes acquirable by stealth.
How did those concerned within New Zealand become party to this?
Never before and certainly not in New Zealand had there been encountered any kind of deal in anything at all in which a central government, China’s, was in fact the potential acquirer and which controlled the potential transaction at every step of its process.
A subsidiary reason is that by dragging out the sale for so long the Chinese ensured that the Hutt Valley software engineers constantly improved the technology and especially so in customising it, adapting it to Chinese requirements which included diverse applications in coal mines to hospitals.
For China it was an early and outstanding example of their win-win principal. They won twice. They got the technology. They got it for next to nothing.