Last Saturday the Dom’ gave economist Bernard Hickey a full page to lambast the government (and others) over housing prices, which as an aside, is a world-wide problem.
Bernard devoted most of the article to outlining the wrong prophecies on house prices by diverse public figures, going back nearly quarter a century.
Don Brash copped three entries, as did former Reserve Bank Governor Alan Bollard, and his successor Graeme Wheeler, also three. Bill English, John Key and Steven Joyce’s’ wrong calls were also detailed.
But amazingly one of the most publicised doomsday prophecies over that period was missed out.
That was by a bloke called Bernard Hickey, who a decade or so back, proclaimed that Auckland house prices were insane, were about to collapse, and that he was selling up and shifting to the capital, which he did, losing a fortune through this wrong call.
How to explain this omission? A Dom’ cockup is one’s automatic assumption.
Another possibility is there are two economists called Bernard Hickey, both obsessed with this subject.
Think of the rich potential this offers. Bernard (A) could embark on a life of crime; raping, pillaging, shop-lifting and what have you, safe in the knowledge that if nabbed, he could claim the culprit was his clone, Bernard (B).
He certainly should think about such a career change, given his disastrous record (like most economists) on economic forecasting.
13 Comments
Equab Mumbojumbo was another economist a few years saying the same. He went further and says it made more economic sense to rent!
Economists were invented to make Astrologers look good!!!
Bernard Hickey is a waste of time and space
Hi Sir Bob. Just for reference, here is a story about it from 2012. “Finance guru looks south after cashing in on housing boom”.
https://www.nzherald.co.nz/property/finance-guru-looks-south-after-cashing-in-on-housing-boom/RK7XQRJ7EXQH43MN5PQ4B2MSQY/
26 Halifax Avenue
Sold for $1,005,000 on 12th Nov 2012, (which was $392k profit over 7 and half years)
2021/2022 rates Capital Value (CV) from 2017 is:
$2,025,000
So a safe bet at least a million dollars missed out on over 8 years, on one house, if it were to sell today.
https://homes.co.nz/address/auckland/epsom/26-halifax-avenue/Qj8DA#councilDataSection
And from the Herald link (thank you) we see the modest $392K profit on sale needs to have the renovations Mr Hickey effected factored into it too. As stated: “… extensive renovations on the home including painting inside and outside, a new roof, creating a fourth bedroom in the basement, insulating the floor and ceiling and paving the section”.
The cat amongst the pigeons; or so they say, is the Resource Management Act.
Economists and (public and private) politicians have been using this as an excuse for raging house prices for decades, when other factors are having a much more significant impact. By far the biggest is the control overseas owned banks have on our market. The old saying is he who controls the money controls the power.
No doubt the RMA is responsible for constraining supply, but another less published fact is most growth cities have been ring fenced by rich lister land banksters. This lot are sufficiently capitalised to control the supply to maximise price.
The only departure from this and the RMA was Christchurch, where significant supply come on stream at the same time, and there was an open market for land supply, rather than a controlled one. This met (and continues to meet) the desired outcome of sustainable house prices.
What Labour has done right is demand Councils increase housing density more centrally. They need to balance this with more investment in centralized infrastructure to encourage this; otherwise it becomes a half baked attempt to balance out these land banksters. Changing these landbanksters residential rates (rather than rural) could help also..
I’ll leave Labours introduction of first home buyer grants for another conversation.
Auckland is ring fenced by the Rural Urban Boundary. A zoning construct created by local government to force Auckland to build inwards and upwards. Unless I am misunderstanding you, the land bankers you describe have speculated on land outside of that.
If the boundary was lifted or moved they would develop their land and pay residential rates. Are you really suggesting residential rates on undevelopable rural land? I really don’t see what you are getting at here. Those speculators have no impact on anything as long as their land is not zoned for residential development.
As an aside, I agree with you entirely about Christchurch. The earthquake shattered artificial zoning constraints.
Mate. I said nothing about rural urban boundary limits. Its about these landbanksters controlling supply, where their properties while zoned urban or future urban are still paying rates based on rural use. Search special rateable values if you’re interested.
Thank you for placing the problem in its correct context – a world wide problem
An economist is a person who knows 107 different ways to make love, but does not know any women.
It continually amazes me that so many who have never built a house feel entitled to opine on why they are so expensive. The irony being that bad choices made by exactly those people are the real reason.
I remember Bernard Hickeys earlier predictions very clearly..Mostly because he was foolish enough to put his money where his mouth was and as you rightly point out, lost a small fortune. At least he had the courage of his convictions but no doubt learnt a valuable lesson
Or, looking at it as supply and demand…
There are c. 2.6 people per household, which means roughly 2 million properties in NZ. That’s enough.
If we control population growth (by better education, immigration and child benefit policies, and the helpful covid virus) then supply could equal demand, stabilising house prices.
Either build more houses to solve a problem created by bad planning, or care for the planet.
More housing means more infrastructure, more resources used, more environmental damage, more water shortages, more congestion etc etc.
Sure there are many other factors but this would be a good start – to take responsibility for ourselves and our planet (our home).