by frog
As a frog, I’d never thought twice about deleting unsolicited e-mail from a group called Demographia. I fell off my lily pad when I read that the Housing Minister Phil Heatley was basing government policy on it. The Dominion Post reports:
Mr Heatley announced the plans yesterday after the publication of the Demographia International Housing Affordability Survey, which measures the cost of buying a home in six countries at 265 locations.
Demographia research consistently finds that New Zealand is one of the most unaffordable places to live largely because there’s too small a supply of land for property developers to get their hands on. Unaffordable? Yes. Because of scarce land? Doubtful.
The Herald’s Chris Barton recently debunked Demograhia’s arguments here. All this frog wants to focus on are the key people involved; Not surprisingly, they’re property developers.
Hugh Pavletich (the spammer) is a property developer based in Christchurch. He’s connected to an American anti-smart growth/ anti-public transport movement in the United States. (If you think it’s important to underline key information so that it gets noticed, you’re going to love their website.) Demographia recently hired Wendell Cox from the Heritage Foundation/Public Purpose to promote their work here. Judging by their use of WordArt alone, the New Zealand Government should not consider data from Demographia as authoritative.
Published in Economy, Work, & Welfare by frog on Wed, March 4th, 2009
Tags: anti smart growth, Demographia, heritage foundation, pavletich, spam, wendell cox
on the trolls and those who are unable to keep on topic
As I have pointed out chances are that it is the (assets =$14B + 20 corporate member) Property Council who back the major parties (especially ACT). Owen Glenn was a distraction from the real story.
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Housing Minister Phil Heatley
and
One of the most remarkable things about this enormous transfer of wealth has been how little most people were aware that it was happening or what caused it. A few people – notably Bernard J. Frieden in his book The Environmental Hustle from 1979 – had sounded the alarm. More recently Wendell Cox and Hugh Pavletich at Demographia.com have made a similar case using substantial data from cities in the English speaking world. Although all of these observers have been dismissed as free market enthusiasts, more mainstream commentators – like Edward Glaeser of Harvard and Joseph Gyourko of the University of Pennsylvania – have embraced this theme. Even the noted liberal economist Paul Krugman has joined the chorus, comparing the moderate land prices in the “flatlands,” meaning lightly regulated places like Texas, with the extremely high prices in the “zoned zone” or places like heavily regulated coastal California.
http://www.newgeography.com/content/00275-the-smart-growth-bailout
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The above quote was from
http://www.newgeography.com/content/00452-the-housing-bubble-and-boomer-generation
and this is revealing:
“This shift of decision-making about development from private developers and individual property owners to public planning bodies, almost always controlled by homeowners, was hailed by many observers as a triumph of democratic process. The community rather than the developers, so this line of thinking went, would henceforth dictate the growth of the community. The problem with this equation was that it failed to consider who was speaking for the community and whose voices were not heard or to calculate the costs and benefits of these policies.”
demographia paint themselves as heros of first home owners but they ignore the fact that we have a globalised property market and just as our best fish and fruit goes overseas that’s where our property is marketed.
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I looked at their website, and now my eyes hurt.
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That could be masturbation
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Sorry Wat does that mean you agree or disagree?
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I agree: It’s definately the masturbation.
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yeah right fwwog, of course it hurts, you are in opposition forever,
forever fwwog, thats because yous a fwwog,
love hELEN fwwog,
love whats their name .. Labour party dead Goff
cough Goff,
listen up fwwog Pavletich was the only New Zealander in 2005 who publicly told you that housing prices would crash in 2008.
Of course he’s dumb fwwog of course.
Anyone who doesn’t want to lock up the land for bushfires and fwwogs is dumb, and he drives a car fwwog, uses petrol and thinks while he drives
fwwog,
can you imagine that
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These are some quotes from Gareth Morgan:
People Matter
migration – 6 October 2005 – 4892 views
Wasn’t long ago the New Zealand economy was trucking along on the back of high population growth, arising from big net immigration numbers. What’s happened? Growth is holding – just – but we’re running on empty.
Population growth has slumped back to a sub-1% annual rate well down from the 1.7% pa growth earlier this decade and below our long term average rate of 1.2% pa. Indeed the net migration Labour has overseen exceeded in significance that National fostered in the mid-1990’s. It was the largest contribution to population growth from migration we have experienced since the 1950’s.
And the economy responded merrily. Together with falling interest rates it has been population growth over the last few years that have underpinned the giddy appreciation in house prices.
http://nbr.infometrics.co.nz/people-matter_1031.html
Immigration Impasse
migration – 26 July 1995 –
The second aspect of such high gross flows is that they put substantial pressure on the country’s infrastructure. For instance, to the extent that the folk leaving NZ permanently are of a younger age and of single status then they don’t necessarily release ownership of residential property to the extent of the immigrants’ additional needs. The net upward pressure on house prices can be substantial.
In particular, the extent to which migrants are using NZ as a temporary ‘permanent base’ for the education of children while at least one spouse remains in the country of origin earning the family income, is a call on NZ taxpayer resources (schools) which could be done without. To boot, the additional demand in the economy that they contribute without concomitant contribution to supply via domestic labour force participation, only exacerbates the inflationary pressures domestically. Given the numbers involved these effects are not piffle and arguably have already driven inflationary pressure in the Auckland region.
Government would be better to alter the points system to favour more migrants with the technical and professional skills which are in short supply, and downplay the so-called entrepreneurial or ‘lump of money’ criteria*. Capital inflows which drive up asset prices as a side effect of an altogether different rationale for immigration, should be unwelcome.
* especially where it is the same lump doing the rounds.
http://articles.gmi.co.nz/immigration-impasse_699.html
This quote is from George Mombiot:
“Already, in the rich nations, the beneficiaries of development spend much of their money on escaping from it: it costs a fortune to live in a place that does not assault your eyes and ears with ugliness. To absorb our increasing wealth we must keep building. Our new cars need new roads, our new goods and services must come from new shops and warehouses and offices. One day there may be nowhere left in which we can shut the noise out of our heads.”
http://www.monbiot.com/archives/2002/08/27/what-do-we-really-want/
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Didn’t we already try unbridled sprawl for forty years and proved beyond a doubt with our own little local example that it doesn’t end up work?
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Chris Barton’s article is good, and shows that all Demographia is talking about is one factor – there is more to it. Although scarcity of land available for housing (through urban growth limits) does NOT help. If people want to build at the edge of cities they should be able to, as long as they pay for the local access road, and as long as there is road pricing to charge by distance travelled. For example, if all vehicles paid RUC instead of fuel tax, it would be a charge on sprawl.
Demographia is worth reading just to see some of the statistics on public transport in the US – demonstrating how poor value for money it is.
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RUC makes sense to me; people forget that there is a fuel tax they just see it as the cost of fuel.
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The problem with RUC is that it provides no real encouragement for people to use more fuel efficient vehicles. Fuel tax achieves so much in terms of taxing both the amount you travel and taking into account the fuel efficiency of your vehicle.
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Frog is being a little economical with the truth.
Here is Wendel Cox’s bio as listed in New Geography:
Wendell Cox is principal of Demographia, an international public policy firm located in the St. Louis metropolitan area. He has served as a visiting professor at the Conservatoire National des Arts et Metiers in Paris since 2002. His principal interests are economics, poverty alleviation, demographics, urban policy and transport. He is co-author of the annual Demographia International Housing Affordability Survey.
Mayor Tom Bradley appointed him to three terms on the Los Angeles County Transportation Commission (1977-1985) and Speaker of the House Newt Gingrich appointed him to the Amtrak Reform Council, to complete the unexpired term of New Jersey Governor Christine Todd Whitman (1999-2002). He is author of War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.
And Hugh Pavletich is a retired property developer. He has not been in the business for a decade or more. His background actually gives him some useful knowledge.
Demographia provide an incredibly useful service to urban economists and geographers because they put great attention to using standard definitions behind their measurements. Until they provided this service international comparisons of urban data were not worth the paper they weren’t written on.
If you do not like their data and it makes your eyes hurt maybe the sty is already in the eye of the beholder.
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A while ago Christchurch ratepayers were asked to vote on one of 8(?) options. The one they chose was the most restrictive on outward growth. I think the message was “we don’t want growth”. Hugh Pavletich took the matter to court (from memory). Allowing more sprawl may have saved Chc gardens but I doubt it.
Some people have gotten very little benefit from growth: a neighbor close to the fence, a more valuable property but less chance to escape as foreign faces show up at auctions and developers respond by jamming hill suburbs with infill; others have become multimillionaires.
Christchurch wasn’t empty 30 years ago but faceless individuals in government decided (on our behalf) it was better to throw the gates open. The lifestyle economic model was discarded. If economists can’t measure it it has no value.
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Owen, I think the point is that Demographia seem to ignore all other causes of housing unaffordability and get obsessed with relaxing urban limits. When one considers all the other reasons, and all the other ways in which affordability can be improved other than allowing unabated sprawl, it’s hard not to look for a hidden agenda in what they’re saying because it’s so nonsensical.
Anyway, housing unaffordability is so 2007.
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Hugh Paveletich is going a bit far blaming the world financial crisis on greens (urban planners) Owen.
“These “constrained markets” had the foundation in place to allow these bubbles to get underway.”
http://www.interest.co.nz/ratesblog/index.php/2008/12/15/opinion-an-open-letter-to-bernard-hickey-on-de-leveraging/
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I see the greens are staying silent about the fact kiwi rail is worth $0.
How much money did the greens make NZ spend to buy it again.
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jh,
Hugh is hardly alone in that. There would have been no financial crisis without the real estate bubble. The recessionary trends began with the collapse of the real estate market and it was the collapse of the real estate market which dragged down the finance companies which caused the credit crunch which caused the financial crisis.
There can be no financial bubble without an asset bubble and the asset bubble comes first. The tulip bubble created a finance bubble, as did the South Seas Bubble and the Dot Com bubble and the Real estate bubble.
The two soon start feeding off each other but the two bubbles eventually burst.
Quite simply without the real estate bubble there would have been no financial crisis because there would have no place to put all those loan packages and no security for all the rash lending.
If you disagree, what is your explanation?
The next bubble looks to be the carbon bubble. Although it looks as though some “so called art” may be about to turn to dross in the very near future.
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I notice that Wendell Cox and Hugh never talk about the market distortions caused by minimum parking regulations — even though minimum parking regulations have a far greater monetary impact than the MUL because they affect land in town centres, which is more valuable than land on the fringes.
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Owen, we agree!
“Quite simply without the real estate bubble there would have been no financial crisis because there would have no place to put all those loan packages and no security for all the rash lending.”
But of course, the financial crisis was triggered by houses losing value in the US in car dependent ex-urb subdivisions. The reason people started defaulting on their mortgages was because their variable transport costs doubled with high oil prices, and the value of their house fell because it was too far away from workplaces, goods and services. In the meantime, food prices were also going up, at least partially because of oil prices as the ag sector in the states is heavily dependent on fossil fuels, and food is transported all over the place before it is consumed.
There is no point considering housing affordability without considering its relationship to the next biggest household expenditure item — transport! They should be considered together, a fact that Demographia completely ignores. No point in creating affordable housing in an area where your transport costs are doubled.
So — removing metropolitan urban limits seems like a pretty counter-productive policy response to the current financial predicament. More development on the fringe will be that much more vulnerable to oil spikes.
I suggest getting rid of minimum parking requirements and supporting some high quality urban redevelopment projects so banks realise that not all apartments are high risk, only shoddily built investment style apartments. Then we might see some housing affordability that isn’t subject to fluctuations in fuel prices and doesn’t worsen congestion, and improves our urban air quality and reduces our rate of sedentaryness/obesity.
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Why were people unable to pay their mortgages from last year onwards, causing the sub-prime crisis, which went on to cause everything else? Of course it was because other expenditure had increased so much. it wasn’t because housing prices had reached such high levels, as they’d already started coming down in the USA. So what was everyone spending all their money on?
1) Interest rates
2) Food
3) Petrol
All three of these increased significantly last year. Interest rates went up to combat inflation, which was caused by (largely) higher food & petrol costs. Food went up because of grain being used for biofuels and because transportation costs went up. Both caused by higher oil prices. Petrol obviously went up due to higher oil prices.
It all comes back to oil prices.
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If it all comes back to oil prices how come there was no bubble in Texas and many other markets in the US while the bubble was massive in markets as far away as California, Sydney and London, while much less so again in markets in Canada.
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It is unfortunate to see the frog talking this nonsense – and readers are urged to read the material on my website http://www.performanceurbanplanning.org and draw their own conclusions.
Indeed – it is rather disapointing to see this nonsense from the frog – as I have discussed these issues with him and the Greens Housing spokesperson – and there is in reality much we agree on.
I asked Prof Solly Angel of the Planning School of NYU Wagner to contribute the Preface to this years edition of the Demographia Survey. Both Solly and I are strongly of the view that the evironomental constituency has positively contributed to these issues generally.
Indeed readers will note that I have been rather harsh on the economics profession.
I do not share Owen McShanes approach to these issues. He is somewhat wide of the mark with respect to the Annual Demographia Surveys which I initiated back in 2004. Wendell Cox and I are the co authors. Cox is a demographer and transport expert – my expertise is property.
Hugh Pavletich
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“If it all comes back to oil prices how come there was no bubble in Texas and many other markets in the US while the bubble was massive in markets as far away as California, Sydney and London, while much less so again in markets in Canada.”
Mr McShane, I agree with you on this point, and might I add a few words of my own. Interest rates were going up to combat inflation, but why was there inflation? Partly because of the increase in commodity prices, but more so because of the wealth effect brought on by increasing house prices. When the price of assets go up, people generally feel richer and are more likely to purchase that television, or that car. That pushes prices up in general. No wealth effect = much less inflation.
“Then we might see some housing affordability that isn’t subject to fluctuations in fuel prices and doesn’t worsen congestion, and improves our urban air quality and reduces our rate of sedentaryness/obesity.”
Julie, why does suburbanisation have to be subject to fluctuations in fuel prices, or that other stuff? Let me take the example of Gosford in New South Wales. In the late 1950s, it was a small town eighty kilometres to the north of Sydney with very little going for it. In 1960, electrification was extended to Gosford, and with it came interurban services to Sydney. That saw the entire Central Coast bloom with new housing, and before long, Gosford had turned into a de facto suburb of Sydney. While you did have some problems when the Sydney to Newcastle Freeway was built, nevertheless, because of the proactive approach taken by the New South Wales government, you had suburbanisation that was and is not subject to fluctuations in fuel prices.
I must also emphasise that suburbanisation prior to World War II was on the basis of tram and railway routes, so don’t throw the baby out with the bath water. The problem has been poor planning of transport corridors in cities, not suburbanisation.
“So — removing metropolitan urban limits seems like a pretty counter-productive policy response to the current financial predicament. More development on the fringe will be that much more vulnerable to oil spikes.”
Only if you don’t plan ahead. Build the railways and busways before the subdivision starts, and then you will not have that problem.
“There is no point considering housing affordability without considering its relationship to the next biggest household expenditure item — transport! They should be considered together, a fact that Demographia completely ignores. No point in creating affordable housing in an area where your transport costs are doubled.”
In fact, the price of housing in a city should correspond with transport costs, at least on the basis of the von Thunen model and its urban applications. The fringe housing should be cheaper because transport costs should be higher. The thing you need to remember Julie though, is that cheap housing is more important than transport costs because you only need $1 of income to spend $1 on transport. You need $3 of income to spend $1 on a mortgage – that becomes crucial, especially when you consider that if Auckland had a house price multiple of 4 instead of 6, you would be able to get into a median house on $30,000 less per annum – IIRC, you needed $89,000 worth of income per annum to get into a median house with a 90% mortgage, in an Auckland with a multiple of 6 @ 8% interest. It could get as low as $50,000 per annum in an Auckland with a multiple of 4, a 20% deposit @ 8% interest.
“But of course, the financial crisis was triggered by houses losing value in the US in car dependent ex-urb subdivisions.”
The financial crisis would have happened even without the spike in oil prices that we saw last year; interest rates were doing that job brilliantly, especially as sub-prime mortgages were being rewritten at interest rates up to two hundred basis points higher than before. Of course, we wouldn’t have had the sub-prime mortgage market had it not been for Clinton era legislation, but that is another debate.
“I see the greens are staying silent about the fact kiwi rail is worth $0.”
I also noticed that they did not congratulate the National Government for purchasing new locomotives and passenger rolling stock. When the new locomotives come, let us not forget that they will be the first additional locomotives that New Zealand has seen since Queensland’s 1460/1502s arrived in the late 1990s, and the first new locomotives since the EFs arrived in the late 1980s.
“Anyway, housing unaffordability is so 2007″
Jarbury, until the median house price in Auckland heads towards the lower $200,000s (might I add, that would mean a 30% drop in house prices), then I would still be concerned about housing unaffordability – anything above a multiple of 4 I would be concerned about, and 6 would be my own acceptable limit.
“Demographia is worth reading just to see some of the statistics on public transport in the US – demonstrating how poor value for money it is.”
Although, ironically, some of the best systems also have very good farebox recovery ratios. According to Wikipedia, Toronto has a 74.5% recovery rate; Washington DC has a 61.6% recovery rate and SEPTA has a 58.6% recovery rate. Obviously cities such as Detroit have terrible farebox recovery ratios.
“Didn’t we already try unbridled sprawl for forty years and proved beyond a doubt with our own little local example that it doesn’t end up work?”
apl, where was our own little local example?
“Given the numbers involved these effects are not piffle and arguably have already driven inflationary pressure in the Auckland region”
If immigration was such a big thing, then why didn’t we see worse figures coming from Brisbane? Let us remember that Brisbane has been the fastest growing city in Australasia for a number of years now.
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this story further confirms what critics of immigration have been arguing for years. The principle motivation behind immigration is not as a charitable act towards other people or even to serve any vital economic need, rather, it is nothing more than a crude device to drive up the demand for housing to facilitate the transfer of wealth from the broader Australian community and from other countries into the pockets of land speculators and property developers and related industries such as financial institutions and manufacturers of building products3.
http://candobetter.org/node/710
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Wikipedia has a page on migration to Australia and the effect on the environment + house prices etc.:
http://en.wikipedia.org/wiki/Immigration_to_Australia#cite_note-pp-24
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julie,
- “The reason people started defaulting on their mortgages was because their variable transport costs doubled with high oil prices, and the value of their house fell because it was too far away from workplaces, goods and services.”
Rubbish.
Petrol prices are at best marginal to household expenses and there are all manner of ways to mitigate the price spike. Try car sharing.
If your analysis had any merit whatsoever, we would be seeing a sharp recovery since the price of oil fell dramatically. But, of course, we see nothing like that, because you are wildly off the mark.
House prices were a huge bubble, primarily caused by loose credit (Fed manipulation of the interest rate) and a crazy government policy of subsidising hundreds of billions of dollars of sub-prime mortgages to help poor people into houses they simply could never afford.
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“Many people believe that Australia takes immigrants mainly for humanitarian reasons. This is only true these days in the case of refugees. Rather, most immigration is justified on economic grounds based on the desire to create a larger local market and to stimulate inflation. Thus business organisations are the main drivers of immigration, constantly lobbying government to enlarge the formal immigration intake.
The most active of these organisations seem to be in the areas of property development and housing, such as the Housing Industry Association and the Urban Development Institute of Australia.
The Australian Population Institute (APop) is also an outspoken advocate of higher immigration. While it claims to have no political or other mission objective other than to “represent the views of the many Australians that support responsible population growth”, the committee nevertheless has very close connections with property development. APop president Albert Dennis, for instance, is Chairman of the Dennis Family Corporation which is reputed to be Victoria’s largest private land developer, with considerable land holdings in Melbourne and Brisbane. APop’s Secretary Geoffrey Underwood is Director of Underwood and Hume P/L, a group of Town Planning Consultants. And Vice President David Coomes is Managing Director of the Coomes Consulting Group which is concerned with development and engineering of major residential and industrial estates as well as roads, bridges and assorted infrastructure. In addition, APop itself admits that it began with “initial support and seed funding of the peak body, the Urban Development Institute of Australia”, which is of course an association of property development organisations.
Other business organisations, the upstream and downstream industries to housing and infrastructure industries, are also involved in advocating population growth through higher immigration levels.”
http://www.mnforsustain.org/newman_what_and_who_is_driving_population.htm
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Testing block
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Frog – the article is drivel and no doubt readers (of all political persuasions) can draw their own conclusions to what you have written above and mine at http://www.PerformanceUrbanPlanning.org .
Its rather amusing to read this nonsense – as I have hold Russel Norman and Sue Bradford in high regard – and had a delightful and rather lengthy meeting with them both back in 2006 – and have made a point of keeping them informed ever since.
I asked Solly Angel Planning Professor of NYU and co author of the UN and World Bank Indicators Programs to contribute the Preface to this years Demographia Survey (which I initiated and co author) – which he kindly accepted. Like me – Solly takes a pragmatic approach to these issues and readers will note that in his Preface, he commends the environmental movement for its efforts.
It appears McShane is a little confused about my role with respect to these issues both here in New Zealand and internationally. Cox is a demographer and urban transport specialist and my area of expertise is property.
While Im rather amused by the article – I do hope that the Greens participate constructively going forward. In case any readers dont think these issues are “serious” I would suggest they read my articles (incl the one hyperlinked above) – and take particular note of the current unemployment situations in California, Spain, United Kingdom and Ireland. Ireland is the same size as us – and near 30,000 are being thrown out of work there monthly.
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I think that there is a middle-ground here that most people might agree upon, and is somewhat similar to the argument that john-ston puts forward.
I am generally opposed to urban sprawl, and support residential intensification as a far more sustainable method of developing a city. I have this view from the enormous amount of research that I did when writing my 2005 Master’s Thesis (http://portal.jarbury.net/thesis.pdf). One of the main issues that I have with removing urban limits is that the housing affordability gains from such a policy would be outweighed by the sustainability losses (including economic sustainability through increased transportation costs and increased servicing costs) by allowing such a policy. This view is generally backed up by the Auckland example, where our most recent areas of development (Flat Bush, Botany, Albany, Greenhithe etc.) are quite probably our most unsustainable – due to their high automobile dependency, their huge detached houses and so forth.
I think the excellent point that john-ston makes is that “we don’t have to develop like that”. Indeed, much of the greenfield development in the early 20th century was built around the tram network in Auckland, and in London around the expanding tube network. Suburbs like Sandringham, Avondale, Balmoral and Epsom in Auckland, and Golders Green, Neasdon and other in London show that it is possible to create non-auto dependent greenfield development. Gosford in Sydney appears to be another example. In London, these late 19th and early 20th century developments generally consist of high(ish) density townhouses and terraced housing within easy walking distance of a distinct town centre and a tube station linking the area with the rest of the city. Similarly, in Auckland early 20th century development was built around the tram network (as can easily be seen by the ‘semi-grid’ road patterns of the central isthmus) and to this day is far less auto-dependent than the rest of the city.
So, I guess what I would like to be seeing from people like Hugh, Owen and john-ston, are ways in which greenfield developments could be made that wouldn’t lead to auto dependency and other unsustainable outcomes of urban sprawl. My prefered definition of sprawl is something like “low-density, single-use development which results in automobile depedency” NOT “greenfields development”, so clearly there are ways to expand the urban area but do so in a sustainable manner. Flat Bush tries, but fails due to poor transport links with the rest of the city and its obsession with McMansions. Addison in Takanini tries a bit harder, and may partially succeed once there’s a nearby train station and a bit more of a town centre, Hingaia totally fails as it’s just large-lot sprawl.
The one thing that goes against this argument is the belief that intensification could actually be our saviour. While one could argue that the MUL has choked the supply of land in Auckland, it could equally be argued that overly restrictive zoning has choked up this supply. Auckland City Council should have rezoned up to 19 different growth nodes as residential 8 by now to allow for increased development – yet 10 years after the regional growth strategy was released we only see Res 8 in a bit of Glen Innes, a tiny bit of Panmure, part of the Mt Wellington Quarry development and (only confirmed in the past week) in parts of Newmarket. I would suggest that is where our land supply is being choked most strongly.
Restriction on “units per site” also choke up land supply, as someone with a 600 m2 site (in Res 6a) can only ever have one unit on their site, even if that unit could be up to 400m2 in size across two levels. If they were able to split that dwelling into 2-3 units there would be a huge improvement in affordability.
So, in summary, if you want to do greenfields developments show me how it’s not going to be unsustainable auto-dependent sprawl. I do believe that is possible, it just seems like we’ve forgotten how to do it over the past 80 years. Secondly, lobby councils to remove the restrictive zoning on land within the urban area, allow houses to be split up into smaller units and see what that does to housing affordability too.
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Hugh,
Frog’s comments described you as a property developer and obviously pursing self interest.
I was defending your status and that of Wendel because frog ignored all Wendel’s credentials and focused on a connection to the Heartland Institute.
Here is the quote which I find offensive to both of you:
“Hugh Pavletich (the spammer) is a property developer based in Christchurch. He’s connected to an American anti-smart growth/ anti-public transport movement in the United States. (If you think it’s important to underline key information so that it gets noticed, you’re going to love their website.) Demographia recently hired Wendell Cox from the Heritage Foundation/Public Purpose to promote their work here.”
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jarbury Says:
March 6th, 2009 at 9:19 am
I am generally opposed to urban sprawl, and support residential intensification as a far more sustainable method of developing a city.
………….
Developing for what/ whose benefit?
The logic behind infill is “how much profit can I get from this piece of land?”
Why not just plan for a southern japan filled with people from communist China and so restrict land on urban limits and build quality apartments. Remember (politically) there are no limits to growth. Let’s just admit this is our future.
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I don’t quite get your point jh? Should we not allow for intensification? That has either one of two consequences in a city that has an increasing population:
1) Constriction of housing supply so prices go through the roof (an even more extreme version of what has happened in the last 5-8 years)
2) Extra housing gets built on the edge of the city and we end up with more auto-dependent sprawl (that is unless developers find a way to build non auto-dependent greenfield developments).
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The Economist wonders if Santa Barbara’s relative financial health is owed to its aging population and resistance to development.
“Nowhere in California is immune to recession, but the oldest areas are proving most resistant. Of the ten counties with the lowest unemployment rates, nine, including Santa Barbara, contain an above-average proportion of people aged 65 or older. Youthful Los Angeles has shed almost a quarter-of-a-million jobs in the past year. Slightly older San Diego has lost a few thousand, while considerably older San Francisco has lost none.
http://www.economist.com/world/unitedstates/displayStory.cfm?story_id=13185560&source=hptextfeature
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Firstly – readers may be wondering why there are two comments of mine – winding up the frog. The reason was that i was experiencing problems posting at first. So I came back later posting another – without realizing one of the earlier ones had actually appeared. Apologies for that.
There has been extensive discussion following my articles with respect to these issues over at http://www.interest.co.nz over the past two months – where I have responded to a good number of the matters raised here. i will continue posting articles there every week or two as time allows – and welcome the participation of you people.
One concluding comment though.
It would appear to me that many on this website may not appreciate yet the consequences of the current crop of housing bubbles collapsing – as whats happening elsewhere all seems rather distant and irrelevent. Particularly those who work for government where pay cheques appear regularly.
By now you all might have noticed that while politicians globally are assuring their publics that they have everything under control – the reality is that they dont – and cant. The reason is that as the bubble values of housing markets being wiped out – leading to other asset classes bubble values being wiped out as well (what economists refer to as “deleveraging”) – it is way too big for governments to cope with.
As this process grinds on (it was 16 years in Japan fron 1989) be assured there will be no public or political desire to allow the conditions to exist, for further housing bubbles to get underway.
If you have friends / colleagues in Ireland or California – I would suggest you communicate with them to find out where things are at there currently and where they are heading.
Hugh Pavletich
Hugh Pavletich
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jarbury Says:
March 6th, 2009 at 10:30 am
I don’t quite get your point jh? Should we not allow for intensification? That has either one of two consequences in a city that has an increasing population:
………….
My point is that Chiristchurch was better 30 years ago but elements influencing government decided that we should encourage mass migration to boost economic growth while the costs are ignored. Growth is an end in itself (everywhere). There is a sort of orphaned reality that finds no expression other than perhaps a perplexed attitude of older residents who haven’t been the beneficiaries but are keenly aware of the disadvantages.
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Apart from xenophobia, I am not sure whether New Zealand has been negatively affected in any way by immigration over the past 10-15 years. Migrants from Asia are usually very economically productive, while the greater cultural diversity has enriched our lives enormously. Perhaps there aren’t quite enough migrants in ChCh to move beyond the weirdness of seeing a non-white face yet?
In terms of sustainability, the only reason why increased housing demand has pushed up prices (other factors not related to demand have also pushed up prices) is because supply hasn’t been increased to match the demand.
I can’t speak for ChCh, but I actually think Auckland could be a much better city with a population of 2-2.5 million than what it is at the moment as long as we grow in a sustainable way. A bigger city would allow us to build a proper rail system, to have better provision of facilities and services and enable us to complete on the global stage much better. Further intensification also allows for a greater mix of land-uses, making it possible for people to walk and cycle to more places.
What we don’t want is another million people added to the north & south of the city in a continuation of the bland, auto-dependent sprawl that currently inhabits Auckland’s urban edge. However, it isn’t a choice between sprawl or nothing. There is a third way
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jarbury Says:
March 6th, 2009 at 11:01 am
Apart from xenophobia, I am not sure whether New Zealand has been negatively affected in any way by immigration over the past 10-15 years.
……….
China stands out for the potential of its massive population (and business culture) They are just the raw material but our people have their hands on the lever. Migrants consume places knocking poorer locals to smaller lot size or poorer suburbs while enriching property developers and investors. Queenstown is described by some travel writers as “over developed”. If you can’t see any damage as hill suburbs are infilled as garden are built on and places become “over developed” then perhaps you’ved grown up in an apartment or have a healthy income so it never occurs to you that many people are largely immobilized as their neighborhoods become an assault to the senses.
Your discussions above are dealing with the growing pains of population growth and as with the need for more and more infrastructure these are the result (negative effect) of population growth. Much of our stunning recent economic performance seems to be based on building houses for migrants.
[See links to Gareth Morgans articles above]
http://articles.gmi.co.nz/labour-s-third-world-solution_409.html
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Owen McShane, is a shame he is getting old now and he’s starting to believe himself
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NOT ALL FIRST WORLD ECONOMIES DEPEND ON POPULATION GROWTH :
IMMIGRATION SINCE THE OIL SHOCK IN FRANCE AND EUROPE
By Sheila Newman
http://dieoff.org/page194.htm
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On Back Bencher Rodney hide blamed the financial crisis on too much regulation, but I went out before I heard his explanation….was he endorsing his masters…… Demographia?
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(ie his masters view) back bencher brings out opinion snippets but is useless for complex discussion (as is parliament).
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jh
Demographia the masters of Rodny Hide?
Mush as I admire the work of Demographia I can assure frogbloggers that Rodney was writing about the benefits of deregulation etc long before Demographia was born. I would appreciate jh providing a thread of evidence for this claim.
Does it not occur to you (and others of like mind) that people can have minds of their own and reach similar conclusions without any master servant relationship?
And peterquixote, good to see agism is alive and well in the Green Party. I now understand why Jeannette had to go.
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Firstly what regulation was Rodney blaming for the financial crisis? I haven’t heard this argument in relation to the financial crisis other than Hugh Pavletich’s blaming it on zoning.
Secondly as there is limited transparency in political party funding we have to assume that well funded parties get their funding from somewhere and look at whose interests they serve. Small nudges here and there can have a big effect on results. I pick the Property Council (developers, investors, real estate agents, financiers…. $14B in assets and 20 Corporations).
Of course it could be coincidence that honest and well funded Rodney was able to see that Winston had managed to get some funding too (and a deal appears to have been done) but it is convenient to get rid of a nationalist voice while the other two major parties don’t care if the whole demographic changes in a few decades (the greens spokesman is Kieth Locke! ). Also while it is true regulations need a rethink, the RMA is more an issue to BIG developers (according to the Landlord Says).
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Into moderation it went> Kieth Locke!
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Frog if you dont allow that reply i hope you give a reason.
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Can’t see a thing wrong with it, jh.
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Firstly what regulation was Rodney blaming for the financial crisis? I haven’t heard this argument in relation to the financial crisis other than Hugh Pavletich’s blaming it on zoning.”
Don Brash shot down the “lack of regulation” BS a few weeks back in the herald…
http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10554617&pnum=0
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“However, it isn’t a choice between sprawl or nothing. There is a third way”
Jarbury, that is correct, there is a third way and this is what it can be. The powers that be can ensure that railway lines and good public transport connections are up and running before the area becomes suburbanised; I would be starting up bus routes to places such as Alfriston, Hingaia, Flat Bush and so on and have it as a cross between urban style provision (ideally fifteen minute frequencies all day) and rural style provision (infrequent services).
What the powers that be need to be is proactive instead of reactive; one can generally get a good idea when an area is about to be developed, and you then go in a frantic rush to get the railways, busways and bus routes developed.
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I still haven’t heard what rodney actually said but this is this is what Don Brash said
“And driving the housing bubble in many markets, in the English-speaking world at least, were the highly restrictive zoning policies of local governments – policies which sharply increased the price of residential land and led both borrowers and lenders to assume that the price of housing would increase forever.”
Glaeser:
So far, the preliminary data have led Glaeser to believe that the past decade’s run-up in prices is probably caused by factors beyond the restrictions on supply; the home-appreciation numbers appear to be so high that they suggest that prices in coastal cities have some psychological component too. (In his view, the supply shortage greatly magnifies the effect of any sort of “irrational exuberance.”) ”
http://www.nytimes.com/2006/03/05/magazine/305glaeser.1.html?_r=2&adxnnlx=1219478546-P8XPeGTq%20QBCtPf/wtll/A&pagewanted=all
Note Glaesser figures that it is all about maintaining house prices it isn’t it is about quality of life and enjoying a liveable city.
The Home Economics article is a good one. There is a quote in there about how important our built environment is………. haven’t our Hummer driving developer types let us down badly!
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“Jarbury, that is correct, there is a third way and this is what it can be. The powers that be can ensure that railway lines and good public transport connections are up and running before the area becomes suburbanised;”
and then the value of land shoots up and the profits go to the developer/ land banker? (adding to costs)… and if you release a whole lot so you maintain affordability the bus routes aren’t viable (subsidised)? If all goes well and land is cheap and the area is desirable migration increases (globalised property market and pro migration policys)?
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and then we have the same discussion 10 years from now.
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jh – i have come back on to this blog because of the quality of the discussiion. I was frightened off when the frog fell off his lilly – and I was what could be termed a victim of “unjustified lilly bashing” by the frog. Im probably fortunate it was just the frog and not the Greeens Housing Spokesperson – where I would have got a hard smack! Im fond of the housing spokesperson – a fondness based on fear…..!
Good on you for drawing readers attention to the excellent NYT article on Prof Ed Glaeser of Harvard – who incidentally is an advisor to our Motu Research here in New Zealand – where the likes of Dr Arthur Grimes have done some excellent work on these issues (chech out the Centre for Housing Research Aotearoa New Zealand).
I would be grateful if you could provide the hyperlink to a recent article by Glaeser “Houston: New York has a problem” – another NYT article
I hold Glaeser in very high regard – but (as the NYT article states) he has only been heavily involved with these urban issues since 2000 – and from the academic environment. There is such a thing as “tacit knowledge” that can only be gained from practical experience. Without this – he can sometimes get a little wobbly.
With all due respects to Glaeser – I think he has some way to go in understanding the political drivers of these unnecessary housing problems. His numbers of housing construction / development costs were “all over the place” because he relied on the standard construction cost engineers / quantity surveyors RS Means Construction Costs Handbook – where more often than not the numbers within these type handbooks are way above actual market prices. This in turn led to “residual values for lots / sections – which were all over the place.
May I suggest readers go to the Planetizen website http://www.planetizen.com – for the article by Utt and Cox of Heritage – where they can see how the “public conversation” in the United States on these issues is far behingd us in Australia and New Zealand. I popped in a comment – to wind the Americans up! Others are encouraged to as well.
Hugh Pavletich
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“and then the value of land shoots up and the profits go to the developer/ land banker? (adding to costs)… and if you release a whole lot so you maintain affordability the bus routes aren’t viable (subsidised)? If all goes well and land is cheap and the area is desirable migration increases (globalised property market and pro migration policys)?”
That is why you either have a Capital Gains Tax to pay for such a thing, or you include it in the development levy. Furthermore, why would the bus routes be unviable? If they are in existence before the houses go up, then people would be more inclined to use it.
Also, could you explain your comments again. I didn’t quite understand it.
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