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New Zealand Housing Crisis Forces Hundreds To Live In Tents And Garages

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Article in the Guardian today about the crisis in Auckland. People sleeping in their cars and 10 family members sharing a garage.: http://www.theguardian.com/world/2016/may/17/new-zealand-housing-crisis-forces-hundreds-to-live-in-garages-tents-and-cars

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Its another example of the impact of low interest rates and unrestricted lending...

Gordon Brown was correct that there is no more boom and bust. When the bust enters the next stage it will continue for decades...

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Interesting to look at what is going on in NZ:

NZ house prices to drop in real terms from 2018 as 'borrow and spend' cycle burns out - Westpac

Reading the comments was funny also - you see the same memes you get over here popping up. Difficult to argue with this one though:

When you embark on an extensive and thorough program of neoliberal 'reform' firstly you deregulate banks and insurers, then sell off state monopolies and reduce tax on the rich, eliminate the concept of the common good and replace it with user pays, finally you privatise state services provision, prisons, schools, hospitals, welfare and housing.

Increasing income inequality follows, as does ever greater rentseeking by the new private owners of each now privatised monopoly sector of the productive economy. The trickle down effect is your entire productive economy becomes less competitive. However the financial services sector booms and it is possible for some time, to maintain a sense of growing wealth among a majority of voters by increasing debt availability and engineering housing/asset price inflation.
Many aspirational citizens become smallscale rentseekers owning several rental properties.
Up to a point the illusion can be maintained. We are close to that point.
Nobody who has benefitted from this wants it to end.
The banks, insurers, financial sector, the privately owned infrastructure framework, homeowners.
But our entire economy is now so weakened, our productive sector is starved of the funds required to maintain those assets and debt levels are close to unsustainable.
Debt funding anything other than productive assets, is a disease.
A few percent increase in the rate of return on money would now collapse this economy.
Forced sale of remaining assets to foreign ownership is more and more likely.
Loss of economic sovereignty.
Greece is the word.

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Interesting to look at what is going on in NZ:

NZ house prices to drop in real terms from 2018 as 'borrow and spend' cycle burns out - Westpac

Reading the comments was funny also - you see the same memes you get over here popping up. Difficult to argue with this one though:

That really is a great quote.

'Debt funding anything other than productive assets, is a disease.

A few percent increase in the rate of return on money would now collapse this economy.
Forced sale of remaining assets to foreign ownership is more and more likely.'

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That really is a great quote.

'Debt funding anything other than productive assets, is a disease.

A few percent increase in the rate of return on money would now collapse this economy.
Forced sale of remaining assets to foreign ownership is more and more likely.'

Debt funding anything other than productive assets, is a disease

+1 Great quote

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Average house price is Auckland circa £440,000.

Median income in Auckland circa £13,500, household income £27,000 assuming working couple.

16x income for couples, 32x income for singletons.

And a projection for 1/3 of their population to be Chinese by the end of this decade.

Ergo, the place is fvcked.

Edited by cashinmattress

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They do have inflation there though so at least there is a horizon if you overpay. From Google Median household income is £35k.

They'll survive.

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according to tradingeconomics

NZ private sector debt = 388 billion NZ dollars (March 2016)

NZ GDP = 200 billion US dollars = 296 billion NZ dollars (2014).

So on that basis (not strictly accurate because of the difference in the dates but not that far out because GDP isn't growing that fast since 2014) NZ Private Sector Debt to GDP ratio would be about 130%.

http://www.tradingeconomics.com/new-zealand/private-sector-credit

Reserve Bank Of New Zealand

http://www.tradingeconomics.com/new-zealand/gdp

World Bank Group

Edited by billybong

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