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Demolishing Demographia? It’s cookie time.

Yesterday’s post considered the recently released Demographia survey on housing affordability. Thanks to everyone who commented; the discussion was useful for honing my thoughts on follow-up posts. Such as this.

But first let’s re-cap: Demographia’s key findings were 1) New Zealand has increasingly unaffordable housing and 2) this is the direct result of urban containment policies.

The main issue I took with the Demographia report in yesterday’s post was 1) the lack of strong economic justification/references supporting their housing affordability indicator of choice (namely the median-multiple ratio) and 2) the lack of discussion/investigation of potential alternative indicators.

Indeed, my quick web search threw up at least two alternative indicators of housing affordability, namely the rent-multiple ratio and the home affordability index, neither of which appeared to lend much support to Demographia’s findings. Of course, this does not prove their conclusions are incorrect, but it does suggest they are premature.

In this post I wanted to look beneath the hood of Demographia’s housing affordability indicator a little more. The reason being that when you do you start to see what they are measuring and, perhaps more importantly, what they are not measuring. In Demographia’s case, they calculated their housing affordability indicator as follows:

Median-multiple = median house price / gross median household income per annum

This then measures, in a simple sense, the cost of the median home relative to the median household income. While that may sound reasonable enough on the surface, the devil is in the detail. Two of the more obvious issues with Demographia’s indicator that spring to my mind are discussed in the following paragraphs.

Demographia’s definition of “income” excludes taxes and transfers. This is pertinent for at least two reasons:

  1. First, some taxes have direct impacts on property prices, e.g. local rates. These will simultaneously tend to affect property prices (higher rates = lower property prices) and post-tax income (lower), but not gross income. Somewhat perversely, this would mean that jurisdictions with higher property taxes would tend to exhibit more affordable housing, at least according to Demographia’s indicator.
  2. Second, most taxes directly impact on a household’s disposable income and in turn affects their ability to afford housing. In New Zealand tax rates have changed considerably over time, especially for different segments of the population. Consider for example the impact of Working for Families on demand for certain types of housing.

Such issues mean that the median-multiple housing affordability indicator, as it appears that Demographia have applied it will not pick up on relevant differences in taxes and transfers, both  spatially and temporally.

The spatial differences are likely to be fairly minimal within a country like NZ – where local taxes don’t vary that much from place to place – but this is certainly not the case when making international comparisons. Many countries have much higher rates of property taxes (and even local income taxes) that will tend to impact on house prices and thereby affect their housing affordability relative compared to New Zealand.

On the other hand, the temporal differences introduced by changes in domestic tax and transfer policies are likely to be fairly large, even within a country. The potential impacts on housing affordability of recent tax changes to the top personal tax rate, ability to claim capital depreciation on properties, and commercial tax rates are hard to predict in advance. Tax impacts may well spill over national boundaries as well; NZ’s lack of capital gains tax, for example, is frequently quoted by my Australian colleagues as a primary driver of their decision to invest in New Zealand’s property market.

These issues would make me extremely cautious about drawing broad, sweeping conclusions on trends on housing affordability both within and between countries simply based on the median-multiple indicator.

“C is for cookie and that’s good enough for me” – The following (deliberately facetious) statement helps I think to highlight a dimension of the housing affordability debate that is all too frequently glossed over, namely:

You don’t measure the  affordability of cookies based on the cost of buying the cookie factory.

The point is that housing is a actually a type of good, or more specifically a service, which is “produced” by a house. You can gain access to housing without necessarily buying the factory that produces it, i.e. rent a house. Obviously, some people do this already and they’re called “renters.” Like me.

Cookie-monster-bedtime

Even in New Zealand many people rent by choice. And in many countries in central and northern Europe renting is even more prevalent. But the key takeaway message is that the affordability of housing, which is what Demographia sets out to investigate, is probably better measured (from an economic perspective) using rents rather than house prices. This is especially true for low income households that are more likely to rent.

And that’s why I’d place more emphasis on the graph produced by the Productivity Commission, which calculated the ratio of rents to household disposable income over time than the median-multiple indicator presented by the Demographia study. This showed the rent to income ratio in New Zealand declining since the 1990s, contrary to Demographia’s findings and casting some not inconsiderable doubt on their conclusions.

My preference for using rents is also related to the first point on the impacts of taxes on house prices: Unlike houses, which are an asset, rents measure the cost of housing services. I suspect it’s far easier to “net out” the impact of services taxes in various jurisdictions, i.e. GST, on rents than it is to adjust for changes in the myriad of other income and asset taxes that might affect house pricing.

That’s all for tonight, but tomorrow’s another day and I’m already fomenting ideas on the next Demographia post; in the meantime I’d welcome your comments/suggestions/criticisms.

41 comments to Demolishing Demographia? It’s cookie time.

  • JohnP

    This is a great follow-up post Stu. Also, I love cookies, but most people do so I will not expand further on this point. One of your key points is that “housing is actually a type of… service, which is “produced” by a house. You can gain access to housing without necessarily buying the factory that produces it, i.e. rent a house.” For the non-economists out there, we economists call this a ‘derived’ demand. Like demand for electricity or petrol, where we don’t actually want the thing itself but what it can give us.

    It’s a bit of a simplification to apply this to housing, since people attach all sorts of meanings to home ownership besides simply having access to “housing services”. But it’s a valid one, good for modelling comparisons, and should arguably be fairly close to reality if we can break down some of the barriers that exist for renting. I think you are absolutely correct that rental costs are a much better indicator of affordability than house prices, and it would be very interesting to see some international comparisons on that basis. The major stumbling block is how to figure out after-tax income, but presumably you would just take median personal/ household incomes and apply the relevant tax rates based on those. More complex than Demographia – which, to be fair, would be a big reason for why they use the measurements they do – but much more relevant.

    • Stu Donovan

      Thanks JohnP and I agree with you – housing is generally a derived demand. In terms of after tax income, the StatisticsNZ Household Income and Expenditure Surveys are probably a good place to start. With regards to what Demographia do and don’t do – while I agree that there is merit in using an indicator that is simple I don’t think that excuses them for 1) failing to discuss its relative strengths and weaknesses and 2) drawing such strong policy conclusions on the grounds of what appears to be relatively weak empirical evidence.

  • Greg N

    “It’s a bit of a simplification to apply this to housing, since people attach all sorts of meanings to home ownership besides simply having access to “housing services” ”

    Deep down, people usually actually don’t want to own the house (I own one, but its only as means to an end as I see it) – any more than they want to own a “car” or a “credit card”.

    These things provide the means and so are the “derived benefits” in your terms. Like no-one really wants to own petrol, they want the outcome(s) it enables their car to give them.

    But to get the other things you allude to like such as: security of tenure, access to certain schools, asset to use for retirement, tax dodge, collateral to banks for other loans (e.g for starting a business – not buying a car!) etc, etc.

    All up you can’t beat them for that in the NZ context currently – which is why owning at least one has been so popular with so many for so long. And why so many people want one now.

    However, if you could have a way to deliver these benefits – without having to “own” the house then the house truly become a service.

    And in that context, would housing affordability be relevant to any one any more?

    Would we care about the Demographia index if all NZ houses cost say $1 each, but were all owned by the Govt or local council, so everyone rented
    – and yet you could still get all the above same benefits without needing to own it?

    And before you say, hey thats sounding awfully socialist my left leaning Communist friend!
    – I’m not suggesting that we go there, but what I am saying is that longer term we need to think about these and de-couple the housing services from the other things people use a house for.

    As you see from the list above, the housing services our houses provide is way, way more than a roof on your head.

    But if you could get **exactly the same** benefits by renting instead of owning the house, Would you choose to willingly “rent” over owning?

    And then who would care whether the mean median multiple for a house was 1, 2, 10, or 10 billion – only the Government might, when it came to prioritising spending on housing versus other things.

    • The history of home ownership in new Zealand is not one of simply benefits and utility, it formed a very central part of what governments of both political persuasions saw as the New Zealand way of life.

      Both Britain had a very stratified society and property ownership was a very integral part of these societal divisions,

      Early New Zealanders wanted their society to be different to this and as a result over many years successive governments encouraged home ownership as a means to create a less stratified society,

      I think that to simply up turn this on its head and say that everyone should aspire to rent, and the government will facilitate that renting has the same benefits as ownership is really not possible unless there is a huge change in the mind set of the majority of New Zealanders..

      • Greg N

        I’m not saying that we all should rent, but what I am saying its lets be clear about the other stuff not related to housing as a “service”, that housing is used for.

        And maybe start thinking about this stuff if we want change in the way houses are used.

        It is often discussed here and around the country at length, ad nauseum and we are told by the World Bank, IMF, Economists, Treasury, Politicians, Uncle Tom Cobbly and all
        “that NZers have to break their love affair with houses if we want to make things better for the country”.

        And yet no-one actually offers any actual practical ways to do that except vague stuff about “wrong investment signals” and “structural changes”, and also platitudes about buying shares or starting long term businesses and not selling out to the first offer for your Beach, Bach and Beamer lifestyle we supposedly all aspire to instead of buying a house.

        Questions for you.

        (a) do you agree that there is a problem with housing in NZ?
        (b) do you agree that perhaps using house ownership being used as a trojan horse for all sorts of other things is maybe a “Bad Thing”TM for all of us?
        and
        (c) If so what do you propose to do fix the problem if anything?

        If you don’t agree that there is a problem, thats fine, but everyone else seems to believe there is, and maybe they are right and you aren’t?
        And so, why do you think you are right and everyone else is wrong?

        And if you do agree, then what do you think should be done about it – presuming you agree soemthing should be done?

        It seems to me that identifying the “services” housing is used for from the other stuff (derived benefits) is a necessary first step to do anything.
        Can’t fix a problem if you can’t identify the causes right? First step for a cure is to admit theres a problem.

        Then these other areas can be tackled by various means not today, or tomorrow, but over time, by various societal changes and long term processes probably including tax reform, the way banks operate in NZ to name some likely suggestions.

        And just because “owning a house” was considered the only way forward in Feudal England 500-600 years ago does it make it the best or only model for everyone on this side of the planet, now in the 21st century and forever after?
        There were alternative models of community and ownership before owning a house was the “in thing” back in Merry old England, and there will be alternative models in the future.

        Sure we don’t bend and scrape to Kings as if they are divinely appointed these days, but we do worship other things as if they were Kings annointed by the gods (Celebrity culture, “success” through owning “stuff”, money, beauty to same some obvious ones)

        But the difference now is that we all know we don’t have a luxury of another 500 years of “steady as she goes bo’sun” either – the planets finite resources of all types are running out for all sorts of reasons and therefore if we don’t start to think about and then make changes, then we shall collectively reap the outcome..

        So if you want to help ensure future generations of your descendants don’t end up back in Feudal society (again) sometime in the next 5-600 years, then maybe these things need to be worked through and changes made to try and avoid that outcome?

        Human slavery was once considered the norm, but we don’t accept that now as normal practice some 150 years on – and slavery was considered “the only way” back then.

        Nowadays we just have slavery in another form – its to a bank via a Mortgage not a human overlord and the shackles that stop us escaping from it is not the iron bands of old, but rather the is the attitude that owning a house at all costs is “the only way”.

        So why we think as a society we have escaped the old Feudal system from the old country – we have probably just replicated it in a much, much, more sophisticated form.

      • I sometimes wonder what percentage of a house price in NZ is attributable to snobbery and class war. Brian Rudman certainly thinks it’s a big factor.

  • James H.

    use of the median-multiple indicator carries an assumption: that the income-earners at and around the median are the same group who demand the houses priced at and around the median, and that result can be extrapolated for other price-income pairings. As mentioned in the post, that excludes measurement for a large group of earners at many income levels who are in fact happy to rent for a range of reasons. Also I doubt whether median houses are often bought by median earners for a variety of reasons including life stages, geographical differences etc.

  • I think your “C is for cookie and that’s good enough for me” analogy also represents another issue with the demographia study. The authors are well known for having strong anti urban, pro sprawl views and so for them they will only look at data which supports that predetermined outcome.

    • Stu Donovan

      Yes I agree.

      On the other hand, I think we can and should reasonably consider their methodology/conclusions separately from their biases, because there may be merit in what they say even if we don’t like the way they say it. In other words, we probably should not write them off completely simply because of their idoelogical bias, even if we should be aware of it when considering their arguments. After all, most people will tend to bring some pre-formed values and opinions to the table, even if they differ from Demographia’s.

  • jonno1

    Stu implies, without saying so explicitly, that renting is cheaper than buying. He’s right of course. Residential rentals typically return about 4-5% after expenses (assuming no interest costs), which is then taxed at 33% resulting in a return which is largely offset by inflation, ie a net yield of zero in real terms. So why be a landlord? Well, the only benefit is that residential property values increase over time at, or slightly above, the average inflation rate. This is tax free provided you’re not a trader, but even so, all you’re really doing is preserving your capital. The renter, on the other hand, presumably invests his capital elsewhere (sometimes in other rental properties). Like everything in life, it’s a choice.

    Commenters above have listed some of the non-economic reasons for owning rather than renting, so I won’t repeat those. But I will make one further comment – it’s often postulated that “the poor” are disadvantaged, especially at retirement, by having no assets such as a house, while the “rich pricks” have it sweet. Well hello, if low income earners have chosen to rent, and then chosen not to save even a small percentage of their residual income, even in Kiwisaver, then they really can’t criticise those who have.

    • Stu Donovan

      Does that not assume that the “poor” have residual disposable income, albeit less than the average person, and that this disposable income is able to be reinvested? From what I’ve seen there is a proportion of the population whose incomes exactly match their expenses. For these people renting is the only viable accommodation option; and there is no surplus income to be “reinvested”.

      • jonno1

        Exactly Stu. It comes down to personal choices. OK, I’m about to generalise here, but it’s pretty clear that many (not all) “poor” people spend a disproportionate amount of their income on cigarettes, Lotto, Sky TV, alcohol, fast foods… I’m not agin any of those (well, Lotto’s a bit stupid), it’s just that priorities need to be addressed first.

        • harrymc

          Here we go – the “deserving” poor versus the “undeserving” poor argument.
          If one is poor one is not allowed to have any indulgences – no drinking, smoking, gambling. These are all the preserve of ones betters.
          You really have no idea of what is like to have no money do you?
          This is just another way of washing your hands of the problems and saying “if you spend money on (what I consider to be) non-essentials then everything is your fault and I don’t have to do anything to help.”
          Yes it is obvious you are not agin (sic) them – just so long as it is the right sort of person!
          “Personal choices” are severely limited if one has little income.

          • jonno1

            Read it again harrymc. Hint: the key word is “disproportionate”. Your last sentence is spot on though. I was brought up in a low income household where my parents made immense sacrifices for their kids.

          • Greg N

            Exactly right harrymc.

            We need to cut the judgemental crap out and cut the renters, the poor (whether deserving or not), and everyone else different from us – some slack from time to time.

            I once had a company run training session, that was run by 3 women trainers who worked as a “group” doing the training.
            All very good presenters, none of them “trainers”, and each had life skills more than formal training skills, but they got the message across well and were very good at doing so.

            So good – I remember most of it now after some 20 odd years! Good value for that training course.

            One of the women trainers was an ex-Police women, who had been there done that and seen it all – you name it she’d done it/come across it/or had it done to her as a cop.

            During the training subject of her background in police work came up and why she quit being a cop
            (I recall she stopped being a copy as she got injured on the job rather than perfed out like they do now).

            Anyway, she explained to us, that her attitude to her on going daily “customers” that she saw as a cop – some “customers” way, way more frequently than others mind you
            – was that she wouldn’t judge or criticise them for their choices (or lack of choices).

            She said this to us in a small, quiet voice, that stopped everyone in the class, dead in their tracks and made them all sit up and listen

            “These people, no matter how they seem to you or me, are simply doing the best they can with what they have”.

            “The best they can with what they have” she explained was what-ever amount of ability, skills, you name it they had in their backgrounds, their history, their life skills, the money and whatever amount of self-respect or ability they had. Basically, “what they have” is what makes them a normal human being.

            As a result of her attitude she was cutting these criminals, drunks etc you name it – a lot of slack,
            She said wasn’t there to judge (“thats the court’s job”).
            If this is one thing to learn, its that you can’t always judge everyone by your standards.

            It is an interesting way to approach things in life
            – if you assume that for the most part people are trying to do what *they* think is good, even if they may define “good” a little or lot different from your definition – they’re trying.

            So yeah, its easy to judge when you’re up high looking down – not so easy when you’re in the thick of it or below.

            I certainly couldn’t do her job (or want to), but I’m glad she was able to do it
            – and I reckon she made a difference to those she interacted with before and after her police career.

            We certainly need more people like her in our society – in the important and not so important places – when decisions are made that impact lots of us – as that way, they can help make differences that matter.

            Unfortunately it is not an attitude I see from the current Government, whether it be PT, “social welfare”, employment, the economy, health care or housing.

  • “Even in New Zealand many people rent by choice” That is a wide sweeping assumption Stu – I would not call 1/3 “many” if basing from Stats NZ http://www.stats.govt.nz/browse_for_stats/people_and_communities/Households/housing-profiles-renting.aspx – although they are 2001 figures I would suspect the rent figure now around 36% currently.

    Taking into account actual CHOICE in renting (meaning they had a free choice rather than a determined choice due a restriction such as income or credit that can’t allow the renter to execute choice (so basically lugged with it)) I would be at a hazard of a guess to move the figure from Stats NZ to (off 2001 figures) 25% actively chose to rent. Oh Stats NZ even list possible reasons why ones choice might be determined rather than having free choice at hand)

    “is probably better measured (from an economic perspective) using rents rather than house prices.” No as that is swinging the pendulum from one technical extreme to another which could easily allow someone to yell “agenda” just as some here have with Demographia.

    If one wanted to take a full comprehensive measure on our situation – but keep it simplistic (unless you are Stats NZ) then there are three measures that should be used to give the snap shot:

    1) Demographia’s House Price to Income median multiple (for those entering the market as we are still New Zealand (Not Central nor Northern Europe) and considered a liberal property owning democracy)
    2) Rent to Income – for those who do rent and it has been used before (last I saw was in the last boom where the % moved to 46% of a family’s total income was spent on rent which Councils considered highly stressed (the “normal mark is 33% – the same figure as Demographia’s “3” multiple)
    3) Mortgage to income for those like me who own a house (and actually enjoy and want to Greg) to deem the stresses involved which were similar to the 46% situation I pointed to above. And again 33% of income to mortgage is deemed affordable, anything above 40% is considered stress. And of remembering, mortgage goes out first then what ever you have left over goes to everything else unless you want a mortgagee sale

    And before someone (I believe one of the writers) asks why “3” or by extension 33% – it is because what Central Government uses, Council uses (have had many a discussion with councillors over this), the Ministries use, the banks use, the economists use, and the UN keeps any eye on when deeming affordability and stress situations/levels. And through monitoring the last boom and the current situation where the levels were at “stressed” there were negative effects reported constantly when the “3” and 33% mark were breached – on people’s physical and mental health…

    So if Demographia wanted to go further it would of used all three measures above for and I’ll say it again – a liberal property owning democracy

    (and as a final note as Councillors were told when I trundled along to the Auckland Plan hearings, now that I am a home owner – I am more acutely aware in where my rates are going – the Centre Right Councillors :D ‘ed)

    • Greg N

      “for those like me who own a house (and actually enjoy and want to Greg)”

      Don’t get me wrong – I enjoy and take pride in owning a house
      – but only for the enabling/derived benefits, not for just for owning a house for the sake of it or to be able to say to anyone “I own my own house”.

      The same with my car, I enjoy having a car and using it – but its only an enabler for me to do other things.

      If I could go everywhere I needed to by PT tomorrow – for the same or even better – less – time and./or hassle – then I would.
      Even it cost a little more, because I would derive more benefits to my own mind by doing so!

      I am not a slave to either my car or my house. And thats as it should be IMHO.

      For others, yep, I know just like people use PT as they have no choice or decide to, there are people who rent through lack of choice or by concious decision.

      But they are not to be looked down as inferior because they don’t own a house. And they should not be looked down as they don’t own a car and have to use PT (or could own a car but choose not to and use PT).

      But sadly, in this place and time, it seems that you get no respect for either renting or using PT.
      And that you are somehow “diminished” as a member of society if you don’t drive and/or (at least aspire to, even if you don’t yet) own a house, or earn pots of money etc.

      I know round my office, if you use the bus or train to get to/from work its implicitly understood that because your car is being serviced/repaired, and not because you enjoy the experience!

      And thats something as a society that to our collective dis-benefit to have these kinds of attitudes.
      What we need is long term change so that people actually want to use PT (or at least, don’t disdain it) and don’t see anything negative because you rent.

    • Stu Donovan

      I’m not saying people “should” rent, only than rents are a more reliable indicator of housing affordability, especially for people on low incomes who are more likely to rent. More people pay rent (36%) than pay mortgages (31%) according to the last Statistics NZ survey, so if you wanted to pick only one indicator out of the bunch (as Demographia have done) then you should choose the rents indicator – as it is both more robust and more indicative.

      Personally I both rent and pay a mortgage. I also don’t feel like I have an agenda, apart from to 1) highlight the shortcomings in Demographia’s survey and 2) stimulate wider interest in these issues. In terms of a better approach, what you have outlined above seems reasonable; I’m saving my own ideas on this topic for another post.

  • Walkablecity

    There are indeed different benefits (and drawbacks) from renting versus buying/owning. This discussion needs to consider the financial and social cost of having to shift frequently at the behest of the property owners. I and others may prefer to rent, but this is not always optimal. My own experience is of having to shift more often that I’d like, at mounting cost – new phone and power accounts, movers, time off work to find new rental, etc. One year, against my wishes, it was multiple times because 1) the owners were coming back from overseas 2) their children were moving in 3) they needed to cash in on their investment, etc. The CHRANZ report “Housing Costs and Affordability in New Zealand” touches on this costly issue and “the high transaction costs involved in moving within the rental market (especially for low-income groups)”. An example of the social cost is the upheaval of children having to change schools and its negative impacts.

    • I certainly sympathise with your situation but, if you were on a fixed term tenancy, none of those situation should have allowed the landlord to require you to move.

      If the property is purchased by a new owner, that owner can then give you 49 days notice if they intend to move in or 90 days notice otherwise. This doesnt give NZ tenants much long term tenure and is very much in favour of the owner. On the other hand, giving the tenant very strong occupation rights on a fixed term tenancy would really discourage landlords from signing long term fixed tenancies as that would reduce the attractiveness of the house to home buyers (though maybe not another investor).

      Even if tenants did have more security of tenure, I dont know how many tenants want to sign a 5-10 year fixed term lease in NZ, as happens in Europe. However, that is a cultural aspect and can change over time. If we do see long term tenancy as an option in NZ we need to chnage the Residential Tenancies Act to give more security to tenants.

      • Walkablecity

        Totally agree. goosoid, which is why I chose fixed term tenancy agreements. Unfortunately I lived in a series of properties owned by people wanting sell up for retirement, in which case all bets are off, so to speak. I would have happily signed a 2-3 year agreement, with an option to sublet if I decided to move, and in which case the owner could choose to also end the agreement. Win win from my perspective. Plus that would lessen having to live through yet another round of potential buyers tramping through my home, vacating the house a few hours weekend and randomly during the week, and being told that my “1 bowl in the sink nearly ruined the open house” in an otherwise meticulously clean house, of course apart from the mouldy falling apart dog of a house that the owners invariably let it become because tenants are just money, not people. Just my specific experience, but par for the course. Of course, some tenants can be real shits, too.

  • Stu – there are really two kinds of housing affordability here aren’t there? There is renting, which hasn’t got that much expensive in NZ relative to inflation/incomes since the 1980s but is becoming increasingly unaffordable for very low income families (because they’re getting poorer). Then there is buying a house and paying the mortgage which has got more expensive, especially in the early 2000s. That is why the proportion of the population which is renting rather than buying keeps going up. But since about 50% of the population is still living in their own homes (even in Auckland), why only use renting as a measure of housing affordability?

    • Stu Donovan

      I guess my point is that they’re actually measuring two different things: 1) home affordability (i.e. the price of buying a home) and 2) housing affordability (i.e. the price of renting).

      While both are important I’m arguing that #1 is distorted by a whole load of things, especially tax and transfer, whereas #2 is a more reliable measure – both across time and space. The other thing to remember is that while 50% of people may live in their own homes, some of these are freehold. From StatisticsNZ:
      – In the year ended June 2011, 31 percent of all households made mortgage payments; and
      – In the year ended June 2011, 35 percent of all households made rent payments.

      So my reason for relying on rents is two-fold: 1) more people rent than pay mortgages and 2) rents are a more reliable indicator of housing affordability

  • As soon as I read “I’m about to generalise here..”, I knew some very biased comment based on exactly no evidence was coming. Kind of like wehn people say “I’m not racist, but [INSERT RACIST COMMENT HERE]“.

    I really think comments like that have no place on an evidence based blog like this. Go over to Whaleoil though. They love broad sweeping condemnations of people not backed up by evidence.

    • Sorry that was aimed at Jonno1’s comment above. Damn reply function doesnt work properly.

      • What browser are you using goosoid? I find entering replies on this blog very troublesome in Explorer but Chrome/FF both seem to avoid the problem.

        • IE – the only way I can get it to work is to right-click, open new tab/window then put in my reply. It then seems to put the reply in the correct place. If I just left-click, it always puts it in as a new post not a reply.

    • jonno1

      goosoid, my comment was anecdotal because I’m a too lazy to dig out the links. However, I would appreciate it if you would explain your perception of bias. And I can’t see any sweeping condemnation either, but maybe that’s because I’m biased! Thanks.

      Although your insults say more about you than me, I’m still happy to engage in reasoned debate. You’re right about one thing though, the standard of debate on this site is generally fairly high, so the tenor of your comment came as a bit of a surprise.

      • I really apologise if you took anything I wrote as a personal insult. I didnt intend it as such.

        I am just making the point that this is the kind of all encompassing statement that I would expect to hear on talkback radio (not that I ever listen) or see in the letters to the editor. I have a read a lot of your posts on this blog and I know you are smarter (and less reactionary) than that so I guess it was more disappointment to see that kind of comment on here. I think I was insulting Whaleoil rather than you!

        I have spent plenty of time in my life with only just enough money to get me through the month and that was without raising a family. Perhaps you have too. From that experience, I dont believe a majority or even many of the people in the lower quartile of salaries are blowing a lot of money on those things you listed. I am not denying there are some but in my experience most people are doing their best to get by.

        One thing that doesnt help is those people having to spend such a huge proportion of their paltry wages on transport, driving everywhere with no alternatives. Luckily for me, I am no longer in that quartile but I would rather see a city and society that allowed those people to live a decent life. From my experiences overseas and seeing another way of doing things, I dont believe NZ is currently heading in that direction and I want to change that.

        • jonno1

          OK fair enough goosoid, perhaps I’m becoming overly sensitive in my dotage! I can’t speak for talkback radio or letters to the editor as I don’t follow them either, but from my experience in voluntary budget advising, prioritising expenditure is the key to financial survival. It’s not strictly an income issue either, some of those who come unstuck are on higher salaries than I’ll ever earn. But I’m sure you’re right in saying that the majority simply get on with it without complaint.

          Greg N @3.55 tells an anecdote about a former police woman who cautioned about judging others’ behaviour. I totally agree with that sentiment, as well as the bit about some people simply not having the necessary coping skills. Of course, ever-increasing handouts without requiring (and providing assistance with developing) commensurate responsibility simply exacerbates the problem, and to me is the greatest insult one could confer upon another human being (ie embedding their dependency).

  • Sacha

    Replies have not worked reliably for me in FF for some months now. Used to.

    • In IE the comments facility either doesn’t work at all, or you have to randomly click in and around the “Leave a Reply” field before it expands to allow a reply. It also completely fails to nest your reply below the comment you’re replying to…

  • Matt Lee

    Rent to valuation is usually a good measure of telling whether house prices are over-valued i.e. to what extent are people paying over the odds because they expect a capital gain.

    Income to valuation is trickier because won’t this be inversely correlated to inflation and interest rates? (I suppose one needs to work out some kind of implicit rent derived from home ownership. Not easy tho’.)

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