Have you ever wondered why the smallest amount of residual “P” smoke left in a house is reported to have such devastating health effects and plus require massive cleanup costs, while the person smoking the “P ” seems to be able to take copious quantities of the pure product into their lungs and not drop dead. It’s been troubling me for years as to why so many users are able to inhale what must be lethal doses , yet we don’t see them dying like fly’s. Something did not add up.
For years now we agents have been bombarded with the risks of Meths. We have had numerous experts coming to our offices and conferences, detailing the risk of meths contamination. Our poor owners have spent thousands of dollars ridding houses of low grade contamination where someone had smoked a “P” pipe in the property once or twice. The lawyers have climbed on board and added ‘P”tests to just about every contract. The banks want a clear ‘ P” test before they will lend on the property . We have had guidelines issued by the Real estate institute about best practice . The REAA has fined and chastised agents for not taking due care if there is the slightest a risk of someone having smoked “p” in the house . One poor agent even got fined for not reporting a rumour that the last owner may have smoked in the property, even though the agent had tested the property and found it had NO contamination.
It now appears, we the public have been grossly misinformed on the subject . Dr Nick Kim, ( A Senior lecturer in Environmental Chemistry at Massey University,) who peer reviewed the current standard tests 6 years ago recently said “ We tested the residue left on walls by meth smokers and found the potential health effects of past “P” smoking was no worse than those of tobacco” ( Stuff.Co) “
For years we have accepted the New Zealand Health department benchmark for safety of 0.5 micro-grams per 100 square centimeters, but it now comes out that the tests were designed to measure contamination in houses where “P” was manufactured and have ” somehow slipped sideways ” to where it’s now being used as a guideline for all houses. This happened when local bodies tried to find a test for contamination and this was the only one around.
The message now emerging is that the test is designed to measure one chemical in the manufacturing process. Dr Kim says “Methamphetamine is like a marker for all the other chemicals that might be present, but you haven’t tested for, that would occur in manufacturing, but wouldn’t occur in smoking” ( Dr Nick Kim . T.V.1 Fair Go). In this case the chemical is the end product, “P” itself. While “P” is harmful in big doses, it’s the soup of chemicals that are used in the processing of “P’ that are the real danger. Chemicals like Toluene, a solvent used in paint thinners, Lithium a heavy metal used in batteries and Acetone, another paint thinner. By taking one chemical out of the process and measuring it, the general quantities of the other harmful products are proportioned and basically assumed or guessed. If this much “P” is present then there will be that much Lithium, Acetone and Toluene.
The reality is the end processed product “P’ will have very small quantities of the harmful products in them. They have been used in the manufacture but are not part of the end product. It turns out that to test a house that has been smoked in, rather than used for manufacture, is not an accurate test .
Millions of dollars have been spent by trusting buyers and owners to get houses checked and if necessary cleaned, all because some bureaucrat misunderstood the basis of the testing.
To use a rather personal analogy, if you think of the toilet paper in your house. If you measure the chemicals in the paper now, you will find minute traces of Hydrogen Peroxide, Chlorine dioxide and Sodium Hydroxide, but at safe levels. (you would assume). But if you measured the paper when it was sitting in the factory vat, soaking in bleaches and other stripping agents, it would be full of these chemicals and very unsafe for your delicate posterior. But once the product is finished the chemicals will have largely been stripped out leaving the paper. So if you design a test that measures the chemical contamination in the processing factory, work out the rough proportion of each chemical in the soup, and then take one of them, in this case the paper as your marker , then you have a great test for the proportions of chemicals in other paper factories. But if that measure happens to be the end product (the paper) which then goes through a washing process that strips the chemicals out of the paper, and you apply your factory test to the residential home roll of toilet paper, you have a problem. The roll is full of “paper” which your factory marker test says is harmful. But it’s not the same product that was sitting in the chemical soup. It’s been cleaned and should be near perfect for purpose. ‘
This article is certainly not an endorsement for “P” usage as I have many friends whose families have been ravaged by “P’ usage in their children, and you just never hear good stories about ‘P”, but in terms of health standards we have been lead by the nose on this one , with our wallets and common sense being raped by the powers that be, who appear to have very little knowledge of what they were actually doing
Another Myth we have been sold is that “P” residue stays there forever. Dr Kim says “ Households where Meth was still being smoked or worse, manufactured were obviously a risk to health , but once it stopped , the residues would break down over a matter of months . “ ( Stuff.co). When asked about what is a safe level for houses where people have smoked only, remembering the current NZ health standard is 0.5ug, Dr Kim says “10-20 ug should be safe, I’d be happy for my kids to live in a household with anything up to 12 Ug.” ( Fair Go). The current safety level is 1/24th of this and we have had buyers insisting on expensive cleans that take the property into the margin of scientific error at 0.02.
I am reminded of a lecture I heard in the Mental Health field many years ago. The lecturer was a visiting American Psychologist and he was talking about the rapid growing in mental health issues. He said the following. “ When you are up to your a**e in alligators, its hard to remember that your initial objective was to drain the swamp, but you also have to remember that not everyone wants the swamp drained as there is a lot of money in Alligator skins”
Please Don’t Sue Me Just Because You Can !
The article from my last newsletter contained the sentence. “So do we predict the Whangarei market still has $110,000 growth in it. The answer is yes! At this stage there is nothing standing in the way.”
With my permission this article was copied, and published in the local Harcourt’s publication “Blue Print”. I have since been approached by a senior member in the company with a caution. “If members of the public take your words as gospel and act on them accordingly, and you turn out to be wrong , then you have left yourself open for possible law suites, and disciplinary action from the Real Estate Agents Authority. “
I accept there is a risk in putting any predictions in the public arena, but based on over 30 years experience , reading the Real Estate tea leaves is the one thing I can do better than most. I can add opinion, analysis and knowledge to your buying or selling decision. No one can know what the future truly holds, but there are footprints showing the way. These foot prints have been there in previous cycles and lead in certain directions and based on my and Diana’s experience we try to interpret the signs we see from inside the industry and pass these on to you. It’s no guarantee that they are right, and I would think they would only be one part of your decision making process. I dread the day when people don’t share information because they fear the shadow of the bureaucracy. I think its called Communism
The warning led me to think hard about what could go wrong with property prices and why the prediction could be wrong. After much thinking there are some factors we have to consider.
• Tony Alexander the BNZ Chief Economist has put the case that the population growth is restricted to Auckland, along with the housing shortage The price drivers are specific to Auckland and that people are taking a risk investing in the provinces as there is little population growth in these areas. That may be fair in some provinces but we are seeing huge population growth in Whangarei. The District Health board figures are showing population growth way beyond the 1 percent the Whangarei District Council has predicted.
The building companies are seeing an unprecedented demand for new houses, with some people not being able to book a builder for 12 months or more. As agents we are inundated with Aucklander’s buying in the district. So while I have the greatest of respect for Tonys’ undoubted ability, the evidence we are seeing here on the ground, says this is not a factor in Whangarei .
That only leaves international factors to think about. I don’t feel qualified to talk about these events and their repercussions as its not my area of expertise but will lightly touch on two of them to highlight possible concerns
- The Brexit. I know of people who lie awake at night worrying about this, mostly English people. If England leaves the EU what will happen? Will the EU collapse? There is no doubt the EU is in trouble regardless if England leaves, and if it deteriorates further it will badly affect the world economy. And when the world economy sneezes little old NZ gets a cold. So this is a possible hiccup to our price rises.
- The USA economy. I subscribe to a publication by John Maudlin , an investment adviser in the States who is aptly named ‘ Maudlin” and he and his writers scribe a lot of “End of the financial world as we know it” stuff. One article that I paid attention to was an analysis of the growth in The USA. The growth is almost entirely made up of three sections. Government spending, Military spending and Health Spending. All the other major productivity sectors were either flat of heading down. They argued that the USA recovery was an illusion based on huge quantities of printed money going into these three sectors while the engine room of the USA, its productive sector was stalled. They highlight the inability of the USA Fed to raise interest rates as further proof of an ailing economy. There is no doubt that if the USA economy is still very sick, as they suggest, then we too could get a rather nasty stomach bug.
- There are numerous other overseas concerns such as oil prices, Russian aggression, disease, The Middle East and Donald Trump to name a few, but the reality is we can’t do anything about any of them. We are a small isolated country at the bottom of the world. A small isolated country that seems to have its act together, a country that is punching way above its economic and financial weight and while we do that we have every chance of coming out of any future global financial crisis better than most . And if the s**t really hits the fan we can unleash our secret weapon. We have Ritchie McCaw retired from Rugby and ready to unleash on any misfortune. Our future is safe!
Our problem is we don’t have enough houses. Houses are a commodity like any other commodity, like cars, coffee and root beer. If there is good supply, prices stay constant, if there is a shortage prices rise. We have a shortage of houses in New Zealand. The greatest shortage is in Auckland but this shortage is being shipped to the provinces by Aucklanders’ leaving Auckland and moving to the provinces.
While we know the solution is to build more houses , if we look at the cause its been created by a combination of :- world events and by Government/ Reserve Bank “solutions” that cause boom bust cycles. The reserve bank lifts interest rates to stop house inflation and kills building, which creates a shortage of houses and so on. Building is always the first to get hit in a world crisis and in an interest rate hike. We have seen this pattern over and over . Muldoon did it in 1980 when he put in the price and wage freeze. When he lifted the freeze house prices boomed. The Share market crash of 1987 was next. When the crash was over, house prices boomed. Then Don Brash as reserve bank governor raised interest rates through the late 1990’s to stop house prices, when this was lifted by Wheeler in the early 2000’s house priced boomed. The G.F..C of 2007 led to the market crashing and now we are in yet another boom. . The more the disruption to housing growth, the fiercer the recovery.
And that is why the government is finally doing the right thing by not interfering with house prices. If left alone they will find their natural level and grow at an average of 8 % per annum. Building companies can work in a stable environment , supply will increase and demand will balance out. But the more outside interference we get, be that internal or external, the more boom and bust cycles we will get. If we don’t have the boom bust cycles real estate will become a steady investment rather the current all in, or all out, cycles we currently experience .
A Quick Snapshot of Other Real Estate Matters
- Whangarei year on year property prices are accelerating again. May’s sales price was up 15.6% (Corelogic May). that means the average Whangarei home is going up by $1200 per week and as predicted the growth is accelerating again. My December prediction of 17.5% – 22.5% growth is looking good and there is a risk this may be conservative.
- The average Rental Price from Just Rentals for May is $362 per week, with the number of inquiry’s for properties steadily increasing to over 750 per month . The demand for rental property in the area has increased by over 35% in the last 5 months