• June 2018 Newsletter

  • The Great Meth Myth and its Victims

heads roll

There is an old saying      ‘ When everyone is thinking  alike …. No one is thinking!  “  .

This is very true in real estate and we have just had a classic example of this with the current Meth’s test debacle.  This matter makes my blood boil. Its not like the latest finding by the Governments Chief Science Advisor, Sir Peter Gluckman, is new. This matter was first raised by Dr Nick Kim, Massey University’s Chief Chemist about three years ago. His comments were broadly dispersed through the media with several television programmes outlining his views.  He was adamant that the Ministry of Health had it all wrong.

To make matters worse this man was on the Government advisory board that set the standard measurements in the first place. Dr Kim was clear that: – “the way the test was being used to measure second hand Meth’s residue in houses was wrong.”  The tests were designed to measure a marker in Meth’s labs, where the chemicals used to create the product were a lot more harmful than the end product.

He said he would be happy to have his kids in a house with levels over 12 mgu and that it was no worse that cigarette smoke. I wrote and widely disseminated an article headed “The Great Meth’s Myth “, predicting that with this new information, things would change . And they did a tiny bit. The same people who had misunderstood how the test should be applied in the first place raised the level of measuring from 0.5 mgu to 1.5 mgu,  showing once again, that they had no understanding of what the test was about and continued to  apply the right to test to the wrong situation. The children’s story of “The Emperor Who had no Clothes “ has some alarming parallels with this story.

At that time Dr Kim was saying the residual fly spray on your walls was a lot more harmful to you than second hand Meth’s smoke and that if you open your windows the harmless residue smoke would clear itself.

This new research has totally validated Dr Kim’s own findings and shows just  how stupid some people can be. Especially the people who apply these types of rules to the public.

Unfortunately, there are numerous innocent victims of this stupidity. The insurance companies that have paid out fortunes to have houses de-contaminated that didn’t require it. The house owners who have paid cleaning companies thousands of dollars to clean houses that didn’t require it. Landlords who have had regular tests done when tenants have gone into or out of houses which wasn’t required.

And it doesn’t stop there. The cost to home buyers who have had lawyers and banks insist that a Meth’s test, costing around $400, be a standard clause in any sale and purchase agreement, or the home owners who have negotiated thousands of dollars off the value of their properties to buyers because of low level contamination. (Just 1 hour and 30 minutes before the new information hit the media we had negotiated and signed off $75,000 from the sale price because of a low level of contamination).  My heart goes out to the owners as victims of blind bureaucratic stupidity.

This whole scenario is just so wrong and undermines the publics confidence in the people who make these standards. Its not the scientist like Dr Kim, who created the measures, nor in this case the media who widely promoted Dr Kim’s findings,  but  the hidden nameless individuals and committees who hide in the bureaucratic halls of government departments, who didn’t understand what they were doing,  and continued to apply the right test to the wrong situation. How many other examples do we have where this is currently happening.  Ian Wishart’s book “Show me the Money  Honey “ suggests quite a few in the medical field alone.

Sadly, it again reminds me that there is a lot of money to be made from alligator skins so not everyone is thinking of draining the swamp.

I do hope some heads roll but I bet they don’t.

Link to earlier article  Earlier article

  • WDC Population Figures Widely out of Whack

population

Most countries have difficulty accurately measuring population growth. This is because it is based on the Census figures that come out every 5 years. It is estimated that about 8.7% of the population don’t fill in the census so the figures given are already 8.7% behind the actual figure. The  Whangarei District Council use the census figures, as you would expect, and have reached the following conclusions about our population growth:-

The WDC predictions for the future are:-

Over the next 30 years, the population of the Whangarei District is expected to increase at an average annual growth rate of around 0.9%. The population of the Whangarei District is estimated to reach 110,000 people by 2043, an increase of around 26,000 people from 2013 or approximately 870 people per year.”

However, individuals in the WDC who are monitoring historical growth figures are already noting that the population is growing quicker than planned.

Mrs Seutter said the recent statistics, estimate Whangarei District’s population to be 87,700 residents, a 2.1% increase on the previous year, and reveal that just over half of this growth is in the urban area.” (WDC planning June 2016)

One has to question why the population is growing at 2.1% yet still be assessed at 0.9%

Based on the 2016 estimate the population of the Whangarei District at 2018, is currently sitting at 87,700 +870 +870 for 2017 & 2018 = 89,440 people.

We know from the census returns that this figure will be underestimated, but let’s look at what we can currently measure using other sources. There is a Government body that accurately records people registered with doctors and the medical system.  As their funding is based on the actual population seeking services this proves a very accurate way of tracking population growth,  because to have access to the medical subsidies available in our health system, you have to be registered. What these figures show is a very rapid  growth rate since 2013 but more significantly since 2016. Keep in mind the WDC population growth estimate is for 870 people per year.

 2016                         1835 new registrations                                                                               2017                          2094 new registrations                                                                             2018                            on track for  2432 new registrations

This is over double and closing on treble the WDC estimate, but in line with the WDC statement of 2016 showing a 2.1% actual growth.

This means that in a 3 year timeline from 2106 to 2018, while the WDC is planning for a population growth of 2610  people,  the population is actually on track to  more than double that growth rate at 6,361. The last 5 years of medical figures show that the population growth rate is accelerating, so the WDC is not only underestimating the real population growth but falling further behind each year.

  • What Impact on Housing Demand.

boomThe below snippet is taken from my July 2015 Blog post and explains how many houses we need per 1000 people.

Statistics NZ say the average number of people in each occupied Whangarei household is 2.5 people per household. WDC has a higher figure of 2.77 as they have factored in the empty holiday homes. 84,500 divided by 2.77 people is 30,505 dwellings required and 84,500 divided by 2.5 people per household is 33,800 dwelling required. Based on these two calculations, we are either currently keeping up with demand or we could be around 2,500 dwellings short. If we support the WDC figures (and I do) then we are currently sitting about right. However, if we see the kind of growth rate that is being suggested by the Hospital research, then we are facing a looming housing shortage starting about now. We need 361 new houses per 1000 new people and residential resource consents for new homes are running at about 350 per year (WDC resource consent monitoring 2014)” 

The current WDC new house building consents (these are issued house permits, so some may not have been built yet) 

2016     612 new houses                                                                                                              2017      611 new Houses                                                                                                                      2018 to date 253 New houses

Based on the WDC figures of 361 new houses for 1,000 people, we are not keeping up with our current demand by about 80-100 houses a year.  The consents from 2016 are nearly double the consents of earlier years so kudos to the building industry. The surge in new houses built means the looming crisis has been partially averted and we have a shortage of houses in the hundreds rather than in the  thousands as is the case in Auckland. However, we are seeing new builds failing to keep up with population demand and the gap will grow and therefore we will continued to see pressure on the available housing stock.

As mentioned in earlier articles this will first be seen in the very bottom of the rental market. The people with poor tenant history will be the first to find they can’t get a rental. We are well into that phase now. Our rental department says they get well over 1,000 inquiries per month. Of these 80% will not fit the good tenant requirements for our landlords. This indicates there are 800 people inquiries each month who are starting to find the supply of houses is drying up for them.

The problem most builders are facing is the lack of sections available for sale. We have fallen way behind the numbers needed which is not helped by the draconian processes and costs one must undertake to create a section.

Enter the super heroes of the urban environment …. The developers!!   I have said before  that these people are not the enemies of the state they are so often portrayed as. These are the heroes of the people, the knights in shining armour who bravely put on their plastic safety helmets  and armed only with wads of money and a shield of reports combined with  the patience of a snake charmer, take on the legions of bureaucratic dragons within the system. Fighting super  slow motion battles , these modern heroes battle  against overwhelming hurdles and weird senseless conditions, to eventually triumph through to win a few sections> The builders then  create your next castle and future  haven and the dragons get the last laugh by taxing you every year to live in it.   Bless the developers, your heroic work does not go unnoticed!

  • House Prices Keep Rising with a Surprising Jump.

House Prices

Corelogic have the average Whangarei House price in May at $524,268. This is a huge jump on the previous month which was at $512,326. The rate of growth suddenly accelerated from what has been a gradual decline. This could be a one-off anomaly, but it may be the early signs of some new pressures in our marketplace such as the aforementioned population growth. We will monitor this jump carefully as this May saw increases back to the market peaks  increases with property growing in value at around $3,000 per week.

In the office we are seeing  pressure on any property priced under $650,000 with multiple offers on many, which appears to be driven by the first home buyers back in the market. The market still has a strong upward drive, so while the rate of growth is slowing, we don’t see house price rises stopping anytime soon.

Our new year prediction of the average house price being in the $525,000-$550,000 by the end of the year looks like it may be conservative with us nibbling at the lower end of that figure 5 months into the year.

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