I know many of the liberal left don’t like or can’t accept the thought that banning non-residents from speculating on residential property in NZ is in any way xenophobic. Thankfully, from my perspective at least, the liberal left doesn’t speak for the whole of the left. Thing is, this banning of foreign investment is similar to the proposed Crafar Farms deal with China’s Shanghai Pengxin. And just as many of the liberal left exhibited large dollops of xenophobia over that little affair but just couldn’t bring themselves to recognise that fact, well…it’s déjà vu – with the caveat that all foreigners, bar Australians, are the bad guys this time.
But good ol’ NZ property speculators? Big thumbs up. Nothing wrong there. Or at least that’s the laughable implication of the stance adopted by ‘the liberal left’.
Maybe if we want to be at all serious then, we need to acknowledge the fact that property speculation is the problem – ie, all property speculation and not just that undertaken by foreigners. And tempting though it is to argue that private individual ownership is the problem – or that a Marxist fixation on ownership that ignores control is the problem – for the sake of this post, I’ll leave the concept of private property in place.
So, to repeat what others have pointed out. 400k is in no way affordable for most people living in NZ. That’s a fact. But it’s not necessarily a problem. Thing is, as a tenant, I don’t give a toss who owns the house I live in. Mostly what I care about is the amount of rent being charged, the long term security of the lease and the physical integrity of my home.
On the basis that most people just want a decent house to live in – a place to call home, I’ll float the following.
Lets take the Green’s ‘fitness of warrant’ on urban rentals as a given. And let’s take the normalisation of ‘rent for life’ leases as something worth pursuing.
Given those two things, it seems an obvious step to take the sheen right off of property speculation would be the introduction of a maximum allowable rent.
Obviously, rent as a percentage of income (as per the Clark government’s 25% of income for Housing NZ tenants) doesn’t fly in the private sector, as only wealthier workers would be entertained by property owners looking to make a buck. So calculate maximum allowable rent through some formula that takes GV and rates or whatever into account. And construct the formula to yield a result that kills off the current financial incentives to owning and renting out strings of properties. And legislate so that tenants who may be ripped off get fast and full redress.
As an aside, from casual conversations I’ve had, my understanding is that rentals in major cities in the likes of Canada are about ¼ of those in provincial NZ. So it seems there is plenty of room for manoeuvre on the rent front when viewed from an international perspective.
Done correctly and thoughtfully (as opposed to this off the cuff post), we get diminished returns from property speculation and cheaper rents. And what’s not to like about that? Let the Australians and who-ever else buy whatever they want. But take the cash cow element away.
And if speculators then quit the housing market and you, for whatever reason, have your heart set on buying a house, then hey…prices are going to be dropping.
Meanwhile, why not devise exemptions or exceptions on any rent formula such that housing co-ops and such like are actively encouraged? Then far more people than at present could wind up in a far more empowered position that today’s home owners. Just a thought.
Mind you, maybe best to just trundle along applauding half arsed measures that might – just might – be to the advantage of a fairly small proportion of the population.