Stating the obvious – Bernard Hickey:
Time for action on high house prices
Auckland’s stratified median house price, which strips out the noise from an unusual number of sales in high or low price brackets, rose 3.4 per cent last month, to $937,100. Despite urgent attempts by the Government and the Reserve Bank to dampen demand in October and November, the cooling off period lasted just five months.
Auckland’s housing market is back on the track of runaway inflation where demand from record high net migration, solid jobs growth, strong real income growth and falling interest rates are slamming straight into utterly inadequate supply.
The not-so-dirty little secret of the politics of rampant house price inflation is it makes voters richer and happier.
Perhaps Hickey means – the not-so-secret dirty little fact of politics.
They have more equity to reinvest in more rental properties, they can use the equity to build and run businesses and they can use their houses as ATMs for the odd holiday or two.
The temporary high has to end in a crash.
Renters don’t vote at nearly the same rate as property owners so politicians can easily preach that they are doing something about housing and safely do very little to stop the inflation. Secretly, it suits them.
As Hickey goes on to note it suits them in the short term, but only if they ignore the social damage and costs. (When first posted the title of this article was Social cost in high house prices).
English already talks about the fiscal risk to the Government from high rent inflation in Auckland ramping up the $2 billion annual cost for accommodation supplements and income-related rent subsidies.
The Government now has to subsidise 60 per cent of all rental properties. The research is clear that home-owning families are much more stable, their kids are better educated and eventually much more productive. Even English has warned of the social costs of housing inequality and poverty.
If the Government is serious about its investment-led approach to addressing New Zealand’s problems with child poverty, the first thing it should do is estimate the long-term social liability of allowing Auckland’s housing supply crisis to stagger on unsolved.
In a similar vein – Liam Dann:
Serious disconnect in housing boom
Right now there is an enormous disconnect between house prices and everything else. That’s actually a wonderful scenario for established home owners. But it is exacerbating social inequality.
The suppressing effect of low inflation on wages is easily compensated for by the wealth effect of knowing your house is worth hundreds of thousands of dollars more than when you bought it.
The problem is that letting property prices come to the rescue now is good for us in the way a P addict might say one last hit, to get him through a bad patch, will be good for him. We know that there is a come down to be had with property but as long as it remains at some ill defined future point we seem to lack the political will to address it.
And the rise of homelessness and stress that housing costs are putting on low wage earners is clearly unfair. It puts a generation of New Zealand children at risk. When we debate housing affordability we need to let fairness and equity be our drivers for change because if we rely solely on the economic case there is always an argument to let things roll on.
According to Simon Bridges there is no Auckland housing crisis. This will be news to Nick Smith, who makes a show of trying to address it (and fails badly). Why aren’t the Nats making a better job of housing? Is it because they don’t want to? An anonymous editorialist explains:
A government of big property owners doesn’t want to tax itself
New Zealand used to pride itself on being an intimate, property-owning democracy. Well, we own much less property than we used to. Our rulers, on the other hand, own much more.
MPs own an average of 2.43 properties each, according to the latest register of MPs’ interests. About half of New Zealanders own a home, whereas two-thirds of the MPs own more than one. … National MPs, for instance, own about three properties each on average. National Cabinet ministers own slightly more again.
“It is difficult to get a man to understand something when his salary depends upon his not understanding it,” the great American novelist Upton Sinclair once wrote. This profound truth applies in general to politics, and perhaps even to particular policies.
The suspicion remains, however, that the Government is not nearly as keen to cool down the housing market as it says it is. Perhaps it’s not in its interests to do so.
Short term profit and bugger the consequences. It’s the National way.