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How can NZ incomes be lifted to match housing costs?

Written By: - Date published: 10:37 am, December 12th, 2020 - 68 comments
Categories: benefits, housing, jacinda ardern, labour, minimum wage, tenants' rights, wages, welfare - Tags:

One of the more useful things in recent weeks in the debate about housing is the clarity of Jacinda Ardern’s position,

Jacinda Ardern says ‘sustained moderation’ remains the Government’s goal when it comes to house prices, as people ‘expect’ the value of their most valuable asset to keep rising


Prime Minister Jacinda Ardern says she would like to see small increases in houses prices, acknowledging most people “expect” the value of their most valuable asset to keep rising.

Two things there. One is that the government has no intention of dropping or even preventing further increase of house prices.

The other is inferred, that Ardern sees property as investment as more of a priority than housing being primarily for homes. It also says to me that protecting the investor classes is more important than raising people out of poverty.

This more than anything else I have seen from her or Labour tells me that they are governing for the middle and wealth classes. With kindness for other classes of course, but still.

I can see a kind of rationale for her position in that we need a strong economy to support the underclass, and with the impacts of covid, eg halving tourism, we need the property market to prop up the economy. But it’s still very much let’s prevent people from dropping down a class and doing that at the expense of the people already at the bottom.

Even if that made sense as a strategy it doesn’t explain the lack of support for beneficiaries, for which there is no plan at all for increases in income, including the tens of thousands of New Zealanders who are in no position to ever take advantage of Labour’s main strategy of ‘work will save us’.

So I’m hoping the people that believe that instead of dropping housing prices we could raise incomes might explain how that might happen. Not a vague let’s raise wages and benefits explanation, but an in-depth, number crunching, evidence-driven explanation. Where is it?

Such an explanation would centrally need to take into account Accommodation Supplement (available to beneficiaries and people on very low wages), and benefit rises, because of the way that increases and AS tend to end up in the pockets of landlords. I’m curious if that happens with minimum wage increases too.

And while indexing wages and benefits to house prices might help once the massive gap between income and housing affordability is lessened, I’m yet to see any good explanations for how we get to that more even playing field starting point.

Maybe I’ve missed them or maybe I’m pointing to the Emperor’s state of undress.

68 comments on “How can NZ incomes be lifted to match housing costs? ”

  1. Grafton Gully 1

    The two things – the government could nationalise the construction industry and lead a massive new housing project with location, site development and architecture based on what people actually need (plenty of science on this) as opposed to what we want (often irrational and unsustainable). Secondly, I want our home to value down for two main reasons – it reduces the rates bill and more importantly it encourages us to donate, spend or save cash we don't need into a wider spread of investments instead of putting every egg into one basket.

    • weka 1.1

      agree. However the government including the PM are currently stating that they want house prices to increase, and I see some lefties arguing that we can raise incomes to make this ok. I'd like to know if there is any credibility to this position (I can't see it).

      • Cricklewood 1.1.1

        The only way this would work is ig the govt found a way to cap house price inflation at 1 percent and at the same time lifted incomes in the lower quartile by over to 10 percent…

        Basically in the never going to happen basket.

        Was very easy to make a heap of noise in opposition and to say the right things in a first term dominated by Covid. But anger is going to grow as the rentier class realizes they have been sold down the river…

    • Tricledrown 1.2

      [Deleted]

      [You have a Moderation note waiting for you here: https://thestandard.org.nz/open-mike-11-12-2020/#comment-1770573 ]

    • NOEL 1.3

      It doesn't reduce the rates bill by much.

      The only components not a Uniform Annual General Charge adds around 15 dollars to my new rates bill.

      Those are measured against land value.

      Glad it isn't Capital Value.

      For the past five years my RV has been pretty near One Roofs figure.

      The latest revaluation sees land value increase by 75,000 and capital value by 80,000 for a total of 90,000 over One Roofs top market value.

      One wonders if this has influence on sellers decision to sell.

  2. 'we need a strong economy to support the underclass'..we've basically had a strong and growing economy since the '84 reforms….I'm not exactly convinced thats been used to 'support the underclass'..or, infact, even the middle class..beyond encouraging their housing fetish…The Economy is for the Players not The People.

    • Cricklewood 2.1

      The strong economy is built on the backs of the under and middle classes. The middles classes are essentially kept placated by the illusion of wealth via house prices.

      Sadly we are distracted by identity politics when the real battle that needs to be fought is essentially around class.

      It runs through everything… education, health care, employment even who will take the brunt of climate change…

    • weka 2.2

      support the underclass in this context would mean enough welfare that people aren't dying in the streets or revolting. I think Labour's kindness intentions are more real than that, and I still believe they significantly better than NACT on welfare and low waged people, but it's hard not to strip it back to bare bones and see that there's really no intention or plan to end poverty and that Labour are in a holding pattern instead.

  3. Pat 3

    I dont believe we can achieve housing affordability from an income increase.

    If we accept that 'affordability' is 3 -4 times the median income then the median income would need to over double….the inflationary impacts of such would be counterproductive, certainly in the short/medium term…It may be possible to improve the (net) ratio by careful remuneration redistribution (i.e. taxation) to compress the wage band but not to the extent we could double the median wage so therefore the problem must be addressed from the other end and that requires Government action.

    That will require state provision of quality (and suitable) housing at around 25% of income and the removal of rent/mortgage subsidies from the private market….7000 new state house aint going to be anywhere near enough and they know it….nor will underwriting private developments.

    • weka 3.1

      If we accept that 'affordability' is 3 -4 times the median income then the median income would need to over double….the inflationary impacts of such would be counterproductive, certainly in the short/medium term

      Can you please explain the inflationary bit?

      What are the rent/mortgage subsidies?

      • Pat 3.1.1

        An income ratio of 3.5 (mid point) for an Auckland property with the current median of $1,000.000 would require a median income of $285,000 pa and even outside Auckland the national median (excluding Auckland) is $600,000 and would require a median income of $171,000 pa….now think about how that will feed into any business/industry and the impact on export competitiveness and the likely impact on the NZD value in relation to our trading partners….everything produced here will cost a substantially more and that will reduce our ability to export.

        The rent /mortgage subsidies are

        https://www.workandincome.govt.nz/products/a-z-benefits/accommodation-supplement.html

        With suitable social housing provision they are unnecessary and all they do is fuel property prices by distorting the markets ability to pay.

        • Foreign waka 3.1.1.1

          Venezuela is beckoning…. if NZ cant find a way to house and feed its people, and more and more are on the loosing side, a silent protest with increasing numbers in gangs (are we there yet?) will be the result. Where are the ideas to find a way that is sustainable and just?

          • Pat 3.1.1.1.1

            https://www.interest.co.nz/opinion/108376/brendon-harre-offers-part-two-his-analysis-new-zealand%E2%80%99s-rack-rent-housing-crisis

            Some ideas here…though it is too slow IMO, but I agree with much of what he proposes but Id put the state housing build on steroids and let the investors know in no uncertain terms their investment capital growth and yields are history in the very near term….and be ready to take on the banks bad loans.

            • Brendon Harre 3.1.1.1.1.1

              I would like it to be faster. But the Empress With No Clothes On has dictated that house prices cannot fall. So the fastest 'allowable' way out of this housing shemozzle is a massive social housing build programme. On a per capita basis the social housing build programme needs to be as big as the First Labour Government – which would be about 10,000 houses a year. Like the first generation of state houses – it should target not just destitute beneficiaries but also the working poor as well. Also like the first state houses – it should be higher quality than current building practices. It should integrate housing with public transport. Like state housing in Lower Hutt http://www.valleysignals.org.nz/documents/hvsettlement1925.html And the communities should have mixed incomes, mixed social and affordable (KiwiBuild) and market rate housing. Ideally 15 minute neighbourhoods where most day-to-day activities can be achieved in a short walk.

              More here https://medium.com/land-buildings-identity-and-values/if-not-now-when-f995dd596c1

              • Pat

                And those public utterings fuel the problem.

                10,000 a year would be fast enough (IMO) to return the social housing ratio per capita back to the level of the 70s which would require around another 60,000 (assuming no great population increase meantime) but as importantly is the public position communicated on the desired effect (the affordability of the wider housing market) and the strength of the commitment to achieve the outcome.

                The market (players) need to understand the new reality

                • Exactly. If there was a credible plan to build 10,000 social houses a year. If it was fully budgeted for. The housing model locked down – Austrian/ Singaporean/ whatever. If there was some sort of housing accord or housing commissioner or both ensuring all the relevant players knew their part and adjustments could be made as the initiative progresses. Then the whole housing capital gains economy would stop. Expectations would change and I think for low socio-economic groups housing conditions would improve quite quickly and for everyone else there would be a more gradual transition.

        • mpledger 3.1.1.2

          The real estate market is a free market. People can essentially spend what the bank is willing to lend them. Giving people more money will just make house prices go up because they will just spend the extra to beat out the competition.

          If we want house prices to go down then we need to build more houses or accept fewer people into NZ (or both) and put some kind of restraint on the banks. The banks make up the money and all it does is get exported as profit, mostly off the backs of income earners.

          • Pat 3.1.1.2.1

            Largely agree….and thats why the gov need to act as the circuit breaker and flood the (rental) market with affordable housing…the flow on impacts on residential prices will follow and banks and investors will need to find a new form of investment if they wish a return….hopefully a more productive one.

            …a carbon neutral economy perhaps

            • Herodotus 3.1.1.2.1.1

              Dear PM you are the problem when we were sold the story that you were the solution.

              When you have a government in 2017 basing affordability as $600k then a few months later increased to $650k, what do you think it is now ? And IMO we were sold a lie and manipulated into accepting that $650k was the affordable ceiling.

              And since Labour won the power in 2017 what has happened since ? Property has boomed thanks to government and its agencies enacted policies.

        • mikesh 3.1.1.3

          Mortgage costs are not true costs since they are matched by the value of the freehold property that the landlord will own once the mortgage is paid off. This applies just as much to the interest component of the mortgage as to the principal. When the mortgage payments are completed the landlord is in much the same position as a family home owner whose mortgage is paid off, but who does not receive tax deductions in respect of the interest included in his mortgage payments.

          In thinking about tax we need to distinguish between "ownership" costs and "business" costs. Mortgage payments, as ownership costs, should not be taken into account in determining rental values. At present, however, we subsidize landlords by allowing them tax deductions in respect of interest.

  4. Ad 4

    New Zealanders certainly have a right to "adequate housing", but they don't have a right to own a house. Nor is there a duty on any kind of government to generate salaries that would support a mortgage on a house.

    https://www.hrc.co.nz/files/4215/1363/5639/2017_07_25_-_Right_to_housing_flyer_-_updated.pdf

    Having said that, the government intervenes at scale a fair bit – but not with the purpose of supporting mortgages.

    The core public service employs over 50,000, the education sector a further 100,000, the health sector over 50,000 with other government entities and those entities they hold majorities in a further 100,000. On average they are all paid pretty well. No doubt many fought hard for those pay rises – but that just shows the government working with the last of the unions. Add in 50,000 local government employees and you've got around 400,000 who have their living subsidised in full by we taxpayers and ratepayers.

    So when you look around for how government generates salaries that support mortgages, there's 400,000 out of a total of 2.7 million employed of all kinds (part time and full). That's your base scale of 'market intervention' for supporting mortgages.

    https://www.publicservice.govt.nz/assets/Legacy/resources/public-service-workforce-data-2017-v2.pdf

    Secondly there's the pay intervention it's done this year – over $40 billion worth – to keep jobs going. That's to stop the economy collapsing. Who knows it appears to have propped up the housing market as well – ain't hindsight a thing.

    Thirdly there's over $30 billion in infrastructure works. Many of those can support mortgages, though that's not the funding purpose. Again it's to keep jobs going, on stuff worth doing.

    There will be plenty who will demand even greater interventions into New Zealand: child poverty being IMHO a whole lot more important than whether you can afford a mortgage or not.

    But saying they're not doing enough this year to sustain incomes is just on the facts wrong.

    • Sabine 4.1

      There will be plenty who will demand even greater interventions into New Zealand: child poverty being IMHO a whole lot more important than whether you can afford a mortgage or not

      child poverty is an issue because generally the parents to whom these children belong are a. so deep in poverty that it affects the children, b. at this stage can't afford to neither pay rent nor mortgage.

      I know its en vogue to discuss child poverty as if the poor kidlings are just a job short of affluence, but really, it ain't the child poverty that is dragging the country down, its the parents who are dirt poor, piss poor – or even worse, so poor they can't afford to piss in a pot. And so far we have no government action on that other then maybe maybe a sandwich for the urchins once they go to school. As for the wages and the houses….lol

      • weka 4.1.1

        yep.

        And some rents are higher than mortgages so the whole "Nor is there a duty on any kind of government to generate salaries that would support a mortgage on a house" thing is a nonsense in this context.

        There's no way to meaningfully talk about poverty now (including child poverty) without talking about housing.

      • Child poverty or family poverty or whatever NZ wants to call it cannot be fixed while we have the most unaffordable rents in the OECD.

    • weka 4.2

      very interesting Ad, but two things:

      1. you've completely ignored the actual question in the post
      2. you've supported my contention that Labour is looking after the middle classes as a primary objective.
      • weka 4.2.1

        also cost of housing doesn't mean home ownership here.

      • Ad 4.2.2
        1. You didn't even try.

        2. Prove it with a fact.

        If you really want an answer to your question, start yourself.

        In the meantime.

        As well as the state doing plenty of intervention already as I pointed out above, we have been using mortgage debt to mask the economic fact that our salaries don't support our mortgages. Our economy remains strongly tilted towards high mass low value agricultural commodities, which on average don't support high salaries.

        Property investment is still the last confident place to make money. So that's why money keeps following money into property.

        The industries that have the highest-value salaries here are: mining and petroleum, telecommunications, energy, and tech development such as gaming.

        Which one of those does this coalition government support? Answer: none.

        In fact it actively undermines mining and petroleum, is massively re-regulating energy, and is letting telecommunications just decline and slip into being just another regulated utility.

        Again, tech development and gaming have small but useful government support.

        But most new listings on our sharemarket – if you wanted an alternative for your estwhile deposit to a house – are about property. Even Xero went to Australia to list.

        So the coalition government has pretty minimal effect so far, and would need a multi-term economic development plan to really tilt our economy towards generating mortgages that could support mortgages.

        • weka 4.2.2.1

          again, all very interesting, but still doesn't address the question. If I knew how to answer the question I'd have written a post about that, but you appear to have misunderstood even the reason for the question. I don't believe that it's possible to raise incomes in NZ to afford rent or mortgages. I want someone who does believe it's possible to explain how.

          In the absence of that I will assume that Labour have no plan to end poverty or the housing crisis, and are simply adapting around it for whatever reason. As I said in the post, it's useful that Ardern has made her position more clear, it makes it easier to pull back the kindness rhetoric curtain and talk about poverty in real terms and what govt policy is going to mean.

    • Stuart Munro 4.3

      Nor is there a duty on any kind of government to generate salaries that would support a mortgage on a house.

      No – the duty on the government is to prevent speculation distorting the market to this degree in the first place. To describe them as an abject and shameful failure is being much too kind – they are massively corrupt, having participated in and exacerbated the dysfunction.

      One does not get "anomalies" like slave workers in economies where the MPs are not irredeemably corrupt.

      • mikesh 4.3.1

        Speculators would not be doing their speculating if prices were not already rising, or if they did not think prices were about to rise. Speculation is a symptom of price rises rather than a cause.

        • Stuart Munro 4.3.1.1

          Regulate them out of the market and most of the extraneous demand goes with them.

          • Stuart Munro 4.3.1.1.1

            101 homeowners locked out by a speculator under a Labour government – John A Lee would've died of shame!

          • mikesh 4.3.1.1.2

            The way to get rid of them is to stop prices rising in the first place.

            • Stuart Munro 4.3.1.1.2.1

              The way to stop prices rising is to get rid of them. Two houses is plenty for anyone – 100 or more should attract massive and costly punitive taxes. Koreans pay a sumptuary tax on second and subsequent apartments – 50 million people in a small area can't afford the level of political corruption we 'enjoy' in NZ.

              But Labour are hooked on their neoliberal delusion, and they will protect the rights of the speculators ahead of first home buyers till we grow old and die. Their shame is bottomless – they might as well be National or ACT.

              • mikesh

                Speculators hold properties hoping to sell them at a profit at some future date. Investors purchase for the rental income that those properties can earn. There is always a demand for rental accommodation. Not everybody wishes to own.

                You seem to be confusing speculators and investors.

                • Stuart Munro

                  The distinction is false.

                  When the property market is unregulated, they all become speculators – making large unearned rewards and locking tenants out of ownership. This is the biggest factor in our burgeoning poverty and inequality growth, and it has to stop.

                  Rentiers are no better for a society or economy than any of the other signature features of feudalism. We are a democracy, in spite of the wretched troughers who have ended up in power, and the job of our government – any government – is to create sufficient economic social justice for society to be stable.

                  A housing bubble is no basis for a healthy economy, and even relative economic noobs like Grant Robertson know it perfectly well.

                  Govern, you lazy greedy no-hopers – or rack off!

                  • mikesh

                    As I said, there exists a demand for for rental accommodation. Not everybody who rents is doing so simply because they cannot get into an own-your- own property, so renting out properties is a legitimate business.

                    However, it is certainly true that many landlords are making little or no profit from there renting activities and are relying on an eventual capital gain to justify their operation. These should probably not be in business, and making mortgage interest non deductible for tax purposes would lumber these landlords with a large tax bill each year, which they would have to pay from their own pocket in the absence of profit to cover it. I suggest that this would be much more of a deterrent to taking on a highly leveraged rental property than any capital gains tax.

                  • mikesh

                    Even if we "got rid of speculators" property values would still rise because of low interest rates coupled with a shortage of houses.

                    • Stuart Munro

                      True – and there are hundreds of things that could be done. Thus far our governments have chosen to be ineffectual in serving the public interest. Giving free rein to speculators is just one of many sociopathies that neoliberalism relabels 'good'.

                      I suppose we are to be thankful that the wretched scoundrels have not sold our drinking water off to Nestle. But with corrupt governance like this it's only a matter of time.

    • Phil 4.4

      you've got around 400,000 who have their living subsidised in full by we taxpayers and ratepayers.

      I'm one of those 400,000. You're paying me to do a job that makes the lives of nearly 5 million New Zealanders a little less stressful and more financially secure. You can fuck right off with that subsidising bullshit, mate.

  5. AB 5

    “How can NZ incomes be lifted to match housing costs? ”

    To afford houses over $1M without the kick-start of inherited money (lots of it), incomes need to be very, very high. And even then, for all but a tiny few, it's a sentence to lifelong debt serfdom f that will suck demand out of the economy into debt servicing. There is no pathway to raising incomes sufficiently that will not correspondingly inflate house prices. Therefore to say that house prices cannot fall, is an unstated admission that it's all over and the 40-year postwar interlude of spreading the wealth around was an intolerable experiment that has been crushed.

  6. Nic the NZer 6

    The unemployment pool approach is a real problem here. Especially around recessions we leave the overall level of employment to the state of the economy. The result is a significant pool of people who are impacted longer term by any slips in economic activity (as they transition through unemployment). This not only impacts their income but gaps in employment history have a further impact on their employment. The alternative is to have available guaranteed employment as an alternative to welfare.

    There are follow on benefits including the country enjoying the product of whatever they are employed to do, employees would always have an alternative to whatever employers are offering in wages and in hours.

    Additionally the government should stop implementing harmful policies like public sector pay freezes (which contribute to lowering private sector wage increases).

    The better prevailing conditions should assist with legislated unionisation and employment conditions which should result in more of the income going to wages.

    I dont know if that is sufficient to keep pace with the housing market without much additional financial regulation, but it should see the country start keeping pace with Australia in terms of wage growth. The main economic advantage Australia having had is the small number of recessions across recent decades.

  7. bwaghorn 7

    You dont need to be a beneficiary to be forever locked out of housing . As nearly 50 ( fuck I'm getting old) low income worker who foolishly didnt jump straight back into ownership after a divorce 4 years ago I feel like I fell of my yacht l in the the Pacific and am treading water while it salls off into the distance and short of a miracle I'm fucked.

    • weka 7.1

      yep. We will see if anyone comes up with a credible theory on how Ardern's position might work, but I'm close enough to believing we're being lied to. Not Key-esque type lies, but what she says in that quote basically equates to low waged workers and beneficiaries and a chunk of the precariat not being looked after and I don't think they're being honest about that. When they say governing for all NZers, they don't actually mean they will do right by everyone.

      Or maybe they are being honest, just not bluntly so. Maybe this is exactly the plan. Stop as much downward tumble as they can, pull up some people, leave the rest behind.

      • Tiger Mountain 7.1.1

        A “group” (working class) has been left behind since the original mass sackings of Rogernomics, entrenched by the Nat 1991 MOAB-not retrained, not looked after, just discarded.

        Few seem immune to neo liberal individualist psychology. Which is what was so amazing about the high level of support for COVID lockdowns. But the Majority Govt. now seems back on some “Chicago Boys” script with a vengeance.

        What to do is rather obvious, but, it will need wide community support, organisation and action. Which is tricky with so many low waged, precarious workers, exorbitant rents and “user pays” charges.

        Move to higher wage economy, Fair Pay Agreements, rent control, build state Houses & Apartments (lots), clean out the public sector, retire The Reserve Bank Act and neo lib State structures, tax and restrict the parasite class, etc.

        Jacinda and Robbo and the Labour Caucus are only going to tinker and let Finance Capital go wild-as kids are in agony for want of dental care, and hidden homeless live unnecessarily miserable lives. Do something in the real world to change this Standard Readers-build a movement and understanding, leading into 2023 that leaves no doubt that “Blair Lite” is no way to run NZ.

  8. RosieLee 8

    You've got it the wrong way round. How can housing costs, especially rents, be controlled so that basic wage and income earners afford a roof over their heads?

    • weka 8.1

      It's not me that needs to be told, it's Ardern and Robertson. Or more correctly, the people that voted them in as a majority govt.

    • Ad 8.2

      Why are rent controls that scary really?

      We used to have rent maxima in Council housing.

      • RedLogix 8.2.1

        Why are rent controls that scary really?

        Go for it, but at the same time can we have rates, insurance and maintenance prices freezes too? And a hold on all those lovely (but expensive) Healthy Homes initiatives?

        Because this year our average costs on just these items alone was a bit over 40% of all rental income.

        (Just for comparison typical rates here in Australia are about A$1500 pa and insurance about the same or less … and Aus might not have the same earthquake hazard, but it sure gets fire and floods.)

        I’ve said this before, a lot of people renting who resent their landlords for ‘creaming it’ would get a nasty sticker shock if they tried to own the house they lived in.

        Of course the downside of this lack of cash flow, is that it pushes people to invest for capital gain instead, which NZ has been doing for far too long.

        • Phillip ure 8.2.1.1

          pity the poor landlord…eh..?

          yeah..nah..eh..?

          do you factor in the rise of capital values on those properties..in yr 40% calculations…?

          and how much higher than the/any mortgage repayments are the rents you charge..?

  9. KSaysHi 9

    The PMs out of touch with this one – offensively so.

    Increasing income would be catastrophic on small businesses, and unemployment would rocket.

    A couple of solutions. Community Land Trusts where the land is leasehold, therefore controling the bulk of the price. Kotare is an example. Building underground with new builds might work. I know that mega wealthy in London do elaborate luxury builds under exisitng homes, but not sure if it would be economically viable for additional living space or even safe to live in.

    • KSaysHi 9.1

      The assumption that rental prices should be expected to go up (because the excuse for rent increases has always been paired with rises in sale price) is the worst part.

  10. Sam 10

    Premiss 1) Arderns cabinet is shit (I said it, fuck you).

    2) National will always be shit.

    In conclusion, well I would recommend testing all or most policy formula on a small scale locally before rolling it out nationally or at least to find the limits of growth in what ever idea because my fucking god, none of you have a fucking clue, not labour, not the Maori party and especially not the fucken greens so please, don't pretend to know and listen you nubs.

  11. gsays 11

    I have to put my hand up as one who has said raise wages and benefits.

    To be able to provide for a family on one income has many benefits. It allows for more care-giving, be it children or elderly parents. Hobbies, volunteer or community work…

    How. In the short term, look at the non payment of taxes- the Googles, Apples, Amazons etc. The 1/4th of landlords that are non compliant in their dues:

    https://www.stuff.co.nz/national/politics/300160946/oneinfour-property-speculators-dodging-housing-tax

    Reform of the tax system, introduce a FTT, Tobin tax or Robin Hood tax, brighter minds than mine imply it can replace GST and PAYE:

    While we are at it, get rid of GST on wholefoods, veges, fruit, menstruation products.

    Banks, get rid of the four big banks. After all, time and time again they are in disgrace, from their economists not being able to forecast, to gouging New Zealand customers with their fees, to being implicated in money laundering.

    https://www.interest.co.nz/banking/107213/westpac-banking-group-and-australian-anti-money-laundering-regulator-austrac-agree

    https://www.stuff.co.nz/business/123659871/retailers-and-shoppers-likely-to-share-spoils-from-hard-caps-on-bank-card-fees

    Medium term, invest in education. Teacher aide for every classroom and reform of the universities. Undo the elitism by changing entry to uni by ballot, not ability to pay. A few vice chancellors may have to go without their subsidised mansions… Increasing diversity in the tertiary sector will change the decisions that are made for society.

    All property investors must be building new houses, not buying exsisting stock.

    Scattergun approach here, but it is the third time I have written this. Twice on my fone but I some how deleted it… A gorgeous sunny day in the Manawatu is beckoning me outside.

    • KSaysHi 11.1

      Yes, we should make it less appealing for investors to buy exisitng stock. Loan to value ratios on new builds should be low, say 15%, compared with existing housing where the loan to value is currently 30% (two banks so far at that rate, more will follow).

      • RedLogix 11.1.1

        Steven Keen proposed some years back that property loans could be regulated to a fixed multiple of their imputed rental income.

        So for example if the estimated market rent for house was say $30,000 pa, then the maximum a bank could lend on it would be say 12 times this, or $360,000. This way prices and incomes could be kept aligned more easily.

        Of course right now the ratios are way higher than this, more than about 24 times instead of 12 times (which was the value Keen had proposed as a historically 'affordable' number.)

        To get from where we are now, to where we should be, maybe we could start with imposing a limit of say 24 times this year, and reduce it by 2% pa each year for decade in order to stabilise gradually and without crashing the economy.

        • gsays 11.1.1.1

          Apply the same ratio logic to wages and salaries. By that the wages rise to meet the CEO etc renumeration. Start with the Public Service, local government…

    • gsays 11.2

      And union membership. What ever form that may look like. Renting union, trades union, churches, sports groups… Power lies in our collectivism.

  12. Bearded Git 12

    A Wealth Tax on the top 5 percent is really the only way…..where the tax raised is used to boost the incomes of the bottom 25 per cent so they may be able to afford a house….house prices may fall a bit too if a WT is imposed.

    The greens WT is a good starting point.

  13. Brendan 13

    Here is what I see happening today to make this happen.

    Simplicity Kiwisaver has the lowest fees on the market – over a life time this gives the average person $60K more in the hand. They are non profit and thus they don't have to keep shareholders happy. (and non govt and thus this keeps the tax payers happy).

    Simplicity is actually introducing super low interest mortgages (as they don't have to have a profit margin). Again this is going to make lots of people better off.

    Kiwisaver itself is one of the best ideas of the Clark govt. $1 of local investment is worth twice as much as $1 of international investment (one day the money has to go home).

    There are somethings the government can do. But what can you do?

    • Bearded Git 13.1

      That entirely missed the point of the question being asked….how the wages/wealth of the poorest be increased so that they can afford a house.

      See my wealth tax post above.

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