As widely reported this morning the OECD is sounding the alarm on our “rockstar” economy. The Herald:
OECD’s stark NZ property warning
Dramatic house price growth is burdening Kiwi households with debt and putting the nation’s financial stability at risk, the OECD warns.
“Rapid population growth and a low responsiveness of supply have led to housing and urban infrastructure constraints. In particular, house prices have risen sharply in Auckland, the largest city, eroding affordability and raising financial-stability risks,” the report says.
Paris-based OECD economist David Carey told the Herald house price growth was a threat to financial stability, especially if New Zealand was rocked by another recession where unemployment spiked and homeowners could no longer maintain mortgage repayments, leading to forced sales. Other threats included a rise in global interest rates, a slowing Chinese economy and falling dairy prices.
In the biennial report the OECD echoes warnings from the Reserve Bank that Auckland’s superheated housing market is a risk to the economy and urges the government to increase housing supply in the region.
“Housing poses some risks to the otherwise sound financial sector,” the report said. … “The house prices are higher than they need to be and that’s having a lot of negative effects on people’s wellbeing and on Auckland’s growth.”
While New Zealand is doing well compared to many other countries, there are inequalities in living standards and wages are low.
The government should do more to stem the rise in poverty and inequality in New Zealand, the report says.
Greater focus is needed on improving the lives of the most disadvantaged, particularly children from low income families.
The OECD says the economic reforms in the 1980s and 1990s are still being felt. Lower and middle income families suffering the most, due in part to higher than average unequal employment prospects and shortage of affordable housing for low-income families.
OECD report: NZ needs more housing for poor, less obesity
New Zealand needs more housing for the poor, and less fat on the hips of the average Kiwi, according to a report from the OECD. The country should also look at road tolls in the form of “congestion charging” to help fix traffic jams in the big cities.
In its latest report on New Zealand, the OECD’s key recommendations included raising the supply of social housing for low income households. The government should also increase targeted housing subsidies for the poor not in local or central government provided housing.
OECD calls for New Zealand to ease housing burden on poor
The OECD wants the Government to do more to ease the burden of housing costs on low income families in New Zealand.
The report’s authors acknowledge that the Government is moving to address the concerns raised. However the OECD specifically recommends that the Government raise the supply of social housing for low income households. In addition it calls for an increase in the number of targeted housing subsidies for low income households that are not in social housing. It also calls for strengthening the focus of social spending on lifting the long term outcomes of the disadvantaged.
Plenty to think about in that report. Freeing up Auckland land for private development and sale at market rates isn’t going to cut it.