The property challenge
The issue is housing affordability in Auckland. Up around 1500 per cent over 30 years, much of that in the last decade or so. How is that even possible, when major-party consensus over the same 30 years has kept inflation overall at less than a 10th of that?
It’s possible because it has been encouraged, by successive governments. And as Peter Calder argues in an excellent column in the Herald today, we now face a catastrophe that should fill us all with rage and shame. The runaway property market might be great for those with the wherewithal to invest in it, but it is fast destroying a foundation of the New Zealand social contract: work hard, save well, and you will be able to buy a home.
With that dream turning to mush for so many, the kind of society we like to think we have is also profoundly threatened. Shut too many people out of the dream and you create a potentially bitter social divide. Introducing racism to the debate is an insidious manifestation of that.
Rampant property inflation is also bad for the economy, because it diverts investment from productive sectors. And it’s bad for city planning, because it creates immense political pressure for the government and the council to do the easy thing – the easy thing for them, that is, not for new home owners or the city itself – which is to focus on quick-build greenfields development.
Any responsible government would systematically identify the causes of our rampant property inflation and rein them in. And because every one of the solutions is politically inflammatory, it would seek cross-party support for a strategy that sticks.
What would such a strategy contain? Here’s a checklist. It’s not exhaustive.
• Remove all of property’s taxation advantages. Stand by for howls of outrage from baby boomers.
• Overhaul building costs, in particular to undermine profiteering over materials and to encourage prefabrication and other efficiencies. Stand by for fierce lobbying from everyone in the construction industry who benefits from building houses in the expensive way they do it now.
• Develop incentives to encourage the scaling up of small and mid-size construction companies. Stand by for complaints from those that are already big.
• Speed up (and make easier) the consent processes for developers, designers and builders who are committed to environmentally smart solutions – in location, construction, energy use and more. Stand by for a battle on two fronts: from those who want to gut the RMA altogether and from nimbys.
• Commit to affordable housing within existing population centres and along major public transport corridors. Stand by for complaints for everyone with a vested interest in greenfields development (including existing land-bankers, ticky-tacky housing developers and motorway construction companies). Also nimbys.
• Overhaul education and trade training to produce a larger and more appropriately skilled construction workforce. Stand by for the angst from institutions currently producing too many lawyers, PR “executives” and graphic designers, and too few carpenters.
• Remove New Zealand’s near-unique appeal as a place for overseas investors to buy property, by making it illegal to own land unless you are a citizen or resident. And do it in such a way that no one is demonised by virtue of their ethnicity. Stand by for a full dose of liberal fury nonetheless.
• Created a publicly available backdated register of property ownership, so we can have well-informed debates about demographic and investment trends of all kinds. Stand by for the rage of privacy advocates, including those who are keen to keep the truth about their property transactions obscured.
Who’d be a politician? Well, actually, they would. Our politicians have self-selected, and this is their job.
No, it’s not easy. But it has to be done, doesn’t it? Labour’s shame, this past week, is that it knowingly turned this important issue into a race debate. How dare they?
National’s shame, this past week, has been to focus only on that. National’s shame, these past seven years, is that it has enabled every one of the causes of this catastrophe to grow. Labour’s shame, the previous nine years, is pretty much ditto.
Enough. This is a crisis and we deserve better leadership. Courage, not fear-mongering and points-scoring, is what we need now.
And while we’re waiting for it, by the way, could we stop treating real-estate agents as independent authorities? They have a vested interest in keeping property values rising fast, and nothing they say should be viewed without that filter.