National’s million dollar problem

The other day the average house in Auckland has reached $1,000,000. Yes. One million dollars. And with it a final, grudging admission from National that the housing market in Auckland is out of control.

But let us be clear. This is not an admission of the cause. Nor is it an admission of the necessary steps to rectify the problem. It is merely that there IS a problem. This in itself is a step forward, but it was the easiest. Politicians are reluctant to admit they are wrong because to do so would undermine their political platform, however strong or weak it might be.

In National’s case, admitting the cause of the problem would be a major undermining of its political platform for the last five years. It would undermine more than just their approach to housing. It would undermine their immigration, economic and social policies as well. It would be a huge admission that one Winston Peters, leader of New Zealand First, was right all along. National will never do that.

But back to the housing problem, where New Zealand First, and Labour – for quite different reasons – believe that immigration is the cause of the housing crisis. In the case of Labour, despite to regain control of the Opposition benches, where Mr Peters is the most effective politician, it might be simple political expediency at work. In the case of New Zealand First, a party that has long been concerned about unsustainable immigration, this simply business as normal. This is a crisis that has seen New Zealanders be progressively driven from the Auckland housing market, and increasingly the housing markets of Hamilton and other cities. Few New Zealanders have enough money to put down a deposit of say $200,000 on a house, much less the million dollar asking prices being demanded in Auckland.

National is desperate to shut this debate down. Their solution is to loosen planning restrictions put in place by local councils on land use under statutory plans that they have been required to prepare. In doing so they propose to rezone land that might not be appropriate for building housing on. National has been trying for years to make the resource consent process for subdivisions easier, but has failed to look at alternative types of housing such as apartments, and higher density housing.

Another problem is developers want to develop big properties with big sections. However New Zealanders are starting to realize that smaller sections have their uses, if the Axis Small Homes Test Lab is anything to go b(u)y. If so, I fail to see the problem for developers, since more people buying smaller properties would probably help cover any reduction in profits.

This is also an issue that needs to have significant intervention before the market experiences what I suspect will be a quite violent correction. If this happens, my guess is that there might be a very sharp contraction in prices that will significantly hurt householders. Were this to happen before the election, it would likely cost National a fourth term in office.

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