With the Government's announcement of a September 19 polling day, it’s now less than eight months until the election.
And make no mistake, this one is important. Normally, it would be a virtual given that the incumbent Government would win a second term, but because of the highly unusual circumstances under which the coalition was formed, the normal rules simply don’t apply this time round.
Labour knows this, which is why they’ve dusted off the National’s infrastructure plans from last term and are pouring $12 billion dollars of your money into them. You can expect many more such carrots over the next few months as the parties do their best to buy your vote.
But, for me, just opening the chequebook isn’t enough – there has to be some logic and wisdom to what’s being offered.
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That has never been more true than it is right now for the housing market. After over two years of talk, virtue-signalling and lack of delivery, it’s imperative that we take this year’s opportunity to hold the parties to account.
Who you vote for is up to you, but I’d encourage you to demand that your party of choice signs up to the following principles, as a minimum:
1. The LVR restrictions have failed and need to go
The clumsy, disastrous, loan-to-value restrictions, first introduced by the Reserve Bank in 2013, are the single biggest cause of the housing crisis. Not only have they failed to achieve the objectives for which they were introduced, they’ve also robbed thousands of young people of the opportunity to buy a home. An incoming Government needs to immediately amend their terms of reference with the Reserve Bank so that its ability to continue this pernicious experiment is brought to an end.
2. Capital Growth is a good thing
The growth in the value of our homes over the past 40 years is the single biggest contributor to our rising standard of living over that same time. That increase in equity has enabled us to improve our homes and lifestyles, travel, help our kids, invest in shares and buy businesses. It is the primary reason that New Zealand is rated as the fifth wealthiest nation in the world, even at a time when our average wages are well down the OECD rankings. Attempts to kill capital growth are a direct attack on the average Kiwi family and you should demand that your party firmly rejects them.
3. There is no housing shortage
The 2012 claim that we were short by 100,000 homes was one of the biggest blunders of our generation. It was never true and, in fact, since 1986 the market has actually increased the supply of homes to the point that the average number of people, per home, in New Zealand has dropped. The spectacular failure of KiwiBuild need never have happened and Governments need to abandon large scale house building programmes and leave private house building to the private sector.
4. The market will always find the right level for rents and house prices
The market has been a remarkably effective mechanism for setting rents and house prices over the past 40 years and attempts to tinker with this to achieve a specific outcome have, invariably, led to unintended consequences which have generally made matters worse. We’ve seen this with the short-sighted LVR restrictions and we’re now seeing it in the rental market, where average rents are rising sharply in response to Government attempts to control them. Demand that your party stays out of the housing market and doesn’t try and set prices.
5. Landlords should be celebrated not demonised
The vast majority of rental accommodation in New Zealand, about 440,000 dwellings, is provided by private property investors (mostly mums and dads). If these people weren’t involved in this sector these homes would need to be provided by the state, at a cost of tens of billions of dollars to the taxpayer. So attacking property investors is the definition of foolishness. Envy should never cloud the ability of a political party to make wise decisions.
6. Getting people into their first home should be the primary focus of all housing policy
Given what we now know about capital growth and its impact on our nation, the primary focus of housing policy for any political party should be to help to get as many people as possible into their first home. Everything else is secondary and will resolve itself.
- Ashley Church is the former CEO of the Property Institute of New Zealand and is now a property commentator for OneRoof.co.nz. Email him at [email protected]
