Auckland says sorry

Everyone pays for the housing situation.

Today, I’m a politician with an apology. Sorry about the Auckland housing market basket case.

Sorry you have to keep hearing about it (I realise this column adds to the problem). More importantly, sorry it’s taxing you $2000 every year even if you live in Gore.

I’m not exaggerating. Auckland’s market costs us all by hiking mortgage rates for everybody.

Every three months the Reserve Bank Governor comes to Parliament and we interrogate him. Each time, Auckland housing comes up and he looks like somebody’s cleaned out the Reserve Bank vault.

He’s advised that Auckland’s housing market is 40 per cent overvalued. A ‘‘correction’’ from that height would be like wiping out the entire New Zealand Stock Exchange. Twice.

This week he confirmed that interest rates won’t drop (again, he held them steady in April too). There’s no inflation and interest rates worldwide are at record lows. For every other reason he should cut rates. But then Aucklanders would borrow even more, sending house prices into outer orbit.

If mortgage rates were just one percentage point lower, the interest on a $200,000 mortgage that be $2000 a year lower. You would also probably see a lot more building and renovation work going on outside of Auckland.

Hopefully fellow Aucklanders will join in my apology because we are wholly responsible. Or, more specifically, Auckland politicians and planners are responsible.

If you had a dollar for every theory on Auckland house prices, you could almost buy one.

But one simple fact undercuts all others. Aucklanders built 50,000 houses in the 1990s. Over the last decade we built 40,000. The population rose, demand grew and prices exploded. Labour and National are both responsible.

Then came the blame. It was on foreigners, speculation, the lack of a capital gains tax. But speculation comes from shortage, or the justified belief there’ll be one. Nobody speculates in Toyota Corollas because there seems to be an infinite supply of them. Unlike Auckland houses.

Meanwhile I’ve met a family in West Auckland who, along with their neighbours, own 50 hectares. It’s enough for 500 homes but they’re not allowed to build on it.

They’re on the wrong side of the Metropolitan Urban Limit – the council’s line on the map past which thou shalt not build. Economist Arthur Grimes estimates the MUL makes residential land nine times more expensive.

It was a relief to hear Labour finally renounce the MUL. But it’s taken years, and will their Green Party allies allow the city to grow?

Generation after generation has built out and created new space to live. For no good reason the Auckland Council has decided it’s time to stop the process, and it’s hurting the whole country.

So, sorry for the trouble we’ve caused you. We promise we’ll get our house in order. Just as soon as we find some political willpower.