Pavlova paradise is a luxury now

‘Is $745k reasonable for a one-bedroom house?’’ asked the headline of yesterday morning’s most popular story on Stuff .It may be the most measured headline on the most emotive of stories, as shown by the alternatives to ‘‘reasonable’’ some housing advocates gave within the story: ‘‘ridiculous’’, ‘‘outrageous’’, ‘‘hopeless’’.

By the afternoon the most popular story was ‘‘Why I’m moving into a bus with an 11-year-old, a dog and a cat’’. The answer was the same as the subject of the $745,000 question: Wellington’s superheated property market.

Clearly there is news value in the fact that we’re now anguished by Wellington’s median house price of more than $1 million, just five months after Auckland’s median price hit the same level. But it is not just major metros that are affected: all over the country house prices and rental rates are setting records.

Whether you view either story – or any of the scores of similar stories from all over the country – as reasonable or outrageous will depend on whether you own a house or not. Housing affordability looks very different depending on which end of the telescope you’re looking through (or perhaps whether your house-downpayment savings plan includes any room for a frivolous purchase like a telescope).

But even people who think they’re winning in this grim game should realise that runaway housing prices eventually catch up with them. In a report entitled Under Pressure: The Squeezed Middle-Class, the OECD found that ‘‘house prices have been growing three times faster than household median income over the last two decades’’. The predictable result is that ‘‘middle classes have reduced their ability to save and in some cases have fallen into debt’’.

Runaway housing prices are an existential threat to the middle class, or as Oliver Hartwich, executive director of the pro-free market thinktank the New Zealand Initiative, put it a few years ago, ‘‘High house prices are not a sign of a city’s success but a sign of failure to deliver the housing that its citizens need.’’

That makes it all the more puzzling that Prime Minister Jacinda Ardern announced in her first term that there would be no capital gains tax under her leadership, effectively declaring that her government would fight New Zealand’s chronic epidemic of housing unaffordability by tying one hand behind its back.

Houses should not be thought of as engines of wealth accumulation but as an essential human right. And to help guarantee that right, both central and local governments should be doing all they can to produce more housing at more affordable prices. It seems as if our national debate on housing veers from one policy fix to another, from loan-to-value lending ratios to debt-to-income restrictions on the demand side to tiny houses and looser building regulations on the supply side.

We need to be pursuing an all-of-the-above approach, including rewriting planning codes to allow more density and upward expansion, rather than having people live further and further from their work, which only turns the housing crisis into a climate change crisis as commutes get longer and more congested.

The quarter-acre pavlova paradise is no longer a birthright but a luxury. And it should be subject to a ‘‘luxury tax’’ that may include more neighbours, obscured views, and less sunlight.

Houses should not be thought of as engines of wealth accumulation but as an essential human right.