Focus on rental market to solve crisis
All we need is a government who actually wants to reduce house prices, writes Nick Morris
There are so many ways to reduce house prices that the question needs to be which levers not to pull, not how on earth to depress the market.
The answer is always going to be some version of all-of-the-above – the development of a genuine relocation programme for retirees and businesses and government departments to regional centres, a capital-gain bright line extension, a ramped up building programme, a block on foreign speculation, punitive taxes on empty houses.
But before all that you need a government who actually wants to reduce house prices.
The only word of warning, should any government have the courage to implement these plans, is that homeowners need to understand that prices are inevitably going to fall.
The last thing you want to do is to allow first home buyers to capitalise their KiwiSaver accounts or take grants that allow them to buy a house they can’t afford before the prices find a new level.
That really would be a poisoned chalice or a poisoned challenge as John Key or Helen Clark might term it.
In fact, for the moment buying a house is less of a problem than overpriced rentals. Those who can consider buying a house will always be ahead of those who have no choice but to pay rent in a competitive rental market.
Consequently, the Labour Kiwi-build plan should be simply a means to an end of financing a massive push towards pepperpotting state housing around the country, rather that fast-tracking young people into home ownership in a top-heavy market.
Houses might be sold, initially at least, only to speculators – not first home buyers – at the massively inflated prices going at present and the profit used to increase the rental stock until it crashes the speculator market in lower socio-economic areas. The rest of the market will then follow those now cheaper houses down and the slide will begin.
Those who want to buy affordable houses in Auckland just need to hold on for a year or two, while those who already feel potentially over-exposed have time still to get out of the market.
Of course, it goes without saying that those who wish to change outcomes will probably have to ensure that the next elected government is from the Left.