Does our housing market have a ‘human rights crisis’?
Every so often a report claims to have the answers to the problems besetting the New Zealand housing market, which is no easy feat given that there’s no agreement among economists and commentators as to what those problems actually are.
But the authors of such reports generally don’t allow this small detail to deter them — they simply use their own pet definition.
Two such reports were released recently, one from London-based Dr Jenny McArthur, from the Helen Clark Foundation, and the other from Leilani Farha, the UN special rapporteur on adequate housing.
Each report took a slightly different slant on the cause of the problem, with the Clark Foundation defining it as rising house prices and the UN apparatchik defining it as the “gutting of social housing and a speculative housing market”.
There was little of any real value in either report. Both prescribed a capital gains tax on investors, with the Clark Foundation also calling for limitations on how much “the rich” could borrow, and Farha demanding a rent freeze and an audit of empty homes, and describing the problem as a “human rights crisis”.
Frankly, this latter claim is claptrap. While Article 25 of the UN Declaration of Human Rights does refer to the right to adequate housing, New Zealand has a proud tradition of social housing and is hardly ignoring the current problem. Do any of these ideas have merit? Not really. Whatever your view on capital gains taxes, that particular policy idea is dead for at least a decade.
Rent freezes have been tried in many places and invariably fail after causing outcomes that damage the rental market. And the concept of forcing people to open their empty homes strikes at the heart of our democratic rights and values and would never be tolerated by Kiwis.
It’s also telling that the theme of both reports is the idea that property investors are somehow responsible for all of the ills of the property market, which is why the proposed solutions focus on curtailing the activity of that group.
This view, which is borne of envy rather than economic pragmatism, is dangerous. If any government implemented such ideas, the damage they would do to the rental market would be incalculable.
Here’s why: Around 40 per cent of Kiwis live in rental accommodation. The demand, in real numbers, is growing because the population of the country is increasing and because our occupancy per dwelling numbers have been dropping.
There are around 525,000 rentals in New Zealand of which around 65,000 are owned by Housing New Zealand,
12,000 are owned by councils, and another 8000 are owned by non-government social housing organisations.
The remainder — around
440,000 rental homes — are provided by the private sector, mostly mum and dad property investors. If private investors don’t provide rental housing, that responsibility falls back on the state, which means taxpayers have to pick up the bill. For this reason alone landlords should be celebrated, incentivised and listened to.
The New Zealand property market’s problems aren’t the result of capital gains, property investment or empty houses.
For the 60-ish per cent of Kiwis who own their own home, capital growth is the path by which they are able to buy businesses, travel, educate their kids, and ultimately, reduce their burden on the state.
Solving the problems of the market isn’t about punishing this group, it’s about doing everything we can to help the other 40 per cent to be home owners as well.
- 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 ashley@nzemail.com
“The concept of forcing people to open their empty homes strikes at the heart of our democratic rights and values and would never be tolerated by Kiwis.”