Time to deflate the housing bubble
What does a millionaire look like? Dome-headed Daddy Warbucks? The top-hatted Monopoly man?
Now, a millionaire looks like the average Auckland home-owner. 2.5 kids. Stuck in traffic. Working too many hours to pay the mortgage.
That’s because the median house price in Auckland has finally hit $1 million, and we may not feel like Daddy Warbucks but (secretly and shamefully) homeowners feel like they’re coining it.
My wife and I bought our little Onehunga cottage before our first son was born. I built white picket gates – they were the best things I’d ever made with my own two hands, and I’m still proud of them.
I can’t help feeling as if the house’s rising CV is just recognition of my gate-building prowess.
It’s not, of course. It’s because housing demand is completely outstripping supply in a global economy.
Only the most laissez-faire of free-marketeers still believe that this housing market is working as it should, as increasing numbers of families sleep in their cars.
Much time on our talk radio airwaves, much talk across backfences, has been devoted to the blame game.
Is it the profiteering real estate agents? Today, we meet Steve Koerber, who has closed 48 sales on one Remuera street. There’s one run-down villa he’s sold five times, starting with a $447,500 sale price in 2001 and working his way up to $2.31 million in April last year. But no, it’s not his fault. Or is it a flood of cashed-up Asian immigrants? No, they’re barely making a dent in the market.
Is it the Reserve Bank? Local authorities? The Government?
No, none of these can carry the blame alone. Ultimately, responsibility must sit with all of us who prefer to delude ourselves that we’re getting wealthier.
Far more important than the blame game, though, is finding a solution.
And as the big old parties encourage their middle New Zealand voters to roll about like Scrooge McDuck in their delusional wealth, voices on the fringes of politics are starting to speak in unison.
Former National and ACT leader Don Brash. Former Reserve Bank chairman Arthur Grimes. Auckland Council chief economist Chris Parker. Green Party co-leader Metiria Turei.
They are proposing pulling some very big levers to make housing affordable again. For Turei, that includes a capital gains tax and restricting ownership to New Zealand citizens and permanent residents.
‘‘We’ve got to avoid a crash, and that means planning for a managed correction,’’ she told me this weekend. ‘‘We owe it to the country.’’
It’s not just the country we owe it to.
My wife and I now have three sons. I’m a whole lot prouder of them than of our house with its picket gates.
The challenge, for homeowners like me, is to put our kids ahead of the selfish short-term buzz of our Daddy Warbucks delusion.