The Herald's John Roughan devotes his column this morning to what seems to be a common worry at the moment: the increasing inability of young people to own their own homes. And he has a few nasty truths to say about our current housing market:
It is very pleasant if you are a home owner with the mortgage paid and savings accumulating. You can safely put that money into another house and let tenants pay its mortgage.
If it turns out you have borrowed too much, or the rent does not quite cover all the expenses for any reason, you know you will be able to sell the place fairly readily at a capital gain.
The market is so good it keeps the value of rental houses rising at the same time as it maintains an ample supply of tenants who can't afford a mortgage.
Jordan sums up the problem nicely:
There is something wrong with a housing market that is structured to deliver endless capital gains to people who have capital, and deny the ownership of housing to the upcoming generation as the consequence.
This is not what most New Zealanders want. Being able to own your own home is supposed to be one of the basics of kiwi society - as is egalitarianism and the classless society. But both are under threat from the current housing market.
What can we do about it? Roughan suggests a capital gains tax on investment properties, while Jordan also stresses a need for more state houses and government "rent to buy" options. I'd like to see a capital gains tax - but as I've said before, I think this is one of those "third rail" issues and I'm not sure that its politically achievable. OTOH, I thought the same about doing something about student loans - but as more and more people got them, and more and more parents saw their children crippled by debt for life, the political ground shifted. Housing is a much broader issue than student loans - even in an age of mass tertiary education, only 40% of 18-24 years olds go to university or polytech, wheras the aspiration to home ownership is almost universal - so there's definite scope there then for a similar shift. The question then is which party will be first to recognise it...