Tuesday, April 11, 2017

Denying the obvious

Currently we have a housing crisis, with homes becoming unaffordable to young New Zealanders. Labour says it wants to do something about this - but not if it results in lower property prices in Auckland:

Labour wants to see more affordable houses built, but is steering clear of suggesting it would welcome a fall in prices, even in Auckland.

After a week focused on his successful defence of a defamation claim, Labour leader Andrew Little was back on message today with a 20 minute press conference dominated by housing issues and Labour's plan to build houses and crack down on speculators.


But asked if he welcomed signs Auckland house prices were falling, Little said no.

"Falling house prices doesn't add a single extra house to a market that is at least 60,000 houses short," he said.

"Just trying to manipulate the prices of existing houses isn't going to provide the 60,000 houses needed. There is only one answer to the housing crisis and that is build more bloody houses and that's what we are going to do."

Except that building more houses would reduce prices - its simply supply and demand. More generally, if the problem is unaffordable houses there are only two ways of making them more affordable: lower prices or raise incomes. And given the huge disparity between incomes and prices, the latter is not a credible option. Which means the only real solution to the housing crisis is to crash prices with capital gains taxes, limits on speculation, and a massive government house-building program with sales restricted to first-home buyers.

This will obviously make wealthy Boomers in Auckland worse off, as their paper wealth evaporates. Fuck them. Speculators who have leveraged that wealth in an effort to bleed us even more will go to the wall. Fuck them too. There will be some real victims - young Aucklanders who paid too much for houses during the bubble who will be left with negative equity. I'd welcome policies to ameliorate that, but I'm more interested in making houses affordable for all than in the handful of young home buyers featured on the front page of the Herald.

As for Labour, this is not a thing you can finesse away. Either you want to solve this problem, or you don't. And if you don't, people can and should vote for someone who will, rather than a party which talks big but in the end wants to defend the inequalities of the status quo.