Wednesday, October 15, 2008

A second gazump on housing?

Over on Pundit, Tim Watkin highlights Helen Clark's hint during the debate tonight, and speculates that housing will be Labour's killer issue for this election. I think he's probably right. While prices have dropped recently, affordability is still a real issue and is likely to remain so for some time. Meanwhile, home ownership rates are in long-term decline. As an issue, it taps into both middle-class anxiety, and the egalitarian kiwi dream of a society where everyone owns their own home. Which makes it perfect ground for Labour.

As for their policy, tonight Clark more or less ruled out the concessional loan schemes which saw our parents into their first homes. They're already tinkering with shared equity, government guarantee schemes, and mortgage diversion from KiwiSaver, but none of these are big enough for an election year policy. They also don't address the core problem of a lack of supply at the bottom end of the market. Which points to the obvious solution: a First Labour Government-style mass-building program for energy efficient, affordable starter homes, both for state houses, and for sale. This would kill two birds with one stone, both providing housing and stimulating the economy during the recession. And as a bonus, because it results in an asset going on the government books (either the house, or the cash ultimately received for it), it doesn't worsen net debt or the OBEGAL.

Such a policy would be an election-winner for Labour. National, with its anti-interventionist ideology, just can't go there, and would be left spluttering in outrage. The question then is whether Labour will have the courage to pursue it.