Tuesday, June 26, 2018

Saying the unthinkable

Winston Peters has finally said what we need to do to fix the housing crisis: we need house prices to drop:

Acting Prime Minister Winston Peters says houses should be affordable even to those on living wage.

Peters said on Tuesday that "a long-term target" of getting median house prices to drop to five times the annual living wage was desirable and "should be achievable before too long".

"That's what our aspiration is, to have a first house buying regime, where young families with not great deal of discretionary money, nevertheless can buy their first home."

Currently Living Wage Aotearoa puts the living wage at $20.55 an hour - or $42,744 a year while working a 40-hour week.

A house at five times that annual income would be $213,720. New Zealand's current median house price is $562,000 nationally, or 13 times the living wage annual income.

Of course, that's a long-term goal, and part of it could be met by increases in real wages while house prices remain static. But the idea of static or falling house prices is unthinkable to middle New Zealand, because it means slashing the value of their biggest asset. But the previous government's refusal to deflate the boom means that that is where we are now: achieving the social goal of accessible housing means liquidating the unearned, unrealised, and largely illusory "wealth" of the boom's beneficiaries. And no doubt, they will fight tooth and nail against that, in defence of their right to profit from the misery of others.