Thursday, July 18, 2019

There are solutions for this

The Herald reports that the housing shortage / bubble has hit a new level:

New Zealand is short of 130,000 homes, the tally having risen lately by 30,000, two economists say.

Jarrod Kerr and Jeremy Couchman, Kiwibank economists said: "This time last year we showed a shortage of 100,000 homes across New Zealand. Our population growth has outstripped housing supply again. We're now short 130,000 homes."

Residential building consents had hit multi-decade highs, they acknowledged, but it was not enough to keep pace with demand.

The shortage could get worse: "If things continue the way they are, the shortage will balloon to 150,000 this time next year."

There is of course a solution for this: the government could leverage its ability to borrow money a absurdly cheap rates to fund a massive house-building scheme, of social houses or of houses for sale. Not the pissing-about levels its been doing with KiwiBuild, but tens of thousands of houses a year. Or, it could leverage that same ability to fund 100% mortgages for first-home builders, or work on some sort of shared-equity scheme. In many of these solutions the scheme pays for itself, through sales, rents, or loan repayments (which can then simply be financialised and shifted off the government's books to a bank).

The problem is that all of these solutions - and indeed, any action to eliminate this shortage - would lower property values for homeowners, including MPs (who have extensive property portfolios themselves). Or it would lower expectations that they would rise endlessly. And so its apparently off the table. A supposedly "centre-left" government refuses to help those in need or solve a pressing social problem because the rich - including its own MPs - might whine.

But that's Labour for you now: putting the "right" in "centre-left". The days of Michael Joseph savage are clearly long gone.