Tuesday, November 24, 2020

Reading the room

It looks like the government has finally read the room on the housing crisis, with Finance Minister grant Robertson writing to the Reserve Bank to tell them to start looking at controlling house prices:

Finance Minister Grant Robertson has told Reserve Bank Governor Adrian Orr that it’s time to think about out of control house prices.

Robertson has written to Orr telling him that “housing price instability is harmful to our aims of reduced inequality and poverty, and is also likely to negatively impact the Government’s aim of creating a more productive and inclusive economy”.

He wants the bank to think about the ways it and the Government can work together to achieve “sustained moderation in house prices that we have both sought”.

His letter suggests this could include asking the governor to consider stability of house prices when it makes monetary policy decisions, including decisions about interest rates.

This is something that Ardern was ruling out just last week, despite it being the way the Reserve Bank Act is meant to operate. But I guess she's finally picked up on the public anger over this. The prospect of people without wealthy parents being locked out of home ownership forever and the creation of an English-style landed gentry is deeply at odds with most kiwis' perception of how our country should be, and we expect the government to fix it. Ardern's staunch refusal to do so and her successive ruling out of any effective policy measure was making people angrier and angrier. But while this is a start, the government needs to go further, from "trying not to make the problem any worse" to actually solving it with mass house-building and wealth taxes. And if they don't, they'll be out on their arses next election.