John Key’s inaction on property: Words not deeds

After reading the article on The Spinoff from Arthur Grimes about bursting the property bubble, and then seeing John Key’s response during his post-cabinet press conference, it made me realise that John Key has no intention of doing anything about improving housing affordability in Auckland. None, whatsoever.

Everything that the National government has announced around the housing situation is aimed at keeping the status quo and making it appear that progress is being made when nothing is actually happening. Words, not deeds, rather than the opposite.

I need to respond to John Key’s assertion that a massive drop in house prices would be bad: this is nonsense.

There are several reasons for this.Firstly, a drop in the average house price doesn’t actually mean that anyoue would need to be worse off. The only real way in Auckland to build a significant amount of additional housing stock is by intensification, that means building more dwellings on the same land, rather than building all the way to Hamilton or Taupo which seems to be the current plan. (Obviously, in reality there needs to be a combination of building up and building out).

A simple example of intensification would be taking a couple of $1,000,000 sections and building 6 2-bed units on the land. These units might sell for $700,000. So the average price has dropped by 30% but no one has lost any money. How is this “crazy”, as John Key described it?

Currently, the value in Auckland properties is mostly in the land. No one is paying for the house, as this article about a pre-fab house on the market for $549,000 shows. Putting more housing on less land is the only way that housing is going to become more affordable in Auckland.

One of Key’s main reasons for not wanting property prices to fall is because buyers would lose money. This strikes me as cynical and putting self-interest ahead of the public interest. If property prices fall on the government’s watch, then National will struggle to get re-elected: it would be the end of John Key’s government.

The government claims that housing needs to become more affordable, but prices can’t be allowed to fall. Logically, this does not make sense. It is nothing but a contradiction.

In addition to being worried about house buyers losing money, I would be interested to know why the government isn’t also concerned about buyers earning a profit out of housing. Any potential future loss would be, by Mr Key’s logic, unearned and possibly undeserved. But is any gain in value not also equally unearned and undeserved? The government is removing any hint of moral hazard and turing housing into a one-way elevator.

So, the government is talking about getting houses built without actually getting any houses built. And it is talking about making housing more affordable without make it more affordable.

A complete failure of ideology at the expense of a whole generation of New Zealanders.




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