Tuesday, 1 August 2006

Dream of home ownership is just that

THE PRESS: Home ownership in New Zealand has plummeted in the face of rising property prices
Nationwide home ownership fell 12 per cent in the year to March 2006, although ownership in the South Island fell less than in the North Island, statistics released today show.

NZ HERALD: Home ownership falls dramatically
Home-owner numbers are sinking as property prices rise, and Auckland is more than twice as badly affected as the rest of New Zealand. In the year to March, the number of people who owned their own homes fell 12 per cent throughout New Zealand - and 26 per cent in Auckland... Previously, half the population aged over 15 owned or lived in their own houses. Now, it is 44 per cent, the survey showed.

What's going on?

As studies of the world's cities have shown and as I've argued and pointed out here before [see posts on Housing and on Urban Design], cities around the world that strangle the supply of land are less affordable to live in.

New Zealand cities are amongst the most strangled by the fashionable nostrums dreamed up by town planners, and measured as a proportion of income they are among the most unaffordable cities in the world in which to buy a house -- more unaffordable even as compared to income than cities like Chicago, Houston, Atlanta, Quebec, Ottawa and even New York.

The chickens are coming home to roost. If Chris Carter really wanted to do something to actually and permanently help first home-owners (and I believe he's genuine in wanting to) he should demand that councils remove immediately their 'smart growth' policies, their 'metropolitan urban limits' and all the other restrictions on land supply imposed under the Resource Management Act.

Wherever such strategies are imposed, wherever policies are imposed that ration and restrict the supply of land, then house prices rise and home ownership falls.

This applies as much to Portland, San Francisco, Sydney, London, San Diego, Dublin, or Vancouver as it does to Auckland.

UPDATE: It's pleasing to note that both Nats John Key and Phil Heatley have at least picked up on the connection between the Resource Management Act, the restriction in the supply of building land, and the unaffordability of NZ housing, if not yet drawing the necessary conclusion from it: that "reform" of the RMA is just not enough.

Asked Phil Heatley in yesterday's Q&A, which received the standard brush-off from Steve Maharey and no follow up from Heatley or any other National MPs:
Does he think that taxpayers got value for money from the $1.8 million Welcome Home Loans marketing budget, pouring in over $1,000 of promo money per applicant, yet attracting a measly 3 percent of those eligible, or would he do better to address crippling land and section prices through Resource Management Act reform?
And on Monday, John Key correctly noted in a press release:
A significant driver of the cost of housing in New Zealand cities is because of the lack of land for new developments – something that is driven by the expensive hoops developers have to jump through under the Resource Management Act..
LINKS: NZ Housing affordability "in crisis," says report - Not PC (Peter Cresswell) [Jan, 2006]
Sustainable cities are unaffordable cities - Not PC (Peter Cresswell) [July, 2006]
2nd Annual Demographia INternational Housing Affordability Survey (2006) - Demographia
Housing Affordability Crisis in New Zealand - Hugh Pavletich [Jan, 206]
RELATED: Auckland, New Zealand, Housing, Urban Design


  1. With typical lack of depth in their reporting the media fail to mention the other "state- induced" actions which influence the "dream of home ownership survey". The tax system & Govt intervention in private property, via the matrimonial property act etc., encourage people to transfer their homes to Trusts. these homes therefore no longer feature in the statistics but do skew the figures substantially.
    Is the govt. readying us for more interference by taxpayer handouts to young, low income prospective Labour voters or a tax hit on family trusts?

  2. Looks like Peter's written some more about this very topic ...

  3. Release the stranglulation of land supply (sprawl should be encouraged), deconstruct government controlled central banking worldwide and bring in private banking and gold backed money.

    This will eliminate inflation, one of the biggest rip-offs in history, and encourage people to invest in productive enterprises rather than the excessive speculation in property which is the result of the government controlled fiat money system.

    The irony is that houses are not assets (shock horror) but consumer items like cars. They are expensive to maintain. They only appear to be assets because of the effects of worldwide central banking and its insidious fiat money and illegal money creation - inflation, and other effects of government interference like restricting land for housing.

    The whole thing will go crack up boom one day but when is anyone's guess. Bottom line - there is no free lunch.


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