For almost two decades now New Zealand homes have been becoming increasingly unaffordable for would-be New Zealand home-buyers. Even the global financial crisis and the bursting of the housing bubble has done little to arrest the growing problem.
But it’s not difficult to solve. All it takes is realising the consequences of restricting supply while demand grows or stays the same—which as any first-year economics student could tell you, causes prices to rise.
There was some who believed that even new National ministers Nick Smith, Phil Heatley and the other bozos with building portfolios understood some of that. There were people who thought they’d been hearing the right noises from these arrogant arseholes before the election, and were prepared to believe the noises meant something. Until one Tuesday last month…
On Tuesday 12 September 2010, New Zealand’s Environment Minister Dr Nick Smith released the keenly awaited Resource Management Act (New Zealand’s land use law) Phase 2 Reforms, under the rather grand title “Planning reform needed for NZ cities to be competitive” stating –
“We are not getting the right infrastructure in place at the right time” Dr
Smith said. “Poor quality decisions on land planning are making homes too expensive.”
He got that much right, but that was all. Sadly, everything else in Smith’s document dump was a continuation of the same poor decisions from the same goddawful bureaucrats who’s caused the whole problem of unaffordable housing in the first place—or, more accurately, an example of complete inability to make a goddamned decision, and decision at all, with the correct decision being to place a firmly wielded boot up the backside of all them.
Instead, we got 165 pages of bureaucratic mush concluding that it’s all just too hard, so here’s some blancmange to make it better.
But it’s not that hard at all. After the Second World War a chap called Bill Levitt showed how making affordable homes could be done.
After the Second World War ended, there was a worry that the 10 million home-coming American GIs were going to be all wanting houses at once, pushing housing prices through the roof.
It didn’t happen because of people like Bill Levitt, who out in Levittown, Long Island, “dragged the American residential construction sector from the ‘horse and buggy’ era to the modern disciplined production one we know today. Bill Levitt figured out how to supply US$7,000 - US$8,000 new suburban houses to SINGLE EARNER young families, earning US$3,500 a year. The wives/partners were not forced to be ‘mortgage slaves’ through that era either.”
A young family could buy a house in Levittown for just 2 to 2.3 times one of their salaries. This was just after the war. For young families who bought there, this set them up for life. Yet in New Zealand’s cities today, a land of peace, young families struggle to buy a home costing less than six or seven times the salary of both of them put together. And that’s before tax.
The resulting problem is almost in-human.
But it’s not insoluble.
As I’ve pointed out frequently here over past years, the simple solution is to stop ring-fencing New Zealand’s cities with planners’ edicts not to build. Take planners’ hands off people’s property so they can have some certainty over what they can do with it—so they can free up their land to meet demand, and maybe even make a profit off it rather than a catastrophic loss. In the long term, abolish the Resource Management Act that gives these planning creatures power, and replace it with a codification of common law that gives power over land-use back to those who own it.
And in the meantime, as Hugh Pavletich points out, we can learn from the likes of Bill Levitt. Who to solve the problem of affordable houses just went out and started building lots of them, on affordable land.
If only New Zealanders were allowed to.