Guest post by Affordable Auckland’s mayoral candidate Stephen Berry
With Auckland’s housing market becoming an international sensation following the sale of a state-house hovel in Devonport for over $1 million [read Bloomberg’s ‘London House Prices Have Nothing on Auckland’], it’s clear young people and low-income families are paying the price for the Council’s regulatory disaster.
Nosey NIMBYs, heritage preservation and zone rigidity are all contributors to the insane hyper-inflation that has afflicted Auckland’s housing market. Resource consent costs averaging fifteen- to thirty-thousand dollars per site don’t help. However the biggest elephant in the room, which the left-wing council refuses to recognise, is that what is causing the artificial land shortage sending values skyrocketing are their very own policies.”
I refuse to accept the usual scapegoat of ‘foreign speculation’ as the cause of Auckland’s heated house market. Speculation is just a symptom of our problems, not the cause. In order to slow price inflation the city needs to abolish the urban boundary and allow the city to spread out, as well as intensifying.
High school economics textbooks are not the only place you can find the basic economic laws that demonstrate price inflation when supply is artificially prevented from meeting demand. A 2010 report from the Productivity Commission report was also able to illustrate this consequence when it showed land 2km inside council’s self-imposed urban limit is eight times the price of land 2km outside of it.
Centrally planning special zones where consents processes are streamlined, and where land-owners receive special favour, will attract headlines but is not going to make the slightest dent in prices. The fact only 102 houses have been built out of 30,000 projected proves this.
The Council needs to remove the regulatory distortions it has created to allow the market to begin behaving in a healthy manner. Centrally-planned growth must be replaced by organic growth respecting private property rights. The consequences of not doing so will be and are becoming catastrophic.
Stephen Berry is the Affordable Auckland mayoral candidate for 2016.
He was third place-getter in the 2103 Auckland mayoralty election.
Like Affordable Cities on Facebook.