This past weekend Labour celebrated 100 years of existence. As part of that centenary they announced a Housing policy they would enact if they became the next government. Despite what the right say, it is clever politicking by Labour for two reasons; 1. it’s an attempt to address a growing issue and 2. it harks back to the 1930s era of Labour governance where state housing originates from. Meanwhile, yesterday National announced that it didn't expect a dividend from Housing New Zealand which will, in theory, allow HNZ to invest in building more state houses.
This crisis has been an ongoing issue for years yet has been ignored by the politicians until now. With both main parties deeply rooted in neoliberal economic policy there has been an unwillingness to interfere with the market, choosing instead to believe the market will right itself. There has also been a push to emphasise one issue or another. We’ve heard that not enough houses are being built, too many foreigners buying up our houses, it’s Kiwi investors, it’s councils not releasing enough land. What we haven’t heard is a concerted combined attempt at solving this growing problem.
I have decided that instead of complaining, I would have a go at offering a combined solution to the problem. Admittedly I am no economist, or finance advisor, nor do I claim expertise in this area. But as a lay person I think some of these ideas, as part of a wider ranging policy, have merit and should be openly discussed.
1. Discourage foreigners purchasing housing stock.
This crisis has been an ongoing issue for years yet has been ignored by the politicians until now. With both main parties deeply rooted in neoliberal economic policy there has been an unwillingness to interfere with the market, choosing instead to believe the market will right itself. There has also been a push to emphasise one issue or another. We’ve heard that not enough houses are being built, too many foreigners buying up our houses, it’s Kiwi investors, it’s councils not releasing enough land. What we haven’t heard is a concerted combined attempt at solving this growing problem.
I have decided that instead of complaining, I would have a go at offering a combined solution to the problem. Admittedly I am no economist, or finance advisor, nor do I claim expertise in this area. But as a lay person I think some of these ideas, as part of a wider ranging policy, have merit and should be openly discussed.
1. Discourage foreigners purchasing housing stock.
This is often seen as being “anti-foreign investment”. I believe that’s a false label used to dismiss this idea but this idea needs an alternative offered in conjunction.
2. ENCOURAGE foreign investment into local businesses.
This is that alternative. The problem isn’t foreign investment. The problem is where that investment is going. Housing stock doesn't generate wealth for our country. Foreign investment in our small and medium sized businesses does. These first two ideas have to go hand in hand.
3. ENCOURAGE local investment into local businesses.
Likewise, local investment shouldn’t be sunk into multiple homes. Local businesses generate wealth, employ people and return money back into regional economies.
4. Capital Gains / Property Tax.
People hate this idea but the reality is that currently there is little to no tax on property investment. A graduated tax based on the number of properties one owns seems to be a fair way of taxing. If you want to make your money in property go ahead, but you will be taxed just like any other investment.
5. Education on Investments.
Too many Kiwis have no idea about how the sharemarket works, what a share is, what a bond is. We fear the sharemarket because we don’t understand it. As a nation we need to financially school ourselves up and get over our fear.
6. Build More Houses.
It is a no brainer but the population is growing, particularly in Auckland. Not enough housing is being built to cover the growth.
7. Build Up, Not Out.
Building more suburbs in our major cities, particularly Auckland will not solve the issue but will simply create more complex problems. We need to have a long term plan to make compact people-friendly cities. Sprawling metropolises like we have now are car-friendly, use up valuable farmland and don’t work. The desired quarter acre section with a white picket fence is an idea best left in the 1950s where it belongs.
So seven ideas. Not rocket science but at the same time if done properly can help to solve the housing crisis. Some of the ideas won’t see immediate effects but are necessary to stop the speculation and correct the craziness that currently inhabits our property market. I’d love to see all of these ideas implemented. I’d love to see politicians with the guts to actually work together to solve the crisis. But I fear that that won’t happen. I fear personal interests will trump what’s best for the nation and that the housing crisis will only get worse until something snaps, plummeting us into the abyss of fiscal depression.
So seven ideas. Not rocket science but at the same time if done properly can help to solve the housing crisis. Some of the ideas won’t see immediate effects but are necessary to stop the speculation and correct the craziness that currently inhabits our property market. I’d love to see all of these ideas implemented. I’d love to see politicians with the guts to actually work together to solve the crisis. But I fear that that won’t happen. I fear personal interests will trump what’s best for the nation and that the housing crisis will only get worse until something snaps, plummeting us into the abyss of fiscal depression.
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This will form the start of a 4-6 part series. I will attempt to expand on some of these ideas over the coming weeks. Next week, redirecting investment away from housing and into Kiwi businesses (this will attempt to expand points 1-3). That will be followed by a look at Capital Gains Tax, Financial Education, Increasing the current housing stock and finally why I believe we should be focusing more on going up rather than out, particularly in Auckland.
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