Auckland's sky-rocketing house prices could do the country a service -- as long as they are not artificially lowered
There have not been a lot of real issues about so far this year. We have had the usual silly season diet of non-consequential stories, interspersed with stories on the weather, accidents, crimes and so on. Often they make pretty terrible reading (why won’t boaties just put on their life-jackets?) but they are the sort of the events that happen anyway regardless of who is on the Treasury benches at the time (even they are on holiday not doing anything). Nothing political there.
Lately this seems to be different in one respect. One genuine issue appears to be arising. There is a growing concern and interest amongst the public at large -- and a growing focus amongst the political parties -- on the issue of affordable housing. Various definitions of affordability are offered; whichever definition is used, the picture now is that housing is becoming less affordable.
Especially in Auckland. The problem is that housing costs more in Auckland than it does in the other major centres (and often considerably more), and it costs even less when one goes to provincial towns and rural areas.
As for Auckland, the bigger it gets, the more it attracts additional people, and the higher its housing costs go. Various predictions show its population becoming a larger and larger proportion of the total population of New Zealand and that happening in quite a short time period. Now I am a happy Wellingtonian myself and struggle a bit to understand why anyone wants to live up there, but that seems to be what is happening.
There is a serious side to this issue. The more this "Auckland growing much faster and to be much bigger than all the rest" phenomenon happens, the more I wonder whether the resulting unbalanced population structure is going to give a good long-term future for New Zealand.
This higher cost for houses in Auckland is really a market signal to say, “Look purchasers -- it costs more to live in Auckland than other places and unless you can find employment or business opportunities to justify the extra cost, you may be smarter to go elsewhere”.
While it is not in New Zealand’s long-term interest to allow housing to become unaffordable, it makes sense to let that signal work.
So while I fully understand why affordability concerns people and want to see it addressed, a bigger concern would be public policies that “solve the problem” by effectively lowering the cost of buying a house in Auckland relative to other places. In short, subsidies on the cost of housing in Auckland. That will attract even more people to go to Auckland because it really doesn’t appear to the house purchaser to cost what it actually costs – the difference would be covered by taxpayers - and the
unbalanced growth problem would be aggravated.
One way those concerned about the additional cost of housing in Auckland could address their concern is to look for other opportunities elsewhere in New Zealand and see their capital go a lot further. I am afraid that the “win that vote whatever the cost” approach all too prevalent in our political cycle will jump on the short-term interest and trump the longer term.