Exploring how taxes, zoning laws, and policy can rebuild trust in New Zealand's housing market. Housing doesn't just affect where we live, but how we live together as a society.
Love the article and love the dogs. You are my favourite writer re politics. I have found both Labour and National rubbish over the last 4 decades. There’s a saying that goes “The right do evil well and the left do good poorly”
Hi Herrman, thank you so much for your kind words! It means a lot! I’m glad you enjoyed the article (and the dogs!). That saying really sums up the frustration with our political landscape over the years, doesn’t it? Which is why I feel there is a real space for radical centrism. Both Left and Right have struggled to find the right balance, and housing is one area where the cracks are really showing. I appreciate the support, and I’ll keep trying to dig into these issues with a fresh perspective and good Dog photos. Thanks again for reading and engaging!
Hi Natalia. This is a more wide-ranging view of housing affordability than we usually see, though the list has missed what might be the biggest driver of house price inflation -- bank credit. This article by the late Brian Gaynor explains it very well, along with some of the history that got us here. https://businessdesk.co.nz/article/the-life/looking-back-the-nz-housing-boom-when-and-how-it-all-began You might also look at this site for a lot of relevant information including links to research. https://positivemoney.org.nz/
Some of the biggest misconceptions about money and banks unfortunately reside in Economics departments so it’s not surprising that your review of the academic literature turned up little about this. As the Bank of England diplomatically puts it: "The reality of how money is created today differs from the description found in some economics textbooks".
Banks can and do take advantage of demand/supply mismatches and their ability to expand the money supply through lending to stuff far more credit into the housing market than it needs. The result is housing inflation -- too much money chasing too few houses -- and it has allowed them to mop up an increasing share of household income gains. As Gaynor’s article explains, their natural desire to expand profitable lending used to be tightly constrained but that ended in 1984 and the era of house price inflation exceeding wage and CPI inflation began. Mike Rehm at Auckland Uni has done some good local work in this field. https://www.thebigq.org/2019/09/17/why-is-housing-so-unaffordable/
Hi Martin, thanks for sharing these great resources! You make an excellent point about bank credit and how its expansion plays a significant role in driving housing inflation—it's definitely a factor often overlooked in mainstream discussions. I’ll check out Brian Gaynor’s article and the Positive Money site for more insights. I agree that the way money is created and its impact on the housing market needs more attention in policy discussions. I’ll also look into Mike Rehm’s work at Auckland Uni. Thanks again for the thoughtful input, it means a lot!
I live in Mangere. Once Auckland relaxed the zoning laws, three story townhouses started popping up like mushrooms around here. Over the road from us, where there used to be 4 homes there are now 32 apartments. These are tiny pigeon coops and our street is suddenly full of resident’s cars. It’s a bugger but I think it’s right.
There are acres and acres of cleared ground waiting for new builds to get under way, around here and in Penrose where I work.
The new constructions are not high-end, with high-end profits (although I have nothing but respect for high-end profits). They have not been built because of a direction from government at any level. They are here because of relaxed zoning and the fact that there is a demand for them.
Can government intervention help increase the supply of less expensive houses? I would think so. Local government needs to manage the angst of incumbent residents who don’t want changes to the character of their neighbourhoods. And then (as with the supermarkets) we could do with more competition in the supply of building products. Maybe central government can help facilitate this. Profit will go to the (likely foreign) new suppliers, but the result will be lower construction costs. Interest rates unfortunately need to remain outside of anyone’s control, other than the Reserve Bank.
Pain to the right of them (people living in suburbs with sections with grass, gardens and trees), pain to the left of them (an unholy alliance of people who don’t like the market together with the vested interests), pain in front of them (the economy and interest rates), into the mouth of hell rode the three coalition partners.
Hi John, thanks for sharing your experience—it’s a really valuable perspective from someone living through these changes, great examples of how it all works in practice eh? I can imagine the sudden increase in density feels disruptive, but I appreciate your balanced take on why it’s necessary. You’re right, zoning relaxations are filling a real demand, and I agree that government intervention could help ease some of the growing pains, especially in competition for building materials. There’s no easy fix, Wellington is sure feeling the tensions between all these different options and it's creating some division between owners and renters, which is unfortunate. I wish we didn't victimize renters so much and villainize landlords, we need them both. but I think striking a balance between progress and preserving community character is key, hard and needs to be discussed often and out in the open. Thanks again for the thoughtful comment!
Love the article and love the dogs. You are my favourite writer re politics. I have found both Labour and National rubbish over the last 4 decades. There’s a saying that goes “The right do evil well and the left do good poorly”
Keep up the good work.
Hi Herrman, thank you so much for your kind words! It means a lot! I’m glad you enjoyed the article (and the dogs!). That saying really sums up the frustration with our political landscape over the years, doesn’t it? Which is why I feel there is a real space for radical centrism. Both Left and Right have struggled to find the right balance, and housing is one area where the cracks are really showing. I appreciate the support, and I’ll keep trying to dig into these issues with a fresh perspective and good Dog photos. Thanks again for reading and engaging!
Hi Natalia. This is a more wide-ranging view of housing affordability than we usually see, though the list has missed what might be the biggest driver of house price inflation -- bank credit. This article by the late Brian Gaynor explains it very well, along with some of the history that got us here. https://businessdesk.co.nz/article/the-life/looking-back-the-nz-housing-boom-when-and-how-it-all-began You might also look at this site for a lot of relevant information including links to research. https://positivemoney.org.nz/
Some of the biggest misconceptions about money and banks unfortunately reside in Economics departments so it’s not surprising that your review of the academic literature turned up little about this. As the Bank of England diplomatically puts it: "The reality of how money is created today differs from the description found in some economics textbooks".
Banks can and do take advantage of demand/supply mismatches and their ability to expand the money supply through lending to stuff far more credit into the housing market than it needs. The result is housing inflation -- too much money chasing too few houses -- and it has allowed them to mop up an increasing share of household income gains. As Gaynor’s article explains, their natural desire to expand profitable lending used to be tightly constrained but that ended in 1984 and the era of house price inflation exceeding wage and CPI inflation began. Mike Rehm at Auckland Uni has done some good local work in this field. https://www.thebigq.org/2019/09/17/why-is-housing-so-unaffordable/
Hi Martin, thanks for sharing these great resources! You make an excellent point about bank credit and how its expansion plays a significant role in driving housing inflation—it's definitely a factor often overlooked in mainstream discussions. I’ll check out Brian Gaynor’s article and the Positive Money site for more insights. I agree that the way money is created and its impact on the housing market needs more attention in policy discussions. I’ll also look into Mike Rehm’s work at Auckland Uni. Thanks again for the thoughtful input, it means a lot!
I live in Mangere. Once Auckland relaxed the zoning laws, three story townhouses started popping up like mushrooms around here. Over the road from us, where there used to be 4 homes there are now 32 apartments. These are tiny pigeon coops and our street is suddenly full of resident’s cars. It’s a bugger but I think it’s right.
There are acres and acres of cleared ground waiting for new builds to get under way, around here and in Penrose where I work.
The new constructions are not high-end, with high-end profits (although I have nothing but respect for high-end profits). They have not been built because of a direction from government at any level. They are here because of relaxed zoning and the fact that there is a demand for them.
Can government intervention help increase the supply of less expensive houses? I would think so. Local government needs to manage the angst of incumbent residents who don’t want changes to the character of their neighbourhoods. And then (as with the supermarkets) we could do with more competition in the supply of building products. Maybe central government can help facilitate this. Profit will go to the (likely foreign) new suppliers, but the result will be lower construction costs. Interest rates unfortunately need to remain outside of anyone’s control, other than the Reserve Bank.
Pain to the right of them (people living in suburbs with sections with grass, gardens and trees), pain to the left of them (an unholy alliance of people who don’t like the market together with the vested interests), pain in front of them (the economy and interest rates), into the mouth of hell rode the three coalition partners.
Hi John, thanks for sharing your experience—it’s a really valuable perspective from someone living through these changes, great examples of how it all works in practice eh? I can imagine the sudden increase in density feels disruptive, but I appreciate your balanced take on why it’s necessary. You’re right, zoning relaxations are filling a real demand, and I agree that government intervention could help ease some of the growing pains, especially in competition for building materials. There’s no easy fix, Wellington is sure feeling the tensions between all these different options and it's creating some division between owners and renters, which is unfortunate. I wish we didn't victimize renters so much and villainize landlords, we need them both. but I think striking a balance between progress and preserving community character is key, hard and needs to be discussed often and out in the open. Thanks again for the thoughtful comment!