Wednesday, March 26, 2008

A birthright?

Is owning a house a birthright?

The NZ Herald seems to think so.

The right to buy a house is no more a birthright than the right to buy a car or a plasma TV or party pills (up until the end of the month, anyway).

If having a house (and I use the term house rather than home deliberately) is an unalienable right, then the only way to achieve this is, ironically, to have cookie cutter high rise housing. Even then, as Singapore has found out, it does not make it immune to the vagaries of the market.

Throw money at the problem?
The Aussies tried that with the first home-owner grant. All that achieved was to push up the price. Exisitng home owners said thank you and put it in the bank. Prospective home owners watched as prices went up even more as more people were encouraged to come into the market.

The move to mass permits is a step in the right direction but will it ensure that the supply over time will be enough to just meet demand? Given that the last decade has proven how volatile (especially upwards) demand for housing can be, would the recent proposal result in supply rising quick enough? Unlikely. So we are still going to see some degree of house price volatility. Will that result in changes to housing affordability? You bet.

Is the housing market so "strategic" that it needs to be regulated so as to ensure a policy outcome? Is the government saying it wants market forces to work better (i.e. faster)? The whole approach seems open to inconsistencies that may well leave a bigger mess.

But then it may not be Labour's problem to deal with.


Lucy said...

What happened in the UK during the 80's was all the Council houses were sold cheaply to tenants and now we have fewer houses on the market which pushes up the price which means first time buyers cannot afford to get in on the act which means we have to build more houses on sites regarded as 'greenbelt' and so in order to afford these new places the public hit the banks who gave out dodgy mortgages which got defaulted on and cost the banks billions and....

Anonymous said...

Couldn't agree with you more. I only wish more people were saying this.

Dismal Soyanz said...

Yes - if only people were more "realistic". After times of plenty, too many come to expect things as of right. It seems a shame but perhaps Matt Nolan is correct and we need a recession.

There's an irony with Kiwisaver in that the whole point of precautionary savings is to provide savers with a better income. Underlying that is the idea that things may not be as rosy as they are now when time comes for retirement. I wonder what the correlation between Kiwisaver participation and house purchases via debt is like.

The ex-expat said...

Housing in this country has taken on a cult-like status.