New Zealand's housing market is "absurd", says former Reserve Bank Governor Don Brash, and Kiwis not yet on the property ladder have little hope of making it up the rungs.
Skyrocketing house prices have been at the centre of national discourse in recent months, the country's chronic housing shortage compounded by a fast-growing population and Kiwi expats returning en-masse to escape the ongoing pandemic, leading to an increased demand for slow-growing supply. With low interest rates and the removal of loan-to-value ratio (LVR) restrictions, more Kiwis were able to enter the property market in 2020 - contributing to the country's sky-high asking prices.
Speaking to Magic Talk on Sunday morning, the former Opposition leader painted a grim picture for the future of home ownership in New Zealand, claiming Prime Minister Jacinda Ardern and her Labour Government have little interest in reducing the record-high house prices.
"The Government does not want house prices to fall, in fact the Prime Minister has been quite explicit that she wants them to continue to rise, although more slowly," Brash told Sunday Cafe host Roman Travers.
"You cannot make housing more affordable if prices continue to go up - they're outrageously unaffordable by international standards now, in Auckland and Tauranga particularly. It's just absurd."
Brash, who was Governor of the Reserve Bank from 1988 to 2002, said people are quick to point out an increase in income inequality over the past 20 years - however, he says it's New Zealand's wealth divide that has expanded "enormously", driven by house prices.
"If you happened to be lucky enough to have a house 20 years ago, you're living in clover. You didn't? You're screwed - absolutely screwed. The Government doesn't even want to fix it," he said bluntly.
"The biggest single issue facing the country is we've got an underclass [with] not a dog's chance of moving into their own home, they cannot live comfortably on the current [average] income… it's a serious problem."
He suggested that scrapping the urban boundary around Auckland - an initiative Labour first suggested in 2017 - would help reduce prices, but maintained that Ardern has "no intention" of repealing the urban limit.
"The Government doesn't want to drop house prices. They want to help first-home buyers into houses by providing more incentives to help them, thereby increasing demand - but doing nothing for supply. Prices just continue to go up."
The Government announced on Thursday that 8000 additional public and transitional housing places, announced in Budget 2020 as part of a $5 billion investment, will go in the regions where population growth has exceeded new housing supply.
"We're on track for our delivery of our public housing programme. We are now expanding it; we're targeting identified areas where we have real need, and setting out where those extra homes will be built across to 2024," Ardern said.
Ardern acknowledged that housing is one of New Zealand's "toughest long-term problems" and that the current rate of housing price growth is "unsustainable", with first-home buyers shut out.
"There is no silver bullet for fixing the housing crisis but that is not a reason for inaction. It's a reason to tackle this issue on multiple fronts and on an ongoing basis," she said. "It will continue to take a concerted effort across the term."
