David Farrar blogs about the silly housing policy announced in the middle of Labour’s leadership conference.
- Generally the state provides assistance to people and families either on a universal basis or a targeted basis. All children get free compulsory education and all under 5s get free healthcare for example. That is a universal approach. A targeted approach is stuff like Working for Families (the lower your income the more you get) or even state house rentals (the rental is linked to your income). But this new housing policy is neither universal or targeted. It is a Lotto policy. If there are more applicants for these cheap sub $300,000 houses than there are houses (which of course there will be), then they will be allocated by random ballot. Now just think about this. As the median house value is $410,000 the lucky winners of these ballots will be arguably gaining $100,000 or so of value. Do you see why this should be called a Lotto policy!! You may earn less money than Jane and John next door but if they win the ballot they effectively gain $100,000 and you get nothing. Anyone from the left who seriously backs this policy is being sycophantic to Labour. They should be demanding the houses be allocated to the lowest income families – or given to Housing NZ to become state houses with income related rents.
- Purchasers who win the ballot will stand to make huge profits. If they buy the house for $300,000 and the market value is $400,000 then many of them will sell them as soon as they can to make a profit. Yes the policy says they may be required to retain them for a certain period of time – but that will just delay the cashing in for a profit. Also what will stop them moving out and turning it into an investment property? Will the state send inspectors in to check they are actually living there? Smart people, to make money, will find ways. They may get in “flatmates” but in fact not live there themselves.
- Rich families will love this policy. Huey, Dewey and Louie will each get a cheap taxpayer subsidized house for their 21st birthdays.
- This will be a boon for lawyers and trusts. The policy is that people must be first homeowners. So what the smart people will do is make sure their family trust buys their first home. They’ll then still be able to get a taxpayer subsidised home as technically they are still a first time homeowner. Cactus Kate is already making plans to make some arrangements so she qualifies for the handout.
- This policy will do little for poor families. They can;’t afford to buy even a $300,000 home. A better policy for Labour would have been that they will build 5,000 houses a year and turn them into state houses for low income families. But instead they are doing the housing equivalent of Working for Families – trying to buy the votes of middle class voters who hope they will win the Lotto ballot for a subsidized house.
Labour is dreamin’ if they think this is only going to cost what they say it will.
Further there are no guarantees that once built and then subsequently sold that these houses will remain affordable houses. You only have to look at state houses in Orakei for an indication of what happens. originally built as housing for the poor they now sit on prime real estate and are worth millions of dollars.
Is Labour going to require an affordable house to be marked on the title and on the premises as an affordable house…and require them to for ever be sold below market value? Of course they won’t, making the policy a sham.
Meanwhile they will gift lucky Labour Housing Lotto winners more than $100,000 at the taxpayers expense all so they can say they have an affordable homes policy.
One thing is for certain though, Labour has no idea how markets work when they are manipulated in such a fashion. Expect widespread rorting to occur and costs to blow right out in providing this bribe to the indigent and wealthy alike.