Labour Housing Lotto Policy

David Farrar blogs about the silly housing policy announced in the middle of Labour’s leadership conference.

  1. 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.
  2. 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.
  3. Rich families will love this policy. Huey, Dewey and Louie will each get a cheap taxpayer subsidized house for their 21st birthdays.
  4. 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.
  5. 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.


THANK YOU for being a subscriber. Because of you Whaleoil is going from strength to strength. It is a little known fact that Whaleoil subscribers are better in bed, good looking and highly intelligent. Sometimes all at once! Please Click Here Now to subscribe to an ad-free Whaleoil.

  • Saccharomyces

    Yep, desperate knee-jerk reactionary policy. Of course, as you say, the smart will find a way to make money out of it, and the poor will suffer still. How ironic will it be when a landlord is renting out an “affordable home” at market rent to a low income family, who will, of course, be using an accomodation supplement to help with the rent.

  • Morgy

    100,000 in 10 years. 10,000 per year. 200 per week. Right…….pass the popcorn

  • conwaycaptain

    $300K per dwelling. Bullshit. Buy the land, subdivide it, pay the council fees, install all the utilities etc then build it.
    Then you have to have the infrastructure to build 200 pw or 40 per day (5 day week).
    How are they going to do this. Keith Hay and Lockwood would be going great guns. Seeing it take

  • DJ

    I would love to know who was involved in establishing this “winning” policy announcement. If there was ever a time to believe that Shearer had just been handed a serious hospital pass, it would be now.

    This remit is so bad, it has to be a conspiracy!

  • blam

    stuff the whinging and moaning, I’m in, where do I sign up ?

    • Honcho

      Likewise, I contract so wouldnt be too hard to structure my affairs to appear to earn a quarter what i really earn.

  • Richard McGrath

    My first home was an $89k ex-state house in Naenae which we could afford because my wife at the time was also working.

    • Sooty

      35yrs ago my first house cost $17,500. Transportable hose, brand new, delivered complete no interior decorating done. Section $1,500. Septic tank and water tank $1,500. Fencing, garage, paths, driveway and interior decorating done as we could afford it. Secondhand furniture, handme downs etc and no tv.

  • Yoti

    Richard you say you paid $89000.00 for an ex State House but give no year. I paid $8540 for my State House in 1970. A loaf of bread cost $0.04 and a pint of milk the same. What is your point.

  • Mediaan

    100,000 new modest houses? In a short time? I hope the middle and slightly richer classes realise this will devalue all their houses and assets, their supposed prudent preparations for retirement?

    Richer and careful-managing people, you are going to pay for this!

    Three ways.

    First, Labour, by flooding the market for houses, would be making theirs worth less in comparison. The market would drop substantially, because demand was removed.

    Secondly, by borrowing (or printing Wussel Wealth) to pay for it. Tens of billions of dollars, which will lower the value of our currency, must be borrowed or printed. Older people who have saved will have the value of their savings chopped. More than usual.

    Thirdly, good-bye tenants. These are the market that older, more prudent people now rely on for income when they have a house to live in and a house to let, or rely on selling their family home and buying two cheaper ones when they retire. Those second houses are their stored savings.