An interesting idea, but one no political party will touch

Arthur Grimes reckons that the government and Auckland Council should work together to collapse the Auckland property market.

A former Reserve Bank chairman has called for the Government and Auckland Council to enact policies to deliberately “collapse” the city’s house prices by at least 40 per cent and intensify building along Tamaki Dr with Gold Coast-style towers.

Arthur Grimes delivered a hard-hitting speech at an Auckland Conversations event, calling for swift action to resolve the housing crisis, and the city’s eastern suburbs to have high-rise residential blocks, ready for the next generation of Aucklanders.

The median house price was $1 million, up from an already too high level of $600,000 five years ago, he said.

“I think we should set ourselves a target now of looking for a collapse in house prices of at least 40 per cent in Auckland, OK? And that should be a political approach … central Government and local government politicians should be out there saying, ‘We’re trying to have policies in place that will collapse house prices in Auckland by at least 40 per cent’, because that will only take them back to a level where they were too high already five years ago,” Grimes told the Auckland Conversations forum.  

“Realistically we have to do that, right? When I’ve put this to politicians, they’re not too keen on it. How do we then go about trying to achieve it? We need to intensify in Auckland.

“I don’t think there’s any doubt. It doesn’t matter if it’s Freemans Bay, Parnell, Remuera, Kohimaramara, Ellerslie. We certainly need to intensify,” Grimes said.

“I can’t understand why that whole [area] from Orakei to St Heliers is not like the Gold Coast.

“Basically, in my experience of other cities, you would expect anywhere with those sorts of beaches close to Auckland … would have line-to-line skyscrapers all the way along there and that’s the kind of Auckland I would expect and I think young people would expect. The old people won’t and I’m in between,” he said.

Don’t you just love these policy wonks who have decided they know what is best for the residents of suburbs? They also show their complete lack of political nous.

Perhaps they should just shut up. No political party that wishes to remain in power for long will even contemplate listening to such a stupid policy. If house prices collapsed 40% then half of Auckland would be upside down on their mortgages…and then the banks will tip over and the rest of New Zealand, who thought this was a good idea, will start to realise how utterly stupid it was.

It is politically insane…and therefore a flight of fancy.

The strange thing is that economists aren’t really known for flights of fancy…so it seems that Arthur Grimes is now sipping the same sort of Krazy-Aid that Gareth Morgan drinks.


– NZ Herald

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