Housing crisis: the solution isn’t more government

Damien Grant opines:

The only positive thing that can be said about Minister for Social Housing Amy Adams’s absurd plan to build 34,000 houses is that it probably won’t happen.

Let’s take a step back and ask; why are Auckland houses so expensive? Humans have been building shelters for at least 15,000 years when our ancestors made them out of mammoth bones. We’ve made homes out of mud, we’ve even made them using snow bricks.

So why are houses in Auckland more expensive than a (pre-election) Hillary Clinton speech? The answer is depressingly obvious and has been pointed out more often than children ask for candy. Various levels of government made building houses both difficult by locking up land and expensive by regulating every aspect of house construction.

We all know this.  And we know the solution.  Free up land and cut red tape.  

The Rural Urban Limit and the legal requirement to install double glazing are two examples of why 38,000 houses were consented in 1974 and only 30,000 last year.

This lack of construction and interest rates lower than a property developer’s ethics are blamed for the perception that we have a housing bubble. Professor John Tookey, from AUT, released a report this week stating his view that the Auckland housing market is a definitely a bubble and it is destined to burst. Goldman Sachs projects a 40 per cent chance that house prices will fall by at least 5 per cent. Mike Hosking says it’s all good and in any event 5 per cent isn’t very much.

I don’t have any idea what house prices will do but I can tell you this: the government cannot run a lemonade stand without consulting multiple iwi, paying a living wage and employing $600-an-hour consultants to tell them what photo to use in their annual report.

This will be a boondoggle on a majestic scale. We already have a shortage of builders and the government offering gold-plated contracts, no overtime and a health and safety checklist longer than a Waitangi Tribunal submission will mean construction costs in the rest of the industry will increase.

Private builders will be crowded out but at least the DIY industry will get a boost.

Despite this, government-built houses will probably leak, there will be cost over-runs, a lack of accountability and in the end people will be suing the Crown between now and the end of western civilisation.

The housing crisis is a government created problem. The solution isn’t more government. Let’s hope this plan dies after the election faster than Winston’s Prime-ministerial ambitions.

When he isn’t sitting in jail or associating with even dodgier liquidators than him he occasionally gets things right.

All these pinko idiots who say the free market has failed the people regarding housing are talking utter rubbish.

There isnt a free market in housing as everything has to through the council. It is the various governments and councils that have stuffed it all up.

 

– Damien Grant, Stuff


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