The laws of unintended consequences bite Labour on the ass

Rory Lenihan-Ikin, Victoria University of Wellington Students’ Association president

Socialists have never been able to exhibit joined up thinking with their sloganeering and electioneering.

In Wellington we are seeing the unhappy confluence of some of their daft ideas.

Wellington could be staring down the barrel of the worst rental crisis in the city’s history, property experts say.

Record rent increases are forecast to hit the capital during early-2018, fuelled by predicted growth in government staff working in the CBD, more students attracted by a year’s free tertiary education, and sustained falls in available rentals.  

Compounding the issue is early indications of a rental property sell-off. Ray White business development manager Gareth Robins said he had noticed a surge in multi-unit and multi-flat properties appearing on the market.

It was too early to tell if the sell-off would continue. But with most investors believing property prices had peaked and new costs on the horizon coming from the Government’s Healthy Homes Guarantee Bill, Robbins said the stage was set for such an event.

“People who have been holding those properties as their retirement plan, for example, see this as a good opportunity to cash in.”

Trade Me’s October Rental Property Index showed 69 per cent fewer rental properties were listed in the Wellington region compared to the same time last year, a trend that has been worsening throughout the year.

Trade Me Property head Nigel ​Jeffries said less rental stock hitting the market and a slowdown in the creation of new stock could push rent increases in Wellington city up 20 per cent higher than would usually be during the busy seasons of January, February and March.

“The choices renters are going to have in January and February are expected to be significantly lower than 2017.”

So, Labour signals housing warrants of fitness and a capital gains tax for rental properties. Of course people will change their portfolio and quit the market. This is called market forces.

Contrary to the rainbows, fairy-dust and unicorns view of economics that socialists seem to live by, the reality is if you tell people they will pay more tax with that asset, plus it is going to be harder and harder to own it, then the market takes those signals seriously and changes.

Add more market forces into the mix, like more students and more civil servants and you are going to get a “crisis”. Except this crisis is one the new government created.

Wellington Property Investors’ Association president Richard Bacon said the rollout of new standards under the Healthy Homes Guarantee Bill were months or even years away. But the direction had been set, and many landlords may decide to sell their investment properties.

“It’s more the story of the increasing compliance demands than the reality,” he said.

Having a Labour-led government in charge would likely mean the size of Government ministries grew, meaning more workers in the CBD, Bacon said.

This was good news for landlords, who could increase rent, particularly in the family home market.

So much for affordable accommodation, Well done Labour.

The Government’s plans to instigate a year’s free tertiary education was expected to draw more students, with Education Minister Chris Hipkins predicting a 15 per cent increase in numbers nationally.

“It’s too early to tell what the policy’s effects on actual student numbers will be at any specific provider or city,” Hipkins said.

“The fees-free policy will boost demand for tertiary study over time. However, this does take into account the current situation that student numbers across the tertiary education system were otherwise forecast to decline slightly over the next four years.”

What a muppet. Clearly yet another student politician now meeting face to face with reality. If he stopped shagging students he might find he gets better information.

It is unlikely any increase will be accommodated in university halls, with Victoria University, Massey, WelTec and Whitireia all reporting the majority were already booked out for the 2018 academic year.

In order to accommodate the increased demand, Victoria University will have an extra 240 beds available for 2018, making a total of 3474 beds.

The reopening of Boulcott Hall, which had been closed since February for refurbishment, would provide 180 of these, while 60 would be added at 222 Willis St.

Victoria University of Wellington Student Association president Rory Lenihan-Ikin said a Government policy to increase student livings costs by $50 a week would be cannibalised by the increased price of accommodation.

“When I first got a flat in 2013 I was paying $150 and that was very normal. Now the average in the student suburbs in Wellington is $218, according to the most recent data we’ve had.”

With a porn-stache like that old Rory Two-Fathers is destined to be a Labour MP, and he certainly deserves to have trouble finding accommodation.

It’s dead simple. More students and civil servants = more demand. Stupid laws on rentals and a pending CGT = less supply.

More demand + less supply  = rent increases.

Simple, standard, market economics…and a “crisis” caused by muppets.

 

-Fairfax

 


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