Let’s allow Shamubeel Eaqub to make his case
The latest Demographia International Housing Survey confirmed what we know – house prices in Auckland have risen much faster than incomes. So much so, that Auckland is the fourth least affordable city in a survey of 92 cities around the world.
The causes for the housing crisis have been well covered. Housing supply is too slow because of ineffective regulation, while demand is too high because of our culture, tax incentives and bank lending biases towards existing homes over new builds and businesses.
Similarities across some markets around the globe show that the drivers are not necessarily unique to New Zealand, but often the underlying causes are much the same – the economies are successful, populations are growing, and home owning and investing cultures and housing supply is unresponsive.
But some historical context is also helpful.
The increase in house prices relative to incomes is not new. It started to diverge in the 1990s. Unsurprisingly home ownership peaked then, after rising for nearly a century, and has since fallen to the lowest level since 1956.
Extremely unaffordable housing has had the expected consequences: increased homelessness, housing stress for the poor and vulnerable, and slipping hopes of middle classes ever owning their own home.
Unaffordable housing hits the poor the hardest – they face higher costs and often get shunted further away as suburbs gentrify. Lack of investment in social housing has meant that we have fewer state houses today than in the early 1990s, and relative to population, the lowest number of state houses since the late 1940s. Read more »