Our wonderful stop start economic policy

Its happening again as it always does – the tinkering of our economy to stop house prices going up and up in certain  parts of the country. First it was the “reserve bank” (year right it was them) lending restrictions. Hasn’t stopped prices but it now means first home buyers are put off, and the overseas investor market ( of which there are billions of people) have the field wide open. Next the “reserve bank” (remember they are a government department) are talking about putting up interest rates, and they probably will. Again New Zealanders will be slowed in buying houses – but not those overseas investors as they can pay cash for an entry level house.

So what do we think is good – a policy that keeps houses at the lower price point steady – Yes. What isn’t good – stifling the entire housing market and the resultant economy as it is no coincidence that people feel confident and empowered to spend when the house they own and live in goes up in value.

Why does the govt/reserve bank care that a house in remuera or grey lynn goes up in value from $1m to $2m?  Who does this harm?

Why doesn’t the government care that 36% of the cost of an entry level house is made up from holding costs during the consent process, council fees and the higher cost of materials we pay in New Zealand.

This is what our government should urgently be investigating and sorting. Instead they  have lending restrictions that harm those trying to get ahead and then they threaten and will put up interest rates which will have a major effect on the entire economy , (and on National’s re election chances) and more importantly will restrict our growth rate. …. Well done again to those in charge!

Next blog – why there never was a housing as shortage.

 

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