Auckland Housing in Dangerous Territory
Reserve Bank Governor, Graeme Wheeler’s warning to MPs last week could not have been blunter.
The faster house prices rose in Auckland, the greater the likelihood there would be a steep price reversal, he told the Finance and Expenditure Committee in Parliament.
Auckland house prices, he said, were neither affordable nor sustainable.
“The house price to income ratio for Auckland is at nine(house prices are nine times the average household income). It’s twice that for the rest of the country”.
Auckland is now in the top 10 most expensive cities of the world to buy a home.
“This is just dangerous territory,” the Governor said.
It’s time that the Government stopped denying that there is a housing crisis in Auckland. It’s obvious to everyone.
The Kiwi dream of owning your own home has become impossible for many first home buyers and new migrants in our city.
We now have the lowest level of home ownership in New Zealand for 64 years and the level of home ownership in Auckland is lower still.
In my electorate of Mt Roskill, where house prices used to be modest, a house last week in Betts Ave, a state housing area, sold for $1.8 million. A former state house in Bremner Ave sold for $1.47 million.
These are crazy prices. Only property investors can afford them. The percentage of sales to property investors and speculators keeps going up. Some properties change hands several times a year as people speculate in property and make a fortune. We are building up a property price bubble. When it bursts it will cause wider economic problems including the real possibility of a further recession.
The Government’s response has been too little and too late.
Until recently, it was perfectly happy to allow speculation. It did not even want to know how much foreign investment into housing was coming in from people never intending to live in New Zealand. That has pushed house prices up still further.
The Government’s attitude is that high house prices make people feel rich and so what’s the problem.
For home owners, in contrast to speculators, high house prices don’t make you better off. When you sell your home at a higher price, you have to buy a new one which is also at a much higher price.
Only speculators benefit, and many of them aren’t even paying tax on the hundreds of thousands of dollars they are making without any effort.
It’s the ordinary person who pays the cost- the couple who are paying tax on both incomes coming into the household and who can’t earn enough to meet the rising house prices, and the single person for whom home ownership is even more difficult.
If and when the bubble bursts, as it did in the US in 2008, then the whole country will pay through the economic downturn that results. For seven years, the Government has watched the housing crisis unfold and has taken no effective action to counter it.
Reserve Bank Governor, Graeme Wheeler’s warning to MPs last week could not have been blunter.
The faster house prices rose in Auckland, the greater the likelihood there would be a steep price reversal, he told the Finance and Expenditure Committee in Parliament.
Auckland house prices, he said,...
Reserve Bank Governor, Graeme Wheeler’s warning to MPs last week could not have been blunter.
The faster house prices rose in Auckland, the greater the likelihood there would be a steep price reversal, he told the Finance and Expenditure Committee in Parliament.
Auckland house prices, he said, were neither affordable nor sustainable.
“The house price to income ratio for Auckland is at nine(house prices are nine times the average household income). It’s twice that for the rest of the country”.
Auckland is now in the top 10 most expensive cities of the world to buy a home.
“This is just dangerous territory,” the Governor said.
It’s time that the Government stopped denying that there is a housing crisis in Auckland. It’s obvious to everyone.
The Kiwi dream of owning your own home has become impossible for many first home buyers and new migrants in our city.
We now have the lowest level of home ownership in New Zealand for 64 years and the level of home ownership in Auckland is lower still.
In my electorate of Mt Roskill, where house prices used to be modest, a house last week in Betts Ave, a state housing area, sold for $1.8 million. A former state house in Bremner Ave sold for $1.47 million.
These are crazy prices. Only property investors can afford them. The percentage of sales to property investors and speculators keeps going up. Some properties change hands several times a year as people speculate in property and make a fortune. We are building up a property price bubble. When it bursts it will cause wider economic problems including the real possibility of a further recession.
The Government’s response has been too little and too late.
Until recently, it was perfectly happy to allow speculation. It did not even want to know how much foreign investment into housing was coming in from people never intending to live in New Zealand. That has pushed house prices up still further.
The Government’s attitude is that high house prices make people feel rich and so what’s the problem.
For home owners, in contrast to speculators, high house prices don’t make you better off. When you sell your home at a higher price, you have to buy a new one which is also at a much higher price.
Only speculators benefit, and many of them aren’t even paying tax on the hundreds of thousands of dollars they are making without any effort.
It’s the ordinary person who pays the cost- the couple who are paying tax on both incomes coming into the household and who can’t earn enough to meet the rising house prices, and the single person for whom home ownership is even more difficult.
If and when the bubble bursts, as it did in the US in 2008, then the whole country will pay through the economic downturn that results. For seven years, the Government has watched the housing crisis unfold and has taken no effective action to counter it.
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