The news is out, finally, that the Auckland housing market has slowed down even when many other regions outside Auckland are still performing well and playing catch-up. Nationally there is a slowdown in the housing market activity, according to ANZ Bank’s latest monthly Property Focus publication.
The report categorically states, “The clear takeaway is that Auckland is bearing the brunt of the recent slowdown in housing market activity, with numerous other regions still performing well and playing catch-up; although unsurprisingly, some are doing better than others.”
The ANZ report also states that “The property market is softening, particularly in Auckland as the combination of a turn in the interest rate cycle, less credit, LVR restrictions and severely stretched affordability act as headwinds.”
This may be big news for many who are more emotionally invested and intellectually inclined about the rise and the fall of the housing market, particularly in Auckland.
However, not everyone may be equally able to comprehend the real meaning of this recent development in the housing market.
For a Kiwi-Indian working mum, Richa Singh, who has been renting a property in Sandringham in Central Auckland that her family calls home, this news of slowdown in the housing market came just at a time when her property manager has served a notice of increasing the rent by $30 a week in two months’ time.
“This news of the slowdown in the housing market does not affect me right now as my cost of renting is going to increase anyway,” Mrs Singh said.
It is not clear though if her indifference was mere customary or a mark of abject surrender to the idea of rising on the property ladder in Auckland housing market anytime soon.
There is no intention here to suggest that any movement in ‘markets’ in general can affect individual situations of many people immediately.
The only intention is to point that different people receive different information differently and digest that information distinctively to formulate an opinion on any issue.
The housing issue is one that many experts believe will be affecting the opinion of average voters in the general election 2017, and primarily responsible for complicating what can be probably called as the biggest debate in this election – the great immigration debate – leading to outlandish comments from some political parties.
Therefore it is pertinent to start this inaugural edition of The Indian Weekender election special issue – Verdict 2017 – with a debate on the housing market.
The key question of the debate emerges from the given fact that the average house price has increased significantly in the past few years: so is there a need for a greater intervention by the government in the housing market?
Current state of play on government intervention in the housing market
As housing market is a complex space which involves different interest groups such as property developers, homeowners, investors, first home buyers, renters, bankers, credit providers and possibly many more, the choice of government intervention in the market can often be arbitrary depending upon what does the government of the day chooses to focus on.
Moreover, the choices available to intervene in the housing market are also varied and diverse depending on which aspect of the market does the government of day want to intervene, say credit availability, housing supply, opportunities to private investors (and foreign investors as many categories) or concessions to the first home buyers.
The opposition parties (read Labour Party) have been making the most vocal noises on increasing government intervention in the housing market starting from 2015 when Auckland housing market was superheated and rising at more than 24 per cent. Perhaps the most controversial was the allegation on private investors with Chinese sounding names suggesting a racist overtone in the argument demanding intervention against foreign investors.
The Labour Party has since then sought to detach itself from the racist interpretation of its main argument while upping the ante on alleged foreign investors in Auckland housing market.
Meanwhile, the government had quietly stepped up increasing the intervention in housing market starting from October 2015 itself, requiring investors in Auckland property to have at least a 30 per cent deposit.
This was further augmented from October 2016, when the then Finance Minister Bill English had signalled a ramping-up of government intervention in Auckland's private sector housing market.
“The Government will be a provider for the next 10 years of significant numbers of medium-density, medium-priced housing into the Auckland market,” Mr English had then told NZ Herald in an interview, signalling government intent to intervene toward the supply side of the housing market.
The government is largely following the trajectory of gradually increasing intervention in the housing market since then, to an extent taking away the sheen of Labour’s policy to build 100,000 new houses over the next decade. The government has come up with its own promise to build 34,000 houses in the next ten years.
Similarly, the mutual competition among the key political parties in determining the level of government intervention in housing market specifically in areas of credit availability, concessions to first homebuyers and other areas is intense.
The Indian Weekender sets up the debate: Verdict 2017
Against this background, The Indian Weekender has invited key political players within the Kiwi-Indian space to put forward their main argument for and against this perceived demand of need for more government intervention in the housing market.
The Indian community in NZ can expect to read messages of all participating political parties around this question in our next print edition, due Friday, July 7.