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Government Assistance Will Worsen Housing Crisis

Government Assistance Will Worsen Housing Crisis


Affordable Auckland Mayoral candidate Stephen Berry said today, “Calls by Family First for greater state assistance for first home buyers are well intentioned but completely erroneous. Greater state intervention in the housing market without correcting the fundamental distortions currently at work will only worsen house price inflation and make all buyers and property owners worse off.”

“It is wrong to think only those who are currently seeking to break into the housing market are at a financial disadvantage. Existing property owners also suffer when house prices are inflated. Every time the Council reassesses their property value, what happens to their rates? They go up! For pensioners on limited incomes, these constant rates increases can be a death-knell to their independence. Even if you reap a windfall by selling your property in the current market, you have nothing else to buy but other exorbitantly expensive homes.”

Stephen Berry argues that the problem in the Auckland market is not that people cannot afford homes, rather that houses are more expensive than they otherwise whould be were it not for the distortions created by Government intervention. “Tax breaks, or subsidies by another name, will only increase the pool of buyers capable of paying inflated house prices, increasing the demand for insufficient supply, driving up house prices even further. The solution here is not more Government action; rather, less.”

“Most of what needs to occur can be done at local body level. A decent cut to rates is the first place we should start. In order to cut rates, Auckland Council needs to cut spending. Weasel methods employed by the current Council to keep rates increases low through borrowing in excess of $1 billion a year can’t be accepted either. The borrowing of today will be the high rates of tomorrow as we struggle to service the growing interest on $7 billion worth of debt. So the first step is for our Council to get its own house in order.”

“Next we need to remove the costs and barriers to development imposed by Auckland Council. Aggressive central planning ignores the individual aspirations of those who wish to build, imposing oppressive financial burdens on those who can still be bothered trying while extinguishing the motivation of those who simply cannot afford the tens of thousands it can cost to obtain building consent. Heritage rules and character area regulations imposed by elected zealots and nosy neighbours make simple alterations to property in many established areas an economic nightmare. Respecting the right of property owners to do what they wish with their land, on the proviso it does not infringe upon the rights of others to do the same, should be the basis of a flexible zoning approach.”

Mr. Berry says the final step should be blindingly obvious to anyone who has done economics at high school. “The Metropolitan Urban Limit contains residential building within an artificial boundary and restricts the supply of land available to purchase for that purpose. When supply is artificially constrained by legislation, only one result can eventuate – demand fuelled price inflation. For this reason alone, if we ignore all the other many contributing factors, calls for state assistance for first home buyers are deluded.”

“You cannot solve problems created by regulation with further regulation.”
Stephen Berry is also standing as a candidate for the Waitemata & Gulf ward as well as Waitemata Local Board. Peter Chan – Waitakere, Niko Kloeten – Franklin Ward and Local Board and Heidi Bale – Whau Local Board are also standing on the Affordable Auckland ticket.

Ends

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