Housing: Foreign Ownership is not the problem
Housing: Foreign Ownership is not the problem
Fightback is running a series of articles on the housing crisis in Aotearoa/NZ.
Ian Anderson (Whanganui-a-Tara/Wellington) examines the centre-left focus on foreign ownership, and argues rather that private capitalist ownership is the problem.
For more on the housing crisis, see Urban Housing is an Ecosocialist Issue, Housing Under Neoliberalism, Desperate people: Christchurch’s Slum Dwellers, or Living Outside the Rainbow: Queerness and the Housing Crisis.
Bankers warned early this year of a drop in property prices; a bust to follow the boom. It would be overconfident to pick an exact date. But when (rather than if) the crash comes, we need to understand the fundamental problem if we can hope to address it.
One narrative places the blame on foreigners. The New Zealand Labour Party recently threatened to bar non-residents from buying existing residential homes. Strangely, Australian investors were excluded; if speculation is the problem, why not restrict all investors?
Labour’s policy is symptomatic of a general tendency to scapegoat foreigners (particularly Asians) for deeper economic problems. Local investors still routinely donate to the Labour Party; foreigners are easier to blame.
Another form of scapegoating blames immigration itself for the housing shortage. A number of letters to the editor in the mainstream press have suggested that migration be reduced or halted until the housing shortage is remedied.
This generalised anti-foreign sentiment obscures class divisions. A “non-resident” may be an economic migrant, moving to New Zealand for work, not yet past the red tape of legal residency, and trying, along with other low-income earners, to find affordable accommodation while facing the additional burden of discrimination by landlords. As Labour indicates, “non-residents” may also be overseas property speculators with no plan to live here.
Locals also speculate on the housing market, gambling with houses they never plan to live in. Depending on who you listen to, foreign buyers own around 4% (according to property investor Peter Thompson) or 7-10% (according to former Labour leader David Shearer) of homes in Aotearoa/NZ. This is less than a quarter of all homes owned by non-occupiers; around 40% and counting according to Statistics NZ.
It’s worth distinguishing here between personal property and private property. Understandably, many want ‘a place of their own’, as distinct from a commodity to trade. As Marx and Engels underline in The Communist Manifesto, capitalism itself abolishes and undermines many forms of personal property:
We Communists have been reproached with the desire of abolishing the right of personally acquiring property as the fruit of a man’s own labour, which property is alleged to be the groundwork of all personal freedom, activity and independence.
Hard-won, self-acquired, self-earned property! Do you mean the property of petty artisan and of the small peasant, a form of property that preceded the bourgeois form? There is no need to abolish that; the development of industry has to a great extent already destroyed it, and is still destroying it daily.
Capitalist private property means that the ‘value’ of houses can be anonymously exchanged, sold on for personal gain. Marxists call this the contradiction between ‘use value’ (a place to stay) and ‘exchange value’ (a property to sell). Although house prices are partly a problem of supply and demand, there are by most estimates more empty houses than homeless people; the drive for profit is the fundamental problem.
It’s tempting to simply portray bankers and other financial institutions as parasitic; they don’t produce anything. While some (often anti-Semitic) conspiracy theories suggest that bankers are perverting the natural course of capitalism, profitable financial institutions are necessary to generalised capitalist production. Banks centralise the means of exchange, and lend out the initial capital for private production:
When the system of exchange is relatively simple, the personal knowledge and trust of individual capitalists may guarantee the quality of debts incurred, but in a complex market system this cannot form an adequate foundation for the credit system. The bank seeks to institutionalize what was before a matter of personal trust and credibility (David Harvey, The Limits to Capital).
Banks and financial institutions must also make a profit – which means interest, predatory lending, speculation, incentives to gamble with workers’ lives as poker chips. Trade in houses as commodities undermines the right to affordable housing, driving further extension of credit. Debt operates as a form of social pacification for an anxious middle class operating on a speculative bubble (Joel Cosgrove, Housing Under Neoliberalism). Ninety per cent of private debt is in housing.
Alongside proposing barring non-residents from buying houses, Labour also proposed a Capital Gains Tax. As a direct tax on profiteering, this is a better policy than xenophobic scapegoating. That said, many countries, including the US and UK, already have a Capital Gains Tax – speculation and property booms still run rampant. Market mechanisms cannot address a problem produced by the market.
Only strict restrictions on market activity, combined with a democratically planned expansion of public housing, can begin to address the root of the crisis. Capitalist parties will not grant this willingly.