Dearest New Zealand:- You’re wrong about housing
New Zealanders are quite stuck in their ways on a lot of things. Some of it is to do with situations, like Aucklanders and their cars (let’s be honest, what other option do they have, given Auckland’s public transport system…), but others are more to do with an inherent belief that something is good, even if it really isn’t. Housing and the desire to own a quarter acre is one of those things.
Even the political party that actually understands economics (which I will not name, but I assume you’ll know who I’m talking about – and unfortunately, there really is only one) does not get this. Investment in housing doesn’t benefit the economy. It doesn’t benefit the citizens. All it does is create a desire for something we cannot afford to provide. Why the National Party keeps harping on about how New Zealanders should be allowed their piece of the New Zealand Dream, I will never know. Our housing market is one of the things that pushed us into the recession as quickly as we ended up there. Without trying to re-educate New Zealanders about housing, what you’re doing is creating the perfect economic storm again. We got out lucky this time – next time, I don’t see it happening again.
Why is housing so bad? Firstly, it does absolutely nothing for the economy. Our economy is benefited by the creation of real goods and services. Selling a house and land doesn’t create real goods or services. It simply transfers assets from one person to another. Sure, it’s a relatively sound investment, because people are always going to need houses, and therefore it’s likely to increase in price rather than decrease. However, when you have all your money in housing and markets that are actually productive suffer for it, you end up with an unsustainable economy, and the economic meltdown we saw from about mid 2008 is likely to occur again. At that point, people defaulted on their mortgage payments, property was going to market quicker than people could buy it, and the price of property fell dramatically.
The second reason our desire for property is so bad is that if we want to continue farming (that’s a rhetorical question – we do. Remember what I said earlier about productive markets?) we simply don’t have the land for every person in this country to own a house and a quarter acre of land. The urban sprawl of the previous decades has cause major issues – it’s one of the reasons it’s so difficult to fix Auckland’s public transport system. Thankfully, Auckland has realised that the way forward is up, not out. Unfortunately, the rest of the country isn’t quite there yet.
So please, New Zealand. Do me a favour and stop your absolute need for property. We’re all better off without it. Sure, without having a bit of land, you can’t go out into the back yard with your kids and kick a ball around or whatever. That’s why good town planning involves things like public parks. Start using those facilities instead.