In his self-described state of the nation address to Party members last weekend, ACT leader David Seymour came out with some world-class tosh.
Referring to the housing supply crisis, he said, “…you’ve just overseen the greatest transfer of wealth from those who work to those who own”.
Not very logical David. Regrettable though the housing demand-supply imbalance is it does not represent a wealth transfer from the poor to the rich, not the least because the poor by definition have no wealth to transfer.
It’s like someone discovering a Da Vinci painting in their attic and selling it for a billion dollars. That new found billionaire will have derived his wealth, not at the wider public’s expense but in a fair trade to a buyer with an idle billion dollars. Everyone else is unaffected.
If house prices had been steadfastly falling would David argue this was a transfer of wealth from those who own to those who work? If not, why not?
Due to a shortage of supply. In part, driven by speculators using historically cheap money, prices have soared and cut out the poor from purchasing. But there ‘s been no wealth transfer between rich and poor.
One could argue there’s been a wealth transfer between vendors and buyers but that’s a lucky circumstance for the buyers few foresaw.
Seymour leads a party which is supposed to promote the market economy and should know better than to spout this guff.
Characteristic of a working market economy are winners and losers, more so these days with so many unforeseen major events that seemingly overnight turn previously accepted certainties on their head.
We constantly read the envy-ridden call for wealth taxes.
History records, target the wealthy and they transfer their wealth to more receptive locations.
Others say ban private landlords. Take that to its ultimate step and give them say three years to sell up. That’s about a third of our housing stock so who would be the only major buyer? That easy; the government or more accurately, the taxpayer who with no rising prices would have bought a dog, net housing rental returns being virtually non-existent.
There’s only one remedy for our housing crisis and that’s to massively increase supply, which as I’ve repeatedly pointed out, is of a shortfall size beyond our building industry’s capacity to deal with.
Building tiny pretend houses is a poor answer to the problem.
7 Comments
Hear hear.
This is a very surprising comment coming from the ACT party, are they starting to lean centre?
Perhaps the better question is are the woke left winning??
Answer : See the Eddie McGuire nonsense.
I can only urge people to watch Sky News Australia available on YouTube. That will also lead you to the truth about Lying Joe B. The family connection to the Ukraine was beautifully hidden by the press leading to the election. A massive number of executive orders exactly like Cindy ruling out challenging Maori Local Council Representation currently being forced through like true communists. Open and honest Governance is not something the left has any clue of.
Trotted out again today in Question Time by his Deputy while Seymour looked with smiling approval
Seymour’s quote in full: “Imagine you are an idealistic young Labour MP. Let’s call you, say, Grant, or Chris, or Jacinda. You realise you’ve just overseen the greatest transfer of wealth from those who work to those who own in the history of our country.
The average wage for a worker is $55,000. In 2020 the average house price went up more than twice that, by $121,000, from $628,000 to $749,000.”
He framed the situation as a wealth transfer through the lens of the Left.
He went on to say, “We know what the problem is. We know what the solution is….The shortage of housing is at the centre of this country’s difficulties.”
The day he starts calling for more state intervention in the market it’ll deserve to be labelled ‘nonsense’.
Sir Bob; leaving aside David Seymour’s comments, I believe that even if the building industry does not have sufficient capacity to build “enough new houses” in the short term, throwing open land supply would make a major difference. It was regulatory rationing of land supply that caused the “new normal” of house price inflation to “whatever demand side inputs could make it” – without land supply rationing, housing is just another product in which there is “consumer surplus”. Easy money doesn’t make the prices inflate when potential land supply is orders of magnitude greater than what is required this decade.
The evidence from Britain, where they have done this regulatory land rationing for several more decades than everyone else, shows that the building industry suffers steady attrition from one cycle to the next even as the shortage of housing worsens. This is a classic example of planners conceits having destructive consequences. Perhaps less clearly understood than the 20th century experiments in central planning, but another case nonetheless.
We should not use the attrition of the building industry as an excuse to not do the essential reform. I assert that removing restrictions on using land for housing, in principle (conserving some for justifiable reasons, rather than conserving all of it except drip-fed quotas) would cause the price of all urban land to fall. Suppose the massive area of land in lifestyle blocks – it is more than is occupied by the cities themselves – were suddenly allowed to have multiple dwellings built on them. Sure there would be a rush on the existing capacity of resources to build stuff, but every avenue would suddenly be getting explored, including importing kitsets from, say, Canada, like the Japanese do after a disaster wipes out too much housing. We could crank up all sorts of approaches that have been rendered uneconomic now due to the distortions in land prices. It is tough going for innovative new entrants to supply of housing, when the budget of every potential purchaser has already had half a million dollars taken out of it for the section alone. You can get a LOT of new house on a LOT of section, for this kind of money in the US cities where the planning classes conceits have not been tolerated. Their local political culture of freedom and “don’t tread on me”, while despised by the world’s sophisticates, has had un-noticed upsides.
Imagine the “substitute Keynesian stimulus” to local economies where a far lower proportion of household incomes is swallowed up by mortgage repayments and / or for a far shorter period of time. These effects are starting to show up in these local economies. Not to mention that a lot of the money “being swallowed up in housing” is actually for new housing that represents “production”, and there is a lot more new infrastructure going in, also representing “production” and useful work. Please note that I make a distinction between the US “rust belt”, and the high-growth systemically affordable cities; they are two different things. Of course housing is affordable in the rust belt. But it could be made to inflate in price by restrictive urban growth boundaries quite independently of any actual economic recovery.
All very true Bob.
Would just add that we have had a net increase of 300000 people coming into the country over the last 6 years We can’t cope with that level of increase. My belief is that the shortage is demand driven and can be eventually cured say in another 6 years by severely constricting immigration to absolutely essential human resources (in conjunction with accelerated house construction presently underway).
Our housing shortage is the perfect example of why Govts, both local and National, should be involved in running anything.
Very few private enterprise would be so ill prepared for growth. When you allow for increased population (growth) through immigration but do nothing to prepare for that you must be morbidly moronic. Which of course we, the voting public, know they are.
This will upset many here but this country is too small. It is horrendously expensive to build infrastructure in this country and Labour laws make running any business expensive and add swollen local and central governance and you have a country treading water. Compound this with frivolous “settlements” and an eye watering number of people “who will never work” and you have an imploding economy unable to handle any growth. This could account for a search shows us near the bottom of ICU beds per capita in the world.
So we need growth but can’t afford growth.
And wasted expenditures like NZ trying to influence “climate change ” everywhere.