As almost everyone knows, there's been a housing price boom going on in NZ for quite some years now, which is why every second Listener magazine cover seems to be about how to improve the value of your home etc. Apparently the national median house price is now $335,000. Economists say the property boom has meant that 'New Zealanders are paying some of the world's highest house prices compared to our incomes and Auckland ranks alongside London as one of the world's most expensive housing markets.' According to the chief economist of Deutsche Bank in Auckland, the lack of affordability comes down to the low pay of the country. The negative effects of the housing boom have obviously been borne by the poor. [Read more below]
As reported earlier, rates of home ownership have plummeted in NZ, forcing more people to rent.
Also, homelessness has surged. The Dominion Post reported today that 'Skyrocketing property prices are making more New Zealanders "homeless", with families forced to share properties and boarding houses increasingly full.' The Wellington Housing Trust says that the significant increase in homeless families is a result of rent increases. They say that 'the situation created health problems due to overcrowding and rising tensions within families'. Unsurprisingly, 'it was not known how many New Zealanders experienced homelessness, because limited data was collected.' There are some things that the Government would rather not know about. And, of course, the fact that the Labour Government has done so little in the area of state housing also increases the problem.
The housing boom is of course happening in many other places like the UK, where prices has increased at a rate of 11% per year for the last 10 years. According to satirical columnist, Mark Steele, the problem comes down to the use of the free market to allocate such an essential need:
Could there be a more shambolic way to organise everyone's houses, than leaving it to the free market? When primitive farmers first settled in villages, imagine if someone had said: "I know how to organise this. We'll build enough houses for everyone. But then we'll keep some empty as an investment. This will mean some of us have nowhere to live, so they'll be desperate and offer more money, pushing the price up, but they still won't get one, because someone from a richer village will pay even more for it, leaving it empty while it doubles in price because we put it about that this is an up-and-coming area with easy access to a circle of stones."
Steele says that amidst the obsession with housing investments people have come to think they're not for living in, but for investment - 'everyone's forgotten it's a bloody house'.