This New Zealand documentary from Bryan Bruce investigates the reasons house prices have soared while the home ownership rate is falling. The result is there are people sleeping in cars and "rental refugees" in Whangarei.
In considering causes, Bruce reflects "My dad was a postman and my mum was a factory worker, and yet they were able to build a brand-new house in Christchurch with next-to-no money. All a family like mine had to do back then was to get a five per cent deposit together and then the Government lent them the rest of the money (a State Advances Loan) at three per cent for 40 years." In those days housing in New Zealand was seen as essential infrastructure, with home ownership being "the key to a healthy society and a stable democracy". Bruce explains in the 1980s and '90s, when we switched from a regulated economy to a market-driven one this changed. Deregulation of the banking system is described as creating a "dramatic effect on who gets to own their own home today, and who doesn't". Bruce calls this “the rise of the assett class”
Another factor considered is New Zealand wages. Since the 1960s wages have increased 59 per cent, but housing has gone up a massive 280 per cent. As Bruce says: "Our market-driven economic system has created huge income inequalities that didn't exist 30 years ago."
Immigration is also seen as contributing to the housing crisis and the extent of this is considerd. Bruce seeks advice from independent Treasury, Reserve Bank and IMF advisor, Michael Reddell and learns there is no register of foreign buyers. Information from land transfers is collected for tax purposes, but foreign shareholders in companies and trusts buying property in New Zealand go unnoticed.
"The Government is not collecting information on who is buying how much of New Zealand, where, what kind of value or even where these people are coming from."
New Zealand is not the only country to have welcomed foreign investment in residential property, and had to deal with the consequences, so Bruce travels to Canada to compare statistics. The British Columbian government is also slow to provide any data with actual figures, with one professor suggesting it's a diplomatic issue. "There are constantly trade missions to China... if data has inconvenient truths, then that data is not available."
Bruce also points out that fast-track investor visas to wealthy immigrants have not resulted in expected economic growth and job creation. Same thing happened in Australia and the UK, but those countries have toughened up on their fast-track programmes as a result. And in Canada, the scheme has been described as a "sham", with immigrants coming through the investor programme declaring a lower income in Canada than any other group, including refugees. But both Hong Kong and British Columbia have introduced foreign buyer taxes to help cool the market. But not in New Zealand, where the house price ripple effect means our towns in the provinces are also reeling.
New Zealand seems to have an unwillingness to embrace alternative solutions, But bruce argues there are alternatives to traditional home ownership, and New Zealand needs to embrace these. Among these alternative he presents a co-operative housing scheme in Germany.
Overall the suggested solutions are:
- Collect good data on ownership in residentaial housing market
- Treat provision of housing as essential infrastructure
- State funded mortgages
- Restrict foreign ownership of private housing Introduce long-term leasing & co-operative housinG
- Lift wages