Late last year Finance Minister Bill English acknowledged that Auckland's runaway property prices posed a risk to the New Zealand economy. In similar markets, he cautioned, spiralling house prices had steadied before collapsing. For thousands of homeowners and investors, freefalling real estate prices would be a disaster. Property values would be wiped out, leaving mortgage holders servicing loans worth a lot more than their asset. That would endanger not just the economy, but also the Government's political wellbeing.
For younger generations, the chasm between property prices in Auckland and incomes has become so wide as to seem unbridgeable. By one estimate the gap, at 10 to one, is the largest on the planet, meaning the prospect for many of home ownership in the city where they live and work is out of reach. This breach has opened rapidly. Should it remain it could entrench the division between those fortunate enough to have a foot on Auckland's property ladder and those who sense they will pay rent for the rest of their lives.
So it is hardly a surprise that Mr English has identified the Super City's property market as a significant economic and political issue.
This week came the first sign that the Government is thinking outside the square, with Social Housing Minister Paula Bennett floating the idea of paying cash to help poor families find empty state houses outside Auckland. There was a hint of stick in the announcement, with the suggestion that tenants who stuck with the Auckland waiting list would find themselves waiting longer for a home. Ms Bennett indicated that the idea could appeal to Pacific Island families, though it would be unfair if any family got pushed down the waiting list for refusing to shift to a region where they might struggle to find work or social connections. This measure would have limited impact on the Auckland property market, but is a response to one part of the housing challenge, given that low-income families face overcrowding and related social ills.
