The Government's attempt to tilt the housing market towards the first-home buyer was fundamentally flawed from the start, writes Mike Hosking. Photo / Fiona Goodall Photography
The Government's attempt to tilt the housing market towards the first-home buyer was fundamentally flawed from the start, writes Mike Hosking. Photo / Fiona Goodall Photography
OPINION:
How many experts, professionals, charts, research papers and stats does it take to show the Government's attempt to tilt the housing market towards the first-home buyer is not happening and was never going to?
The problem for the Government is twofold. One, it's a specific promise that won't happen,but, more importantly, two, goes to the much bigger issue of reputational damage.
The more it promises, the less it delivers.
Delivery of course was already an issue before Grant started writing to Adrian last year about his housing "crisis".
Although the letters started flowing last year, the specific promise to "tilt the market" was made in March with tax, bright line and LVR changes.
So here we are in the latter part of June with growing amounts of data coming in virtually weekly, and we are still not seeing any signs that any of it is working.
The latest updates come from the ASB, QV, Barfoot and Thompson and economist Tony Alexander.
Reserve Bank Governor Adrian Orr, left, and Finance Minister Grant Robertson during their press conference at Parliament, Wellington. Photo / Mark Mitchell
The ASB suggests house price growth this year will be 10 per cent, next year about 5 per cent. According to the Budget it's supposed to be 0.9 per cent.
The ASB also forecast GDP growth at 1.5 to 2 per cent, another reality check for a Government that is promising much more, and tragically for us all a growth rate according to World Bank forecasts last week, in the shadow of what many of our trading partners will be doing. We are the hermit kingdom going nowhere fast.
Barfoot said upon the release of its latest numbers that there is no sign that the market is slowing, QV stats last week show the same thing, and Tony Alexander who does an excellent series of ongoing surveys, tells us the investor is back in the market, the first-home buyer isn't, and that the intergenerational issues that Grant Robertson was so keen to address are not being, nor will they be.
And the crime here is that it is so damn obvious this was never going to work. The attempt to gerrymander the market was fundamentally flawed from the start and reminds us yet again why people who have never actually been a part of the real world don't understand how it works.
In roping Adrian Orr in at the Reserve Bank, he has done what he was always going to do, use tools to slow the growth.
He can't and was never going to be able to specifically protect or encourage the first-home buyer the way Grant wanted.
In fact it's the opposite. He is now after loan-to-debt rules around lending that will specifically prevent a first-time buyer ever getting close to a mortgage.
All the facts are out there if only you want to see it, writes Mike Hosking. Photo / Fiona Goodall Photography
The irony of this is many first timers find a mortgage at 2 per cent cheaper to service than rent, and yet don't have the deposit given it's 20 per cent.
That's before you come to the other fundamentals preventing any of Grant's promises ever coming to fruition.
Labour is short, and despite the apprenticeship programme, won't be fixed because the new migration policy settings are about people being prevented from coming here and solving the problem.
Materials are in short supply and if you can get them ... more and more expensive. The Government is one of the biggest purchasers of land and housing, thus pumping the market up and locking out regular folk.
The beauty or tragedy depending on who you are of all this is it's not that hard to understand. All the facts are out there if only you want to see it.
The market increases will slow, because they always do, winter will play a part, if interest rates ever rise they will play a part, but the specific idea that first homers will somehow get access to a house was always a fanciful dream if not an outright con.
Although owning your own home has never been - nor should it be - a right, and although owning your first home has always been hard work, making specific and detailed promises the way this Government has is criminal because it gives false hope and shatters dreams.
It came to this policy setting with a shonky reputation and all it has achieved thus far is to remind us all that housing is its Achilles heel and the real world is not its forte.
