Bernard Hickey: The renting generation

If young people were running things, would they create more high-density housing? Photo / Doug Sherring

Imagine what a political party designed to represent New Zealand's young renters would do if it got into power in Auckland or Wellington.

Let's call it the Generation Rent Party.

Wooing the young and disenfranchised vote certainly won United States President Barack Obama his second term, but it was clear after last year's election that no one has managed it in New Zealand.

Let's imagine if they did. What policies would they pursue?

First, they would try to make housing affordable again for first-home buyers who want to start a family before they turn 40 without having to beg parents and grandparents for money.

Or they would at least try to make rents consume less than 30 per cent of their disposable income.

House prices in Auckland are rising again at double-digit rates and rent inflation is accelerating into the higher single digits.

The median house price in Manukau was 25 per cent higher in January than a year ago.

Record high net migration, heavy buying by property investors pumped up with interest-only mortgages and unfettered buying by non-residents has combined with chronic under-supply to pump up prices.

The Generation Rent Party would remove the shackles on development of higher density housing in Auckland's fringe "heritage" suburbs around the CBD, which would free up supply in areas close enough to the centre to use cheaper and less time-consuming public transport.

Removing restrictions on apartment heights, view shafts, parking requirements and balcony and backyard sizes is not as outlandish as the Nimby Boomer opponents would make out.

A New Zealand Institute of Economic Research study for Auckland Council found these restrictions cost households $933 a year by pushing up prices across Auckland, and increasing commuting times and transport infrastructure costs.

Generation Rent would also impose a land or capital tax on the generation that gained more than $400 billion in wealth over the past 20 years because house prices more than doubled.

It might also use the Crown or council balance sheets to fund mass home-building programmes.

Second, Generation Rent would move to rectify the inter-generational wealth transfer around tertiary education.

The generation that received free tertiary education in the 1970s and 1980s ensured it didn't have to pay so much as taxpayers, by forcing students from the 1990s onwards to pay fees and take on big student debts.

Third, Generation Rent would move to reduce the future cost of the escalating universal New Zealand Superannuation and healthcare for an ageing population.

It is expected to rise from 4.1 per cent now to 6.7 per cent by 2060.

One of the younger MPs, David Seymour, is at least trying to raise the issue again.

The unfairness is galling for younger beneficiaries who see their benefits rise in line with consumer price inflation (0.5 per cent this year) while superannuation payments rise in line with average wages (2.5 per cent this year).

Those are the things Generation Rent would do in power, if they knew about the intergenerational wealth transfer happening under their noses or cared enough to vote.

For now it's a moot point because Generation Rent is Generation Doesn't Vote, whereas their older and creakier neighbours at least know how to shuffle into a voting booth.

Debate on this article is now closed.