Property hysteria is here again, highlighting just how entrenched the issue is in NZ. Photo / File
Property hysteria is here again, highlighting just how entrenched the issue is in NZ. Photo / File
Opinion by Liam Dann
Liam Dann, Business Editor at Large for New Zealand’s Herald, works as a writer, columnist, radio commentator and as a presenter and producer of videos and podcasts.
But this one is more disappointing to people who had hoped a global pandemic, complete cessation of immigration and a recession might have offered a small window to get on the property ladder.
It didn't.
In fact, it seems to have had the opposite effect and in doing so has highlighted just how entrenched this issue is here.
I'm beginning to think the attachment of New Zealanders to property as an investment class is a cultural phenomenon that runs so deep it will never change.
There's an old joke: How many social workers does it take to change a lightbulb? Just one, but the light bulb's got to want to change.
The point being that you can't help anyone who doesn't want to be helped.
That's us - middle New Zealand.
We can't solve the housing crisis because we don't really want to.
"We seem to have made no progress towards dealing with house prices despite having been granted six years' grace since the peak of the last bubble," I wrote back in 2013.
And here we are again.
One of the ways we have collectively avoided dealing with this issue is by endlessly dragging out the debate about which of several possible causes is the right one to address.
Supply or demand? Immigration? Interest rates? Tax treatment? Zoning laws? Building costs? Bank lending policies?
Well, we can narrow that list a bit this time.
Immigration used to cop a lot of blame but is entirely out of the picture now.
House-price hysteria has hit levels not seen since 2016. Photo / 123RF
And while it is still a hot issue in central Wellington, Auckland has made good progress on issues like zoning and consenting.
The rate of new building is at record levels and starting to balance with population growth.
Interest rates have been the obvious culprit this year.
But we shouldn't forget that housing boomed all the way through 2007 when the Reserve Bank pushed mortgage rates above 10 per cent.
It took the GFC to stop that boom.
Or how about the boom through 1986 and 1987 when mortgage rates went as high as 20 per cent?
The cost of borrowing is just part of the credit story, which includes availability of credit.
Low interest rates drive behaviour but so too does the attitude of banks to risk.
Back in 2007 banks were taking plenty of risk - allowing people to borrow with no deposit if they liked the cut of their jib.
We have changed that culture to some extent.
Even though loan-to-value restrictions were removed, banks didn't revert completely to the bad old ways. And they've quickly fallen into line ahead of plans to bring LVRs back in March.
