Controlled deflation can't hide fact - ordinary people can't afford own home

We don't actually have a property bubble in Auckland at all, according to the Prime Minister and his friends in the business elite. Photo / Brett Phibbs

At least it's something: the Reserve Bank has finally got off the fence and signalled it's getting its giant pin out and trying to deflate Auckland's housing bubble a bit.

It's more of a controlled deflation than a grand splat of course, but it's interesting, considering we don't actually have a property bubble in Auckland at all, according to the Prime Minister and his friends in the business elite.

This week we learned David Hisco, who makes $2000 an hour heading up ANZ, is in total agreement with BNZ chief executive Anthony Healy, who is in total agreement with John Key, about the fact that that there is "no bubble". According to Mr Hisco, Auckland's "sheer desirability" is why its three-bedroom houses now average a million dollars - and why there's a shortage of, by some estimates, 30,000 homes.

The Government's inaction has been given the blessing of the financially blessed. Further, they all agree to heap copious amounts of blame on urban planners and other civil servants who are clearly the ones orchestrating all the trouble.

Mr Hisco, whose annual pay-packet is more than $4 million, says Auckland's simply falling in line with Australia; people will just have to move out of the central city if they want a first home. Given that there are "many, many homes for sale" in Auckland for under $500,000, that shouldn't be a problem, am I right?

One might have suspicions that it's in the bank's interests to keep property prices ratcheted up, and people borrowing, and profits flowing. ANZ's half-year profits have just been clocked at $877 million - a record - and its share of the lucrative home loans market has increased, particularly in Auckland and Christchurch, where it leads the pack.

The top four banks made almost $2.3 billion in profits in the first half of this year, or $12 million a day; a third of that was reaped from property investors. They've been vocal in their dislike of any sort of crackdown on property investment. Mr Hisco says a crackdown would "make no difference" anyhow to the situation, which, he repeats, is "not a bubble".

John Key must agree, as he's said there will be no measures in the Budget targeting property investors. But in recognition of a situation that's "becoming unsustainable" - although "not a bubble" - he's happy enough to circumvent the Auckland Super City's "Metropolitan Urban Limit", which those evil civil servants at council are far too fond of.

Serendipitously for Mr Hisco, anything the National Government does is, by his esteemed reckoning, the right thing. We know this from a track-record of statements to that effect. In March of last year, he took to his keyboard to proclaim New Zealand was in a sounder position than Australia because business paid less tax and "more labour market flexibility" aka stink wages, which we got from "taking our medicine" in the 1980s - and continuing to take it.

He told a Bloomberg journalist in Sydney before the last election the Key government "has a good economic record and re-electing [the] National Party would minimise disruption to businesses". He was particularly keen on the possibility of a surplus; clearly seeing no reason to amend that statement even though it continues to be a mirage.

We have a business elite who are so much in tune with the Prime Minister's views on housing it's not even funny. Take Garth Barfoot, for example, director at Barfoot & Thompson, who topped up the National Party war chest in 2014 with thousands of dollars. With B&T agents collecting commissions of more than $1million a day, it's no wonder both this company and others in the sector are wholehearted fans.

Adrian Burr, a rich lister and property investor worth $350 million, is one of the National Party's major benefactors. So is property developer Mark Wyborn, worth $320 million. Add that to the fact that the top property-owning politicians are all from the National Party, and an unmistakable pattern begins to emerge. Or, as they like to say, a "conspiracy theory".

According to detractors, people like myself are just glass half-empty types, because where we see crony capitalism and the buying of influence, they see the natural order of things. A natural order where ordinary people are locked out of owning a house, and poor people live week to week at the mercy of an unmediated rental market, in the service of ensuring legislation never unduly discomforts those who can most afford it.

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