Looking for a house some years ago, I'd often come across properties advertised as "affordable". We'd do the sums and despair at the gap between our income and our dreams. Affordable? Maybe if we stopped feeding the kids.

We became propertied again with luck, and just in the nick of time.

If we were starting out now, we wouldn't be able to afford our modest Auckland house. Its value has more than doubled in the last decade - unlike our income. If we sold our house now, we'd pocket several hundred thousand (untaxed) dollars that we did nothing to earn. Lucky us. And too bad for those who missed the boat.

If we had done what some of our friends did (borrow, buy, sell, reap the rewards, repeat), we'd have been even better off. But that seemed to defeat the purpose of buying a house: putting down roots, settling in for the long haul.


It's not hard to see why so many of us have a vested interest in the system, as damaging and unfair as it is.

Despite the scolding from the Reserve Bank and others, the Kiwi love affair with housing is entirely rational. We continue to invest in property because it's worth our while. We don't trust the stock market. And we don't trust the Government to take care of us in our old age, hence the need to provide a buffer against poverty.

Our ideological preference for home ownership over tenancy seems just as pragmatic. Kiwi tenants don't have the same tenure security as in other countries; and they certainly don't command the same political clout, let alone the same economic advantages as homeowners.

Still, the housing boom has cost us dearly.

Houses have become less affordable - home ownership has dived from around 74 per cent in the early 1990s to around 67 per cent now - and more of our wealth is concentrated in property than most other OECD countries.

Housing accounts for just under 96 per cent of New Zealand households' wealth - up from 74 per cent two decades earlier. And housing related debt has grown from around 58 per cent of GDP in early 2002 to just under 90 per cent.

It's household debt, not government debt, that's hindering progress. We've borrowed heavily from foreigners not to fund job-creating, foreign-exchange-earning businesses but bigger and more expensive houses.

As the OECD noted in a 2011 report, the tax bias favouring property has led to an unhealthy savings-investment imbalance, and "widening inequalities in the form of larger homes for those who can afford them, but deteriorating affordability for the rest of the population".


Despite that, central and local government response to housing affordability has been underwhelming.

In a report published in August, Alan Johnson, a senior policy analyst with the Salvation Army's research and policy unit, argued for a radical rethink.

Johnson said our failure to ensure that all Aucklanders have decent, affordable housing is due to institutional failures.

"We have developed, supported and nurtured systems that have sustained and even expanded inequality ... these systems have allowed some Aucklanders to occupy larger and larger houses, while other Aucklanders live in more crowded houses and in sheds, garages and caravans."

They've also "biased our tax system so that not only are house prices excessively inflated but now higher and higher public subsidies are required for modest-income households to be able to afford any housing".

While the problems are too big and the causes too ingrained in our social and economic fabric for quick fixes, Johnson maintains that our responses have also been hampered by our political culture. The neoliberal paradigm that's dominated the political economy for the last three decades has limited the framing of the problem, and the range of solutions.

Ideology certainly seems to the fore in the current Government's drive for "affordable" housing.

When a Labour government first introduced state housing back in 1936, it aimed to provide homes for workers that were as good if not better than housing for other citizens.

By 1950, a National government was promising to sell those houses off.

As home ownership increased, social housing has become marginalised.

The Hobsonville development is a perfect illustration of how difficult it's become to argue for a place for low and modest income families.

The 3000-house development initiated in 2006 under the Clark government was to have included 500 state rental units and 500 "affordable" houses.

But the plan was panned as "economic vandalism" by the local National MP, John Key, who seemed to have forgotten his state house roots. The $500,000 sections, he implied, would be wasted on state house renters. So far the development has not included one state house.

Then there's the Tamaki transformation programme which is uprooting low-income Glen Innes families from the homes they've lived in for decades. Despite promises to the contrary, state housing there will be halved from 156 to 78 homes.