Respected business commentator, Brian Gaynor, writing in the NZ Herald on 2 April 2016, examines the changing role of banks over the last 30 or so years. He outlines the history of banking deregulation and the subsequent massive rise in residential lending, from less than one billion dollars in 1984 to $211B this year.
His conclusion that “aggressive bank lending has been a major contributor to the sustained rise in house prices over the past few decades” adds yet another ingredient into the complex mix affecting housing supply.
Together with economists’ frequent references to our favoured tax treatment of houses, the growing view of houses as investment products rather than homes, the anecdotal evidence of dwellings standing empty in Auckland, and the significant proportion of the building industry being diverted into reconstructing leaky buildings, it’s a rich mix that warrants some serious attention from the government.
How disappointing, then, to read the Productivity Commission
’s view that “planning has massively increased the price of urban land by not zoning and servicing enough land for new housing”, (NBR 15 January 2016) with only a passing reference to the multitude of other factors involved.
To be fair, the topic they’re investigating is urban planning, but their airy dismissal of the “many reasons why house prices have grown” is very frustrating.
However, in our submission to them, we stuck to our field of expertise and avoided politically fraught topics – you can read it here
. Many thanks to all those who contributed.
If you’re really stuck for something to do, you could read all the submissions at http://www.productivity.govt.nz/view/submissions/2682
In their submission, Sir Geoffery Palmer and Dr Roger Blakeley
, noting the government’s current multi-headed interest in planning and urban design, went on to say “At the very least, those stakeholders with an interest in planning will suffer from submission fatigue. Three sets of submissions on related, but not identical, topics are due almost at the same time.
This is a recipe for confusion and policy train wreck. Serious resources need to be brought to a topic like this, and to balkanize the policy resources of a small country in three separate efforts seems both unwise and profligate.”
We can all agree with that!