Mike's Minute: Government is in full panic mode over housing

Author
Mike Hosking,
Publish Date
Wed, 25 Nov 2020, 9:56AM

Mike's Minute: Government is in full panic mode over housing

Author
Mike Hosking,
Publish Date
Wed, 25 Nov 2020, 9:56AM

As much as I like Grant Robertson, and I do, if you ever had any doubt that this government is hopelessly out of its depth economically, Robertson's letter to Adrian Orr should confirm it.

"Dear Adrian, have you seen the price of a house? My god, it's through the roof. What can we do, Adrian? We've banged on and on and on about prices being out of control, in opposition we bagged the government mercilessly, we promised to do something about it, but that blew up in our face. Who knew Phil Twyford was so useless? Anyway Adrian, it seems I'm now stuck, given I am in charge of all the money and the prices are still going up.

It was suggested to me that your monetary policy might be to blame, so given that suits my political agenda, I am writing to you today to blame you. Adrian, it's not good enough and you must do something about it. Don't ask me what, but please, please, please can you make the price of a house go down.

But, and this a big but Adrian, while you're at it can you not sink the economy? The economy is already in trouble and let's not mention how much of that money you’ve printed for me. And I know I added employment to the list of stuff you had to take care of with the OCR, as well as inflation of course, but Adrian have you seen the price of a house!"

So, in essence what Robertson is doing, is dropping Orr in it for political purposes. They have flooded the economy with money, they want people to borrow, but given they haven't created an environment of confidence business isn't borrowing. The only ones who are, are those who want a house.

Go figure, who saw that coming? Apart from about everyone who has ever bought a house.

Orr as much as he is taking heat, can only do so much. He's not in control of everything.

The man who has more control than Orr is Robertson. And he's panicking because he made a promise on housing he couldn’t keep, and he's been caught with his pants down.

The lesson here, as we have said, god knows, how many times, is politicians don't control housing. Never have, never will.  

Stop getting sucked in. And if you insist on getting sucked in, stop blaming others for your inability to understand the market.