Mike's Minute: Is there really angst in the housing market?

Author
Mike Hosking,
Publish Date
Wed, 18 Nov 2020, 9:45AM

Mike's Minute: Is there really angst in the housing market?

Author
Mike Hosking,
Publish Date
Wed, 18 Nov 2020, 9:45AM

Well, well, well, high drama and tension at the banks, one bank anyway.

Chief Economist at Westpac Dominick Stephens is suggesting some sort of wealth tax is coming. By mid-decade, maybe 2024 or so, a tax of some description is on its way he reckons, and it's coming because of the anger.

And that is anger from the disparity of the haves and the have nots. The have nots, according to Stephens, are going to be so outraged no government will ignore them, and some sort of redistribution mechanism is on to quell the fury.

It's an alarming statement in an otherwise upbeat-ish sort of report. He, like all the other economists and banks, are concluding that the Covid recession or depression is not as bad as first feared and that the bounce back is on. As in the third quarter number will be solid, it won't cancel out what we lost, but by next year we could be in roses.

How he works that out, how any of them work it out, I have no idea. Given next year tourists still won't be back, and given, along with farming, they are our two biggest foreign income earners.

Where the 6.2 percent growth is, I'm not sure. I hope he is right, but given we went backwards a bit over 4 percent this year, and we still don’t collect from tourists next year to get 6 percent, someone somewhere is rolling in it.

Well, they better not be rolling in it too much, because I assume that will merely add to the anger and fury he talks of and the need for new taxes.

It's all predicated on housing, of course, and this general acceptance that the government support helped by the Reserve Bank's money machine is driving what they call an asset bubble. So if you have assets, like a house or houses, you are getting richer, while those who don’t have one, don’t.

What we appear to be forgetting, as is so often the case in failing to learn from history, is that it's not like housing hasn’t got hot before. And given it has, many times, what happened to the anger then? Why not a wealth tax then? And why a desperate need for one now? And given the rise and rise and rise of the first home buyer in the market, are people really missing out?

Or is this just a continuation of the age-old story? For some housing has always been a bridge too far, and a tax won't change that.

Anyway, my gut says we are not quite as jazzed up about this as Stephens thinks. There's a reason people like Jacinda Ardern, especially, backed off on a capital gains tax, and why she put her foot down on a wealth tax, she can read the room.