Mike's Minute: When will the government realise it's powerless over housing?

Author
Newstalk ZB,
Publish Date
Wed, 16 Jun 2021, 9:31AM

Mike's Minute: When will the government realise it's powerless over housing?

Author
Newstalk ZB,
Publish Date
Wed, 16 Jun 2021, 9:31AM

Another day, another set of statistics for Grant Robertson and Adrian Orr to mull over and work out how they have got the housing market so fantastically wrong.

The tilt to the first home buyer is the Kiwibuild of tilts. There were never 10,000 houses a year, there is no tilt.

The Real Estate Institute figures just out show the house price index is up 29.8 per cent. Shall we call it 30? The nationwide median is up 32.3 percent. It's the highest jump since records began and is the 12th consecutive month that we have seen a new high.

Robertson and Orr, to be fair, would argue this is why they did what they did with the rules. The Brightline, the tax deductibility, the LVRs, and the currently requested loan to debt ratios for lending.

But they did that in March. It's come and gone, so has April and May, we are now into June, and there is no sign whatsoever things are changing. The crime here is not so much the response, but the fact they thought the response would do something. Thus, indicating they don’t know about housing.

Counteracting their moves is the labour shortage. The houses being built aren't being built at the rate they need. That's an outcome that's not changing.

The shortage of materials. That's an outcome that isn't changing. The cost of materials. That's an outcome that many change, but not for the foreseeable. Cheap money. That's an outcome that will inevitably change, but not now or anytime soon.

And there's demand. And as long as borders are closed, they’ll chase housing.  And there's yield. Nothing pays better than housing, so demand stays high. And stock is short. The Institute's figures say the second lowest on record, so supply does not meet demand.

As I have said a million times, this won't last forever, it never does.

But, as each week and month passes with no real obvious change as a result of government or Reserve Bank policy, one can only hope that, once and for all, those that were deluded or sucked in by Robertson or Orr, might finally realise that housing marches to its own tune.

Always has, always will.