Mike's Minute: Will the Government’s housing policy work?

Author
Mike Hosking,
Publish Date
Wed, 24 Mar 2021, 10:13AM

Mike's Minute: Will the Government’s housing policy work?

Author
Mike Hosking,
Publish Date
Wed, 24 Mar 2021, 10:13AM

So, two parts to the housing announcement.

Part one, the lying. If there was anyone left who still genuinely had fallen for the most open, honest and transparent government bollocks, yesterday sorted that once and for all.

Not only did they say they wouldn't touch the bright-line test, which they did. And the Prime Minister, yet again asleep at the wheel, stood there and lied by saying they were silent on the issue when clearly, they weren't.

You can dance on the head of a pin if you want around whether a brightline adjustment is a Capital Gains Tax, which it is. But what is as clear as day is that Grant Robertson said no brightline adjustment, and they adjusted the brightline.

Most governments lie but lying this blatantly and then pretending you didn't lie, makes the lie even worse. And the lie is on about the biggest issue you can lie on, housing. One way or another it affects every single one of us.

And then part two, will it work. Well, yes and no.

The tax deductibility on expenses simply means one of two, or two of two things. One, the increased costs of being a landlord will be passed onto the tenant, rents are already rising. Or landlords will bail, rentals will become harder to get, and rents will rise.

Either way rents will rise, on top of an already rising market. This is a simple economic truth, the same way you can't touch one part of an economy without affecting another.

The development money for pipes, lights, and roads is sound. The adjustment for HomeStart is fiddling. The adjustment for low deposits isn't enough, given the deposit is the key to first home buyers, not the mortgage, given money is so cheap.

Westpac may or may not be right about the wider economy. If the investor bails, that affects the wider economy. The wider economy can't afford to be affected because it's currently going backwards. We are in a recession, actually a double dip recession.

Housing, like it or not, drives economic activity, and if Westpac are right, Robertson and his obsession around this so-called crisis, will have blown it. Of course, like GDP, the good thing about all this is, the price rises will either slow, or they won't. Therefore, showing this move either worked or it didn't.

House prices are slowing already, proving we yet again got freaked out by something that has happened before and will happen again.

If the government understood that yesterday, the dramas and dishonesty wouldn't have been required.