Bill Ralston: Good times, bad times

by Bill Ralston / 04 June, 2014
Our rapidly growing economy is proving intolerable.
I am confused. Again. Six or seven years ago we had a migration problem. Kiwis were deserting the country in large numbers to live and work across the Tasman. My son headed for Perth to dig large holes in West Australia. Our population was shrinking and pretty soon it would only be you and me living here in a ghost town.

Nowadays we still have a migration problem. Too many people are coming here to live and work. Worse, New Zealanders are coming home. Our population will rise by more than 40,000 in the coming year.

“That’s right. We’re moving to the formerly lucky country.”

The culprit is our economy. Sadly, it is growing quite rapidly, unemployment is falling, interest rates are still relatively low and wages are predicted to increase. An intolerable situation. We are told this migration gain is putting pressure on our housing market, pushing up the price of a home. This, of course, is unbearable as the value of my only real asset is escalating, adding many thousands of dollars to my net worth.

I pine for the days of economic recession.

The short answer, I would have thought, is to rapidly build more houses to accommodate the new arrivals and returnees. But television opinion polls tell me the best idea is to shut the door and not let anyone in. That is a little odd because surely those coming here have some money in their pockets and building them houses to buy might generate some cash for the country.

In a worrying trend, both John Key and David Cunliffe agree with me that building more homes is the answer. Of course, that requires sections to put them on and some councils, such as Auckland’s, seem extremely reluctant to designate rural land for development. The council argues for more intensive housing such as blocks of flats and apartments. That, too, would do the trick, but the problem is that while the issue is debated, the city seems to have gone into a state of development paralysis. I’m sure they will come to a conclusion, probably sometime next century.

The housing price boom is really just an Auckland problem. I’ll exempt Christchurch, which also has rapidly rising property values, as the hand of God seems to have intervened in the market there and shaken things up, so to speak.

It is hard to blame migration for property prices in, say, Ashburton. Last month there were 29 arrivals and 17 departures, presumably leaving 12 families hunting for a home there. I drove through the town recently and saw no one sleeping in the streets so I suspect they found somewhere to live.

I’ve been helping a friend look for a house to buy in Hawke’s Bay. Of the dozen or so properties we’ve looked at, all are priced less than their government valuation, some nearly $100,000 under.

South of the Bombay Hills it’s popular to blame Auckland for virtually anything that might go wrong in the country. But in this case, people would be right to cast a jaundiced eye north. The Super City’s council has a bung stuck in its housing market despite the hoopla about its accord with the Government that theoretically will allow 35,000 homes to be built. In fact, only 3599 new sections have been created so far, yet the first-year target is just 9000.

With more than a net 40,000 people arriving here each year and most intent on living in Auckland, I’d suggest we need a few more sections and houses than that.

Then again we might be panicking for no reason. The Australian economy might strengthen next year and ours might slump, resulting in a resumption of the familiar brain drain as folk once again stampede for the door. Then we can start berating whichever government is in power about that problem again.

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