National is stuck in the bad old days with its obsession with land supply. Auckland now needs something more, and here's what
National has finally published it's National Policy Statement (NPS) to try to slow down Auckland's charge-ahead property market. But NPS may as well stand for No Plan Sorry, because it's an admission of failure; proof it's living in the past.
The government is now requiring councils in fast-growing regions to open up land to match population growth. If the councils don't open the land – in the hope of keeping prices flatter – they can be taken to court. The main target of this policy is Auckland.
Problem is, Auckland Council is already opening up land at a rate of knots, and with the government's help. Problem is, that's the same goal the government's Special Housing Areas hand – 'release the land'. As of April this year and tranche 10, 56,000 sections are being made available for houses. Problem is, Auckland's problem is no longer a lack of land, it's a lack of infrastructure and houses.
The focus now has to be on who pays for the road, parks and sewers... and ultimately the houses themselves... if you want that land to start sprouting homes. Otherwise we're going nowhere.
National is blowing the message. Instead of saying 'we've fixed the land supply problem, it's time to now turn to housing supply', It's repeating its five year-old mantra about land supply and reinforcing the impression of failure.
National seems to be stuck in its 2012 mantra "release the land... release the land".
But the problem has moved past National's limited array of solutions. While Nick Smith keeps saying he's "pulling every lever" and there's "no silver bullet", he's ignoring the obvious options for what can only presumed to be political reasons.
It seems that the government 's willing to wear the stench of failure around its housing policies to keep the 64 percent of New Zealanders who own their own home happy and feeling wealthy. Because it's willfully ignoring the obvious.
More than that, it's opening the door to loan-to-income ratios that are guaranteed to hurt first-home buyers. And of course every time they muse on the plan, they encourage those first-home buyers to add another 20 grand to their next bid.
All the while National is ignoring what could make a difference. First, change negative gearing. You could remove the whole thing or just remove the ability to, essentially, claim your mortgage as a tax loss.
Second, put some limits of what banks can lend. No, not income limits. But rather limits on those buying second, third or more homes. We want more money invested in the productive sector, but banks are increasing their mortgage holdings instead.
Third, rather than opening up land and insisting a housing market with the median house price running at ten times the median income is not broken, it could build houses itself. National can't cross the ideological line, but more than just releasing land and sending passive aggressive policy statements, it could guarantee a pipeline of affordable houses to builders. That is, create a National version of Labour's KiwiBuild.
Oh, and there is a fourth: Council bonds. But that's for another post.
I guess John Key has that up his sleeve for Budget 2017, should the market continue to steam ahead.
And one other thing the government could have done... I wonder if National should have swallowed the dead rat and accepted Labour's offer for limited RMA reform a year or two back.
Now, all we have is an NPS that doubles down on an solving a problem that's living in the past.