Thursday, June 10, 2021

Mike Hosking: The fact don't lie - Government has got it wrong on housing


The evidence is mounting, if not now irrefutable, that what the government and the Reserve Bank have done in concert with each other is not having the desired effect they wanted housing.

Both TradeMe and QV figures yesterday give no suggestion that the housing market is taking any direction at all.

At best, the QV number shows a slight, and I mean slight, decrease in the increases we have seen – 0.1 of 1 percent, to be precise.

That could easily be winter, or if it was government policy, hardly worth the drama around it.

So not only are the figures showing no progress, there are a slew of market indicators  that suggest the changes are being counter acted on an ongoing basis.

Labour is an issue and shows no signs of changing. Supplies are an issue in a twofold way: one, they are costing more and two, you can’t get them anyway and as a result current builds are being delayed.

Money is still cheap, one product in the market has money at below two percent, and another announced over the weekend a new low for the particular bank at very close to two percent.  

Supply is still a problem, and that’s not just from housing not being built as fast as they thought, it’s the number of houses for sale. People won’t sell if there is nothing to buy, it’s a self-fulfilling issue, and hence people are looking at fewer options, therefore paying higher prices

This, we remind you again, is happening from the Gold Coast, to the Gulf Coast, to the Cornish coast: places where prices are at record levels despite a slew of tax and regulatory regimes already in place that look remarkably similar to the new ones we just put on thinking they’ll make a difference.

There is the anecdotal talk of fewer investors inquiring, fewer first home buyers taking the leap.

The irony of the latter part of course is these very measures introduced were specifically designed to quote unquote tilt the housing market towards the first home buyer.

The reality is this: the market and its increases will slow a bit for the rest of the year because they simply can’t keep going the way they have been.

But it is not the new rules that will do it, because it never was going to be, but then we told you that.

If interest rates rise, that’ll put a brake on. But as long as money is cheap, people feel business is going ok, as long as we can’t travel, housing will be what it will be.

And as we have seen this week with two more sets of numbers: the facts don’t lie.

Mike Hosking is a New Zealand television and radio broadcaster. He currently hosts The Mike Hosking Breakfast show on NewstalkZB on weekday mornings.

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