Bishop is obsessed about massively increasing the supply of cheap new houses to reduce average prices.
“I wake up every day,” he says, “determined to improve housing affordability in this country.”
It is, he says, his “driving mission in politics”.
NZ Herald
Hmm…like someone else who said their driving mission was “child poverty”?
But I’m not sure why you’d tell homeowning voters that you want to see their main asset drop in value, maybe exposing them to negative equity?
Bishop even argues, unconventionally, that if house prices fall, productivity will rise. The more mainstream view is that if productivity rises, houses become more affordable.
Despite being National’s campaign strategist, Bishop is impressively stolid about the political consequences of falling house prices. The majority of New Zealand homes are owner-occupied, but Bishop says owners’ losses would be first-time buyers’ gains.
He says it’s a moral issue.
NZ Herald
Mmmmm…Okay.
So, let’s get this straight, Bishop is prepared to throw home owners under the bus in order to attract first home buyer’s votes? Did I get that right?
No wonder National’s poll numbers are mired in the 30s.
The minister is true to his words.
In February, he announced he would “flood urban housing markets” by redesignating rural land adjacent to Auckland, Hamilton, Tauranga, Wellington, Christchurch, Whangarei, Rotorua, New Plymouth, Napier, Hastings, Palmerston North, Nelson, Queenstown and Dunedin for urban development.
He won praise from millennials and left-wing commentators.
His fast-track legislation will give him, Shane Jones and Simeon Brown the power to so act.
For example, Bishop has long advocated for Winton Land’s Sunfield development to house 15,000 people in cheap homes on the edge of South Auckland.
But that’s only the start.
Bishop said this week he would use “every option available” to build more cheap houses, including his new build-to-rent scheme for foreigners.
NZ Herald
Tucker Carlson talked about politicians like him, preferring to look after foreigners rather than Kiwis.
If a National Party politician is winning praise from left-wing commentators, then he’s in the wrong party.
Hooton then highlights the travesty of Chris Bishop’s drive for newer, cheaper housing, imperilling the investments of existing home owners.
The only reason we need new houses – and the only reason we’ve ever needed them this century – is to accommodate new immigrants. Without them, the population would have fallen.
That means, when you see a new house being built, it’s not for the young couple and their cute new baby renting next door. It’s for the young couple and their baby queuing up – or paying an agent to queue up – outside Immigration NZ offices in India, the Philippines, China, Fiji, the UK, South Africa and the US, which together provided over half our new immigrants in 2023.
The Government’s policy is to maintain high immigration for the foreseeable future, to replace citizens leaving and to generate at least headline GDP growth. It needs high headline GDP growth for Finance Minister Nicola Willis to have a chance of eventually delivering a surplus. For that goal, it doesn’t so much matter if per-capita GDP keeps falling.
The Prime Minister argues, probably naively, that under his leadership Immigration NZ will do better at attracting well-educated entrepreneurs to New Zealand rather than Uber drivers.
My money remains on immigration consultants in Mumbai, Manila, Shanghai, Suva and London having it over any Wellington bureaucrat.
NZ Herald
National, same as Labour, but less shit.
In reality, house prices are almost entirely a function of interest rates.
Whatever hard-hat photo opportunities and bold new policies successive housing ministers have generated over the decades, when the official cash rate (OCR) goes down, house prices soon go up. When the OCR increases, house prices soon fall.
That was never more obvious than when Adrian Orr was printing money and Grant Robertson borrowing it. Despite a global pandemic and lockdowns forcing tradies to stay home, house prices soared more than ever before, increasing the paper wealth of Kiwi homeowners by around $1 trillion.
Once Orr belatedly raised rates, house prices fell back again, evaporating around half of the trillion paper dollars, despite record net immigration.
Bishop can claim that house prices are already falling under his watch, but that’s mostly because Willis is borrowing so much that the OCR risks staying higher for longer.
When interest rates finally start falling, Willis will claim victory. But poor Bishop will be defeated as house prices rise again.
NZ Herald
And if Bishop gets his wish – bringing house prices down – then the impact on the economy, which is already on its knees, will be dire.
New Zealand’s small and medium-sized enterprises (SMEs) are primarily backed by our $350 billion of home mortgages.
If house prices fall, banks won’t lend to SMEs to help them grow.
The Government itself is exposed, given Kiwibank’s $25b home-loan portfolio and Kainga Ora properties being worth $40b.
All three of Standard & Poor’s, Moody’s and Fitch identify falling house prices as a major risk to the Government’s credit rating, in significant part because that would destabilise the banking sector.
Higher interest rates would thus be both a cause and consequence of falling house prices. The good news is that house prices should start rising again next year.
NZ Herald
This is what happens when you elect school and university debating champs rather than people who understand basic economics.
Chris Bishop won’t be fazed by this at all. He will just think to himself that if he spends just 15 minutes more haranguing Hooton then Hooton will see the merits of Bishop’s brilliant (in his own mind) rationale for dropping house prices.
Matthew Hooton needs to understand that if you debate issues with an idiot, then you become an idiot too.
Cam Slater is a New Zealand-based blogger, best known for his role in Dirty Politics and publishing the Whale Oil Beef Hooked blog, which operated from 2005 until it closed in 2019. Cam blogs regularly on the BFD - where this article was sourced.
13 comments:
It’s a little worrying that a prominent member of a nominally free enterprise party doesn’t understand the effects of rapid population growth on the demand side of supply and demand.
davelenny
Exactly.
Bishop is displaying that newly elected arrogance that afflicts new members.At least his utterances allow us to see the real person that was hiding prior to the election.
Bishop also said in Parliament that he wanted NZ to have a population of 10 million.
How about asking us kiwis.?
The facts are building a house in NZ is way too expensive, period.
Prices must come down by whatever means possible, less regulation, open the market to other products from overseas, free up more land.
Totally agree about increasing our population, 15 million would be a good size for a country this size.
Basically, we are too small to get scale on anything and because of this small size we pay over the top for everything.
All countries are going to see large population drops in the next few years, this means attracting people to NZ becomes critical.
It is ironic that many who have experienced destruction by earthquake and flood, and despite damage being quite predictable in many cases, will be well compensated by various means. But a property loss in value due almost entirely to govt action or lack of, including the recent very unpredicatble zoning changes, interest rates, immigration policy is expected to be just meekly accepted even when it represents years of sacrificial saving.
The immigration issue aside, there will be quite a few parents who see their children's despair at being locked-in to flatting with multiple others and other renting arrangements; not being able to get a house. While negative equity has very serious consequences, a broad reduction in house prices shouldn't be considered only negatively. For those people who think that they are "rich" because of their house value, remember that the market you sell in is the same one that you buy in.
Overall, a significant cut in house prices isn't, in my opinion, such a bad thing.
A good variety of opinion here. In my view Bishop encapsulates the incompetence and arrogance, and thus inherent corruption of most political parties, in particular the older established versions. Bishop’s performance in supposed opposition during the dreadful Covid scam years was more disgusting than disgraceful, and not one vote should have been cast for him in the last election. But we are where we are. It is all our previous Govts who have destroyed the value of our currency. The task is now to stabilise its value through greatly increased productivity, encourage our own population to increase their family sizes, restrict immigration to compatible and productive people in moderate and assimilable numbers and (heaven help us) elect mature capable and honest people to guide the nation. (I would still prefer a form of restricted ballot, the Athenian option, if you will, to eliminate the intrinsic and inevitable corruption that accompanies political parties as they age.)
Don't we simply want real estate prices to stabilize- neither up or down ?
BTW, can anyone tell me when houses were inexpensive ?
They have always been priced relative to wages and input costs.
My parents told me how scarce houses were post WW2, how expensive, and so small and primitive - maximum of 800sq ft allowed, extremely basic by today's expectations.
Don't tell me that the Boomers had it easy - it really wasn't.
Well said Robert
Arthur. Other various comments smack of heavy duty socialism. Just like tax the rich. For most people buying a house is a huge saving and investment and now they are penalised for being part of a market economy.
Buying my first house was the toughest financial investment I ever made and most banks would not lend to a single woman borrower.
So cry me a river. It is never easy.
Hmmm.... the same Mr Bishop who told a constituent meeting that " noone is interested in co-governance?" Deluded.
A young business couple employed in the city, and seeking a potential home reasonably close and near transport, after diligently consulting the carefully thought out Auckland Regional Plan and then selecting a safe Single House area, suddenly find themselves zoned for 6 stories very close next door as of right because within a 20 minute trudge of a railway station. $500,000 value vanished, more if a block eventuates.
It is fine for locals to breed up but it tends to be the lesser skilled recent immigrants and low or no skill locals. It will likely dawn on many of the children of the former that there is no need to tediously work but that a lifestyle at least as good as their parents in their homeland will be provided by the state. Children of the lesser or no skilled or motivated locals figured this decades ago. Full and prosperous employment and a comfortable consumer (high carbon) lifestyle does not necessarily follow population growth. How do they fare in Cuba, Haiti, etc? Few populations have increased percentagewise as ours. It is a major cause of problems. However the immigrants do postpone the maori take over (slightly).
How do we quantify the loss of 700,000 young adult kiwis to Australia? Many left for Australia and other countries to get access to more affordable housing and wider choice in housing.
How does a pensioner "do well" if they don't have access to doctors, nurses, dentists, etc. (because those people have left the country)? How much does this loss cost them?
Many of the immigrants are simply backfilling the jobs hole of these leavers. Why do we vilify and blame them for a problem that is not theirs to own? We should be grateful that they are here to provide the services we all need. My dentist is from South Africa. My doctor is from US. The people who serve me at restaurants and cafes are from India, Philippines, Germany, etc.
Why are these hardworking "foreigners" less deserving of adequate housing at an affordable price? They are new residents and new citizens, and they are contributing greatly to the economy and the future of New Zealand, as are their children.
Aren't we all rowing together? Bishop, for one, understands this, and he understands what we need to do to advance the future of this country.
I welcome his efforts, and I am a homeowner.
A good book: "The Moral Basis of a Backward Country" (Banfield).
The title is actually "The Moral Basis of a Backward Society".
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