Unlike Aussies, Kiwis want lower house prices

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By Leith van Onselen

During the Australian Federal Election campaign, the Turnbull Government and real estate lobby ran a scare campaign against Labor’s proposed changes to negative gearing and the capital gains tax discount, warning that it would “smash” property values and endanger Australian’s biggest asset.

Former Prime Minister John Howard once said that no one was going to complain about their house prices going up. And this has been the mantra of Australia’s politicians ever since, with policy directed at inflating house values for the benefit of existing home owners at the expense of would-be new entrants.

The situation is different in New Zealand, however, with housing affordability now the central issue political issue in the country, with all three major parties – National, Labour and The Greens – all locked in vigorous debate.

The New Zealand populous, too, wants action, with a poll conducted by UMR finding that 60% of Aucklanders and 55% of home owners would prefer that house prices either fell a bit or fell dramatically over the next year, with the overwhelming majority of respondents also believing the was a “housing crisis”. From Interest.co.nz:

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The poll of 1,000 New Zealanders over the age of 18 was taken from July 29 to August 17 through UMR’s online omnibus survey and found a total of 63% who would either prefer house prices to ‘fall but not too much’ (37%) or to fall dramatically (26%).

UMR, which conducts polls for the Labour Party, found 55% of home owners would prefer house prices to fall a bit (40%) or dramatically (15%)…

The poll also asked if there was a housing crisis at the moment and found that 81% of all respondents and 85% of Aucklanders thought there was a crisis, while 79% of home owners thought there was housing crisis.

Politicians are inherently reactive in nature, and the primary reason why New Zealand’s politicians are now taking action on housing affordability is because the electorate actually cares deeply about this issue.

Contrast this with Australia where housing affordability barely gets a mention by politicians, let off the hook by an apathetic electorate that does not care enough to demand action.

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We get the politicians that we deserve, and things will not change until Australians demand it.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.