NZ PM goes into bat for foreign housing speculators


By Leith van Onselen

New Zealand Prime Minister, John Key, remains the biggest roadblock to the country achieving genuine housing reform.

A year ago, Key cheered on rising house prices and the associated Chinese investment – effectively selling younger generations out whilst promoting unproductive investment:

“Aucklanders are getting wealthier,” Key said, referring to front page newspaper articles in Auckland about house prices…

“The point is there is over 500,000 Aucklanders that own a home. They are significantly wealthier. I go around the rest of the country and people say to me ‘Can we have a few of those Chinese buyers in Wellington and other parts of New Zealand because actually we want our house prices to go up’,” he said…

“Let’s just take the counter-factual for a moment. Would you want your house price going down?,” Key said.

“And what most Aucklanders say to me is ‘I’d rather my house price went up, but I’d rather it went up a little more slowly than this'”…

John Key has also been an unabashed supporter of the population ponzi, backing New Zealand’s record immigration program despite growing concerns about its quality and adverse impacts:


Prime Minister John Key… told a business audience on Thursday that Auckland’s house prices and congestion issues were a “sign of success”…

“If you look at the challenges Auckland has at the moment – and you know, they’re well documented from housing to transport – they are in a funny kind of way a quality problem to have because what they reflect is that Auckland is doing well”…

“You’ve got net migration not just strong from India, China and Australia but actually net migration from around the country”…

“And the truth is we would rather be having to deal with the challenges of growth and say ‘OK we’ve got to deal with those issues but gosh they’re signs that as a city we’re doing incredibly well and actually as a country we’re doing incredibly well’.”

And today, John Key has pushed back against calls to tax foreign home buyers as well as tighter money laundering rules, claiming the Government’s role was to protect homeowners’ equity:

“Anyone in Government has to be a bit careful, because for most people their primary asset is their house and for most people, a significant amount of the home is borrowed from the bank, so you do have to protect their equity.”


In the article, Key claims that tighter rules and taxes on foreign buyers could cause a “catastrophic slump in the market”, but then directly contradicts himself by arguing that foreign buyers are a non-issue because LINZ data showed that only 3% of buyers were non-residents for tax purposes.

Only in Bizarro World would endemic traffic jams and unaffordable housing, not to mention falling per capita income, be a “sign of success” and economic progress.

The sad truth is that New Zealand’s authorities, like Australia’s, are no longer managing an economy, but rather a property bubble.


One can only wonder how both nations would now look if the many billions of dollars of excess capital that has been poured into established housing had instead been funneled into businesses and infrastructure. Instead, both countries have been been left with hollowed-out industries, non-mining/agricultural companies that are struggling to compete, and an infrastructure deficit that will likely never be closed, made worse by rampant population growth (immigration).

Youngsters in both nations now face the choice of a life time of renting or debt servitude as they pay-off some of the world’s biggest mortgages, together with an ever-rising tax burden as they fund their asset rich boomer parents, along with a zombie economy.

That’s some future that is being bestowing on our ANZAC youth.


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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.