Overseas Advertisement a Symptom

Affordable Auckland Mayoral candidate Stephen Berry believes that while an overseas advertisement promoting investing in Auckland’s housing market is offensive, Aucklanders should be directing their anger at their own Council and Government. “This advertisement is a symptom of a greater problem, and housing unaffordability cannot simply be blamed on foreigners.”

The advertisement aired in Singapore promoted investing in Auckland housing because there is no land or capital gains tax and Aucklanders will pay them half their weekly wages in rent. “The way the advertisers have framed their pitch clearly was not intended for Auckland ears but unfortunately it is true that many Aucklanders are paying half their weekly income in rent to landlords. For this we can blame Auckland Council and other regulatory bodies.”

“The Council’s stubborn refusal to abolish the Metropolitan Urban Limit is the number one reason why house ownership is well out of reach for Generation Rent. Penny Hulse can throw her hands up and call for a bipartisan approach but there is no denying that the MUL is causing a land shortage in a city with plenty of land. When supply is artificially restricted, the price goes through the roof.”

Mr. Berry says the Reserve Bank also has a lot to answer for due to their introduction of a 20% LVR. “As widely predicted, this move did nothing to arrest house price hyperinflation. Investors already in the market have the wealth to continue buying property without a 20% loan deposit. The people who were really hurt by the LVR are young families and those on low incomes.”

Even steps being taken by the Government to help first home buyers will be ineffective. “A move by National to provide $20,000 grants to first home buyers is like throwing petrol onto a fire. It will increase demand without making a difference to supply. It will lead to further house price inflation until the grant value becomes worthless.”

“Until Auckland Council, the Reserve Bank and central government remove the regulatory framework which is distorting normal market behaviour, house prices will continue to skyrocket until the bubble eventually bursts. Cheap shots at foreigners will do nothing to help those who are now locked out of the property market.”

Ends

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