This housing crisis has actually been a wage problem all along | Josie Pagani



This housing crisis has actually been a wage problem all along

This Government and the last failed to properly define the problem.

If the 'housing crisis' is a crisis of supply, then build more houses. Incentivise developers to get working. Cut red tape, free up land, and simplify regulations. Governments and local councils can put in the roads and pipes to attract the developers. Kiwibuild promised 100,000. So far just over 1000 have been built.

If the problem is lack of social housing where too many families are now living in motels in Rotorua for years on end, then just build more social housing. Governments can fund community organisations and iwi to do the building and the planning. The Salvation Army, Habitat for Humanity, iwi organisations know who the families that need a place to live and where to build the houses in their communities.

If affordability is the crisis, then focus on supply and look at the tax system. My son is about to rent his first student flat in Tāmaki Makaurau. It's a basic house, probably worth about $1 million. Together, his mates are paying about $1400 a week rent. Deduct rates and insurance from that, and the owner will won't even make enough to pay off his mortgage with interest rates as high as they are. Presumably the owner's plan was to bank the tax-free capital gain when they sell. That capital gain isn't looking so great now.

Those of us who have been calling for house prices to drop so Kiwis can own their homes - home ownership has dropped from a high of about 60 percent in the 1950s to somewhere below 30 percent - have got what we asked for. But inequality is still with us. The average wage still can't buy the average house.

Perhaps we don't have a housing problem after all. We have a wage problem.

Josie's editorial on Today FM is here.