The only sensible conclusion an observer can come to is that there is no real political will to address the housing crisis. While a number of serious solutions are self-evident, the level of the debate is bogged down in headline grabbing but relatively ineffective proposals like registration and a potential land tax on foreigners. Foreign property taxes have been relatively ineffective in other countries.
The term crisis applies quite correctly to the housing situation. Stratospheric house price appreciation, particularly in Auckland, has all the hallmarks of financial bubble which will at some point collapse. Although many of us may enjoy the apparent wealth effect of ever increasing house prices, there are two main areas of concern. The first is that when prices do adjust they might inflict significant damage on the banking system. The amount of bank debt lent against NZ houses has doubled over the last decade and now represents over half of all bank lending. When measured against household income, Auckland houses are now amongst the most expensive in the world, are valued at over twice their long run average and have recently surpassed Sydney.
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