Marcus Lush recorded an interview at 5-50am this morning with me on the pros and cons of banning foreigner purchases of houses here. I always enjoy RadioLive interviews, because they rarely try to fit me into a stereotyped slot. Both Brigid who last night set up the interview, and Marcus, sought fresh information. That contrasts with the predictable Punch n Judy show statements sought by others.
As sometimes happens in a genuine conversation, I realised that the issues could be summed up simply. Prices go up when supply can't increase to respond to demand. There is no a shortage of building supplies, or builders. So foreign buyers' money can only affect prices if there is a shortage of land to build on. But New Zealand is not short of land. It is short of consents to use land. And probably more important than the supply of new land, is the cost, delay and risk in trying to intensify the use of land that is already built on, nearer the centre of our cities.
In other words, our housing problem is the inevitable consequence of the political success of selfish middle and upper class families, working with their stupid green children. They enforce their aesthetic preferences for the status quo (labelled as 'heritage') by locking newcomers out of their leafy and quaint inner suburbs. The RMA has frozen the dynamic processes of rebuilding and intensification that have created all great cities (and our own towns and cities up till 3 decades ago). The result is that poorer people must pay for more expensive housing ever further from where the work is.
To blame the resulting prices on foreign money is a nice distraction from their own culpability, for the selfish generations, and the councillors and MPs who pander to them.
It is 7 years since I was an ACT member, but I have to commend the Freedom to Build solution offered by John Banks and ACT in this area. It is the most plain, simple speaking any politician is offering.
Still, if central government can't summon the political courage to solve that problem, then restrictions on foreign money might mitigate the problem temporarily. If so, any restrictions on investment should be confined to:
a) Auckland (because sellers and builders of houses in most of the country would love to have a deeper market of buyers);
b) Existing houses (so that new money can go into increasing supply); and
c) Houses kept empty (because a house occupied is part of supply, whoever owns it).