Thursday, 29 April 2021

Housing loans will fuel crisis


“Labour’s changes to housing loan schemes ignore basic economics and will further fuel the housing crisis,” says ACT’s Housing Spokesperson Brooke van Velden.

“The Government’s proposals to increase price caps and funding through the First Home Grant and First Home Loan schemes are not only likely to be ineffective, but official advice says they could make the housing crisis worse.

“The Ministry for Housing and Urban Development specifically recommended against increasing price caps and income caps multiple times warning that the policy changes could increase house prices:

‘…we do not recommend increasing the price caps for existing properties, as this would inflate prices further, and only provide temporary relief for first home buyers.’

‘We do not recommend increasing the income caps for First Home Grants as this would primarily assist households who are already close to being able to buy and may result in prices being bid up higher.’

The Government has been warned about this before. It was told last year that ‘financial support is likely to increase prices when supply is constrained.’

"This is classic Jacinda Ardern, introducing policies that appear kind but actually make matters worse.

"She's like a firefighter with a hose full of petrol. Pouring more taxpayer money into the housing market will only make the housing crisis worse.

“Adam Smith wrote the Wealth of Nations in 1776. Does Labour really believe basic economics has changed in the last 12 months? The fundamentals of our housing market are the same. If you boost demand while housing supply is constrained, prices will rise.

“Despite official warnings that these changes will throw fuel on the bonfire of house prices, Megan Woods pushed the policy through Cabinet.

“ACT’s answer is for the next generation to build like the Boomers. ACT would radically overhaul infrastructure funding, through a thirty-year partnerships with central government for each region. We’d then replace the Resource Management Act with legislation designed to facilitate home building, and get councils out of the building consent business.

“Rather than dividing, the Government should be uniting New Zealanders behind good ideas.”