Key Takeaways:
- New Zealand’s housing market is a significant component of its economy, with $400 billion borrowed against housing stock.
- The country’s housing affordability issue is linked to low productivity growth and wages, rather than just high property prices.
- National’s goal of driving down house prices and rents may alienate its core supporters, particularly in Auckland’s leafy suburbs.
- The party’s strategy to "flood urban housing markets" to drive prices down may not be well-received by its traditional voter base.
- National needs to balance its focus on renters and first-home buyers with the concerns of its existing supporters, who value the traditional Kiwi way of life.
Introduction to New Zealand’s Housing Market
New Zealand’s economy is often jokingly referred to as a housing market with some dairy farms, kiwifruit orchards, and holiday resorts attached. However, this joke belies the significant role that housing plays in the country’s economy. With five million New Zealanders having borrowed around $400 billion against their housing stock, which is valued at around $1.6 trillion, it is clear that housing is a critical component of the country’s economic landscape. However, this also means that any attempts to crash the value of the middle class’s major asset could have significant consequences for the economy and for National’s electoral prospects.
The Politics of Housing Affordability
The issue of housing affordability in New Zealand is complex and multifaceted. While high property prices are certainly a factor, the problem is also closely tied to low productivity growth and wages. Simply driving down house prices and rents may not be enough to address the underlying issues, and could potentially harm the economy and National’s core supporters. The goal of owning a quarter-acre or eighth-of-an-acre section is deeply ingrained in middle-class aspirations, and character homes in leafy neighborhoods are a key part of National’s support base. Therefore, any attempts to address housing affordability must be carefully considered to avoid alienating these supporters.
National’s Housing Strategy
National’s housing strategy, led by Minister Nicola Willis and Associate Minister Bishop, has been focused on driving down rents and house prices. However, this approach has been criticized for being overly simplistic and potentially harmful to the economy. The party’s goal of "flooding urban housing markets" to drive prices down has been particularly contentious, and has raised concerns among National’s traditional supporters. The party’s leaders, including Christopher Luxon, have signed up to this goal, but it remains to be seen whether it will be effective in addressing the complex issue of housing affordability.
The Importance of Auckland’s Leafy Suburbs
Auckland’s leafy suburbs, such as Remuera, Epsom, and Parnell, are a key part of National’s support base. The party’s ministers from these areas, including Luxon and Justice Minister Paul Goldsmith, must ensure that National remains in touch with the concerns of these voters. The party’s strategy on housing must balance the needs of renters and first-home buyers with the concerns of its existing supporters, who value the traditional Kiwi way of life. This includes preserving the character of these neighborhoods and protecting the value of their homes.
The Role of Backbenchers
National’s backbenchers play a critical role in sense-checking ministerial decision-making and ensuring that the party remains in touch with its core supporters. However, the party’s tendency to pigeonhole backbenchers who raise concerns as trouble-makers rather than valuing them as essential contributors to the team is unhelpful. Luxon’s pride in getting weekly caucus meetings completed in under an hour may be efficient, but it may also mean that important concerns are not being fully considered.
A Potential U-Turn on Intensification
National strategists are reportedly considering a U-turn on intensification, which could involve allowing Auckland Council to include new capacity in the CBD in its growth projections. This could have the effect of lowering the intensification required in the suburbs and requiring it more in areas that make sense, such as the central city. The party could then position intensification as being mainly about the central city’s rejuvenation, rather than a threat to the suburbs. This approach could help to address the concerns of National’s core supporters while still addressing the issue of housing affordability.
Labour’s Perspective
Across the aisle, Labour and its urbanist friends have always been keener on intensification in the CBD and around transport hubs than outward expansion. The party believes that National just needs to make some decisions to provide certainty and let Auckland and the construction industry get on with it. However, if National executes its planned U-turn competently, Labour’s chances of taking power later this year may be reduced. Ultimately, the outcome will depend on which party is able to best address the complex issue of housing affordability while also meeting the needs and concerns of its core supporters.