These days finding a place to live has become really tough for many. Especially for those who live in popular places such as Auckland, Hamilton, Tauranga, Wellington, Nelson, Christchurch Queenstown, Wanaka and more. Why is this so and what can be done to alleviate the many issues surrounding it?
According to Housing New Zealand, Prime Minister Richard Seddon in 1905 instated the Workers Dwelling Act. Mr Seddon believed that Kiwi's should have affordable housing and a higher standard of living. This was the beginning of the nations ideals to support it's people into affordable and comfortable homes. The government even offered financial support for housing, this was called the Community Housing Improvement Programme. By the end of the second world war the government was building around 10,000 houses each year. Entire suburbs were planned and established to provide homes and jobs.
Eventually in the 1980's the government introduced economic reforms to stimulate growth and enable companies to flourish and compete with each other. Terms such as deregulation, free market economy and the trickle down effect became synonymous with economics and business in the western world. This shift in ideals was due to a new doctrine developed by American economist Milton Friedman. Friedman believed that free markets and free trade was the solution to enable freedom and democracy. The image below depicts Friedman with one of his quotes which conveys his ideological views about reduced equality and 'free marketism'.
In the 1990's, about 74% of kiwi's lived in their own homes, however, today this has reduced to 64% and falling according to Bryan Bruce. Bryan Bruce produced a documentary titled Who owns New Zealand now in 2015 to shed light on the housing crisis and it's subsequent impacts on Kiwi's.
There are apparently over 40,ooo people homeless, however, this number is truly unknown. Mr Bruce points out that wages since the 1960's have risen 59% where house prices have gone up 280%. It appears the free-marketism isn't delivering what it's proclaimed to deliver. How can increased homelessness be a measure of freedom? Is this some kind of sick joke?
Apparently not, and it's set to continue so long as demand for housing increases. And this is what our government desires for us. The government tells us we need economic growth and that this 'growth' will improve prosperity. Who's prosperity exactly are we talking about here? Below, Mike Pero looks confident and pleased about the increase in housing prices.
From my perspective, I see that increased growth in many areas are impacting housing affordability. Increased population through immigration combined with foreign ownership have pushed prices beyond the reach of many kiwi's. Currently the demand for housing is so great, we apparently need to import more people to create more housing. Does this not just fuel the fire? Bringing in more people to create more housing sounds absurd when there isn't enough housing to support the current population. Does no one else see the correlation between increased demand, prices and homelessness?
The current ideal of a living wage in New Zealand is just over $20 per hour and adds up to $42,744 per year. This would mean that affordable housing targets for the average income would need to be $213,720, however, the actual average house price is $677,966 in New Zealand. The average house price in Auckland is $1,054,729 and would need to fall 80% in price to meet current average incomes. For wages to match the current house prices in Auckland, the living wage would need to be $101 per hour or $210,945 annually (Newshub, 2018).
So, what are the possible solutions for this conundrum? One obvious solution is to slow the demand. This would mean reducing the yearly intake of immigrants, however, how could a government decide on this when their current belief in perpetual growth pervades all policies? The other possible solution could be to ban foreign ownership and why would a government that believes growth provides prosperity do this?
My final suggestion to fix this important puzzle would be to reform our economic system to one that better fits with the ideals of societal and environmental congruence.
What possible solutions can you suggest?
According to Housing New Zealand, Prime Minister Richard Seddon in 1905 instated the Workers Dwelling Act. Mr Seddon believed that Kiwi's should have affordable housing and a higher standard of living. This was the beginning of the nations ideals to support it's people into affordable and comfortable homes. The government even offered financial support for housing, this was called the Community Housing Improvement Programme. By the end of the second world war the government was building around 10,000 houses each year. Entire suburbs were planned and established to provide homes and jobs.
Photo from Pataka Museum Collection, Porirua Library
Eventually in the 1980's the government introduced economic reforms to stimulate growth and enable companies to flourish and compete with each other. Terms such as deregulation, free market economy and the trickle down effect became synonymous with economics and business in the western world. This shift in ideals was due to a new doctrine developed by American economist Milton Friedman. Friedman believed that free markets and free trade was the solution to enable freedom and democracy. The image below depicts Friedman with one of his quotes which conveys his ideological views about reduced equality and 'free marketism'.
Source: AZ Quotes, 2018
In the 1990's, about 74% of kiwi's lived in their own homes, however, today this has reduced to 64% and falling according to Bryan Bruce. Bryan Bruce produced a documentary titled Who owns New Zealand now in 2015 to shed light on the housing crisis and it's subsequent impacts on Kiwi's.
There are apparently over 40,ooo people homeless, however, this number is truly unknown. Mr Bruce points out that wages since the 1960's have risen 59% where house prices have gone up 280%. It appears the free-marketism isn't delivering what it's proclaimed to deliver. How can increased homelessness be a measure of freedom? Is this some kind of sick joke?
Apparently not, and it's set to continue so long as demand for housing increases. And this is what our government desires for us. The government tells us we need economic growth and that this 'growth' will improve prosperity. Who's prosperity exactly are we talking about here? Below, Mike Pero looks confident and pleased about the increase in housing prices.
Source: Mike Pero Real Estate, (2018).
From my perspective, I see that increased growth in many areas are impacting housing affordability. Increased population through immigration combined with foreign ownership have pushed prices beyond the reach of many kiwi's. Currently the demand for housing is so great, we apparently need to import more people to create more housing. Does this not just fuel the fire? Bringing in more people to create more housing sounds absurd when there isn't enough housing to support the current population. Does no one else see the correlation between increased demand, prices and homelessness?
The current ideal of a living wage in New Zealand is just over $20 per hour and adds up to $42,744 per year. This would mean that affordable housing targets for the average income would need to be $213,720, however, the actual average house price is $677,966 in New Zealand. The average house price in Auckland is $1,054,729 and would need to fall 80% in price to meet current average incomes. For wages to match the current house prices in Auckland, the living wage would need to be $101 per hour or $210,945 annually (Newshub, 2018).
So, what are the possible solutions for this conundrum? One obvious solution is to slow the demand. This would mean reducing the yearly intake of immigrants, however, how could a government decide on this when their current belief in perpetual growth pervades all policies? The other possible solution could be to ban foreign ownership and why would a government that believes growth provides prosperity do this?
My final suggestion to fix this important puzzle would be to reform our economic system to one that better fits with the ideals of societal and environmental congruence.
What possible solutions can you suggest?
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