$1 trillion will be the total ‘value’ of New Zealand’s houses by the end of 2016 if prices keep going up in December at the rate of the previous 11 months.
The ‘value’ of New Zealand’s homes has risen by more than $400 billion, or two thirds, over the past eight years. Those homes are not bigger or fancier or warmer or drier or have better views, but interest rates are substantially lower and over that time we failed to build enough houses to match population growth.
Also over that time, New Zealand’s home ownership rate has fallen to close to 60 per cent and many young Auckland first-home buyers have had to abandon their dreams and deal with rents rising faster than incomes.
Yet voters also rejected Opposition proposals at the past two elections for a Capital Gains Tax. Labour has given up trying to campaign for any changes that would see house prices fall.
Less than half of young renters voted at the last election, and more than 90 per cent of property owners over the age of 50 voted. Politicians know this and have calculated that more voters want higher house prices, which means they can afford to ignore the renters.
The big question for New Zealand in 2017 is: will young renters start voting at high enough rates to change that political calculation in the same way that poor white voters started voting and changed the calculations in America?