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August 5, 2013 | by  | in Opinion | [ssba]

Letters From a Young Contrarian

Dear Victorians,

Kiwis have a love affair with home ownership. We dream of quarter acres. DIY is in our DNA. Home is where our heart is. Embedded in our collective psyche is a yearning to buy and own a house. The more you move up the property ladder, the wealthier you become. But lately, it seems as if the bottom few rungs have been removed: it’s getting harder and harder for first-home buyers to buy that important first house.

Why is this? First, it’s getting harder to get a mortgage: in response to the Great Recession, Parliament has put in place strict regulations which limit the ability of banks to lend mortgages to those with little savings and low incomes. This hurts your typical young couple keen to move into their first home and start a family.

It’s also getting more expensive to buy a house, particularly in the larger centres. That’s because the population is growing faster than we are building. It’s simple supply and demand: the more people at the auction, the higher the price when the hammer falls. If we built more houses, they would become more affordable. However, legislation such as the Resource Management Act and local bylaws preventing residential housing being built in green belts or on rural land make it impossible to increase the land supply.

But Labour thinks the problem can be blamed on foreigners. As part of its housing policy, Labour has announced it will restrict overseas buyers from buying New Zealand houses. Leave aside the fact that foreigners make up only nine per cent of buyers in the market, the fact that there are a million ways of getting around the law such as putting the house in a New Zealand resident’s name, and the fact that the law breaches our obligations under five different free-trade agreements; this policy is flat-out racist.

The case is clear. Australians, who make up a majority of overseas buyers, are exempted from the ban. This policy therefore specifically targets the next biggest group of overseas buyers: the Chinese. It is a continuation of the Yellow Peril narrative New Zealand has maintained since its early beginnings: first they’re taking our jobs, then they’re buying our farms, now they’re buying our homes. If you agree that racism is harmful discrimination on the basis of race, then it is impossible to argue that preventing a Chinese person from entering into a mutually agreeable private agreement with a New Zealander is anything but racist.

Winston Peters complains that 19 of the top 25 real-estate agents in New Zealand are Asian. Never mind the fact that they are all New Zealanders. How dare that race be successful in our society? For some ugly reason, New Zealanders would rather make scapegoats out of a marginalised race than look inwards and realise the problem stems from our own policy failings.

Which might all be fine, apart from the fact that racism also hurts New Zealanders: by preventing Chinese buyers, the Government is literally preventing New Zealanders from selling to the highest bidder. First-home buyers may win, but at the expense of New Zealand sellers. Decreasing the value of New Zealand homes, which are almost always a family’s biggest asset, seems a bizarre way to encourage economic growth.

The saddest thing about this policy isn’t that it won’t work, or that it is racist, or that it will actively hurt New Zealand sellers; it’s that so many New Zealanders will support it.

Cameron Price.


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