Tuesday, 3 September 2013

House price obsessions

Bernard Hickey has a terrific story about a nasty downward spiral affecting most of New Zealand, one indicator of which is falling house prices. Apparently Auckland and Christchurch are doing fine but things are on the slide pretty much everywhere else. Rural youth are migrating to town leaving the oldies behind. Plant closures hurt. So the government should think about how to reverse this vortex says Bernard.

I reckon they probably are, deep inside MBIE.

But hopefully they're using a proper evidence base, and I guess they will also realise that low house prices aren't necessarily bad.

As Aaron Schiff recently mused, it would probably boost innovation if urban housing was a lot cheaper. Certainly there are big benefits from low cost rural housing. I mostly live in the rural top-of-the-south. There are plenty of young people, a steady demand for rental accommodation, and housing costs are low. That's a big plus. We have quite a few neighbours raising families like this while also growing gardens and hunting and fishing. They don't seem to hate it and are probably doing fine financially.

Compare that scene with a typical group of Auckland house-owners obsessing about prices. Its a stark contrast.

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