The excellent Shamubeel Eaqub is now blogging as part of the team over at TheVisible Hand of Economics. Shamubeel has been a regular commenter at TVHE and
is often quoted in the media; it is great to see him now blogging. Eric linked
to Shamubeel’s first post yesterday in his Monday round-up.
Shamubeel was commenting on this story about National’s latest housing
policy, in which “the number of first home buyers eligible for KiwiSaver
deposit subsidies will double”, but buyers “will have to save a bigger deposit
before they qualify for Government assistance”. Again, I find myself asking,
What is it about housing policy that leads to people forgetting basic economic
principles? The two quotes that jumped out at me were the following:
"Key said the requirement for a bigger deposit was necessary to avoid throwing fuel on an already overheated housing market in Auckland."
And David Shearer’s
"I am also determined to reduce speculation-driven demand in our housing market. Labour will restrict sales to overseas speculators and clamp down on speculators here through a capital gains tax on houses bought over and above their own home."
So Shearer wants to make housing
more affordable partly through taxing it and partly through a policy that
restricts the nationality of who can own a rental property but won’t affect the
number of people wanting to live in houses or the number of houses available
for living. I have discussed these ideas before (here and here) so won't belabour the point. But now Key wants to join the party by promising to make housing
more affordable by simultaneously shifting the demand curve to the right and then
shifting it back to the left to prevent price increases! For sheer internal
inconsistency, you have to say that National’s policy takes the cake here.
To be fair to both parties, both are also offering solutions to act on the supply side as well. And both parties think the other’s policy is crazy, so they have that right as well. But it wouldn't it be great if we could get beyond these silly games and have the political discourse focus on real policies?
To be fair to both parties, both are also offering solutions to act on the supply side as well. And both parties think the other’s policy is crazy, so they have that right as well. But it wouldn't it be great if we could get beyond these silly games and have the political discourse focus on real policies?
