We are sleepwalking our way towards the next housing crisis.
I’m not sure when it’s going to be and I’m not making predictions – other than that, as sure as night follows day, there will be another crisis.
Look, it might seem to be odd to be talking like this at a time when house prices have actually been falling, and housing shortages are diminishing.
But that's the whole point.
We don’t learn lessons. We don't anticipate the consequences of actions. We repeat mistakes. And we are doing it now. Even as we strive to recover from the last crisis, we are setting ourselves up for the next one.
Here’s a quick quiz: When was this comment made by a New Zealand government minister?
"…we can’t afford to simply turn on the tap to the previous immigration settings. That path is a continuation of pressures on our infrastructure, like transport, accommodation, and downward pressure on wages."
That was said less than two years ago. The now gone Economic and Regional Development Minister Stuart Nash said that in May 2021 in a speech delivered on behalf of the now gone Immigration Minister Kris Faafoi.
Well, it was little more than a year later that Labour turned the tap back on. And now that tap's hosing away merrily.
Ministry of Business Innovation and Employment (MBIE) figures showed that a March month record of over 20,000 people arrived in NZ last month on work visas. Off we go again...
A recent Reserve Bank discussion paper highlighted that between 2000 and 2020 our population increased by 1,225,000 people, or by 1.4% per year. That's TWICE the average rate in the OECD.
I’ve said this before, but it is worth repeating. I’m not against inbound migration. I’m an immigrant.
I’m against ‘accidental’ migration, which I see as being when a country pumps in migrants through some short-term expediency, such as filling job vacancies - not necessarily for even particularly skilled jobs. And the impact of all this is heightened and worsened if the country has no long term strategy, or indeed even the vaguest clue, how to deal with the consequences of such an inflow. This has been New Zealand in a nutshell.
Nash spelled it all out in that May 2021 speech. "That path is a continuation of pressures on our infrastructure, like transport, accommodation, and downward pressure on wages."
And that folks, is the path we are back on again.
Now, okay, there may be an argument that what we are currently seeing is a 'blip' caused by the fact that obviously our borders have been shut and also we do have a labour market that's tighter than a tight thing.
But I do recall constant refrains through much of the 2000s so far that high inbound migration numbers was a trend that would abate. Well, it didn't. Not till we shut the borders.
Personally I'm very doubtful what we are seeing now will be a short term blip, not if we leave this to 'market forces'. Without some sense that someone's going to properly control the numbers there's no reason to believe things will be any different to before. And remember, the National Party's already indicating there will be much more of the same if it governs after the October election.
Just this week National's promised to double the cap for seasonal workers in the RSE scheme (to 38,000 a year).
The pandemic period actually gave this country some breathing space to rethink the whole question of population, housing, infrastructure etc. And the time has been wasted. Our politicians are stuck in a rut, bereft of ideas.
The country is just emerging from a long period of under supply of housing. Stats NZ figures show that nearly 50,000 new dwellings were consented in the 2022 calendar year.
But now with the housing market itself in the doldrums, there's widespread expectation of significant contraction in the building industry.
Boom and bust cycles are all too familiar in our construction industry. In 2004 Stats NZ figures show that over 30,000 dwellings were consented nationwide. Five years later that number had more than halved. By 2011 we were looking at just over 13,5000 dwellings consented for the whole country.
The subsequent rise to nearly 50,000 consents as of last year was slow and at times pretty painful. Once our building industry contracts it takes a long time to get it cranked up again.
The point of this is that we are now getting ready to pour vast numbers of new people that will need housing into an environment in which new building activity is likely heading for a very significant decline. Cue another housing shortage down the track.
At this point in an opinion article, I generally start trying to look at some potential solutions to the issues/problems I've just been raising. Try to end on a positive note.
There's a big problem with trying to do that with this subject though.
I just don't think our current crop of politicians 'get it' on any level.
Why else are they embodying the definition of insanity - by doing the same thing over and over and expecting different results.
And I don't see when and how things might change.
It seems blindingly obvious to me that once interest rates move lower, and we have more migrants seeking houses, and fewer houses are being built, then so our house prices will start heading for the moon again.
And yet here we all are madly galloping down the same path that helped lead us to such a situation previously.
Why are our politicians all running headlong to make the same mistakes, and saddle the country with the same consequences, again?
Is it the shortness of our three-year electoral cycle? Look I'm not sure that could be the whole answer. But for whatever reason there's this short term focus on expediency. There's no boldness. No long term vision. There's no genuine attempt to try to work out what sort of country we want this to be - and how we can do that.
Clearly there's huge issues in this country that could and should be addressed as part of a long term strategy.
• Population - what's the right size? Establish that and then have policies to suit.
• Infrastructure - what are the future needs? (Heavily dependent on population outcomes). How do we meet the future needs?
• Housing - how do we avoid boom and bust cycles? How do we monitor on an ongoing basis the need for provision of new housing?
• Labour market - how do we fit the skills and experience of New Zealanders to available jobs and ensure the right training so that even relatively unskilled areas of work are not left struggling to find people. How might increased mechanisation help our industries?
• Migration - don't just do this as a short-term salve for labour market woes. Decide what we want from a migration policy. HAVE A PLAN.
• Climate change - are we ready? Doesn't seem like it after the events of January/February, does it?
And I'm sure I could probably think of loads more things, but really I don't see much point listing more at the moment. You get the idea. As far as I can see, none of the six things I've just mentioned above are going to be 'properly' examined by a New Zealand Government in the foreseeable future.
Until we have a future-focussed Government then we will keep doing all the same things we've done in the recent past.
Including having housing crises.
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