“It is based on the notion that increasing supply of houses at any price will somehow bring down prices. This is trickle-down economics at its most dubious.”
That is exactly what shifting the supply curve right does … unless demand is perfect elastic with respect to price. That is ridiculous.
Note: If (marginal) willingness to pay doesn’t change on the basis of the number of houses sold, then it might be a bit difficult for “banning sales” to have any impact on prices …
And how is this “trickle-down economics“.
“Trickle-down” is when you do something like cut taxes for the wealthy, or intervene in the exchange rate to subsidise manufacturers and say this will generate jobs and the such. [I’ve heard Labour suggest the exchange rate one – making them “trickle-down” proponents themselves!].
Freeing up land will push down land prices around Auckland, thereby reducing the wealth of a whole bunch of landowners via the swipe of the regulators pen – this doesn’t sound like “trickle-down” economics at all. Lower land prices, lower property prices for existing dwellings …
It is “supply side” in terms of the supply side of the property market – surprisingly the term “supply” doesn’t always mean exactly the same thing (there are different markets and macro and micro “supply” is different!), so when it turns up in a sentence we can’t just start ranting “trickle down” :O
What Twyford is trying to say is (I’m guessing), is that if large expensive homes end up being built on the freed up land it won’t sufficiently help to improve affordability for the poorest people – and given that recent Treasury evidence (<3 working papers) suggests that housing costs in the lower (though not lowest) part of the income distribution have been climbing, and given that this issue is “likely” endemic in Auckland, there may be a role to ensure that smaller cheaper housing is built. Hell even whip out the “the lack of scale in our building industry is biasing construction, helping to make property unaffordable” line. I don’t fully agree with these, but they are consistent and articulate the idea I THINK Twyford wants to make.
If he wants to say something cutting and more accurate try:
Freeing up land and letting developers decide what to build isn’t going to ensure we get affordable housing to those most in need, we have a genuine issue for those facing hardship in Auckland and this government is willing to ignore it by throwing it in the too hard basket
Again I don’t necessarily agree with this (it is a relative price argument, and one I can see for and against elements for) – but it proposes that the person saying it knows whats up, and has a solution without throwing in random poorly worded rhetoric. And the affordability line appears – that is actually the point right?
The houses were likely to be expensive and snapped up by speculators, he said.
So the houses will be expensive relative to rents (trying to figure out what he means by expensive here), and so in some sense “overpriced”. And these magical speculators are going to come in and overpay for them. HELL YES – I love it when magic people come in and overpay me for things!
Wait, Labour wants to ban the “speculators” … what?
Compare this to the Greens:
Green Party housing spokeswoman Holly Walker said the amendments did not address any of the party’s fundamental concerns.
The amended bill retained the Government’s power, criticised as anti-democratic, to directly establish special housing areas and approve residential developments.
They have reasons – logically consistent reasons that are clearly articulated. Whether you agree with the Greens or not, they aren’t just throwing out “random terms” into the air to see if it will make people like them …
Update: Paul Walker is also, concerned.