A real estate agent commented in the media recently that young couples who couldn’t afford to buy their first home in Auckland only had themselves to blame.

Wow! In one sense, he was right. If you chose the wrong parents, I guess that is true. Few young families today can get into their first home if their parents can’t give them a helping hand with the deposit.

My wife and I helped our two sons into their first home. Most parents, who can, want to help their children in this way. However, for parents on lower incomes and without spare capital this just isn’t possible. And those who can’t put together a deposit are finding that the prospect of saving enough themselves to do so is fading quickly.

Incomes aren’t keeping up with the cost of housing, which is rising by thousands of dollars a week. On top of that, with a housing shortage, rents have been rising at five times the rate of overall inflation and much faster than incomes. Soaring house prices lock those without a foot already on the property ladder, out of the Kiwi dream of home ownership. Those who have only their own home don’t benefit much either from soaring prices. You sell your home for a much higher price but then have to spend a whole lot more for a new one. The people who benefit are those with the assets to spend on multiple houses as investment and property speculators. The media last week ran a front-page story about a Papakura house sold five times in nine months, going up in value from $335,000 to $590,000. The short-term investors in that property made tens of thousands each by doing nothing. If they pretended they hadn’t bought the property to on sell, they would have paid no tax on their income.

While a speculator can make huge profits in just a matter of months, the genuine home seeker is falling further behind in their efforts to afford a home. If they do manage to pay the prices pushed up by the speculators, it would add years to their mortgage. It’s no wonder that the rich keep getting richer while many Kiwis simply struggle to make ends meet.

The housing market isn’t working. The number of housing units being built falls behind the level of demand each year by thousands. Ministers deny that there is any real problem let alone a crisis.
However, the fact is that the percentage of Aucklanders who can afford to buy their home is the lowest in 70 years and the prospects for the home seeker are getting worse not better.

The answer lies in increasing the supply of land and housing. Intensification, housing going up as well as out, has to happen as in every other big city. It should be based around town centres, the CBD, transport hubs and arterial routes. That allows us to address transport and housing problems together.

With intensification, there has to be a good urban design, good infrastructure and plenty of public open space if we are to preserve our quality of life in Auckland. Central government can’t just sit on the sidelines and watch the crisis grow. It has to partner with the local government and with the private sector to ensure growth in supply. And if we can lower demand by stopping foreign-based property speculators buying a large number of existing houses, creating nothing but extra inflationary pressure, we should do that as well.