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Aerial view of houses in Devonport, New Zealand
New Zealand house prices surged to record levels for the second month in a row in December Photograph: PatrikStedrak/Getty Images/iStockphoto
New Zealand house prices surged to record levels for the second month in a row in December Photograph: PatrikStedrak/Getty Images/iStockphoto

New Zealand's 'public secret': house prices won't come down until we really want them to

This article is more than 3 years old
Iain White

Many of us express concern about the country’s soaring house prices - but we also vote for policies that let them stay that way

It was the anthropologist Michael Taussig who coined the term “public secret” – a collective social understanding, a truth generally accepted but not articulated.

Public secrets, he argued, can be important to the functioning of institutions and societies: they allow the existence of seemingly contradictory positions, help maintain current power relations, and assist in reconciling the inevitable tensions of policy or complexities of politics.

Once you know about them, you see examples everywhere. From the now repealed “Don’t Ask, Don’t Tell” policy regarding homosexuals serving in the US military, to the knowledge that Brexit does not directly translate to an extra £350m a week for the NHS.

In New Zealand, and in other countries around the world, it is now clear that the desirability of ever-rising house prices is just another public secret.

That doesn’t mean we deny the existence of the problem – in contrast to the recent past, politicians of all parties now routinely acknowledge the existence of a housing crisis.

And it’s not just politicians who are party to the secret – we homeowners are too. Because while we might be concerned about the societal effects of skyrocketing house prices, we’re equally concerned about the consequences to ourselves of bringing them back to Earth.

So while politicians publicly profess to be concerned about the growing housing inequality, homeowners support them in occupying the contradictory positions that allow it to persist. Like other countries, investing in housing for capital gains is just about the most productive way to generate additional capital in New Zealand. Much has been written about the inability of Jacinda Ardern to address this via changing capital gains taxation, but in this her political antenna has, again, proved accurate.

Not only is there little public appetite for disincentives, but Ardern recently acknowledged that, in contrast to every other financial asset, people expect the value of their homes to rise and that there is no support for politicians to encourage them to do anything but.

In fact, while stocks and shares are expected to rise and fall, all major parties support housing as an asset class that should only ever increase in value – all while expressing concern, and all supported by voters. Perhaps most striking is how many New Zealanders are happy about the situation. They don’t want change, they want the current policy settings to remain.

Some people point to the benefits of rising house prices – the increase in individual wealth or spending power, for example. But the benefits are not shared. As a consequence New Zealand is more unequal. The gap between winners and losers is widening. Capital is becoming more concentrated. Social mobility is decreasing.

So what do we do now? When is enough enough? The problem with public secrets is that exposure doesn’t necessarily help – of course, we already knew about them.

New policies are often mooted, but while there have been genuine government attempts to address the housing crisis, the continued rise in house prices suggests these policy settings are having little impact.

There is a limit on how effective policy changes can be when part of the public secret involves insisting that the impact must be minor and prices continue to rise.

Those concerned with the implications need to publicly reject the shared secret and give those with power the mandate to act with real meaning. Homeowners need to acknowledge that, for the broader social good, house prices need to fall over time and that they will vote for politicians who will make this happen in a controlled and managed way: by changing the taxation regime, supporting increased density in our urban centres and turning a house back into a home not an asset.

If we really want to address the housing crisis we know we need house prices to fall relative to wages over time. So start by saying so – out loud.

Iain White is a professor of planning at the University of Waikato

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