New low for economic analysis of NZ opposition leader and Dominion Post editorial on housing affordability

The editorial in today’s Dominion Post about the proposed reforms in New Zealand to the Resource Management Act to increase of urban land supply and make housing more affordable actually supported some absolute nonsense economic analysis by the Leader of the Opposition, Andrew Little:

Labour leader Andrew Little says part of the problem is in fact low and in many areas stagnating wages.

That is correct, but this merely points to a huge problem that successive governments have failed to solve. Nor is this Government likely to do much by way of living wage reforms or other non-market solutions.

The alleged professional journalist who wrote this editorial is ignorant of the most basic workings of the economy which he could pick up as an ordinary consumer and home owner.

If consumers become wealthier because of higher wages, they will use this increased income to demand more housing and land.

If the supply of land is fixed or otherwise constrained from expanding much, the only thing that will happen is that the price will go up with more money chasing the same amount of land and housing.

This will benefit the existing home owners in New Zealand. Workers who don’t own homes will simply have to pay more of their now higher wages to buy houses. Once again, the Labour Party betrays the interests of the working class to win middle-class home owner votes.

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