It is those below median household income that are suffering more from rising housing costs in New Zealand since 1982. Those on low incomes in particular have suffered the most.
New Zealand housing prices were pretty stable until the passage of the Resource Management Act in 1993. After that, prices took off New Zealand and didn’t slow that much for the recession subsequent to the Global Financial Crisis.
American prices just had a bubble because of loose monetary policy by the Fed and loose lending criteria by banks at the behest of regulators. Real housing prices in the USA started to rise again last year after a dramatic fall.
Australian prices were rising steadily until about 2000 but then took off with a strong economy and the usual restrictions on land supply by local governments at the behest of the existing homeowners.
"Your neighborhood could be next." San Francisco-wide mailer in support of Prop I, the Mission housing moratorium. http://t.co/PtN38JTaUM— Jed Kolko (@JedKolko) October 10, 2015
Note: The house price index series is an index constructed with nominal house price data. The real house price index is an index calculated by deflating the nominal house price series with a country’s personal consumption expenditure deflator.
Note: The house price index series is an index constructed with nominal house price data. The real house price index is an index calculated by deflating the nominal house price series with a country’s personal consumption expenditure deflator.
Note: The house price index series is an index constructed with nominal house price data. The real house price index is an index calculated by deflating the nominal house price series with a country’s personal consumption expenditure deflator
Note: The house price index series is an index constructed with nominal house price data. The real house price index is an index calculated by deflating the nominal house price series with a country’s personal consumption expenditure deflator.
Note: The house price index series is an index constructed with nominal house price data. The real house price index is an index calculated by deflating the nominal house price series with a country’s personal consumption expenditure deflator.
Mortgage interest rates were last in the double digits in the late 1980s and early 1990s. Since then, housing prices have exploded in New Zealand and barely paused for the recession in the wake of the Global Financial Crisis.
With house prices and mortgages several times what they used to be, the ability for any household income to absorb the sudden return of high mortgage interest rates because of a return of even moderate CPI inflation and double-digit mortgage rates is well-nigh impossible, politically.
The chart above shows that the number of 25 to 44-year-olds in New Zealand who have more than 30% of their income going to housing expenses has doubled since 1988 to nearly a third of all households. The number of 45 to 64-year-olds who pay more than 30% of their income in housing expenses has quadrupled to 20%. That is a lot of voters who would be offended by mismanagement of monetary policy.
None of these households would have much left over to absorb an increasing mortgage interest rates. That is very different political arithmetic too the last time both mortgage rates and CPI inflation were in double digits, which was more than 20 years ago. Not many New Zealanders under the age of 40 or 45 have an adult memory of high inflation and high mortgage rates.
Nothing much has happening to child poverty before housing costs in New Zealand since the early 1980s. It is after housing costs poverty that is crucifying the children in New Zealand.
From HES 2013 to HES 2014 median household income rose 5% in real terms (5% above the CPI inflation rate)…
On the AHC moving line measures, child poverty rates in HES 2014 are around the same as their peak after the GFC. A good amount of the rise from HES 2013 to HES 2014 is due to the large rise in the BHC median, as noted above, rather than a change in the numbers in low income per se.
The parties that oppose measures to increase the supply of land and reduce the cost of housing through reform of the Resource Management Act and its many restraints on the supply of land are the New Zealand Labour Party and New Zealand Greens.
All homeowners have an incentive to stop new housing because if developers build too many homes, prices fall, and housing is many families’ main asset. But in cities with many Democrats and Green Party members, environmental concerns might also be a factor. The movement might be too eager to preserve the past.
Why Evolution is True is a blog written by Jerry Coyne, centered on evolution and biology but also dealing with diverse topics like politics, culture, and cats.
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