% spent on housing as a share of disposable income, OECD members, 2014

New Zealand is pretty much on top of the world as to the amount of income that households must spend keep a roof. That success is a product of local council restrictions on the supply of land and national and local regulations such as under the Resource Management Act (RMA) that increase the costs of bringing lands in the market.

image

Source: OECD Better Life Index.

Note: Household net adjusted disposable income is  the maximum amount that a household can afford to consume without having to reduce its assets or to increase its liabilities. It’s obtained, as defined by the System of National Accounts – SNA, adding to people’s gross income (earnings, self-employment and capital income, as well as current monetary transfers received from other sectors) the social transfers in-kind that households receive from governments (such as education and health care services), and then subtracting the taxes on income and wealth, the social security contributions paid by households as well as the depreciation of capital goods consumed by households.

A lot of young adults in Southern Europe still live with their parents

via 11 maps and charts to challenge your perceptions of Europe.

@NZNationalParty housing policy defies the laws of supply and demand for land

If homebuyers access additional lines of funding because they can tap into their KiwiSaver retirement savings, they will use this to bid up the price of housing and land.

If the supply of land is fixed or otherwise constrained from expanding much, such as by the Resource Management Act and the metropolitan urban limit in Auckland, the only thing that will happen is that the price will go up with more money chasing the same amount of land and housing.

The price of land and housing must go up in the absence of some reforms that increase the supply of land. Rather than increase access to housing among those with don’t own a house, allowing homebuyers to access their KiwiSaver retirement savings entrenches the prospects of Generation Rent.

Rethinking urban growth boundaries

ScreenHunter_250 Nov. 12 19.20

Land just inside the Auckland urban limit is worth 10 times the value of land just outside the limit.

 

 

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