Are MPs personally incentivised to keep house prices high? Massive investigates.

Do you ever think about owning a house? Nothing too fancy, just a small plot of land and somewhere warm to chill and feel secure. For many of us this seems like a distant, vague and unattainable dream. But it isn’t a dream for those in power. The 120 current sitting members of parliament have interests between them in 224 properties, and only 12 of them have no interests in properties. So, do you think they have an incentive to keep house prices high? And in the process continue to fuck us over by shutting first home buyers out of the market and perpetuating a cycle of forever renting? Who really cares? You should. This isn’t an abstract problem; it affects you now and will most definitely affect you when it comes to trying to buy a house. Should you be angry? Have they, as Greta Thunberg said, ‘Stolen our Future’? Or do our representatives put aside the gain they get from owning an appreciating asset and act in good faith when attempting to deal with the housing crisis? 

To answer these questions, let’s first examine who has interests in what assets, provided by the Register of Pecuniary and Other Specified Interests. It’s been legally required since 2005 that members of parliament declare most financial interests they have, as a way to foster public trust (if you can’t be fucked reading the waffle, I created a tool to more easily search the data called politiciansinterests.site). Let’s examine some of the more interesting numbers here, shall we? By party, National MPs have an interest in an average of 3.5 properties each, while Labour MPs have interests in an average of 1.66. Jacinda Ardern owns just one family home, Judith owns three properties and David Seymour also owns three. Sure, many of these properties are in trusts or retirement schemes but even in this position they’re still used as instruments to create wealth. 

The big dogs in parliament are David Bennett, having interests in eight properties and Christopher Luxon with seven. Unsurprisingly these two are both members of the National Party. Housing Minister Dr Megan Woods (Labour) owns just one residential property. I believe, however, that what should be taken away from this data are the bigger picture trends. Overall, members of parliament have an interest in an average of 1.86 properties each. That’s fucked. How are you meant to live in more than one house when you can only be in one place at a time? There are just 12 members of parliament who own no properties, which does not mean they are renting but gives an indication that they might be. That’s just 10% of our representative body who do not own a house, compared to the 37% and rising of the general population in the same situation. 

Owning a property is not just a matter of keeping a roof over your head. Residential properties can and are often used as a speculative asset, which has always seemed weird to me. Why must one of our most basic needs, simple shelter, be treated like any other commodity in the markets? Water was not treated as such up until recently, because people recognised that it was vital for survival. Sadly, as the world slips slowly into a climate dystopia, some stock markets such as the NASDAQ have started selling water futures. If a house is too expensive when you get round to thinking about buying one, maybe another one of life’s essentials is a good fall-back plan. Property speculation is a part of life and it’s here to stay, which means there are reasons for house prices being so high. One such reason is the concept of supply and demand. If demand is high and supply is low, such as in our housing market, prices tend to go up as buyers are willing to offer more money to ensure they get the product. 

So why is New Zealand’s supply so low? The current Labour Government likes to state that they inherited the housing crisis from the previous National Government. And that’s true, I’m not giving John Key and Bill English a pass, but house prices rose by an average of 9.5% nationwide in 2016 and a median of 25.5% between August 2020 and August 2021. Labour promised to fix the housing crisis, to provide homes for those children and families who were living in poverty, and to ensure first home buyers had a chance in the market. But all they’ve done is allow house prices to skyrocket, either through neglecting their promises, incompetence, or an intentional effort to ensure their assets continue to make them rich. (Also National, ACT and NZ First would have done just as bad of a job so put those pitchforks down, this problem pervades every party but Labour just pretends to care more than the others.) 

Members of the Government may have an incentive to keep house prices high to line their own pockets, but does the Government as an institution stand to gain in the form of taxes or some other metric? When owning or selling a house, there are a few ways in which the national or local government can make money. While New Zealand has no flat capital gains tax, there’s many caveats and special cases which means that when selling a property there’s a likelihood that you will have to give the government at least a small kickback. The laws have two main components, the ‘intention to sell’ and the bright line period. From the end of March 2021, no matter your intent, if you sell your property within 10 years you'll have to pay a whopping 39% tax on any profit made. Let’s ignore, for now, the fact that this makes it harder for renters to get on the property ladder and focus on the ‘intention to sell’. This intention is not a well-defined term, and can depend on factors such as your property selling history and how many properties you have owned previously. If the Government believes you bought the property with the intention of selling it, or if you did not live in the property for over a year, you guessed it. Tax Time. These measures are in place to stop people using property speculation as a method of wealth generation and it remains to be seen if this works. In the short term, however, discouraging people to sell their homes serves only to ensure we, the young people, are shut out of the property ladder for longer. As mentioned before, this is a problem of supply and demand and these policies serve only to restrict supply in a futile attempt to curb prices, while demand remains higher than ever. Even your most beaned out first year finance student knows this, so why does government policy not reflect reality? Could it be that 39 cents from every dollar profit that goes into their back pocket? Surely not. 

Currently, the state of things looks a little grim. But what does the future look like for those of us who do not own a house? To give this and the previous government credit, there have been attempts in the past to solve the problem, such as KiwiBuild. Not to give them too much credit, however, KiwiBuild appears to have failed to build anywhere near the promised amount of houses and looks to be heading towards the can. But it had the right idea. More people want houses than there are houses available, so more must be built. For the foreseeable future, rents will continue rising, as will house prices, and both would have continued to rise even if KiwiBuild was in full swing. For people like us, housing will continue to be a luxury that we cannot afford without reliance on the generosity of others, such as family or friends. 

Unless you want to live in the forest, catch your own food and avoid regular DOC worker patrols, the market will force you to continue renting. It appears that we may be trapped in a cycle of forever renting where rents are too high to save for a house and house prices continue to rise, further increasing rent and making it harder again to save enough for a house deposit. Massive reached out to our elected members of parliament for comment on what the next ten years might look like for young renters and first home buyers, but no response was given. Only the Hon Dr Megan Woods replied, who is, amongst other things, the Minister of Housing, so that’s a start. She told Massive, “We have rebuilt the public sector’s ability to plan and build new housing and are working hard to fix problems like a lack of available land, a slow resource and planning processes, and the need to coordinate with transport and other infrastructure to ensure new housing, whether owned or rented, can grow into thriving communities.” Woods also notes the need to provide immediate support for those in urgent need of housing, promising more than 18,000 public and transitional housing places to be delivered by 2024. 

Woods says that the current Government has made multiple changes to improve the rights of renters, “including limiting rent increases to once a year” and enabling tenants to request a rent reduction through the Tenancy Tribunal if they suspect their rent is not in line with market rates. “Increasing rental supply is also a key part of creating better housing outcomes. The shortage of a good supply of high-quality, well-located and well-managed rental properties offering secure tenure at affordable rents helps explain many of the poor outcomes many New Zealanders who rent continue to experience,” she says. 

Of course, for some, renting provides the level of flexibility and responsibility which suits their lifestyle, and there are of course situations where renting is needed, such as for students or people with temporary jobs. However, shelter is one of the few things which is absolutely vital for a person to survive. Our housing, and by extension our survival, should not be dependent on someone else having spare. 

So yeah, we’re in a bit of a Catch-22 situation. Those who we entrust with making sensible decisions for the good of our society have interests which directly contradict this prerogative. It becomes clearer every year, as the price of a house creeps ever upwards, that general population interests are being tossed aside so those in power can make a quick buck. Those who we elected on promises of a better future are working towards the exact opposite. This is not a problem with the current government, or the previous one, or even the next one. It’s a problem of power, of accountability and of selfishness. A party can have all the rhetoric they like but at the end of the day it is just an organisation made up of people. And the one certain thing in this world is that people will always act in their own self-interest. 

For now, the average person can only sit, watch, and save. Those in power will continue to act in whatever way they see fit, and will turn on the charm machine during the election to make you conveniently forget their current failures. Don’t let them lie to you. Demand accountability. Email your MP, hell even pop into their local office. It seems that they have forgotten that they should work to enrich us and not the other way around. Maybe it’s time they were reminded. Stay safe, make your voice heard and remember, the revolution will not be centralised.