The reason for this? There is fundamentally tight supply thanks to regulation. If there was no such thing as a council banning subdivision, there would be enough supply to cater for all sectors of the market – like in the rest of the economy.

Bob – the banks are falling over themselves to lend against housing. There is no shortage of access to capital.

Banks won’t lend and builders won’t build without insurance, and the insurance companies have been very wary about lending because of the earthquake risk. Also, subdividers are competing with one another to make their subdivisions the ‘higher-class’ ones, by setting minimum floor areas for houses to be built on them (meaning that if you lost a small house, and had an insurance payout to build a new small house, you struggle to get a site where they will let you build as house of a size you can afford), and they also generally banned people from shifting existing houses from red-zoned land to the new subdivisions. This means there has been an exodus of houses from Christchurch being shifted to other parts of the country, even while Chrtistchurch was the place where the demand for houses was highest, because people couldn’t get land in Christchurch to put them on.

People who worship the wisdom of the market should be happy about how slowly the Christchurch rebuild has been going, because it is the market in its infinite wisdom that has decided to keep Christchurch people homeless.

* Unless you mean they have access to govt funding? From a govt that is having to borrow money to pay public service salaries…?

To be fair, swan makes a good point – RBNZ is supposed to be independent to ensure govt doesn’t evaporate monetary value by tinkering for short-term election cycle benefits. However, that does seem to ignore the evidence that the RBNZ are as blinkered as a clydesdale on the downsides to preserving monetary value we are currently experiencing.

My vote? Nationalise the RBNZ (without compensation) and tell Key to show us how wonderful he is at setting monetary policy to achieve his economic goals. Then we can at least have a good laugh when the next jump in unemployment comes out.

@ swan – lack of building in Auckland and Chch has nothing to do with council control freakery; everything to do with a failed free market approach to building. Our system is based on owner-operator builders, with similar contractors and subbies, and sub-sub-sub-subbies…. none of whom have the capital to order a Chinese takeaway on Friday night (the more successful builders have their capital tied up in trucks, diggers, etc). So the actual builders don’t have the coin or equity to buy the land and develop it. Which leaves property development to the wealthy investors, who are happy to sit on their landbanks and watch values rise as the housing shortage grows. Sure, they’ll trickle out a small supply of homes, but not enough to slow their speculative capital value growth (unlike the builders, who would keep building, as they need the regular income).

Basically, we are short of a big cashed up investor who is willing to get builders in regular work creating enough houses for everyone to live in without big house price rises. I wonder where we could find such an investor? Perhaps we should ask our good mate Housing NZ?

Meanwhile, with a mini-boom in the housing market, we still have very low levels of building in Auckland and Christchurch. Perhaps someone needs to start pointing the finger at the council (and government) control freaks.

No – Treasury predict these things because that is how their model is constructed. Look at all of their forecasts – in the long run they always predict something like 3% growth regardless of the short-run. It doesn’t matter who is in power, it’s their understanding of the economy.