There have been a few pieces talking about the politics behind the housing bubble, like this by Jesse Mulligan at The Spinoff. And it’s true that there’s a strong political driver: younger people who don’t own houses don’t vote very much, and older voters who do own houses do, so of course the policy settings favour the latter.
Also, I don’t think the property bubble of the last sixteen years is reversible; even if the dreaded land tax were introduced and reduced prices by 17% that would really just take Auckland prices back a few months. Unless there’s something fraudulent/crazy happening on the demand side (like the financialisation of mortgages and mortgage derivatives in the US in the 2000s) the best that can happen to prices is a plateau with a large proportion of younger people locked out in perpetuity.
What are the long term consequences of this? There’s a phrase in Marxist-Leninism: ‘heighten the contradictions’, which encourages socialists to maximise the flaws inherent in capitalism (in simpler terms: make life worse for the workers) to hasten the revolution. Left-wing parties in democratic societies tend not to do this. But there’s a related idea on the right which I’ve always thought of as the opposite of heightening the contradictions. ‘The ownership society’. It’s most closely associated with Thatcher and George W Bush but the basic idea has been taken up by most right-wing governments in the last fifty years: expanding home ownership and share market investment to the middle classes. Align their interests with those of organised capital. Make capitalism work for them. Lessen the contradiction.
That’s gotten abandoned somewhere along the way, with the majority of younger people locked out of the housing market to maximise the wealth of older investors. Who capitalism ‘works for’ is now largely a generational thing. Which is, presumably, why an aging socialist is doing so well in the US democratic primaries, and why Millennials in general are so much more left-wing than Gen Xers.
This isn’t a problem for Key since he doesn’t seem to have any ideological commitment to capitalism, or any other ideology than doing whatever is most advantageous to him in the immediate short term. But the heightened contradictions for subsequent generations is an interesting challenge for National, and maybe something for the left to feel optimistic about as Key floats towards a seemingly inevitable fourth term in government.