New Zealand property and houses are the new asset class reaping spectacular returns by way of capital gains in astonishingly short timeframes.
The boom began quietly in the Auckland housing market some years ago, fuelled by foreign investors and immigration, and is continually breaking monthly records.
The age-old supply/demand equilibrium of our housing stock is badly skewed and, with Auckland's median house prices now around $800,000, the city is brimming with plenty of both newly made millionaires and distraught young people despairing of ever owning their own home.
Home ownership for most young Aucklanders is a Kiwi dream that is now completely over and the trend is unfortunately appearing throughout the country, as northerners with their new-found wealth are looking for prospects all over NZ, to buy up a few "rentals'' and secure their financial footing for retirement.
Who can blame them, when there are no effective disincentives being applied by Government to control the rush.
And what is so wrong with it?
Well, there's plenty.
Apart from the untaxed capital gains, there are tax breaks on property investment to fuel the appetites of those who otherwise have income levels that attract a sizeable income tax bill.
And with plenty of equity in their existing homes, investors easily meet the lending thresholds of banks. So the odds are stacked against the generation of young Kiwis starting out, struggling even for a deposit.
For most of them, it means renting for a very long time, if not for the rest of their lives.
And while there are cash bonanzas and more "property investment'' opportunities for my generation of homeowners, there are some huge associated financial and social costs being borne by those in our society who are least able to afford them.
With 60% of rental properties in Auckland now having a government accommodation supplement paid on them because their tenants simply are not able to afford the full rent, we have developed a subsidised income scheme for NZ's house collectors.
Let's call it POORS - the Property Owner's Opportune Rental Subsidy - taxpayer-funded of course.
Cities and towns throughout New Zealand are now experiencing the creeping southern buyout by many northerners, keen to find higher rental yields than Auckland is now providing because of its ridiculously high property values.
And the rental properties are not hard to pick.
House-maintenance standards often quickly slip, and once-carefully tended gardens become neglected. Who can blame tenants for not spending the same time and effort on section upkeep for a property they don't own?
They don't have the same stake in their street, or their community.
It is a rapidly worsening situation that I am ashamed of.
As a 1950s-born baby boomer, I come from a generation which enjoyed high rates of home ownership, where one income provided well for a family, health care was free and readily available, and I was paid during my tertiary education.
While income levels and living costs have now altered in response to economic circumstances which are largely uncontrollable, I am appalled at the failure of this government to take any tangible steps to ensure housing affordability for our younger New Zealanders.
We have many talented and intelligent people among our ruling politicians.
Why the inaction now, with such a basic trend and obvious problem? T
oday our society often sees chronic overcrowding in rental houses and a growing number of folk living in their cars, in parks, camping grounds or on the streets.
Add in the bizarre phenomenon of more than 20,000 empty Auckland homes, where the investor owners are happy to just make do with the ever-increasing capital gain and forget the hassle of tenants.
This property boom is quickly carving a deeper cleft through our society.
The mark of a great government is to serve the interests of all its people.
It is not in power to create or oversee the types of divisions that are now appearing, and the wealth redistribution that we are now watching, as the financially well-off chase down and buy the homes that deprive others of affordable ownership.
Encouraged by favourable and inequitable taxation rules and lack of regulation, sadly, this selfish trend has become the new norm.
And the growing costs of this disparity will be with us for a long time.
- Nick Loughnan is a long-time Central Otago resident and farmer.
