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Housing New Zealand’s migrants

Published in Insights, The New Zealand Initiative’s newsletter, 12 August 2016

This week, Newshub released a new opinion poll showing a large majority of New Zealanders demand curbs to immigration. Three in five voters said so.

The same opinion poll also revealed that three quarters believed the government was not doing enough to control the housing market.

Taken together, these results make perfect sense. It is not so much that New Zealanders have suddenly become xenophobic. They just fear that the country’s housing market cannot accommodate many more newcomers.

And they have a point.

The way the housing market currently works (or rather doesn’t), supply will struggle to keep up with demand. There is a housing shortage already as indicated by ever more exorbitant house prices, particularly in Auckland. More migrants would exacerbate this problem.

There is a problem with this logic, though. It implies that we should let our dysfunctional housing market determine migration policy settings. But that is putting the cart before the horse.

A better conclusion would be to make the housing market functional – for the benefit of both migrants and New Zealanders.

There are good reasons for not curbing migration, even if it is currently showing a record net intake.

Prime Minister John Key commented on Tuesday that it would be undesirable to cut numbers since we were largely dealing with natural flows. “When you look at what drives migration at the moment, for a large part it is New Zealanders returning or Australians coming over here or people coming on working holiday programmes or students and I think that’s broadly about right,” Key explained.

In other words, the government believes it has little control over the migrant numbers. You cannot stop New Zealanders from coming home – or Australians from seeking a better life in New Zealand. You would not want to cut the numbers of tuition fee paying international students. Nor would you want to stop highly skilled people or investors from entering the country (though questions should be asked whether our current migration intake is indeed highly skilled enough).

The Prime Minister rightly realises that he cannot easily fiddle with migration numbers. But that means that he finally has to deal with the housing market. And that means planning reform, new vehicles for infrastructure finance and local government finance reform.

Having ignored the housing crisis for too long, the government has seen it spin out of control. It has also allowed a dangerous anti-immigration sentiment to grow.

If Newshub’s poll is not a wake-up call to get serious with housing reform, then what is?

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