New Zealand’s top job
Published in Insights, The New Zealand Initiative’s newsletter, 25 September 2020
Too much money is spent on education. New Zealand invests billions into schooling its children. If they then also go to university, that only makes it worse.
It is all a colossal waste of money to train young Kiwis to become nurses, teachers or office administrators.
Instead, we should be teaching our young people how to become a house.
No, really. Being a house is the most attractive job in New Zealand today. If you do not believe me, let me tell you the story of our family home.
When we arrived eight years ago, we bought a modern, 4-bedroom family home in one of Wellington’s Northern suburbs.
This week, real estate website homes.co.nz sent me email to inform us our home might fetch $700,000 more than what we paid for it in June 2012.
Just to do the maths, that equals an average annual price increase of $87,500. This is a little more than the base salary for the most highly qualified teachers. It is $15,000 more than the average salary of a policeman. Our house is earning $35,000 more than the median full-time income.
If our abode was in the labour force, it would be in the top income tax bracket and among the top 11% of income earners.
Of course, all of this is a nonsense. Houses are not employees. Owner-occupied houses do not generate an income, let alone a taxable one. And I am not suggesting the Government tax imputed rents or introduce capital gains taxes.
But our house’s story does show how grotesquely absurd the property market has become.
Had we arrived in New Zealand this year instead of in 2012, we could not afford our home.
Worse: Anyone younger than us, or on entry-level salaries, cannot afford any decent family home in Wellington these days. Those on the median income (about $52,000) would struggle to purchase even an apartment.
In this election campaign, all parties talk about housing affordability. But they offer few concrete solutions, and none have a credible record on housing policy.
It is a sad indictment on New Zealand that most young people will not earn more money than their parents’ houses accrue each year. And they will struggle to buy a house themselves.
There is only one way out of this mess. We must unclog the housing market, abolish the RMA, incentivise councils to build the necessary infrastructure to support more housing – and build.