Housing under Neoliberalism

housing debt

Joel Cosgrove (Fightback/MANA Poneke).

It is a generally acknowledged political fact that housing is unaffordable. Within the awkward blame shuffling and finger pointing, MANA’s policy of building 10,000 well-built and insulated homes per year until demand for affordable housing was satisfied, was a good policy. The policy called for an expansion of state-housing. Yet the Internet MANA alliance also endorsed renting-to-own, a policy which maintains the need for private home ownership.

The nature of private home ownership

Why do people want to rent-to-own? In part because there is no surety now in state housing tenancies, with the National government revoking the right to lifetime tenancies, and the opposition Labour Party raising barely a whisper of opposition. The current alternatives to private home ownership are the vagaries and insecurity of private renting or the modern, run-down state housing ghettos, the product of budget cutting and under-maintenance by both National and Labour governments over the past thirty years.

The collapse of state housing as a serious alternative to private rentals makes for grim reading.  Currently, 3,700 of 68,460 current state houses are empty, with a majority ready to be immediately occupied.

The current situation has its origins in the massive attacks on workers’ conditions that were carried out in the early 90’s. The CTU estimates that if pay rates had kept up with productivity rates, the average wage would be $35.91 per hour as opposed to $28.20 currently, a gap of over 20%.

Alongside attacks on wages and benefits was a massive escalation of house prices and housing-based debt. According to the Reserve Bank, household debt has increased from around 60% of disposable income, to around 144%. Around 97% of that debt is in housing.

To a certain extent, as long as you were able to maintain ownership of a house, you could leverage the increasing value of housing (which is now 75% above its historical value), swimming on debt in the assumption that capital gains from the sale of the house would bring a tidy profit. In Auckland alone, average house prices have risen from $340,000 in 2004 to over $700,000 in 2014. Those with houses have profited mightily. Those without have had to weather continual rent increases.

With average national house prices having risen by over $30,000 in the last year, and average wages by only $1500, the gap between those who own houses and those who don’t is only increasing. The Dominion Post reported in August this year that investors who already own ten properties or more brought two out of every five homes on the market.

That the overwhelming amount of household debt is property-based further demonstrates the divide – those with property have potential access to hundreds of thousands, while those without are left with credit cards, overdrafts and loan sharks.

Stable living standards are increasingly tied to atomised individual asset ownership, as opposed to a collective process of winning wage increases in worksites. This is a departure from the historical period of Fordism, with large industrial worksites, with relatively clear identity, tied in part to collective work.

While speculation on properties increases, and rents increase, rents are (relatively) constrained by wage growth. This leaves a yawning gap between the going price of a property and what can be charged in rent for it.

We live in a country of abysmal housing, with the recent Housing Warrant of Fitness survey finding that 94% failed on at least one of 31 criteria that they were judged across. Criteria included weather-tightness, insulation and ventilation, lighting, heating, condition of appliances and general building safety. Yet the system of housing speculation specifically pushes people to provide the bare minimum to maintain their properties, as the point of houses is not primarily to be lived in, but to appreciate in value and make money for the owner.

Social base of the National Party

There was a lot of (important) talk of the missing million at the most recent election; non-voters uninspired by the options on offer, largely the most poor and marginal. Another million is also important, namely the million who have voted for the National Party over the past three elections.

National is favoured by business; however this is not the whole story. Ninety-seven percent of the 112 chief executives who responded to an NZ Herald ‘Mood of the Boardroom’ 2014 survey indicated support for National leader John Key. However, that only accounts for 108 votes all told.

Debt encumbered home owners, although being rich on paper, are nonetheless in a precarious position – one needs only to look at the sudden fall of Terry Serepisos – and this ties them to the status quo. This is a form of social pacification, binding people to a capitalist hegemony.[1]

Building state houses, until demand for affordable and safe housing is met, would cut at the base of a significant part of New Zealand society. Currently there are over 570,000 homes rented out, according to Statistics NZ. This is a question of billions of dollars in yearly rents and hundreds of billions in speculative value. The National Party allays the anxieties of a middle-class and other property owners operating on a speculative bubble.

Fighting for public housing

In seeking to reverse the upward redistribution of wealth, we call for more and better state houses.

A serious public-housing building programme would make a major difference to the overcrowding and poverty-related illnesses that currently exist within New Zealand. It would also undercut the dependence on speculation as a basis for security.

On one hand, there is something to be said for satisfying people’s desire for security in housing. On the other hand, by upholding private housing, there is a danger that those trying to challenge the situation end up being absorbed into the status quo. We need to be clear about the need for a public, collective solution to the housing crisis.

Whatever private home ownership might have meant in the 70’s, it increasingly serves class stratification. Those with access to property profit from those without.

The human need for shelter plays only a secondary role at best in this dynamic.

[1] ‘Hegemony’ refers to a situation where an oppressive social system is so entrenched that many consent to it, not requiring direct violent coercion.


  1. Hello

    You are just fighting fires as they appear but you don’t catch the arsonist.

    I would suggest a social credit system mixed with a cryptocurrency. Like a Gareth Morgans universal payment with some funding coming from a government created non-debt based currency.

    Without destroying the current debt based money system and the use of credit to inject money into the economy you will always face these problems.

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