Ye Lin Ko, content contributor
Recently, Phil Twyford, Labour’s housing spokesman, released data showing Chinese sounding names accounted for 39.5% of the 3922 Auckland property sales, despite the fact that people of Chinese ethnicity only makes up 9% of the city’s population. This has led to accusations of racial profiling, as at face value it appears that the Labour party is placing blame on those with ‘Chinese-sounding names’ for the Auckland housing crisis.
As the opposition party, Labour has every right to criticize the current government’s housing policy. However, the way in which they have gone about this appears to be to resort to cynical ‘dog-whistling’ by labelling a specific ethnicity as the biggest problem. Some (including several prominent Asian-New Zealanders as well as Race Relations Commissioner Susan Devoy) have sharply criticised this approach, calling it a racist remark and a ‘half-baked’ accusation. As Housing Minister Nick Smith puts it: “the data is unreliable as it comes from an unidentified source, covers only one of many real estate agencies and the data analysis is based on surnames rather than whether the buyers are residents or citizens.”
Housing affordability in Auckland is undeniably a serious issue. The house-price-to-income ratio for New Zealand as a whole is 5.53, compared to the ratio of 8.86 for Auckland. It is evident that the housing affordability in Auckland is by far the most problematic, with Auckland houses being 22% less affordable over the course of this year.
It is highly likely that foreign investment contributes to the current housing market crisis. But there are also a number of other factors influencing Auckland property prices, especially regarding the disproportionate intensity in demand compared to the limited supply of houses. For example, as capital gains are essentially untaxed in New Zealand, it creates a higher incentive to invest in property, which could be playing a role in increasing the demand in property and thereby raising prices. Additionally, there are factors that are out of New Zealand’s control, such as cheaper credit overseas. For instance, the Chinese Government deliberately keeps the Chinese currency undervalued as a way to keep their exports cheap and competitive. Consequently, this allows some foreign investors to borrow at lower interest rates than New Zealand buyers – again, contributing to the intense demand for houses, whilst the supply remains the same. These are arguably more substantial policy issues, which go beyond pointing the finger at buyers with ethnically Asian sounding names. Instead, the Labour Party has made the problematic assumption of grouping all people with Chinese or Asian sounding last names together, without regard for whether they are a NZ resident or an overseas investor.
Allowing non-resident foreign investors to crowd our property market and leaving New Zealand residents priced out has damaging consequences. One of the main consequences is that as house prices rise in Auckland, inequality levels also rise as it shuts the low and middle income earners out of the property market. Even worse, as houses become more and more unaffordable in Auckland, it gives the ‘best and brightest’ New Zealand citizens an incentive to move out of Auckland, or worse, move out of the country to build a better life. Moreover, high house prices are not only bad for those individuals who wish to buy a home, but also for the economy as a whole. Employers may have to pay their employees more to attract skilled workers to Auckland, and of course, the current tax settings may be contributing to a property “bubble” which could have damaging consequences down the road.
Less inflammatory solutions seem far more appropriate rather than blaming those with ‘Chinese sounding names’ for unaffordable housing in Auckland. For instance, taxing capital gains (formerly a Labour Party policy), or introducing stamp duties or land taxes for foreign buyers.
The Labour Party raised a perfectly relevant issue, especially with average Auckland house prices about to hit the $1 million mark. They wanted to open a debate about controlling Auckland’s skyrocketing house prices – and certainly, they’ve opened a debate. However, instead of looking at policies, their message has sparked an unhelpful racial debate. Simply, Labour should have been more careful with their data analysis. Although it may have not been the primary intention, Labour’s accusations are deeply hurtful for a segment of New Zealanders by drawing all Asian New Zealanders with the same broad brush.
The views expressed in the posts and comments of this blog do not necessarily reflect those of the Equal Justice Project. They should be understood as the personal opinions of the author. No information on this blog will be understood as official. The Equal Justice Project makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The Equal Justice Project will not be liable for any errors or omissions in this information nor for the availability of this information.
Share this Post