Source: University of Auckland
Banks are aiding and abetting housing speculation, contributing to New Zealand’s housing crisis and making massive profits in the process, says researcher Dr Michael Rehm.
Dr Rehm, who spoke on possible policies to curb housing speculation at the Economic Policy Centre’s workshop on housing affordability at the University of Auckland this month, says banks are using their privileged positions to fund speculative purchases.
The senior property lecturer says bank lending is lacking oversight and argues that lax lending is the primary reason for the vast gap between house prices and household incomes.
“Banks have aided and abetted our situation and it would be tragic if they walked away without taking any responsibility for the dislocation of house prices to incomes. If there’s one culprit in all of this, I would say it’s the banks.”
Rehm, who published a paper titled Betting on capital gains: housing speculation in Auckland, New Zealand in 2020 and another, Housing prices and speculation dynamics, late last year, says many people are unaware that the banks they thought were Australian-owned are majority US-owned.
“We’re experiencing a kind of financial colonialism here, and the real culprits are the likes of JP Morgan Chase and Citi Bank.”
Rehm proposes a look back at our recent history, to when state-owned banks played a part.
“As a society, we need to sit back and think about whether it’s appropriate that foreign-owned banks, who are sending massive profits overseas, should be allowed to continue to operate in this way.
“Is it appropriate that they have almost exclusive access to this market? If we genuinely want to support first home buyers and owner-occupants, maybe now is the time for a state-owned bank, like Kiwibank, to change the status quo.”
