The New Zealand population of 4.5m is a fraction of the 66m in the UK but they are experiencing similar issues to the UK. Queues for food banks are rising, homelessness is rising and young people don’t even dream to own a home. Despite all this, economic data looks rosy and positive. GDP is growing and unemployment is low. The wealth however, is not filtering through to the population and they don’t feel any wealthier. The wealth gap is growing, so the rich are getting richer and the majority don’t see the benefit.
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New Zealand has a new prime minister – Jacinda Ardern – and she has promised to change economic policy. They are no longer going to use GDP as the basis for economic policy making as it has no link to the living standards of the population.
Ardern is turning economic policy on its head, she says that what really matters is the living standards of the majority is improved.
New Zealand is still going to measure GDP but they will use a living standards framework to measure the success of the economy instead and base economic policy on this framework.
One of the steps that Jacinda has taken is to tackle the over-priced residential property market by banning foreign investment into the NZ housing market. She says that she welcomes foreign investment into businesses and commercial areas but not into residential property.
She has said that she doesn’t accept that home ownership for young people may never be possible. She cites that there is such a security that comes with home ownership, particularly later in life in retirement. With lower house prices, this should help younger people onto the property ladder.
The UK is facing similar problems to New Zealand and that is why we should look to see if New Zealand has some answers to these global problems.
Rebel Economics 
Interesting, but I think there is much more to property prices than foreign investment. The current value of existing properties in the UK reflects their scarcity rather than their utility. If any government wanted to, it could make ‘free’ parcels of land available exclusively for development by self-builders, for example, with a sliding premium payable if the property is transferred within say 30 years. It could encourage schemes for self-sufficient communities that grow their own food and harvest their own energy from wind, solar and biomass, for example. But there is too much vested interest in the status quo, I think.
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Thanks for your comment, I think the point I wanted to make is that New Zealand government now have a policy in place to remove housing as an international investment asset class. It will be interesting to see how this impacts property prices in New Zealand and maybe this is a policy that the UK government could look to implement in the future if it works to lower prices in New Zealand. House prices are a function of supply and demand, and this policy would reduce the demand. You are referring to the supply side which also affects prices.
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I think the UK Government is doing a sterling job on this front: by pursuing a disorderly Brexit, it’s making foreign investment in the UK less attractive which will eventually reduce demand for property in the UK as (1) a valuable asset class (fall of the pound sterling, decreased rental value) and (2) a place to live for foreign workers (relocation of multinational business abroad, fewer EU residents). I think we are one house crash away from the nirvana of house affordability for all! If imported inflation won’t trigger a massive interest rates rise, that is….
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