Bad ideas have a habit of being spread. The Labour Party’s policy to ban foreigners (except those nice Australians) from buying houses in New Zealand is such an example.
 
Floated a few weeks ago by Tony Alexander, the idea has taken off within the Labour Party, which has it as a vote winner.
 
In fact, Mr Alexander argued that Asians were not buying as much property as commonly thought, but that the perception of high levels of ownership might create xenophobic sentiment!
 
To mitigate such sentiment, he argued that foreigners should be banned from buying existing housing stock and be limited to buying newly built dwellings.
 
In adopting Alexander’s policy proposal, the Labour Party believes that foreigners buying houses is an actual rather than a perception problem.
 
This policy is another in a series of quack solutions to stem the accelerating house prices. Most politicians do not want to confront the real causes of price inflation: land supply, infrastructure, planning ideology. In short, housing supply has struggled to keep up with demand.
 
Indeed, in the wake of Labour’s announcement, the party has withdrawn support for more greenfield land supply, and is arguing the Auckland Housing Accord won’t do anything to create ‘affordable housing’.
 
Labour seems to be edging away from the widely held view that housing supply is a problem. Instead, it seems to think that not only should the state intervene more actively in building more houses through KiwiBuild, but that it should also manage demand through a capital gains tax and a crackdown on foreign property ownership. This combination is meant to somehow create affordability.
 
Demand side tinkering is acceptable to some degree but not when such tinkering is imbued with an anti-foreigner bias and a wilful sowing of divisive politics.
 
And to those who argue that the policy is not xenophobic: what else to call a policy banning foreigners from buying houses based on the scuttlebutt and perception that foreigners are making houses unaffordable for New Zealanders?