A long-standing mate stopped me in the street last week. He asked me if I was livid about property rights.
I was bemused, I had to ask him what he had in mind.
What he had in mind was the joint National and Labour Parties’ statement on housing. People will be able to build up to three three-story dwellings on a section without a resource consent.
My mate’s view was that this removed an important right protecting his property. He could no longer hope to use the resource consent process to stop a neighbour from doing this.
I could understand his ire with respect to privacy and views. But I saw the measure as enhancing his property right, and likely the value of his property, along with everyone else’s. It was his turn to be bemused.
From an economics perspective, property rights involve the right to: 1) determine what use your property is put to; 2) retain any income derived from that use and 3) to dispose of the property.
Freeing up people to build houses on the property enhances attribute 1). Security in attribute 2) gives owners an incentive to develop their property for a profit.
Greater freedom for owners to put their land to a higher-valued use should widely lift affected land values. This is so even if privacy and hours of sunshine fall.
This view incorporates the judgement that ill-justified government regulations restricting development have effectively disenfranchised would be home-owners, particularly in Auckland.
Most importantly: Strengthening property rights will also help get more homes built.
Population needs for space change through time. Land use needs to be able to respond to changing needs. Rules that aim to resist change have a cost. That cost is borne by both landowners and, even more so, by people priced out of the housing market.
The opposing view is that the measures will reduce property values overall rather than raise them. This view proposes that properties will be worth more in their existing low density use than if used to house many more people.
But, if that were so, it might not pay a developer to buy them to build up. Developers could be outbid by buyers wanting the property as is. Developers would shift to suburbs where the rewards for building up were greater.
None of this is to argue that Labour and Nationals’ proposals are optimal. They may be unduly permissive in some important details and inferior to better designed remedies overall.
Now is the time for public scrutiny and debate.