Free Market Failures Disavowal in the Auckland Housing Market

Abstract

Auckland is one of the most livable cities; meanwhile, it is the 8th unaffordable major in the world. Auckland’s median housing price has increased dramatically between 2010 and 2016. To control Auckland’s housing price inflation, the Reserve Bank of New Zealand has implemented several restriction policies such as changing the loan-to-value ratio (LVR) policy, and requiring residential property investors using bank loans to have a deposit of at least 20 percent of the property value in the Auckland region. Auckland’s housing price inflation combined with financially restrictive policies have subsequently banished lower- and middle-income Aucklanders from the housing market. As a consequence of increasing rents in the Auckland region, household expenditures and savings have been significantly diminished. However, Auckland’s housing unaffordability has become prominent within New Zealand socio-political domains. It does not generate any public political contestations in the post-political society against the dominant market rationality. On the other hand, planning and its regulations, particularly Resource Management Act (RMA), has been denounced for its lack of flexibility to respond effectively to the demand for housing. Thus, removal, or at least modification, of the existing planning regulations is generally suggested to amplify both releasing land and facilitating residential development projects to increase the supply of housing and subsequently control the Auckland’s housing inflation. This paper will investigate how the overattachment of various actors and organisations to the fantasy of the “invisible hand of the market” that can eventually resolve the Auckland housing inflation impedes the ability of social movements to claim the right to the housing in one of the most unaffordable cities in the world. The authors deploy Lacanian theories to consider how neoliberalism as the hegemonic ideology deceives different actors and organisations generally to disavow its failures. In this context, different actors and organisations such as central and local governments generally deny their roles in the creation of the existing housing inflation. Accordingly, the authors conclude that planning should return to its ontological functions as the regulator of market and its failures including the housing inflation in Auckland.