Mini-Hoon: Arthur Grimes on how monetary policy worsened wellbeing for renters

I spoke with economist and Motu researcher Arthur Grimes yesterday about a paper he has just published today with Amelia Blamey and Norman Gemmell about the effects of monetary policy on wellbeing and inequality.The paper attached below and linked above and below is titled: Impacts of macroeconomic policies on objective and subjective wellbeing: The role of housing tenure and concludes:“Using survey data from 84,732 representative households collected by StatsNZ, we find that, relative to outright owners, higher property prices are associated with a decline in NHE for each of private renters, public renters and mortgaged homeowners. In addition, relative to homeowners, renters report significantly lower life satisfaction as house prices rise, with heterogeneous effects depending on age, income and local house price: rent ratios. Our results indicate that macroeconomic policies, operating through the property market, can exacerbate wellbeing inequalities associated with housing tenure.” Motu paperWe discussed:* how monetary policy has driven up housing prices in New Zealand;* the implications for renters vs owners; * how homeowners benefit from rising property prices, but their life satisfaction does not improve;* how renters experience a decline in well-being as property prices rise;* The lack of a capital gains tax distorts the housing market in New Zealand;* Political dynamics favor homeowners, complicating housing policy reform;* There is potential for reducing house prices through policy changes;* The current housing market is heavily influenced by macroeconomic policies;* Supply constraints have worsened housing affordability issues; and,* there’s a need for tax reform such as a capital gains tax to address housing affordability. This chart tells the story of housing costs for renters both in private rentals and state homes, homeowners with debt and homeowners without debt.Chapters00:00 Introduction to Housing Economics and Well-being02:54 The Impact of Macroeconomic Policies on Property Prices06:00 Winners and Losers in the Housing Market08:52 The Political Economy of Housing in New ZealandSubscribe in full as a paying subscriber for more detail and analysis in the full video and podcasts that go out with my Early Bird and Daily Chorus email newsletters. Paying subscribers support my work being done in the public interest here, and via my appearances on other media such as RNZ & 1News. Paying subscribers also get early and full access to our webinars, our chat room, my morning ‘Early Bird’ post with the full ‘Picks n’ Mixes’ digests of news links, and can comment on articles.Ka kite anoBernard This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit thekaka.substack.com/subscribe