Listen now (38 mins) | And why housing prices aren't just the sum of costs
Land price is not just the price of the accumulated utility value over time. The major part of its value is as a store of value and reliable speculative asset.
The Neoliberal economy of the last 40 years has largely been bankrolled with new credit money collateralised on property, since it's the only asset that has the physical and value permanence to fill that role. This works well in equal measure for property developers & retail bankers, who work for profit, and governments (as represented by the Reserve Bank) desire to maintain a slightly inflationary money supply by means other than their own borrowing. It does not work however, for the person who needs a home to live in. Their needs are mere demand tools, and nimbyism and lack of supporting public infrastructure are supply-side tools that drive constant and necessarily disproportionate price increases.
Necessarily disproportionate, because since 90% of private debt is property debt, that sector has to shoulder nearly all the new credit necessary to bankroll the required increase in the money supply ACROSS ALL CPI PRICE SECTORS. This makes land speculation a 'no-brainer' as an investment class all the time this paradigm continues.
Housing cost affordability has been bought by constantly lowering interest rates, to the extent that in 2020/21 the OCR fell to 0.25% and mortgage rates were similarly historically low
The gravy train of bankrolling monetary policy by this means is at an end, with no plan B in sight.
Decoupling the money supply from property loans seems an obvious start, but the commercial interests lined up against it would be immeasurable.