Parties line up on housing

01 September 2017

As political parties were on the hustings with a range of housing policies last month, new government data was released showing that renting remained more affordable than buying a first home.

MBIE’s Housing Affordability Measure (HAM) showed that housing affordability remained virtually unchanged over the period measured – the three quarters from September 2015 to March 2016.

Meanwhile, parties have been thrashing out their housing and immigration policies at almost daily debates and appearances on the hustings. The NZ Herald held mid-August “Job Interviews” with National’s Bill English and Labour’s Jacinda Ardern.

Herald/NZME head of business Fran O’Sullivan reported that “when it came to hot issues like housing affordability, Bill English believed that rising incomes and a flattening out of the housing market would over time improve things for Kiwis”.

O’Sullivan said Ardern “reopened the thorny subject of capital gains taxes – policies which her predecessor Andrew Little cast aside claiming they had helped cost Labour the previous election”.

Ardern said it was her own "captain's call" to not rule out introducing a capital gains tax on rental properties or second homes next term. It would not apply to the family home, she said. And while Labour would wait to hear what a planned tax working group recommends on the matter, Ardern said waiting to act until after the 2020 election was too long.

She said National had done similarly when it increased the GST without first taking it to the electorate for endorsement and the voters could give their verdict in 2020.

She has also talked about introducing a stamp duty to effectively ban foreigners from buying property, and O’Sullivan said an Adern-led government would extend the bright line test governing taxation on property sales, which National imposed, from two to five years.

NZ Herald political reporter Isaac Davison analysed the parties’ “very different approaches to handling demand for housing”. He said Labour wanted to come down harder on property speculation and would ban foreign buyers from the market – “a line which National will not cross”.

The Greens were the only party to have confirmed they want a capital gains tax on property and along with the NZ First and the Maori Party all want to ban sales to non-residents living overseas.

The Opportunities Party (TOP) wants to charge tax on housing, including the family home, to completely remove any incentive to invest in housing.

Davison said while their policies differed, both major parties were promising to build tens of thousands of houses, help councils build infrastructure, free up more land, and create a new government agency to oversee big housing projects.

The future of immigration as a contributor to housing demand was also the subject of varying policy approaches. New Zealand's population grew by 100,400 in the year to June including net migration of 72,300.

As of August 22 Labour was sticking with its promise to slash net immigration numbers by about 20,000-30,000, partly by reducing the number of international students studying low-level courses. New Zealand First’s Winston Peters wanted an even bigger drop, to a “sensible and sustainable” net number of 10,000.

National said immigrants only needed to be paid over $41,859 a year while those earning less would be considered low-skilled and could stay for a maximum of three years, after which they’d be subject to a stand-down period before they can apply to come back.

And as residential listings and sales continued their slowdown, with some commentators blaming pre-election uncertainty, BNZ chief economist Tony Alexander said the Reserve Bank made it clear in its Monetary Policy Statement last month that it still saw a risk that the current market pause could be temporary.

“The Reserve Bank is highly unlikely to lift the LVRs, particularly for investors, in the near future,” he said. Instead he predicted the next 12 months would bring pain for late-cycle investors hit by the 40% minimum deposit requirement and tighter bank lending rules.

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