With the New Zealand General Election scheduled for 23 September 2017, debate over housing affordability continues to heat up.
On Tuesday, opposition Labour Party leader, Andrew Little, flagged that he would take aim to remove “foreign speculators” from the housing market. From Interest.co.nz:
Labour Party leader Andrew Little responded by saying the current government had grown out of touch on house prices. Housing is the most important issue in New Zealand today, he said.
“Thousands of New Zealanders [are] still unable to afford their first home, not just in Auckland but around the country,” Little said. “It is time to have a genuinely comprehensive housing package for all New Zealanders, so that once again, all New Zealanders can genuinely hope to own their own home – at the moment a forlorn hope for too many.”
Labour will focus on removing “offshore speculators” from the housing market, Little said.
“We’re not alone in that. Six other countries party to an agreement that used to be called the TPPA – they got it, and we signed our rights away over that agreement to legislate for it; Now we’ve got it back,” Little said in relation to Trans Pacific Partnership trade deal talks having broken down after US President Donald Trump signed an order for the US to exit talks.
“Now, New Zealanders have the opportunity to seize the chance, do what’s right for the next generation,” Little said. He referred to Labour’s policy that non-residents and non-citizens should not be allowed to buy existing housing in New Zealand, but could choose to build: “if you want to live overseas and own a house, you’ve got to build a new house. What could be wrong with that?”
In a similar vein, The Greens yesterday raised the prospect of implementing a Vancouver-style tax on foreign property buyers. Also from Interest.co.nz:
Green Party co-leader James Shaw raised the impact of foreign capital inflows to New Zealand on house prices. He asked [finance minister] Joyce whether he thought a stamp duty, like the one imposed in British Columbia last year, could help alleviate pressure on the housing market. In mid-2016 British Columbia imposed a 15% stamp duty on foreign house buyers in Vancouver.
Joyce responded that high house prices were “predominantly” a supply side problem, adding that capital inflows created opportunities for the New Zealand economy. The response needs to be to ensure there is sufficient land to build houses on, he said.
In October last year, Auckland’s Mayor, Phil Goff, also called for a 15% tax on foreign owners, only to be promptly shut down by then National Prime Minister, John Key.
Alleviating Auckland’s housing crisis requires solutions that address both the demand and supply sides of the market.
Within this framework, a foreign buyer tax is an eminently sensible idea. Not only would it take some much-needed heat out of the market, but it would also raise much-needed tax revenue, which could then be used to benefit existing residents (e.g. via the building of social housing and infrastructure). It’s a no-brainer both politically and socially.
