Cooling housing market could continue as Labour seeks to ramp up KiwiBuild, reduce demand pressure, Ardern says; Maintains goal is for existing values not to drop, though

By Alex Tarrant

The housing market may continue to cool as Labour seeks to ramp up the building of cheaper homes and demand pressures weaken, Prime Minister-elect Jacinda Ardern says.

But she maintained that policy would not lead to a dramatic drop in people’s existing values – saying that Labour’s intention was to try and deliver without existing values falling.

Whichever outcome, it’s an interesting admission from the Labour Party leader. Ardern, her predecessor Andrew Little and housing spokesman Phil Twyford in the months leading up to the election all repeatedly sought to keep the conversation away from the possibility that increased supply – all else equal – puts downward pressure on prices.

Ardern made the comment on Newshub programme The Nation Saturday morning in a pre-recorded interview on Friday. She noted the housing market had already started to cool ahead of the election.

Asked about Labour’s KiwiBuild policy, Ardern said that would go ahead, with building phasing up to 10,000 a year, with the target of 100,000 affordable homes to be built under the policy over a decade.

Of course, it might be that KiwiBuild displaces some existing activity – the construction sector is at capacity. Twyford said this year that Labour would seek to have KiwiBuild homes included as part of private developments – for example representing 30% of any planned development. At 30,000 homes nationwide a year currently, there obviously is room for private activity to continue.

Ardern repeated that too many new homes at about 200 square metres were currently being built, and that Labour would seek more 100 square metre homes. 

She also reiterated that demand dynamics could continue to weaken – although questioned whether that would continue to be to the current extent. She said Labour’s immigration policy – targeting reductions of 20,000-30,000 student and temporary work visas – was the one that survived the negotiation process.

Below is the transcript from the section of the interview relating to Housing and Immigration - the bold is interviewer Lisa Owen:

Another issue that mobilised voters, arguably, was housing and the lack of affordable housing. Another thing Mr Peters said in his speech when he announced he was going with you is that building affordable houses would be a priority for him. So when do you intend to start construction on KiwiBuild?

And, look, we do need to get started right away, of course. We spoke over the election about the fact that this would phase up over time. And it’s not just KiwiBuild. For us, it’s also making sure that we start building those state houses again; we’ve lost stock. And we’ve set ourselves a goal of at least 1000 a year. First step for us is getting a form of affordable housing commission up and running.

And you have committed to that in your first hundred days?

And that’s the first step. Before you are able to start getting the hammer out, you’ve got to make sure that we’re able to do the overall planning that will be required.

So how long after that, do you reckon?

I haven’t got a date to give you, but if you set yourself a target, as we have, of, on average, 10,000 houses across 10 years, then we need to get started pretty quickly.

So how many do you think you will build in your first year, then?

Over my recollection over the first three years is that we are scaling up. My recollection is that we moved up to roughly 20,000 over the first few years, and beyond that it will then move at great pace and at scale.

So also around foreign buyers, part of the motivation for shutting down foreign buyers of our houses, is to bring the price down of housing. So do you have an ambition for how much you want to bring that price down and over what period of time?

That was about making sure that we had measures both on supply and demand. But the point that I’ve made continuously during the election is that one of the reasons that the average house price sits where it is is just the nature of the housing stock we have. We in Auckland, for instance, are just not building affordable houses. The average house that’s being built in Auckland, so where we’re increasing our stock, are houses that are closer to 200m2 than 100m2.  We can make sure we bring on-stream affordable housing without having the effect of dropping significantly the value out of people’s existing homes. It’s all about the nature of the stock that we’re building and the fact that we are under-producing the houses we need the most.

But if you build more stock and there is more supply, there will be an adjustment in house prices overall. You know the basic economics of it. So what do you anticipate that that drop in housing– that price that you might be trying to achieve?

I have an expectation that there’ll be a cooling in the existing market. But as I say, our view that we absolutely maintain is that we’re bringing on-stream a section of the housing market that is undersupplied and that we don’t expect to see a dramatic drop in people’s housing values.

So it’s cooling, like, 1%, 2%?

Yes. Yeah, and at the moment it’s cooling because we’re seeing potentially that easing off by meeting the fact that we’re easing off a bit of demand. It’s not clear whether or not that will be sustained. We believe that if we want to make sure we’re addressing the issues we have, it is about addressing supply as well.

OK. So part of that is also immigration numbers, the number of people coming into the country and demand. And you and your coalition partners are kind of at odds on that when you look at the policies. Winston Peters wants a considerably higher drop in numbers than you have specified, and the Green Party actually withdrew their policy around immigration at one point. So where’s the sweet spot? If Winston Peters wants 10,000 people a year – and we’ve got about 73,000 – and Labour were saying maybe cut it about 30,000, where is the sweet spot?

The sweet spot is acknowledging that we have pressure on our infrastructure. And I think, actually, that is common ground between all parties that will form this government because there is undoubtedly strain based on the fact that we have had a government that’s entire growth agenda has been based on population growth rather than focusing on making sure that we move to a productive economy.

But when your agreement comes about–

Our view is that it is about the settings. It is about making sure that we are meeting the skills gaps that we have – and we do have them in New Zealand – meeting those skills gaps by making sure that we are undertaking those work tests, by making sure that our export education industry isn’t exploiting people, and by making sure that people on temporary work visas aren’t exploited either. That’s the area we’re focused on, and there’s agreement there.

So when the deal comes out and we look at it, will there be a number? Will we look through those papers and there’s a number that you’ve agreed on?

You’ll see that Labour’s policy remains.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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130 Comments

Playing catch up on the demand is not going to depress prices, right ?

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The question that is never answered is,How much is an affordable home going to cost?.
Tom Cruise might know,he is in Mission Impossible.

You mean that "zero emmissions" affordable house right? You can't just build the cheapest now with things like cement and rebar. It has to meet ecoloon parameters also.

profile it seems you do not know the CO2 absorption by concrete.
Here an article to change you mind about that substance so often abused and really is something we couldn't do without, an eyeopener for you:

Cement soaks up greenhouse gases

http://www.sciencemag.org/news/2016/11/cement-soaks-greenhouse-gases

Interesting. Thanks.

Nice... Concrete is evidently "green" now, because it may absorb up to 25% of the carbon emissions required for its creation. And this "may" evaluation comes from a country that makes more concrete than the rest of the world combined. Yes, China makes the majority of the worlds concrete. Only a loon would think that this is good for the envronment.

Add: if the data in the linked article is factual, then concrete would then be responsible for only ~4% of the total of mankinds total carbon emissions instead of the current estimation of 5% of total carbon emissions due to the manufacture of concrete. The odds of this article being accurate is rather low. Concrete definitely requires H2O for curing. A modern concrete cement factory generates about 800g of carbon emissions for 1kg of cement manufactured. Based on my experience in mixing concrete, the weight doesn't increase much after it is mixed. In order for the carbon consumption of concrete to be accurate, it would have to increase in weight by at least 200g/kg. This is laughable, not anything resembling reality.

Add2: A bit more research comes to the conclusion that the primary source of the carbon consumption of the concrete comes about when the concrete rots. That is, when the concrete no longer is fit for purpose it will absorb a portion of the carbon that was burnt off in the creation of the concrete cement. Of course, there are some issues here, some of which are; the carbon used to initially heat the limestone will not be reabsorbed, only a portion of the carbon released during the heating of the limestone is reabsorbed, the carbonated concrete loses its structural integrity and will need to be replaced by new and improved concrete that has its own additional carbon emissions.

Fusion power is becoming ever more feasable. Obviously the engineering is extremely complex but there is inproved hope that more of the downsides of concrete production can be considerably ameliorated. There are also a number of other possible developments such as this one. https://www.pbs.org/newshour/show/cement-alternative-absorbs-carbon-diox....

As expected the ecoloons want us to have a zero emmission economy with a tech that doesn't exist yet. To meet the Paris Treaty the following has to be done to drop temp by 0.17 degrees in 2100. If she can pull this off then Jacinda can figure how to go zero emmission:

1) Global CO2 emissions from energy and industry have to fall in half each decade. That is, in the 2020s, the world cuts emissions in half. Then we do it again in the 2030s. Then we do it again in the 2040s. They dub this a “carbon law.” Lead author Johan Rockström told me they were thinking of an analogy to Moore’s law for transistors; we’ll see why.

2) Net emissions from land use — i.e., from agriculture and deforestation — have to fall steadily to zero by 2050. This would need to happen even as the world population grows and we’re feeding ever more people.

3) Technologies to suck carbon dioxide out of the atmospherehave to start scaling up massively, until we’re artificially pulling 5 gigatons of CO2 per year out of the atmosphere by 2050 — nearly double what all the world’s trees and soils already do."

www.vox.com/platform/amp/energy-and-environment/2017/3/23/15028480/roadm...

 http://onlinelibrary.wiley.com/doi/10.1111/1758-5899.12295/full

Policy based on science or policy based on feelings!
Hint: science is better!

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If, in making sure there is enough affordable housing for those who need it causes the market to fall, then so be it, in that case it should never have been allowed to get so stupidly overpriced in the first place.

PocketAces. Yes the housing market should never been aloud to get away like this. Now people that have brought over the last 2 years will get hammered and before 2years sadly disappointed. Then there's the house ATM group. Listing mighted go up that fast , you'd think most people wouldn't want to Add to it to fast. Tho open this listing. Trademes mid is in the nines, 1446945608. Read what he's written and the date listed

Allowed

too

what's your point, nothing particularly odd here, people do change their minds and no evidence otherwise - just a bit of free advertising on Interest? What association do you have with this property?

Not a “significant” drop - what is that?

Will be very interesting to watch the RE market over the coming weeks and to see a huge surge in listings. I bet agents will be pushing for listings “before the Chinese get cut off”

There is way more to it than that as you well know. Uncertainty abounds now.
An extension of the bright line capital gains tax.-ve
The effect of Kiwibuild.-ve
The potential effect of reduced immigration and the economy. -ve
No tax cuts. -ve
And there will be heaps of other factors that I can't think of at the moment which will change the property market.

And it’s not a matter of the market changing as each thing gets done over a year or two. Buyers no now these changes are coming where as before the election results they didn’t. Banks will too . It’s going to be very hard to convince buyers that nows a good time and you would think banks would borrow on the side of lower values pushing the market down simply by doing that as each month goes by

"Ardern maintained that policy would not lead to a dramatic drop in people’s existing values – saying that Labour’s intention was to try and deliver without existing values falling"
1) The simple fact of Lab-NZF-Green being in government will continue to depress housing, both in number of sales and also in values.
2) I do hope the new government will be able to build 10'000/year "affordable" houses (no sarcasm) I will also be very impressed if they manage to do that

I'm convinced that as a result of the Left being in government and the banks tightening their lending, there will be very few buyers in the coming months. As a result, very low volumes of house sales will continue and this will lead to a decline (not a crash) in house values as a few people who are forced to sell will have to meet the few buyer's offers. The majority of people do not have to sell and will just hold on to their houses thus leading to very low sale numbers and also creating a floor to declining values.

I think it is wrong to describe Labour as Left in this day and age. Both Labour and National are Centrist in reality and Ardern's statement here reinforces this.
Keep calm and carry on everyone.

Yvil. There’ll be very low housing sales all right but there will be sales, people sell for many reasons and lots of people didn’t pay very much for there houses , they brought pre 2011, even pre 2002. They will set the price. But you are right the 5 or 7 % of Aucklanders that brought over the last few years don’t have to sell.

Being a politician she will never tell us the truth otherwise people would not vote for her. Of course she wants houses to come down in value in some way to enable people to afford them. If prices do not come down wages would have to go up dramatically and that is not going to happen in our low wage economy. Rising wages will push up inflation and increase the risk of interest rate increases. Inhibiting foreign buyers, building more houses and ending negative gearing should bring house prices down in an orderly fashion. Auckland and Christchurch are already experiencing it and there will be more to come.

Why not start to spread the wealth of this nation more equitably?

How? Taxes? Haven’t the Left been at pains not to scare the horses with talk of taxes?

How about raising the pay of workers while reducing the pay of executives. The reverse of what has happened under neoliberalism. One problem however would be retaining a system where any pay increase is absorbed by landlords.

And taxing capital gains on investment property just as earned (that thing only chumps do apparently) income is taxed would make things more equitable right out of the gate. Slashing immigration and eliminating foreign ownership would reduce competition for housing and ease strain on already failing infrastructure like wastewater. The instruments are there, let's see if they play them.

Middle management executive pay has been on a downward trend since 2000. All expat packages are pretty much gone now overseas, hence why we are seeing a big influx of kiwi's returning would be my guess. A smart tradie makes a lot more now than your typical middle manager PowerPoint office jockey.

The Government could start with Parliament and the Civil Service payrolls.

It's not about 'spreading the wealth' per se, it's about ensuring that every person is afforded the same opportunities to generate wealth/improve their standard of living.

@Didge, spread more fairly? Free health, house, WFF’s, schools, pension and benefit, how on earth could it be more equitable in NZ?

Reverse the current situation where those lucky enough to be able to acquire equity in a property were then able to exclude a large block of our young from being able to do the same.

There are 3 bedroom apartments and houses in Auckland available for under $600k - just did a quick check on trademe to be sure or are you saying young people should be looking to buy 4 bed / 2 bath, Herne Bay villas with sea views?

When I was young houses were 300-400K and wages were relatively the same as they are now.

Ardern should know that if the nationwide housing index falls 10% from this point, the country will be in recession. She would be happy with static prices or a less than 3% annual fall. Any more than this and we will have a recession. With a recession the tax take will decline, she will be running a deficit and the coalition infighting will start, and the fragile coalition will implode. This is a real risk and the Labour Party would run the risk of replicating the fate of the 1970s UK Labour one term government that presided over a recession and was out of power for a generation.

The pre-election Colmar Brunton poll had over 50% of NZ First voters preferring coalition with National, if NZF evaporates at the next election,approximately 4 of NZFs 7% will migrate to National and they will be in position to govern alone.

If NZ First voters wanted them to coalesce with National, then they were bloody fools to vote for them, many "bottom line" NZ First policies were a country mile away from National's and much closer to Labour's. A quick perusal of the 3 parties' policies should have confirmed that. If they could not be bothered doing that and just assumed that it would go their way, then they have no-one to blame but themselves, for the inevitable outcome.They could also chuck the odd brickbat National's way, actually, for them not taking on board the policies they voted for, so that a National/NZ First coalition could have been established.
Do not blame Labour or the Greens for the result, or NZF for that matter, for going where their policies aligned best in the first place.

An economy predicated on foreign buyers and sky-high immigration is unsustainable. Looking at it from Nationals point of view, kicking a generation out of the housing market was a way of maintaining high GDP, high house prices, and simultaneously lowering the government & private debt:gdp ratios. Of course, that financially destroyed a generation of kiwis in the process, created a huge wealth transfer, anti-neoliberal sentiment, and a change in government.

LGNZF have been dealt a poor hand, and they know it. They probably know that government debt will have to go way up to get us through. I see stress on the poor as an issue of government stability. I expect that Nationals regressive taxation policy might be dismantled. Increases in GST and cigarette excise, for example could be rolled back. Perhaps some changes in other areas to help pay. THe good news is LGNZF all seem to be on the same page with strong leaders and common goals.

mmm we will build 10,000 extra homes with less immigration so no more builders and skilled tradies - and unemployment at 4.8% suggests no builders looking for work -- only way is if builders are redirected from existing private developments to Government projects - so we may get 10,000 affordable homes - but at the expense of 10,000 other private builds - so in reality no extra housing being built -

unless of course the jacinda effect means all the unemployed suddenly decide to work and contribute and are actually skilled builders on sabbatical

fix now - fix long !

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check the stats, it was a very low number of immigrant trades people bought in.
also the labour policy is to cut the immigrant student that does not do a university equivalent degree, and i have meet many an immigrant that agree these coming to get a one year certificate and are allowed to work are bad and need to be shut down

Why not restrict immigration to those skills we need the most. Builders etc would seem a foremost requirement.

agreed - start with Mental Health nurses - 100 vacancies in Auckland alone - no staff to fill them - have had 6 recruitment agencies trying to find me and RN - not had one candidate in two months presented!

Its all well and good to say we will expand our Mental Health services - and have a nurse in every school - but where will tehy come from - probably inpatient units which will then start closing wards as they did this week

Must target immigration to the policies - so nurses teachers doctors builders and tradies and IT experts - not tour guides and chefs

Under the Natl government any new mental health specialists would have had to have been volunteers.

From my perspective, NZ has got serious systemic and bureaucratic issues in being able to recruit mental health nurses from overseas. I was trained overseas to post grad level, and used to run an NHS adolescent mental health in-patient unit but have been unable to register in NZ because I am unable to obtain a particular document ( you wouldn't believe how many they require). I also resent having to pay nearly $3k to attend a 3 month competency course in general nursing (when I am a mental health professional and never ever did general anything) and pay $500 to prove I can speak English when English is my first language. I would have gladly returned to that profession but now i'm working in IT and making much more money. It's a shame but I imagine there are others like me, where the whole process with NZ Nursing Council was just impossible. *rant over*

Mental health services are mainly being run and advised by minimum wage, illiterate, non English speaking immigrants/caregivers with very few professionals relying on this substandard reporting and evaluation . A very expensive cost to society where the blind leads the blind

That's probably not quite right Trying to build.

However people need to stop relying on the current Capitalist system to cure their mental problems. It just feeds a huge complex of so called professionals perpetuating pseudo-scientific mumbojumbo and peddling the wares of the drug corporations. The majority of problems can be simply cured by clean living and hard work. Just stop thinking about things, especially yourself, so much and stop doing things that weaken you mentally and physically. We can do this, do it for Jacinda!
Seriously, I can feel myself getting quite enthusiastic about this new era.

.

I'm not sure developing resilience cures the majority of mental health problems, albeit there's a lot to be said for getting teenagers into healthier environments.

"mmm we will build 10,000 extra homes with less immigration so no more builders and skilled tradies"

And don't forget leprechauns and pixies and other things that aren't real, either.

People need to understand that once you scale the lofty heights of power your horizon has broadened and you can see a lot more and you get a better perspective on things. Certain promises have to be toned down, the odd ideal put into cold storage, because they don't really make a lot of sense anymore. Building a lot of state houses or whatever requires a strong and healthy economy and financial stability. A steady hand on the helm, no sharp turns, otherwise known as 'meet your new master, same as the old master'.

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DGZ if she does not implement the measures she promised she is finished. Housing and immigration lost National the election. She either fixes both or loses all credibility. For the record I voted National as I do not trust Winston. Nevertheless I am happy about the new government but only if they honour their promise to look after those at the bottom of the heap.

Housing and immigration lost national the election. So all ardern has to do is crash the housing market and drop immigration and she doesn't lose credibility. Cool. Because that'll be easy

Since when do politicians keep their promises? That would be irresponsible.

The Boomers must be worried now...all the ladders put up are now being put back down. Sad really that a generation that gained so much is so bitter when the country decides on a new direction.

How so? The youngest Boomer is 53, and if they aren’t living in a mortgage free home, then they should be close to it. Labour have ruled out taxes on the family home and rises in the super age. On top of that some, like me, are going to benefit from their children going to University, fee free. That’s likely equivalent to a $10,000 pay rise for a couple of years. Closer to $20,000 if they get into Med school.

I'm in the same boat with kids going to uni soon and retirement not too far away.

I was talking to a Baby Boomer friend today who is quite chipper about not having to pay for his soon to be university age kids education. He's going to use the money put aside over the years to buy a bigger boat instead.

So you you voted for Labour and the tertiary free option? No wait you voted for National and are just getting to grips with what's in it for me (Boomer mind set)

I never have and never will vote Left. Just commenting on your post that boomers will be scared. Nothing of the sort. To date, we look to be a group unaffected based solely on age.

Zachary, I think Teddy Roosevelt's "New Deal" directly contradicts your point regarding the state housing initiative. After the Great Depression, when the American Economy was on its knees, the US government funded massive public works, and is generally considered to have been a very successful initiative. There are plenty of other examples too. Not to say that there are never issues or negative repercussions to state funded public works, but I don't think there is a strong factual argument to say that government funded works require a strong healthy economy because there have been many occasions when one has contributed to the other and it really isn't a black and white issue.

Actually it was FDR (Franklin D. Roosevelt) who authored the "New Deal". They are related 5th cousins I believe. Indeed FDR married Eleanor Roosevelt - the niece of Teddy Roosevelt.

I put it to you, that if the country digs a bit deeper in their gorse filled pockets, that with people in secure and affordable housing, with a bit of extra to spend within an economy, that the strong and health economy will surely follow on behind that.
Cart before horse, even today.

Focks don't really expect Ardern or peters to say expect housing to crash or go down 50% . Come on ,add on mountain loads of housing, reduce immigration, kill housing foreign ownership. Local affordability being miles of today's prices. The last thing a new government needs is a crash but it's going to be very hard to convince people the market will only go down a bit and slowly. Good luck with that

Very difficult to reduce immigration - besides those currently being processed there are 13,000 partners - (you can't stop people marrying and getting residency) and then refugees and PI immigration hard to change without negotiation. No control over Kiwis returning and Australia is pushing NZ families out. So expect Auckland to keep growing until at least the next election.
OK cheap pre-fabricated housing could get 10,000 houses built but not for a couple of years and apartments take time because of financing and consent issues.
My bet is little significant change in Auckland during this parliament. Of course a 20% drop seems insignificant to me but could be a disaster for a recent buyer.

I've just put the transcript in of this bit of the interview.

o4 normal , National lost because they annoyed Peters and tried to take him out , revenge ......
Peters does not like National.
I think interest rates will start going up , due Labours spending expedition unless they have guts and put up the top tax rate to pay for all the promises.
A capital gains tax will take time to kick in by then NZ will be well in the red.

National gave the rich plenty of cash by way of low interest rates, high immigration, overseas investors on a plate, plus they even sold the houses the super poor lived in, what the rich done with that opportunity was up to them. Now it’s the poors turn and if the rich can’t hold onto there money maybe they were to greedy taking housing to far why’ll they new it wasn’t right. Give the poor 9 years

the last time i looked the national government nor any government in new zealand for that matter has set the interest rates nor the amount of money banks loan and at what rate... thats the RBNZ and what ever money banks can lend from overseas which depends on the ratings from the agencies... well it looks to be a bit more complex .... once again the articles on this site and many others are very good. I suggest that people start with this lovely site and read all the articles the can before moving on the really big and boring sites like the ones every OECD government runs. Boy its a lot of reading and its complicated .... those pesky interest rates who would have thought it was all so complicated... Im sure Jacinda will just pick up the phone and tell the RBNZ to raise those interest rates quickly please and while you at it can you please give me some more money as we are going to run out pretty quick... what you mean you wont do a BOJ? WHY NOT!!!

You've forgotten to address his points about the previous government supporting very high levels of immigration and also failing to limit foreign interests from buying residential properties. Would are your thoughts on those things.

Recent immigration has been biased towards low wage students - only very indirectly having any effect on house prices but sure pushing up rents and creating homelessness.
Foreign interests usually is shorthand for Chinese who (a) want to get money out of China (b) love the concept of ownership of land [and so would I if I had lived in a communist country]. Fairly confident they will be able to avoid any foreign ownership rules fairly easily - there must be at least one moderately unscrupulous Kiwi (maybe of Chinese origin) willing to launder money.
Please note that I really don't think the Chinese are any different from the rest of us - it could apply to any country but their history and the size of their population makes them stand out.

Chinese buyers just happen to be who's dominating at the moment. Even if they all disappear tomorrow (which they're showing every sign of doing), we've got massive gaping holes in our legislation leaving NZ open to exploitation by foreign speculators and money-launderers (not to mention domestic money launderers). If the Chinese all sell up and decide they have better things to do with their money, it doesn't solve the problem, because the NZ market's still wide open to exploitation by Russian mafia and oligarchs, genocidal Central African warlords, Mexican drug cartels, members of Kim Jung Un's family and supporters, and any other undesirables with money to hide. The way our companies registration and trusts are run, half the North Island could by owned by Robert Mugabe and the head of ISIS and we wouldn't even notice.

As Richard Prebble ex Labour Leader said yesterday, this government is extremely weak with no expertise.
They will be the most despised NZ government of all,time which I totally agree with.
Many will,disagree but running the country alongside Winston is going to be far harder than just shooting from the hip without thinking!
The reality is that I would be putting everything on the fact that they will be a one term government and NZ First and the Greens will be harmed immensely.
It has become a real farce when 3 parties with no idea can run A country.
Won’t affect us at all will probably assist really As first home buyers will force up prices in Chch.
Capital gains won’t come in as Labour will be out next term but anyway if prices are going to continue to drop then what is the point of a CGT if their is no profit?
Watch the circus happen as we are going to be governed by 3 parties with no idea!!!

CGT is not supposed to generate a profit! It's an Income Tax; the one that is supposed to be paid by the present property system, but most often...isn't. CGT would apply to any income generated by future property transactions. It is as much a 'fair' tax as taxing salaries and bonuses. Income is income is income......
(NB: If the current system was honoured, CGT would not even have to be considered in its stead. But....too may New Zealanders lie on the intention of their property transactions. Lawyers and Accountants etc help them to do this and structure contracts to this end. They are simply 'obeying' the Law, so The Law needs changing)

If its a tax on houses that arnt already in a set of tax accounts it actually its not an Income tax as much as an unspecified unaccounted for profit tax with no set of accounting standards to support it. It really the worst kind of tax because its an asset tax with no set accounting rules... its a tax grab on money and assets that have already had tax paid on them....

Wow...

Any chance you could use some logic in your post?

A CGT is NOT a tax on capital. That capital may or may not have had tax paid on it in the past. This is immaterial. When one makes a gain on the capital, this is a form of income. This income should be taxed in the same manner as other income, such as interest, distributions, wages, etc. This is not a difficult concept to understand.

not to mention get your facts right, Richard prebble was leader of ACT not labour, the best he could do in labour was minister of (selling) railways

FHBer’s can already buy in your town as prices are so cheap and getting cheaper by the day. About to get cheaper as less immigrants and restrictions on foreign buyers. In saying that who would want to immigrate to a cold earthquake prone town miles from anywhere. All I hear is anger and fear in your comment as per usual.

@the Man 2. "They will be the most despised NZ government of all,time which I totally agree with." I am impressed that you have given the coalition such a long time to provide evidence that supports your completely unbiased opinion.

So I take it your are selling up and leaving for somewhere else.

I can’t see long term investors to worried about CGT , most buy for minimum deposit , it gets them something that helps them later even tho they don’t see profits for many years and with interest, rates, insurance and maintenance after 20 or 30 years there wouldn’t be much capital gains but they would have something they wouldn’t have saved. Most rentals I’ve ever brought years ago I have had to chip in weekly by a good $200 a week generally, if I had put $200 a week away and invested it I would had done ok but who can save, rentals are good because they make you save, I don’t care about CGT . It’s fair but I’ll only pay it if I’m told to so it should be. Don’t know why so many seem to get upset about it specially politicians

True. They tax your profit - if you have made a profit then celebrate and don't worry too much about 15% tax because you keep the 85%.

NOT true. The tax any nominal increase- including the inflation component . Real house prices can stay flat and you are still in for a chuck of tax.

As someone who has and does own property in a country where there is capital gains tax, I can say you have a a lot to learn.

Exactly what ?

Exactly everything? A nonexistent CGT, one that hasn't even risen to the level of a proposal let alone been implemented can't be critiqued. If you want an inflation adjusted CGT, do it. If you want one with long term and short term rates, do it. If you want a family home exemption, do it.

If a nonexistent CGT cannot be critiqued equally it cannot be defended - which is what you are doing - and is this has nothing to do with your claimed property experience in a CGT country ( I have that experience too BTW ).

There is no significant jurisdiction that has an inflation-adjusted CGT ( if I am wrong do correct me ) so I do not think that is a realistic option ; as to other exemptions you mentioned they make sense - but leave little revenue to be collected in relation to the cost of administering the tax.

There are calls to index capital gains to inflation in the US, maybe elsewhere, none of which matters.

https://www.cnbc.com/2017/08/11/index-capital-gains-for-inflation-mr-pre...

The notion that it hasn't been done says nothing about whether it could be done. It's just a decision. There is no point in pretending a CGT is a set menu item where you can't change the sides. It isn't. And again, you can tier the rate relative to how long the asset is held. There is a two tier system in the US but there's no Natural Law that say there can only be two, or what the thresholds are.

If your imaginary CGT is bad because it doesn't adjust for inflation, do not then lament that including said inflation adjustment would then (you think) defeat its utility in the first place. Until something like it is in place, the distortion and consequences of preferential treatment of property investment remains.

i amazed yet again... the RBNZ has been popping the so called housing bubble .... cant see the bubbles.. only the roofs.. down from floating off into space for over a year now... I think you will find that the amount of work that the RBNZ put into macro Prudential controls is not trivial, unlike most of the posts here and you will find these bubbles from time to time in every color of government over the time frame that records have been kept. I actually think the RBNZ has really outperformed the government here because governments are just made up of elected representatives and generally they arnt the best and the brights as we will soon see again...

"is not trivial, unlike most of the posts here" always putting down other peoples opinions. Maybe we should just copy you, and you can tell us how to think. I bow to your superiority o great one.

At last I agree other then health and cycling.

Yes our elected representatives have been hopeless over the last 9 years.

Record homelessness etc.................

FFS Gordon.
You are doing yourself no favours in trying to bait me with your repetitive crap about Chch prices, earthquakes,
cold etc!
You are wasting your time if you think it offends me because I now acknowledge that you are a jealous and bitter and twisted old man.

About the same age as you The Boy. You responded as expected and with your usual anger and fear. I have noticed you have been quiet since Thursday night like the other bulls. All busy putting some property on the market. Too late I think.

It's cooling because the the Chinese govt have made it difficult for their people to transfer money overseas.
The Chinese buyers are no longer competing against each other at auctions so can afford to be picky.
If the capital flight restrictions are eased then it's all on again regardless of any foreign buyer ban. They will find ways such using family members with permanent residency to buy the property for them.

That is not a reason not to put measures against foreign buy up of land and houses into place. I reckon confiscation of law breakers would put a few off.

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14

"It's cooling because the the Chinese govt have made it difficult for"..SOME OF.. "their people to transfer money overseas."
Didn't stop one from a $20M buy recently. But the seller has a special relationship with China, it appears.

The combination of static house prices and a slightly lower NZD will make Auckland irresistible to foreign investors. LGNZF will have to put iron clad restrictions on foreign buyers if they want to successfully implement their other policies.

Knowing the wiliness of some of those potential buyers is why I reckon confiscation has to be the penalty for transgressors.

Make it their responsibility to prove it's legit, like with proceeds of crime legislation.

Even better

Why not hanging ?

Then compulsory organ donation?

I think once the capital gains stop, and they have, then Auckland houses, look way less attractive to foreign purchasers.

Jacinda is full of good intent....... but, mark my words, she's not going to get far with her policy agenda. Much of it is high risk - and riddled with incompatibilities and adverse trade-offs.

Nonetheless, she's done well in a very short space of time. Good on her! She deserves a chance! Winnie Peters needs to respect that and not be a prat and a spanner in the works. (Though based on his historical performance, who would trust him?)

Jacinda Ardern cannot fail to do much better than the do nothing years of National.

What this hole childish Ardern thing. I’m very very bad at spelling but how do you say, Arden, Ardon, Adern , Ardurn, Ardirn , her name is Ardern how hard is that to say , it definitely not Arden

It's worth noting yet again that if 100 squares houses are to be built in volumes approaching 10K units p.a., then the most efficient way to do so is factories, CNC, software, robots, trucks and cranes.

Ya don't need 'builders' for any of that.

On-site foundations, yes, but there are specialist firms for that and they are more concrete placers than builders. Good golly, NZR, back in the day, like, a century, sent out hundreds of prefabbed houses from Frankton (http://www.stuff.co.nz/dominion-post/capital-life/home-garden/8546194/Fr...) and things have moved on a little from that...

Unless, of course, Kiwibuild is gonna turn into one of those Gubmint job-creation schemes, to soak up legions of the unemployed and ensure plenty of union members and their Labour tithe, plenty of soft management positions, and nice political optics (See, we are Doing Something, pity about the productivity and don't even ask about the unit costs because they are distributed across four Votes and are un-get-attable). Nothing would surprise me....

A quick glance through the TardMe property section shows its got a long way too cool yet before locals can dream of affording it with local income.

Ardern is trying to not scare the horses but drops in property "values" are most certainly coming.
You'd have to be very brave or very stupid to be thinking of buying now.

I hope the penalties for fraudulent proxy purchases are extremely severe. Confiscation and deportation severe.

I think that 0 4 Normale should have a sense of humor whether its any party everyone is entitled to have say.
Your postings are getting personal where the chat forum is about some genuine input without taking to things to serious , maybe we cant spall arddon or petas or engluish , shore.

Well, day two of the New Gov, the weather is nice, the breeze is gentle carrying away few political loose fig leaves as it blows ... and as the days go by, we shall discover if the emperor is wearing any clothes after all !! --- Once in power, everyone will discover that the BS of the campaign trail promises do not stick any more - now it's time to come up with the Goods !! Generic statements' time is Over, its now time for numbers , data, Plans, and Actions ... and it better be Good !!

20,000 kiwi built home in the first 3 years will not cut it and will not distinguish Labour from what National was already doing .... will not be enough to absorb the 1/3 of the current backlog !! ..... assuming they will have the traders to do that on top of what is being built !!! there goes the First Fig Leaf !!

The circus has just started and excuses are flying high already - It will be a sad dramatic ending to this piece of theatre !! .. Please do not be too disappointed !!

"now it's time to come up with the Goods"

They have a low base, as National did nothing for 9 years. But that had wonderful impact on homelessness.

Labour will stop foreign buyers, clean up education rorts, reduce immigration and train NZers. Good starting point.

Had to get up early as I’m flying out of the country for work (someone has to fill the trough). Immigrant taxi driver texted 15 minutes before pick up and turned up 3 minutes early (thanks National for allowing such a diligent and productive person to live here). 27 minutes drive to the airport (thank you National for the improved infrastructure). On the way to the airport, I didn’t see anywhere remotely obvious that KiwiBuild houses could be built, let alone the question as to who is going to build them.

You should be thanking the previous labour administration for your improved drive to the airport.The best ,most effective piece of infrastruture was initiated by Helen Clarks team and in fact Mr Joyce tried to stop it happening inititially,but was happy to take the glory when it opened.

If you mean the waterview tunnel, I’ve yet to use it. I meant the newly opened underpass on the main airport road.

"...excuses are flying high already"

Ha, look who's talking.

Still squawking away there.

I thought taxinda was going to tax you so hard you wouldn't be able to afford internet.

havnt they already signalled the economy going down and gave the media a warning to not blame the NZF Coalition. I thought the change was to nip the "alleged" problems of the old govt so the changed govt can steer it up--with a VISION.. Bill dont go away just yet, the Governor General might call on you to form a govt.

Factory produced homes don't need 'builders' anecdote: Fraemohs claimed that their houses (found excluded and roof too IIRC) could be assembled on site with a rubber mallet and a Crescent. Didn't put that to the test - land prices killed the deal....

where is all the money coming from?it almost that some spirit has just landed a pot of gold
I think there to many promises I would cut the environmental stuff out to give enough to homeless and struggling families

https://i.stuff.co.nz/environment/98122008/kermadec-ocean-sanctuary-put-...

This is just sad. Labour will not progress the Kermadecs sanctuary as part of the NZF deal. This sanctuary would have gone ahead under a Green National coalition.

Smells like fake news being stirred up by salty losers.

The Greens are getting shafted royally ...
They only have 1 MP less than NZF and hold the balance of power as much as NZF do ; compare what influence on the coalition process , policy and government positions they get compared to NZF. Pathetic negotiation skills.

Regardless of your economic situation, I suggest that everyone takes note and jog down his household weekly / monthly essential expenditures and outgoings and compare notes every month or quarter ....we'll know where we are heading relative to CPI and new policies ...
the proof of ( better and fairer living ) will be in that pudding -
For better or worse that would be the undisputable measure on how to hold this Government to account and expose them if they try to fool us...!

For any " affordable " house - the simple fact is that land followed by GST are the largest costs involved in a new house build making to very difficult to lower the cost of a house.

There are also a lot of fixed costs irrespective of value of the house e.g. sewerage / water / gas / fibre / stove / toilet / consenting.

Unless they can secure low cost land - and I don't see a lot of that on the horizon, affordable housing will involve very substantial subsidies.

Just getting the land will be a major issue - where in Auckland are there large areas of land available for development ?

If we assume say 3 persons per house per annum on and offsite e.g. pre nail, gib board factory etc then 10,000 houses pa requires some 30,000 additional employees which with their families will require significant accommodation themselves.

Reducing immigrant numbers will make it very difficult to recruit these levels of incremental qualified builders.

This program is going to be very very difficult to execute - I would say impossible.

The Government should not become involved in building supposedly affordable houses that just benefit one portion of society and limit the type of house you can build (being told you can only live in a 100sqm house is worse than being told what sort of shower head or light bulb to use - nanny state mentality). Instead they should just make the cost affordable for everyone by making the building of a family home (materials and labour) GST exempt or zero rated. Though I doubt this will happen as it is probably the only thing keeping the economy afloat. However I am sure there is some sort of sweet spot where the cost to the government of building essentially states houses can be balanced against the loss of GST.

Kiwibuild is based on the same daft ideas that National relied on. Trying to fix a serious problem with sticking plaster and finding out it doesn't work.

House prices are high because land prices are high. Land prices are high because people are able to bid a lot of money for it. Where does that money come from? High wages? I think not, apart from a few overpaid lawyers, politicians, senior civil servants, bank executives and real estate salesmen. Money floods into the country with immigrants, from overseas "investors" and via the foreign owned banking system.

National failed to sort out the mess the previous Labour government made because they continued with the same failed ideas. Now it is Labour's turn to fail again.

If Labour stems the flow of immigrants, then where's the supply of skilled labour needed to construct 100,000 new houses going to come from??

There's a dire shortage of people in the building trades right now and we're training nowhere near enough youngsters.

One has to take KiwiBuild (or whatever it's called) with a grain of salt.

But, look, Jacinda deserves a chance and The Greens and NZF need to cooperate with her and govern constructively. Otherwise the lot of them will get the shove from voters.

Stable, responsible government is the bottom line for me.

If there are fewer immigrants arriving then the urgency to rapidly build more inferior houses is reduced (not totally negated, but limited). But of course there is a necessity to give priority of work visas/citizenship to officially recognized certified and qualified builders (not unskilled laborers) otherwise you end up with the Jesus company scenario.

By my calculations Labour will have to build 27 houses a day to reach 10000 in a year.That means a week after they have been sworn in 192 houses would have had to been built.
A ridiculous target that they won't reach and every day that passes the daily total gets higher.
Why don't politicians aim for more achievable targets.

Well, Labour was desperate to win the election - so they got a bit extravagant with their claims and promises.........

Agree with you Ngakonui: not too many people seem entirely convinced!

But, as above, Jacinda deserves a fair chance. If she can make a go of things, than good on her.

TTP

Why don't politicians aim for more achievable targets.

Theorists...that is why.

Because none of them have usually had any business sense, acquired by actually running a business, using ones own money to ensure a thing called a....Profit.

Whilst we overpay theorist idiots to run our Country, nothing will be achieved.

Even more thought provoking...

Whilst we pay rulers who take an inch to run a mile, when the going gets tough and they see the debt, they got us into..........all you will get is a "Tui".

And I do not mean a beer....from me.

Speculators should move to bitcoin next.. will hit $10,000 USD within months

‘Wolf of Wall Street’ warns ICOs are ‘biggest scam ever’
https://www.ft.com/content/739f8954-b61a-11e7-a398-73d59db9e399?mhq5j=e6

“Everyone and their grandmother wants to jump in right now,” he said. “I’m not saying there’s something wrong with the idea of cryptocurrencies, or even tulip bulbs. It’s the people who will then get involved and bastardise the idea. It is the biggest scam ever, such a huge gigantic scam that’s going to blow up in so many people’s faces. It’s far worse than anything I was ever doing,”

The trick is knowing when to pull out...!