After years of hands-off tactics from central government, whatever hue of administration takes over after September 23 is likely to be more interventionist in the housing market

By David Hargreaves

It now seems certain that history will not repeat for the housing market after September 23.

In 2014 the housing market went quiet in the run-up to the election, only to explode into fresh life immediately afterwards as the political status quo remained.

And the status quo for the past nine years has - very generally - been for a Government that has generally wanted to avoid intervening in demand-driven matters while focusing on supply.

That is a generalisation - there has been the odd move such as the Capital Gains Tax by another name, Bright Line test. But in general terms the National-led Government has only moved to intervene in the demand side when directly pressured to do so - either by public opinion or on occasions through pushing from the likes of the Reserve Bank.

Where National has got busy has been in talking up the possibilities of increased supply of housing. But here again, it's - till recently - not go all that closely involved in physically rolling up sleeves and building houses. Initiatives such as Housing Accords with their fast-tracking of the approvals process have looked good, but it would be difficult to point to specific evidence that they've actually encouraged more development than would have occurred.

Gone flat

The fact that the housing market has now gone flat, particularly in Auckland, is not - as Bill English would like you to believe - down to the fact that 10,000 new dwelling consents were issued in Auckland last year.

With the country's largest city current adding around 55,000 a year to its population, those consent figures need to be more like 18,000 a year. Auckland is still currently falling behind in terms of numbers of houses needed. Therefore in a 'natural' situation with demand-side constraints, prices would still be going up.

But the housing market has gone quiet. That is in large part due to a combination of the Reserve Bank's 40% deposit rule for housing investors and far more conservative lending policies being employed in any case by the banks as they have been grappling with a funding squeeze due to flagging deposit levels. Then there's the level of offshore buying, which we are still not monitoring well - but the best anecdotal evidence is that this has dried up.

These factors would not continue to keep the market quiet. Ways would gradually be found around the 40% rule, while at some point the banks would inevitably look to turn the tap on again. Likewise, foreign buying would likely surge again at some point.

In the meantime though the housing market is quiet.

What happens after the election?

With the way the opinion polls are at the moment, there does seem every chance the outcome of the election won't be conclusive. So, it will be negotiation time.

I still think people are tending to under-estimate the potential debilitating effect of a prolonged period of uncertainty about the outcome. Remember, in 1996 it took nearly two months to get a new coalition Government.

Here is hoping we have nothing like that this time - but you can't rule it out.

Any period of post election uncertainty of that nature is not going to re-spark the housing market that's for sure.

And then there is what happens once we get a new Government.

Unless the opinion polls are completely losing the plot, it seems virtually impossible now for National to compose a government in the manner it has been doing. For a start, Peter Dunne has already gone - and his one seat, an electoral 'overhang' (effectively extra) seat was crucial.

So, it would probably be to Winston they would go - he who was central to that two-month pregnant pause in proceedings in 1996.

Changes for National

The big change for National on housing therefore if it does side with Winston is that it gets a partner keen on blocking offshore ownership of New Zealand houses and on limiting immigration. It would seem likely that at least some flavour of one or both of those policies might end up in the policy kit of a new National-led Government. So, that would presumably have an impact on the housing market.

Then we look at what happens if National doesn't get enough numbers even to cobble a deal with Winston.

On current polling the most likely scenario is Labour with Winston - though it's possible Labour-Greens might be an option.

Either way, the significant thing here in terms of housing is that we would likely see on capital gains tax at the very least an extension of the Bright Line test. There may be more. Some clamp on immigration is likely. And then there is the offshore buying ban.

This one's interesting, because it's one of Labour's priorities in its first 100 days.

Problems with an offshore ban

I might be missing something here, but so far as I'm aware nobody's yet adequately addressed the problem such a ban might cause with New Zealand's trade agreements - particularly with China.

As I understand it, we can't put any policies in place that advantage other countries over China.

Where this gets dodgy with an offshore buyer ban therefore is that at the moment Kiwis are exempt from the similar policy that Australia has already adopted whereby offshore buyers can't buy existing houses in Australia. We can. We are exempt.

Therefore, the expectation might be that any policy we would apply here would exempt Australians because, well, that would just be neighbourly - and it would cause us a cartload of trouble if we didn't exempt them.

So, what do we do? Declare hostilities with Australia by saying: "Sorry, guys you can't buy houses in NZ any more without living there, but can our people keep being exempt from your similar rules?" Or do we declare hostilities with China?

And make no bones about it, I say 'hostilities', but that's not actually true. There won't be hostility if we do that. The Chinese may not even say anything. Oh, and then some funny thing will come up whereby Fonterra's blocked from doing business in China, or something like that. Because that's the way these things are done.

It's problematic

I have spoken out before in favour of a ban on offshore buying of existing NZ houses. But, because of our trade deals it is hugely problematic. The only way around it that seems likely is to accept that we would have to give up our exempt status in Australia. Which might not make a lot of people very happy.

Between the likely delays in formation of a Government and then the likely announcements of some of the new policies as outlined above, it's difficult to see the New Zealand housing market doing anything other than marking time - and maybe it could be worse than that over the next 12 months.

A lot of water has to go under the bridge before some of these new policies can be implemented. And markets, of which housing is just one, don't like uncertainty.

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?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

110 Comments

US talks about reviewing its steel manufacturing industry and building the new great wall.
UK talks about exiting EU or re-entering EU after its people finally decide or at its own convenience.
Canada talks about its collapsing housing markets in major cities.
AUS talks about nothing at the moment after the bust of mining boom.
NZ never stops talking about the house market.

What the whole world outside these countries are talking about now?

Whats your point? The housing market is a huge issue and that's why people are talking about it. We have freedom of speech here, we can talk about what we like without he government making us disappear like they may in China for example.

Another question for you, can NZDers buy property in China?

Stop whinging then. Leave the Spratlys alone too when you're at it.

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National plans to reinflate the housing bubble with taxpayer and FHB retirement funds, Labour plans to provide more housing utility. Only one of these is a solution to a housing crisis.

Hm, how? Do you know Labour's actual plan and how it’s going to be feasibly implemented? That’s the issue with a leader that’s severely lacking in experience. Lack of experience in dealing/forming partnerships with other countries, and what it takes to get the economy churning along. Just a bunch of feel-good short “visions” to spend NZer's hard earned money with no plan and no regard for future consequences. Of course this goes down well with the commoners who also can’t see beyond what is in front of them as well, and it’s sounding like we’ve got armies of them here in NZ.

Of course this goes down well with the commoners

And the definition of "the commoners" is?

I think the fact that people are using the word is enough. Just about says it all, really.

Not the landed gentry, I guess?

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What's worse, a leader with limited experience but solid social values or a neo liberal dumby who works solely for big business and the elite?

If you're not one of those two you may be best to change your tune.

Another question for you, when voting do you solely look at what's best for you or what's best for society as a whole? Depending on the answer to that question you may have some difficult questions to ask yourself.

I think, sadly, at least 60-70% of voters vote for whats best for them and family versus what is in the overall best interest

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You may be proven wrong this election. I'm not voting for my own self interest this time, because I am absolutely fine. But I am giving up my vote for my children's future because I want them to have the same opportunities that was bestowed upon me.

A feel good atitude

Fritz I'd guess its even higher than that and the same on both sides - the vast majority vote for what they think is best for them, 43% did with Trump apparently - lets see how they go.

I thought the commoners had more sense, witness Brexit and Trump. It's the intellectuals what know best that you need to worry about.

If we end up with a Labour Govt (in some sort of unsavoury coalition arrangement) in a fortnight's time, then goodness knows what will happen to the housing market........

Certainly, I'm not ruling out an inflationary impact, especially if there's a capital gains tax (which will likely reduce the supply of houses coming onto the market). It's about time Labour came clean about its proposed CGT. How can people vote rationally if the details are kept secret?

Whatever, house prices typically surge after a Labour Govt has been elected.

Heaven help us.

National already brought in a capital gains tax, they called it something different though. They used the word bright but the word shiny may have been equally as effective on the sheep that follow these muppets around.

My fond hope is for a party to tax income regardless of source. Capitol gains should be taxed, regardless of whether the gain occurred in 2 months, 2 years, or 2 decades. It is still income (even if it is a sale of the family home). The fringe group that wishes to tax capitol, regardless of gains, well, good luck with that! A wonderful redistribution of wealth, and a rather strong disincentive for motivation.

It appears that I am still looking for a party that matches my desires (fiscal conservatism, social liberalism). This party has yet to appear in NZ...

Yankiwi - you seem to be extremely keen on a CGT without exceptions , one that includes family home /primary residence.
This is effectively a tax on moving house , with distorting impacts on labor mobility etc . - what do you think makes that unimportant ?
I note that most countries with a CGT ( or indeed a wealth tax ) exempt family home either completely or almost completely . This includes US, UK , Australia , Ireland , Netherlands , Spain and a long list of others . Do they all have it "wrong" ? If yes , why ?

So you think CGT is a good idea now? Note that all these countries also have inheritance tax which is effectively a capital gains tax on the sale of your assets (including your home) to your children.

No I do not consider a CGT is a good idea ( where did I say that ? ) .
Note that all those countries also have income tax deductions for mortgage interest - which balances CGT out to a large extent ( would be a bad idea to introduce that here in my opinion ).

Well, all of them except Uk and the Netherlands but don't let that get in the way of your argument
https://en.wikipedia.org/wiki/Negative_gearing

Nowhere did I refer to negative gearing - this is a separate issue. Mortgage interest deduction for income tax purposes is allowed in the Netherlands ( although there are efforts to phase it out gradually ).

In NZ your rental income tax is after deducting expenses including interest so by your logic we should have a CGT as this will balance out?

No at all - you are either missing the point or playing dumb,
This sub thread refers to the tax treatment of the family home/primary residence. Mortgage interest deduction for that is not part of NZ tax code as it stands , but is allowed in the other countries I listed . Those same countries have a CGT / wealth tax ( with significant exemptions / rate reductions for family home).

Are you trying to tell me that interest paid on the mortgage of your primary place of residence is tax deductible against your personal income in these countries?

It is not in the UK. The MIRAS scheme was scrapped in the late 90s

Yes - with some imitations that differ from country to country.

Yes.

I am just trying to understand where you are going with this. The countries listed have very different tax treatments and you are cherry-picking the ones that suit you.Are you saying that if income tax was reduced then a wealth tax is ok as it balances out?

Yankiwi - I think the problem is that's a Jacinta "vision" thats not going to happen because truth is the two don't generally go hand in hand- One requires a hand kept on the wallet, the other general demands spilling its guts.

I don't think a Labour govt will make much difference to the OVERALL housing market.
What they will do, if they fulfill their policy promises, is give first home buyers much more of a chance

I seriously doubt it.

Well you won't know until someone has a shot at it, I don't think National are interested in disturbing the status quo too much, so we need someone else to have a shot at it.

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Does the Chinese government actually want it's citizens taking cash out of China and investing it in overseas houses? It appears to me that they are doing everything that they can to keep cash in China. They may actually welcome a move like this. Have the restrictive measures in Australia and Canada affected their trade relationship with China? Do you really think that China's long term trade strategies are subject to such knee jerk short term objectives?
If the government has committed us to some secrete open ended deal allowing the Chinese to buy anything in this country, they have not told the rest of the country, and if so we have every right to be pretty dam angry about it. Is this the case????

The Labour Party under Clarke committed to it.

Is that actually right. Labour committed us to allow the Chinese to be able to buy property in NZ without us being able to do anything to stop it? It is a a crucially important piece of information. Id love to see that verified from an authoritative source.

They did not stitch us up, however, to never being able to do anything about it, that was National's doing with the South Korean fta. That one definitely does that and having signed that, we had to offer China the same.

No wonder National invested in over three properties per person. And to think, from Pullya Benefit purchased her first one while on the benefit via a cheap Housing Corp loan.

Edit: clarified, this is not related any allegations made by those who knew her when she was younger. It is rather, public record from a Mana Party press release.

Hone Harawira noted in a press release for the Mana Party, that:

"I like Paula but she’s a bloody hypocrite” says MANA Leader Hone Harawira about the Minister for Social Development’s welfare reforms.

“When she was only 19, Paula Bennett was on the Domestic Purposes Benefit but was able to buy her own house in Taupo for $56,000, courtesy of a Housing Corporation loan. Bennett said she’d worked part-time but that she “pretty much fell apart because I was exhausted. I went back on the DPB".

Source: Press Release from Mana Party

Appears to be just another example of those who received housing help via the Housing Corp and other measures of NZ's governments' efforts in affordable housing, denying it to younger generations of Kiwis. "Got mine. Eff you lot."

Careful. She has lawyered up already on this issue.

If Mana is you source ..

Paashaas, you're engaging in ad hominem instead of addressing points.

I am shocked.

Kidding, of course.

John Fallon on Morning Report pretty much confirmed that this is what happened, so as it stands we have two trade agreements that permit foreigners the unfettered right to purchase NZ homes. National opened the flood gates to this through the Korean deal. That explains a lot about what is going on.
You have to question what on earth the right to purchase homes in a trading partners country has got to do with trade and question what the real motives are for wanting this. It suggest the totally different and wholly sinister objective of invasion by stealth. This is not too different from a army turning up on our shores and we need to urgently address the threat. If need be, trade deals need to be put aside because our sovereignty is under serious threat. I would have thought that the opposition parties would have been shouting this from the roof tops leading up to the election and crucifying National over their treachery.

Very true.
Right now China is undertaking the largest colonisation project the world has ever seen.
We would be wise to see it for what it is.

It wasn't a problem under labour with overseas investors being aloud to buy existing property. If it did you would have thought a quick law change would have been done to keep housing affordable. It wasn't to after the GFC in China then a few years later there stock market crash and there property with all these city's they built (ghost city's) and a lot of the Chinese lost a lot. So then they turned to overseas property. There government put up with that for 4 or 5 years but now have put a stop to it and now giving them the opportunity to invest in the new Silk Road project. I would imagine there's a lot of mortgages in China linked to overseas property like nz that the Chinese government are keeping a eye on so lets hope these property's remain good investments. As for national in 2014 they and the RB should have put a stop to this behaviour . Of course most on here will say it needed to happen and should stay to keep the high house prices. But gone is gone. High demand to low demand means over and theres stuff all that could even get close to the demand of the Chinese money flow. The locals in Auckland haven't a hope in hell matching that

Not true.

Only if the TPP went through would there have been an issue. That was never going to happen so no problem here. Move along please.

"The Labour Party under Clarke committed to it."

Now that was a Government to admire.

First, the Chinese Govt has banned their citizens from purchasing residential property overseas, so I doubt its a problem. Secondly, Australia has a Free Trade Agreement with China as well, and they still ban foreigners from buying established property (except for development or business purposes).

This is a true. The ban is on buying existing property only, it's not very well policed though and there are a thousand and one ways to circumnavigate it. It is however a start.

@Chris-M You're right, Chinese government now restricted citizens using $50k annual foreign currency limit to buy overseas properties. Also foreigners cannot invest properties in China as well. So I think there are no problems for NZ to ban foreigners (including Chinese) even under free trade agreement.

Just amend a few definitions from the existing OIO. No new tax required.

From http://www.linz.govt.nz/regulatory/overseas-investment

Overseas people must get consent through the Overseas Investment Office (OIO) before they can invest in New Zealand’s sensitive land, significant business assets and fishing quota.

Investors who need consent:

- generally aren’t New Zealand citizens or are people who don’t ordinarily live here
- are bodies, such as companies, trusts and joint ventures, with more than 25 per cent overseas ownership or control
- can include associates (including New Zealanders) of overseas investors.

Just deem all residential land sensitive and all investment property significant business assets

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All this hand wringing over what trade partners might think if we impose bans on overseas speculation in residential property is not based on evidence. Canada, SIngapore, Australia and even Hong Kong have all imposed restrictions or other imposts/taxes on overseas ownership. Yes, so New Zealand apparently doesn't have any material demand from offshore buyers (yeah right, just lots of people on student visas) but why not impose restrictions anyway? Indeed, the Chinese Government themselves don't want capital being taken offshore, they say "houses are for living in, not investing in". And who is seriously going to be annoyed in Australia by not being able to buy an existing house in NZ to the extent that their vote is going to cause us issues with trade? I think caring about the few people who have trans tasman property portfolios over the fact that huge amounts of money from offshore are chasing property globally seems a little odd.

Although they aren't perfect, I can say from living in Aus for a few years that at least the Aus government appears to care for it's citizens more than we do.

Great commentary on that 100-days promise re foreign ownership. It seemed to me, about 5 seconds after I heard it, that it was a 'Hope and Change' populist pitch which would see the good ship 'Hopey Changey' afoul of the reefs rather quickly if indeed it managed to set sail.

It will be worth teasing out further on this site, because whilst we are in the grip of a minor political mania and a regional housing bubble;, calm, informed minds are needed. And we can rule out many of the common taters - the standard has fallen rather drastically of late.

What's your position Wymad?

So you are in full agreement then that non permanent residents should not be able to buy property in NZ (in your round about ego intellectual way)

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I would like to dispute this idea that National is focused on housing supply. Sure National keep squawking -supply, supply........but really it is all spin and bulldust.

What National have been doing for 4 years now is using taxpayers money to give ever increasing amounts of $$$$$ to FHB so they have a big enough deposit to borrow gazzillions to buy an existing house. Even though all respected economists from the left or right say that policy does not work -it just inflates house prices further.

Initially the Reserve Bank was countering this by raising deposit requirements. But eventually they got manipulated into raising the deposit requirements on investors to 40% while leaving FHB with only needing 20%. Calls from the Reserve Bank for debt to income tests which would have applied to FHB and limited their ability to borrow gazzillions were firmly rebuffed.

Conveniently for National the Reserve Bank governor term is up, a temporary replacement is due to start in a few days time for six months -before a permanent replacement is found. So no more awkward questions will come from Reserve Bank for a while.

Doing anything, whether it be on the supply or demand side would go against every one of the free market ideals that make up the fundamental building blocks of neo liberalism. Of course they have don't nothing. Do you think multiple property owning Irma and George from Mnt Eden care about either supply or demand?

What the Nats have done an OK job on is in liberalising planning regulation, to help enable supply.
Unfortunately, despite their rhetoric, planning liberalisation is only one of a number of policy responses required.
In and of itself, it is totally insufficient.

Someone needs to explain to Jacinda that when you ban foreign investors from buying the expensive established properties, they simply turn around and buy up all the cheaper new properties. Thus removing all the new supply from the market, and pushing up house prices even more. See the Australian situation as an example. You have to ban them from buying everything, or do nothing.

Got to start somewhere but I agree they need being kept away from the lot.

Like i said it's a start but it's not ideal

Good article David Hargreaves and concise analysis ...
The possibilities you mentioned about china's reactions are real and we really dont know all the content and details of other DTA which Aus, Canada, US have with china and surely there is no one size fit all as some simple people would like to think ...
Your example of blocking Fonterra is quite possible or even twisting our hands in another important issue like the one happened with imported steel last year !
Unfortunately some of us do not actually realise the size and weight of each country and who could get hurt in an arm twisting between Big and Small !!
I agree with Waymad that this is an uncalculated election stunt aimed for collecting some hot heads before they cool down or pay too much attention to the tax policy blunders they want to pass ... and surely cool heads in the ministry of commerce and trade and foreign affairs will advise otherwise.
However, I am still suspecting that there will be rush on high quality houses in Auckland by some overseas buyers before Xmas if Labour crosses the line - these are the $1,5M - $5M range ...nothing of the FHB stock ...

And this highlights exactly the problem with NZ selling off its most productive farmland (as well as houses) to foreign state-and-private companies. People harp "It's fine, they can't take the land anywhere, we can always legislate however we wish", forgetting that NZ lacked the strength to keep two French terrorists in jail in the face of such threats, let alone resist threats from governments if we seek to enact legislation that foreign-owned state-commercial farms don't want.

National is overseeing a sell-off of NZ land just as we head into a time where food security and global climate change will be major issues.

Wouldn't foreign investors buy established property just push up prices making it harder for locals to buy but them buying new adds to housing supply and rentals helping to bring prices Down. Or should I say sorry we want things left the way they are. Is that the greed thing again

Dear Taxinda,

I’ve seen you on the telly, dear,
There’s quite a hullabaloo,
But taxing this and taxing that
Means my two ticks stay BLUE

You’ll tax us on our assets
There’s nothing you won’t snatch
You’ll tax us on our holidays
You’ll tax the boat or bach

You’ve said you’ll slap a tax on fuel
So when I need the car
I can’t afford to fill it up
I won’t get very far!

You’ll tax water by the litre
And our farms will hit the wall
Have you forgotten it’s the farmers
Who grow food to feed us all?

You’ve said you’ll tax emissions,
Does that mean mine as well?
If I can’t afford to fart, my dear,
Your tax can go to hell!

You’ll tax us on the things we own
Is nothing off the table?
I dread to think what else you’ll tax
As soon as you are able

I’m told you want a ‘gift’ tax
So the bit I’ve got put by
I can’t give to my grand-kids?
They can kiss my gift good-bye?

You’ll take the joy from giving
And even when I’m dead
You’ll slap me with Inheritance tax
Or take my house instead

Taxing the shit out of all of us
Is just not very nice
And I’m hoping at the polls, my dear,
The Left will pay the price

Truth to tell, Taxinda,
I think you’ve lost the plot
You’ll not get my vote, sweetheart,
My ‘comrade’ you are not!

So thank you for reading my letter,
I’ve got things off my chest
Just leave it up to National, dear…
They really do know best.

So I’ll vote for Mr English
And his team - they’ll get it right!
A pretty smile is not enough
Goodnight, Ms Ardern…….Goodnight

"anonymous"

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You need help

So I’ll vote for Mr English
And his team - they’ll get it right!

Funnies, most satirical part of the poem bar none. Based on the track record.

Very Nice Ex Expat ... thumbs Up

Hi Ex Expat,

Wonderful contribution!

What a clever poem!

Best original effort I've ever read here.

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Dont get out much do you TTP

I'd like to claim it as mine, but alas it's off a FB post shared to my wife's account. I don't know who wrote it.

Hi swapacrate,

I challenge you to think of something original......... or really just to think at all.

Hi swapacrate

Hey O4

After doing some anlysis on the fundamentals and drilling into the structurals I have come to the conclusion that you offer nothing and the challenge is right back at you TTP.

Im just copying your mode of operandi along with the other Im alright jack pack, I like to copy what you guys do.

That "poem" is the most baby boomer comment i've ever read here.

Confirmation bias? The post on FB has over 2,000 shares and 1,300 comments, many of them with concerning content.

I'm actually starting to worry about NZ. It's turning into a real them and us election and I wonder how long this will last after the election, no matter who wins. We will get land occupations at Mt Maunganui and protests outside single house properties?

TIL there's more than 2000 baby boomers.

I was reading the other day of declines of civilisations. One thing highlighted was that as segments of the population started to have their opportunities for getting ahead and building a reasonable life reduce, this seemed to foment unrest. You can see this in the UK and USA - populations who have effectively been marginalised and ignored by leaders and told everything's fine and they should just get on with being ants, are reacting in rebellion - albeit in small ways to start.

I suspect that if we continue to reduce opportunities for young and upcoming generations of Kiwis (especially those opportunities that were provided to preceding generations) while still expecting to take their earnings off them and give them to the elderly via the Pension, we may well see a decline in our society and the rising of strong discontent.

Capital gain is not evil, but when it comes to residential houses, yes. That gain is paired by the FHB and the younger generations it is our responsibility to keep it in under control.
But we can adapt simpler solution like treating the rental income as a passive income, lets license those unprofessional property managers and make sure all the rent incomes are taxed. (The foreign owners are still not paying tax from rent because they did not need the IRD number.)

I disagree. IMO capital gains should be taxed, and they should be taxed without any loopholes. That is, the gains from the sale of a family residence should be taxed, and treated the same is any other income received. The concept that a sale of an item that has appreciated in value should be considered as tax free... I have trouble understanding this concept. Why should some gains be taxed and others not taxed?

I agree the soonet we get it in our heads profit is profit the better . Profit is taxed on everything else . Keeping in mind most people get mortgages so with the amount of interest payed over the years there wouldnt be that much profit anyway

I wonder if the buyer of Sir Chong's mansion has an IRD number. If not then I'm sure Sir Chong could arrange one with haste...

What happens when your parents die , you will be forced to sell their home to pay Capital Gains tax

Nobody under 40 is worried about the tax bill when their parents die. They are worried about the fact that they can't afford a house, let alone save for their children's future, that their pensions are underfunded because of globally low interest rates, that they are still paying of their student loans, and that their children's student loans are going to be even more crippling.

I appreciate that if you won the generational jackpot that you might not consider this when you vote in a fortnight, but I can assure you that I am far more concerned about my quality of life now, and over the next 2-3 decades, than I am about a **possible** CGT on inheritance.

Are you talking about their home, or their investment property?

Why would you assume it would be different from the current Bright Line CGT that National implemented?

http://www.stuff.co.nz/the-press/business/70183062/more-details-on-the-c...

Yes, the house is on-sold to your children, realising a gain. If your children really want the house, they can mortgage it to pay the capital gain or sell it and still walk away with 70% of the gain. I sure poor Tarquin and Ellie will do ok with 70% of your $4m Greenhithe property.

All that time and effort for a couple of thumbs up...

Capital gains tax has a particularly bad reputation, internationally.

Technically, it's a complex tax and one that's notoriously difficult to administer. Getting rid of loopholes is all but impossible - a can of worms if ever there was.

Developing a capital gains tax that's fair and efficient (and cost-effective to administer) has evaded pretty well all countries.

Politically, the spin doctors can make it sound very appealing/compelling as a means of redistributing wealth/income from the rich to the poor - but the practice is something entirely different.

How about a tax-neutral land tax? That would reduce complexity and work to modify speculative behavior thereby reducing financial risk to the economy. That's got to be a good thing, right?

CGT has nothing to do with " redistributing wealth/income from the rich to the poor" as you say. What it is is one way of balancing taxation ie making it more fair. Sadly the self proclaimed property geniuses who credit their untaxed capital gains from a chinese speculator driven bubble over the past decade to their own wisdom and 'hard' work, refuse to see it that way.

Property values will not come back with a capital gains tax but it would make the tax system much fairer.
Someone in Remuera with a dozen or so houses sells one and makes $300,000 capital gain pays no tax.
Someone working in a factory has to pay33% tax on his pay.
To me this is obscene, but National accepts it as it creates massive inequality.

Firstly, let me get this straight - you are against a CGT because you might easily avoid it? So you would be for a CGT if it was unavoidable?

The least avoidable tax is a comprehensive capital tax on an minimum assumed rate of return.

Interesting article in Stuff today:

Rototuna is New Zealand's boomtown

Hamilton has really become more popular in recent times. The article was particularly interesting to me as it showed the demographic makeup of the suburb which corresponded with something I noticed about some of the wealthiest suburbs in the US when I was "researching" them. If you look at the demographics of Hillsborough, Atherton, Piedmont, Kentfield and Los Altos Hills, all in California they all have about 70% European and close to 30% Asian populations. Asians no doubt seek out affluent areas because they are perceived as safe and have good schools and are likely to be good investments - factors highlighted in the Stuff article. I know it's pretty obvious but that 70/30 mix seems to be the golden figure currently. Wikipedea articles on these places are quite specific about the demographic makeup.

So what do you want to say? Suburban areas in California with a 30% Asian / 70% European demographic split is a benchmark for a suburb to be "wealthy"?

The Chinese / Japanese / Korean populations in California have been in the U.S. for over 100 years and well established. it is quite different to Asian emigration to NZ or even Australia.

According to Wikipedia California was only 2% Asian in 1960 and 13% in 2010. It looks like a similar trend to NZ. We also have our Asians who have been here since the gold rush.
Probably all I am saying is that the canny investor should study the Asian buying trend. It's like the new gentrification in a way. Although it is more likely that they are attracted to areas that are already wealthy however they don't seem to have an adverse impact.

Los Angeles and San Francisco have had thriving Asian communities. That's why Chinatown and Little Tokyo are places of cultural importance and have been around since the start of last century. The U.S. Army even had a Japanese American battalion (the 442nd) who fought the Nazis in WWII and is the most decorated combat unit in U.S. military history. More than one Hollywood movie has been made about them.

In NZ, most people would probably be unaware if their local Chinese takeaways was run by people of Vietnamese or Chinese descent

And yes, many Asian emigrants to NZ are wealthy and are likely to want to live in areas with cultural familiarity.

Definitly been a drift away in Hamilton from Dinsdale,Hillcrest,Glenview and Te Rapa.The place to be is Rototuna and house prices reflect that.Houses in Dinsdale at the moment are pretty slow to sell and i think that is because neighbouring suburbs Frankton and Nawton are filling up with rental apartments.Robberies in Dinsdale have increased ten fold over recent years and police sirens,once never heard are just part of the daily routine.

You want to take a walk around Flagstaff, Rototuna, Huntington. If you know what you are looking for, you will notice plenty of houses that are clearly rented. It is happening everywhere.

One thing for sure is that it's not hard to pinpoint a rental in those areas.

Of those three areas, Rototuna would have the lion's share of rentals. It is becoming pretty hideous over this side of the bridge, the latest area to the east of the roundabout where Gordonton Rd meets Wairere Drive, it is pig ugly. Looks like Addison area of Takanini in Auckland. Sections are so tiny there will be no room for any sort of tree growth, it will be yet another barren area, no flora and full of permashade from houses too close together.
And all the shops and businesses springing up around them, every. single. one. of. them. that I have had anything to do with, operated by immigrants, so clearly this is all this is, growth for immigration's sake for growth, one giant ponzi.

We moved to Hamilton from the South Island 4 years ago and were told to go to the Rototuna area. We couldn't get excited because we can see it going downhill due to congestion, too many rentals and traffic delays into the city. The rule in real estate is unless you have views of some kind (western hills, lake or river) , it will get old and tired and will not be appealing. It suffered really badly after the GFC also.

I don't think most nzers would worry who moved to nz or nzers moved back to there home country or even a little overseas investors. We are only 5 million people in a country the same as the uk and don't they have 60 million. The problem is only about the volume of people so fast changing the affordability of locals and making the argument should a city like Auckland keep demand up and hope wages and housing catch up or ease back and let prices fall back and admit a mistake was made. Auckland does have another problem and that is with lower existing house prices there new builds are quite expensive and tend to die of with lower house prices. But still all Auckland (government) needs to do is controll volume better and not repeat 2013 to 2016. But a mayor part of that started with the overwhelming volume of overseas investors and without that anymore we are very unlikely to get that massive volume again in the future so things can only balance out you would think and the market will work itself out over time. It normally does. A fair DTI restriction could be a good idea specially if the housing market we low to lifting and could keep interest rates low at that time to. Win win

Dear Jacinta
I know you have not got around to reading this as it is probably to complicated for you. Please find somebody to explain it to you as all the information is in here to allow you to come clean on what policies and taxes you are going to put on us hard working New Zealanders. Just think of the money you will save not having to repeat it.
https://www.victoria.ac.nz/sacl/centres-and-institutes/cagtr/pdf/tax-rep...

With a flat building section costing anything from $500,000 , building costs of up to $5,000/m2 , and the Auckland council charging $15,000 for a simple water connection .......... there is no way in hell we can get house prices to anything close the being affordable for people such as teachers or policemen or folk on the median wage .

It simply cannot be done they simply dont earn enough money , and the Banks will not give them a mortgage .............. I know this first hand , my children dont earn enough to service a mortgage of over $600k

Labour are telling porkies when they dangle cheap or affordable houses in front of gullible voters , they neither have a viable plan nor a workable solution

But , nor do National either

And yet sections in Chch start with a 1. As Hugh P used to say, get the land price right and everything else will follow.

Reality checks;

1. CGT is the global norm, and rental markets operate just fine despite it. Most earnings are taxed globally and this is not a novel or untested strategy. It is absolutely the norm.
2. People who are hoarding wealth, often don't want that to see change to that dynamic and that is more important to them than any other social issues. They will attach themselves to uninformed hyperbole to justify the belief that serves their purpose (see the history of feudalism, empire, class and imperialism).
3. Baby boomers have not worked any harder than anyone else. Their wealth is not testimony to their hard labour, but to a culmination of factors that combined to benefit them economically as a generation. This is well documented. The War Generation, Gen X and Millennials work/ed hard and have much less to show for it because of a culmination of different factors.

You have no idea what you are talking about, you were not there to see what we did to get ahead. One thing we were not doing is writing posts at 9.43 in the morning.

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I'm guessing you are in Auckland? And I'm with you - that's unacceptable. And if things don't improve (meaning if house prices don't fall soon), there will be an exodus.

Hi keriwin. Great name. I am DEEPLY interested to know what you did to get ahead, that I am not already doing myself.