sign uplog in
Want to go ad-free? Find out how, here.

NZ will have to wait a couple more weeks to find out how the Govt plans to address the housing crisis, as the latest COVID-19 outbreak moves housing down the priority list

NZ will have to wait a couple more weeks to find out how the Govt plans to address the housing crisis, as the latest COVID-19 outbreak moves housing down the priority list
Grant Robertson

The Government is delaying making housing policy announcements by a couple of weeks.

Finance Minister Grant Robertson had planned to unveil changes by the end of February.

But his office today confirmed announcements would be made in mid-March, as responding to community cases of COVID-19 last week pushed back other work on the Government’s agenda.

Furthermore, Parliament is in recess next week, breaking up two three-week sitting blocks.

While Robertson consulted with Treasury and the Reserve Bank (RBNZ) on curbing housing demand, interest.co.nz understands the mid-March announcement will also include some supply-side changes.

Further supply-side policy announcements will be made at the Budget.

Robertson is expected to make decisions on whether or not to give the RBNZ debt-to-income (DTI) tools. These would empower the RBNZ to restrict banks from lending to borrowers seeking a lot of debt compared to their incomes.

Robertson, like his National Party predecessors, is worried DTI restrictions could make it harder for first-home buyers to get on the property ladder.

But RBNZ Governor Adrian Orr a couple of weeks ago suggested it would be difficult to exempt certain types of borrowers from the rules.

Robertson is also expected to decide whether or not to change the RBNZ’s remit - either requiring it to factor house prices into the way it regulates banks or the way it conducts monetary policy.

Robertson in November proposed changing the Monetary Policy Committee’s remit to require it to consider house prices when lowering interest rates for example.

But the RBNZ swiftly hit back in opposition, suggesting it would rather be made to consider house prices through its financial stability arm/via the way it regulates banks.

Robertson is also expected to make a call on whether or not to extend the bright-line test beyond five years. Currently, people who buy and sell residential investment property within five years have to pay income tax on any gains made.

Given the Government has repeatedly said extending the bright-line test wouldn’t constitute a “new” tax, and thus wouldn’t see it breaking its pre-election promise to not introduce new taxes, there’s been talk an extension of the test could be on the cards.

Beyond this, Robertson and Housing Minister Megan Woods are undoubtedly considering other options.

Robertson earlier this month said: "We all know that building more houses, particularly affordable houses, is critical. But we also can do more to manage demand, particularly from those who are speculating.

"New Zealanders are seeing family members being crowded out of the opportunity to purchase a home of their own by speculators and investors. We want to tilt the balance more towards first home buyers, while also incentivising more investment in the construction of homes.”

The Government has stuck to its position that it wants house price growth to slow, but doesn’t want house prices to fall.

Median price - REINZ

Select chart tabs »

The 'NZ total' chart will be drawn here.
Loading...
NZ total
Source: REINZ
The 'Northland' chart will be drawn here.
Loading...
Northland
Source: REINZ
The 'Auckland' chart will be drawn here.
Loading...
Auckland
Source: REINZ
The 'Waikato' chart will be drawn here.
Loading...
Waikato
Source: REINZ
The 'Bay of Plenty' chart will be drawn here.
Loading...
Bay of Plenty
Source: REINZ
The 'Gisborne' chart will be drawn here.
Loading...
Gisborne
Source: REINZ
The 'Hawke's Bay' chart will be drawn here.
Loading...
Hawke's Bay
Source: REINZ
The 'Manawatu' chart will be drawn here.
Loading...
Manawatu
Source: REINZ
The 'Taranaki' chart will be drawn here.
Loading...
Taranaki
Source: REINZ
The 'Wellington' chart will be drawn here.
Loading...
Wellington
Source: REINZ
The 'Tasman' chart will be drawn here.
Loading...
Tasman
Source: REINZ
The 'Nelson' chart will be drawn here.
Loading...
Nelson
Source: REINZ
The 'Marlborough' chart will be drawn here.
Loading...
Marlborough
Source: REINZ
The 'West Coast' chart will be drawn here.
Loading...
West Coast
Source: REINZ
The 'Canterbury' chart will be drawn here.
Loading...
Canterbury
Source: REINZ
The 'Otago' chart will be drawn here.
Loading...
Otago
Source: REINZ
The 'Southland' chart will be drawn here.
Loading...
Southland
Source: REINZ

We welcome your comments below. If you are not already registered, please register to 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.

106 Comments

35
up

SHAME.

The Government has been clear that it will not reform New Zealand's taxation system by taxing property and wealth, rather than income and consumption.
Wearing that straitjacket Grant Robertson still has room to wriggle with the current regime to try to make housing more affordable, both for first-home-buyers and for renters.
1. Ban banks from lending to landlords to buy existing houses as investment properties: property investors should be able to borrow from banks only to build new homes and increase the national housing stock. This will tilt the market towards first-home-buyers.
2. Extend the Bright Line Test from 5 years to 99 years for all homes not owner-occupied: the capital gains tax you can have when you won't have a capital gains tax. This will tilt the market towards owner-occupiers.
3. Introduce an emergency-housing social levy (not a tax) on unoccupied homes not less than the assessed capital gain for the period of vacancy, and on all vacant land within city boundaries.
4. Require all rental homes to have a warrant of fitness, and all landlords and property managers to have a fit-and-proper-person licence. This will remove below-standard dwellings from the rental market, forcing sale to owner-occupiers, or demolition.
5.. Build state houses for lifetime income-related rent by all who want them: 100,000 of them.

Ideas! Guess what, they do exist. Not in the corridors of power, alas.

Here is some more ideas for how to gets out of this economic mess. Keep interest rates remain low and direct the stimulated borrowing at the logjams in housing supply - perhaps using the kind of mechanisms outlined in JohnTrz above comment. Borrowing should stimulate the provision of housing related infrastructure, build-to-rents etc not further investment in bidding up the price of the current housing stock. I believe NZ needs a housing commissioner to do this not a reserve bank governor. A credible housing commissioner could address both deeper supply issues (including opening up the immigration tap without adequately resourcing infrastructure provision) and first-home-buyers FOMO and property investors greedy demand expectations that currently are having a big impact on the housing market. See part 2 here.
https://medium.com/land-buildings-identity-and-values/new-zealands-rack-...

No way. Interest rates have to go up. Market suppression to favour borrowers over savers has to end. It has gone on far too long already.

Rising interest rates will kill off the construction sector - like NZ did going into the GFC. Is that the outcome NZ wants? NZ feels like 2003. We could keep raising interest rates to 2008 to control the housing market. But if other demand (immigration for example) and supply constraints are still significant factors then it will take a harsh monetary response to crash the housing market. Wouldn't it be better to slow immigration down and reform the housing supply constraints so the country can build itself out of the housing crisis. Essentially that is what NZ did from the 1930s through to the 1950s to escape the Great Depression. It left the gold standard i.e. loosened monetary policy and the 1st Labour government built the equivalent of 90,000 state houses.

The construction sector is work and could be supported by fiscal spending rather than only monetary policy.

Let the inter-generational wealth theft continue! Huzzah!

OK, then use DTIs only for 2nd house onwards, but not the family home. Easy, done.

You cannot make exceptions, otherwise investor funnel their money through relatives and other people who cannot afford buying a house which is very difficult to stop.

14
up

Wow....
The expectation builds......not

The Government has its priorities right.

Covid outbreaks are far more concerning than the housing market - for which the Government has no silver bullet anyway.

Sensible for the Government to prioritise the issues for which it can be effective.

TTP

40
up

But the people doing the housing policies etc have nothing to do with the covid response, apart from the minister himself, being DPM. It is not an either / or situation.

37
up

So there is absolutely no way for this government to do two things at once?

15
up

Looks that way.

Sure does, very bad look. Let's hope there is something a bit more thoughtful going on as opposed to the tinkering ideas so far mooted.

- Extension of the bright-line test would likely further inflate house prices, as investors try to claw back the tax in their sell price.
- DTIs would make it harder for FHBs to purchase.
- Changing the PTA with RBNZ would make little difference.

As everyone here will already know, I favour:

- A tax applied at the time of drawdown on unrealsied capital gains if purchasing an existing home. This would likely stop investors in their tracks where the low end of the market is concerned. Best coupled with no tax on buying new builds with unrealised capital gains;
- And rent controls on all low/median bracket rental properties (low/median based on CV), if they don't want to introduce a universal rent control formula/policy.

And government built leasehold housing. :)

A proper government house building programme - not a fake one like KiwiBuild - but something modeled off a proven successful overseas programme - surely that has to be part of the solution.
Check out this video produced by Vienna's housing and urban renewal fund - imagine if Auckland had one of these for the last 35 years like Vienna has had.
https://www.youtube.com/watch?v=69mIwvdPTkQ

A big NO to rent control. Tried before . All the solutions suggested are just tinkering with the problem.
Needs real Politicians with foresight on how to run the Country for the people in general not for a selective few

Surely you would agree this cannot go on;

https://www.stuff.co.nz/life-style/homed/renting/124318345/my-wellington...

#rentcontrolnow

Extension of the bright line test will only have that effect if it's a short extension that investors think they can wait out. Extend it 30 or 40 years and you solve that issue.

And wins them vote short term. Kick the can down the road for the next Govt

What anyone here still seriously worried about covid in NZ?

The cv19 response is on autopilot. We will not have a major uncontrolled outbreak unless we choose it, or there is a significant amount of mutation.

The covid success here is because community does the right thing. Arden just gets reports and pushes buttons 1,2,3,4.

Time to do the one thing they were originally elected for.

Looks like this government cannot even build expectations. Let alone houses.

18
up

They know what's needed, but are simply to scare to do anything. Makes you wonders who's really running NZ.

In case your wondering...its a land tax offset by less income tax. Not make any more mate, never goes anywhere mate. All good things for tax.

Simple. Unavoidable. Repeatable. Inevitable.

Would this apply to all residences including one’s home?

Yes please.

Personally I'd prefer the proceeds go to a UBI, call it the NZ dividend or something, but reduced income tax is also fine.

Same with an environment tax: tax the crap out of emissions but then give it all back equally in the form of a UBI. In both cases the only people that lose are the ones that have an above average amount of land or emissions.

Exactly

Unfortunately they also make up an above average amount of votes.

11
up

All natural resources should benefit all NZ'ers. Why should rich people sitting on piles of land wealth be exempt through a family home loophole? The incentive for efficient occupation of all land is vital for a functional economy.

16
up

ditto that our water can be taken free, bottled and sold overseas for profit. Nobody got to take our coal for nothing. Where the heck are the Greens then on this outlandish piracy. If they want to get the country behind them why don’t they tackle glaring injustices like this.

It always amazed me that National bleated about oil and gas and the potential wealth for Kiwis (not really forthcoming) yet in the same breath would insist that Kiwis should not benefit from another natural resource, water.

No chance of a Norwegian style sovereign wealth build-up from liquid resources with such attitudes that consider Kiwis so second-place to foreign owned businesses.

Yes, the easiest and most sensible proposal, but don't see it happening.

23
up

Nothing to announce... so lets delay it till we think up something futile that will confuse the natives into believing we are doing something

25
up

Just need to wait for the next distraction. Maybe Jacinda will find another lost teddy, you know, important news like that.

Just like all the other governments have done and are doing all around the world.

25
up

HA-larious~!!

Everybody on interest.co.nz called it - commenters and authors included.

14
up

In the primmers it took me a little while to understand that 1 x 0 was worth exactly the same as 100 x 0. Useful lesson that. Have found empty words work the same way.

Good time to announce the delay too while there is plenty of other news to drown it out.

32
up

COVID-19 is a God-send to this government. They can defer everything by using COVID-19 as the excuse, as if the whole government is working on COVID-19 at all times. They can also use COVID-19 to blow the doors off any fiscal restraint. Robertson isn't even fiddling while Rome burns, just smirking his way through it. Although, to be fair, he did write a letter I suppose!

16
up

As we saw during GR grilling in Parliament recently. Constantly pulling out the "well in case you missed it, a little thing called COVID happened!"
It's a pass to do anything. Or in GR case, a pass to do nothing.

18
up

Perhaps I could 'kind of' accept Covid as an excuse months ago, but certainly not now. It's effectively business as usual with covid.
Regardless, governments always have a number of things they need to grapple with.
Muppets.

15
up

Maybe time to hang up his sports and recreation portfolio if he's struggling to grapple with more than one thing.

COVID-19 is the new Christchurch earthquake.

10
up

They even said this is the year of the vaccine. Rather than this is the year they will put in policies to solve the housing crisis. They are just kicking the can down the road. They are too slow to react to changes in the market, and when they do 'close the barn door' the horse has already bolted.

"They can defer everything by using COVID-19 as the excuse". This is exactly why they should've been the govt to tackle housing. No previous govt touched housing as it is the sacred cow but COVID-19 was the perfect excuse to finally tackle all things housing like tax etc.

Jacinda could have said "In unprecedented times such as right now with COVID-19 we have to be able to adapt to the ever changing environment and that includes re-thinking our policy stances and promises. In line with being a proactive govt we have decided to implement a land tax on residential housing, we're reducing income tax, overhauling the RMA and giving more tools to the RBNZ."

Instead we got to this situation. I've completely lost faith. Good luck everyone.

24
up

Useless pack of troughers.

18
up

Turns out government can't do more than one thing at a time. Now we just need to find out whether it can do anything at all.

16
up

Is out Pravda-level NZ news media ever going to hold this so-called government to account? And how about some of those 'pimping-the-poor' articles that were seen on a daily basis prior to 2017? I'm thinking daily articles interviewing struggling renters who are now spending 80% of their income on rents.

oops reported by mistake, sorry lol

17
up

They will use the 'Covid excuse' to it's full potential.
In March we will win the America's Cup and no doubt Ardern will milk that. It will be a nice bit of 'opiate for the masses'.

10
up

CHCH March 15 also.

15
up

Imagine the hysteria within the government if the number of active COVID-19 community cases was really out of control. Like, maybe, ten or something. They'd be passing laws to make photocopied $20 notes legal tender.

Its delayed 2 weeks guys, just settle grettle and watch the Black Caps destroy Australia tonight.

Pretty big call...
those Aussies.... Like our pollies. They’re a bunch of .... (fill in your favourite word here)

11
up

New Zealand house prices rose at an average of $332 per day in 2020.

I mean, what's another $9,000 average price increase between now when when Parliament is in session again? FHBs will only have to save another $1,800 on their deposit by that time.

17
up

Labour are showing all the signs of state capture by the property market.

13
up

We need to free NZ politics from the influence of a parasitical minority of unproductive landlords. We need to do that for the sake of the future of the real NZ economy, the new generations and the very fabric of NZ society.

14
up

What does someone do when they have no idea what to do in a particularly stressful situation?
Nothing.
They just sit and stare at the paper with the problem on it, and it shrinks to the size of a small pin-head sized view that just magnifies the problem. The heart rate rises; and inertia sets in. They stare at the paper, frozen. Not with fear, just frozen. Hoping that something will come along in due course to get things moving again.
Something will come along, Grant. And you aren't going to like it.
Stability, you and Adrian reckon! Good luck with that.

16
up

Always go 'mega-hard and ultra-early' when it looks like a piddling 10% fall in prices is maybe on the cards, and go 'soft and late (or better yet, never)' when the market is out of control and in dangerous bubble territory.

Tom..do you think they are worried about a 10% fall due to a concern that the 10% fall would feed off itself and turn into something far bigger and more damaging?

I can't remember a NZ government ever taking the stance that prices will not be allowed to fall. After the GFC prices were allowed to fall i.e. we still had a functioning market where the asset owners accepted the risk & prices could rise and fall. As soon as you get to a position where you have the state acting every time it seems prices will fall, then you cease to have a market.

Mind you, after the GFC the Reserve Bank also started their long-running Welfare for Property program.

It's fascinating.
I think they can see that the status quo is great in terms of the overall electorate.
I also think there is a serious lack of brains, creativity and drive in the cabinet.

It's 'great' in terms of the overall electorate as long as everyone is making those lovely 'gains'. (Of course, renters and would-be FHB's aren't making 'gains', far from it). Which is why I say, why do the nouvea riche Kiwi property tycoons deserve a bail-out if it all turns pear-shaped? Talk about having your cake and eating it too!

14
up

Lovely, I'm sure that whatever is eventually announced will be wonderfully fair and balanced towards rewarding property investors for gheir valuable contribution towards New Zealands economy. Prime Minister Ardern is held in such high regard by investors that I'm sure many votes Will continue to swing her way.

yes ... March 2024 ... means you will have to vote for them one more time

It is going to be SO BOLD

10
up

It seems to me that this Government (and National has been at least as bad as Labour) does not have the balls to do anything about it.

This guy knew what he was talking about in 2012 and warned what would happen when you mess with the market .
Trouble is that his wisdom was not listened to at the time.
As a consequence we now have the current mess in the housing market:

https://www.interest.co.nz/property/63578/opinion-olly-newland-says-any-...

"Any tax pushes price UP" Quite right. As does any additional cost. Real Estate Agency fees do. They all get capitalised into the selling price.
The answer is, to remove a component from the equations, not add one, and the main driver has to involve - access to debt.
Demand doesn't turn into Transaction if the ability to pay is curtailed. It remains Desire.

Imagine if income tax worked exactly as it does today, except that dentists didn't have to pay income tax. In that hypothetical world, would you support adjusting income tax to also include dentists? Or would you prefer to make it harder for them to buy drill bits?

I don't follow you comment.
But dentist are productive. I have no issue with extending debt to them to conduct their business.
House builders are productive. So are homeowners (it's shelter to allow them to work productively and raise a family)
Speculators are not productive. Stop them getting access to debt.
If anyone wants to speculate - in anything - go for it! I have no beef with speculators IF they use their own capital; earned from previous or present productivity and leave the debt from those who need it to expand their business to the betterment of New Zealand.

Perhaps a bit too abstract. But you might get the point if you just try answering the question.

I would become a dentist.

Land value taxes don't push prices up.

Does Ardern really have to make all these announcements?

Does Ardern really have to make all these announcements?

No. She only does for propaganda purposes.

She and her political advisors are politically smart. They know her and her tv presence are the party's biggest asset, along with her 'crisis management'. She definitely doesn't need to do it though, and really it's an abrogation of her and her government's other responsibilities.

19
up

Call me a cynic..... but it wouldn't surprise me if they have a vial of Covid, or an infected person or two on stand by to roll out whenever they need to kick the can down the road.

This is all becoming comic gold...... there is a real opportunity for a NZ comedian to do a Ricky Gervias at the Globes here.

Nothing would surprise me at this point

They are wrapping in supply side stuff because they can't reasonably justify the demand efforts as bold

10
up

What's the bet Labour's 'bold' plan is to raise the first home buyer cap (therefore further inflating the market).

Yes, more and more and more taxpayer subsidies flowing into this government run ponzi. Future generations will see Orr, Robertson, and Adern as nothing more than a rogues gallery - they will be hated!!

FFS! I guess it is BOLD of them to keep delaying action while the country goes to crap.

Exactly and every week there is a delay to curb this out of control housing market, the worse it becomes. I remember telling my son (years ago) that just because a particular situation was difficult, putting it off would only make it worse. GR obviously doesn't see the urgency.

10
up

The answer as to why the government is too busy/ not willing to do anything about the housing problem can be easily seen in the above “What happened today” article. Got to keep the debt frenzy going at all cost. The number 1 job of our government and others around the world is to get as many people into as much debt in as short a time as possible. This is a debt bomb the likes of which we have never seen.

10
up

Did anyone anticipate the govt takeover of the real estate market, now a bloated bubble because the free market isn't allowed to work. So now this coward can delay addressing the problem if there is a constant supply of new cases

12
up

When Adern said that prices weren't allowed to go down, we crossed the rubicon into a full-blown mania - with all the consequences that will entail.

True. I think the RBNZ's earlier implicit words along the same line reached fewer ears but lit the fire...Ardern's saying the quiet part loud poured the fuel on the fire. Boundless welfare signaled for property investment.

Augustus Gloop is going to simply regurg supply side policies and extend bright line test in mid March

Exceptionally wise decision!

Stop meddling with the market and it will sort out itself. Keep throwing toys at it and you'll only get more puerile results.

'Stop meddling with the market' to my mind means starting to increase interest rates to accurately price in risk & to deter speculators, and the knocking on the head of taxpayer funded deposit grants. Stoking up the market by suppressing interest rates & handling out subsidies is the very definition of meddling and is the biggest problem we currently face as a nation.

NZ will have to wait a couple more weeks to find out how the Govt plans to address the housing crisis, as the latest COVID-19 outbreak moves housing down the priority list

IT IS NOT COVID BUT EXCUSE TO ALLOW HOUSING PONZI TO RUN AMOK AS MUCH AS POSSILE.

If house price falls is a priority but when multiplying on a weekly is not a priority - AGEIN IT REFLECTS THE INTENT AND MINDSET OF JACINDA ARDEN GOVERNMENT - Any excuse to avoid measures to control the ponzi and if cannot avoid try and delay as much as possible.

The Government has stuck to its position that it wants house price growth to slow, but doesn’t want house prices to fall.

ASK JACINDA ARDEN GOVERNMENT IF 20% RISE PER YEAR AND THEIR AFTER 15% IS SLOW GROWTH BY THEIR DEFINATION OR.... %@$&$# (Swear words)

Is it just me or is Grant Robertson looking a little greyer since he took office?

Someone need to launch a full investigation into GR and co. and turn over more rocks. This is not ineptitude. The evasive behaviour, ignoring treasury, unapologetic disdain, the whole ruse smacks of something deeper at play. Corruption? A controlled demolition of NZs banking system to replace it with..?

Everyone ignores treasury advise so why have one.

FM and all only picks that suits them.........real shame.

Labour government..........only mantra was and is was to support and promote housing ponzi....but.....to what level.....Can delay the inevitable but cannot avoid correction in one form or the other and the bigger it gets ....bloodier it gets.

NOW NZ is in a situation where even if the house price growth stop (stagnate - not fall) will be a disaster just like it is in passing the parcel game momentum should continue to win.

True, everyone ignores Treasury. See in Stuff today Grunter is acting very consertative, total phoney “It pays not to get too carried away – my Scottish Presbyterianism will never let that happen anyway – but look we've borrowed very large sums of money because we did want to support New Zealand businesses and households to get through.
(this was in response to Standards are Poor upgrade)

Kerb, can, kick

Have ball! oooh, it's Hot. Gotta get rid of it.... Riiight - kick it to touch, then take an extended Injury Break, Tricky virus this Covid.... but it gives us time to Think. Buuut - what with?

The plan is to do nothing, or constructively form a committee to advise on what we should do at a cost of $100 million... and then still do nothing
Housing is too big of an issue for them to tackle and too prickly as either way there will be winners and losers and unintended consequences

Better to demonise a virus, look good by empathising at how tough everything is and blow up our budget and national debt with free handouts

They've obviously never heard of inflation. Best stock up on everything you can from cans to cars

They already played the card of waiting for a working groups to advise them. The tax working group reported at the start of 2019 that they should implement a CGT on houses but they dismissed that advice, then ruled it out.

That picture of GR looks to me like someone shrugging their shoulders and saying I don't give a shit.