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Green Party suggests the Govt gives the RBNZ tools to further restrict bank lending to property investors, and forces it to use these tools if it doesn't on its accord

Green Party suggests the Govt gives the RBNZ tools to further restrict bank lending to property investors, and forces it to use these tools if it doesn't on its accord
Julie Anne Genter. Image from Green Party website.

The Green Party has released a “4-point plan” to tackle New Zealand’s housing crisis. It includes:

1.     Taxing capital gains made from selling investor residential property.

The Green Party suggests doing this by removing the five-year cap on the bright-line test.

Green Party finance spokesperson Julie Anne Genter said extending the bright-line test to 10 or 15 years for example “just kicks the can down the road a few years, while property investors will hold on to their properties until the day after the bright line test is over”.

2.     Empowering and potentially instructing the Reserve Bank (RBNZ) to regulate bank lending to property investors by:

  • Limiting the use of interest-only mortgages,
  • Giving the RBNZ debt-to-income ratio tools,
  • Requiring cash deposits for mortgages on investment properties, not just equity from other homes.

Genter said: “The Government must empower the RBNZ with new tools to urgently address the boom in lending to investors, who are shutting first-home buyers out of the market. If the Bank doesn’t use them, then the Government needs to step in with ministerial direction under the Reserve Bank Act, or even legislation.

“Debt-to-income ratios should be allowed and used to slow down the highly leveraged, risky mortgages that underpin housing speculation.

“New requirements for property investors to actually have saved a cash deposit, rather than leveraging equity in other properties, would help level the playing field with first-home buyers.

“The RBNZ should be asked to limit interest-only mortgages, which exposes that many investors never even aim to pay off their principal debt until they flick a property on for massive capital gain.”

The RBNZ currently has the power to restrict the use of interest-only mortgages for financial stability purposes. 

It's asked the Government to give it debt-to-income ratio tools. Finance Minister Grant Robertson is worried about the impact these would have on first-home buyers, so has asked the RBNZ for advice on how these could be targeted to investors. 

3.     Increasing benefits, so the RBNZ doesn’t need to be relied upon as much to provide economic stimulus through monetary policy - IE low interest rates.

Genter told RNZ’s Morning Report she maintained this wouldn’t involve changing the Monetary Policy Committee’s remit. Rather she believed if fiscal policy did more, monetary policy would have to do less.

4.     Getting Kāinga Ora to lead a “massive” urban redevelopment and home building programme until supply matches demand and prices stabilise at affordable levels.

Genter said: “Kāinga Ora needs to be properly supported to acquire land and redevelop it into thriving and accessible communities, with affordable homes, green spaces, and clean transport links.

“That means increasing Kāinga Ora’s debt limit, and working with Community Housing Providers and iwi to build more long-term rental homes and papakāinga housing.

“Kāinga Ora should be aiming for at least 5,000 new builds every year until supply matches demand and prices stabilise at affordable levels. After that, it should be mandated to maintain a constant pipeline of housing development to match expected population increases.”

As of August 2020, when the Urban Development Act was passed, Kāinga Ora was given a number of powers to accelerate the building of large-scale public or private housing developments.

Under the Act it can acquire land compulsorily, override, add to, or suspend provisions in Resource Management Act plans or policy statements, and levy targeted rates, among other things.

It’s yet to really use the powers under the Act.

Kāinga Ora has also just become an approved building consenting authority, so can issue building consents.

House prices need to fall 

Green Party co-leader Marama Davidson in January told interest.co.nz: “The average house price either needs to come down or at the very least needs to stop skyrocketing up.”

Genter went on to say: “Everyone has the right to a decent, affordable home, but house prices are out of control. Auckland’s median house price increased by $100,000 in February alone.

“The housing announcements we’re anticipating from the Government soon need to meet the scale of the problem. We need to ask ourselves what would actually make a serious difference to address the instability of the housing crisis which is increasingly leaving New Zealanders behind.”

The Government is expected to unveil its housing policy package next week.

See Genter question Robertson on housing during Question Time in Parliament on Wednesday:

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127 Comments

12
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All very sensible. Its probably too late though; these policies could trigger a crash, so I doubt any major party would want to implement all of them now.

35
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Any policy change could trigger a crash, because for 30 years housing has been the tax-free government-guaranteed too-big-to-fail place to invest. But crash it must, ultimately. Better to get it over and done with.

Any party proposing such bold measures is signing up to billions being shaved off our overinflated economy, and tens of thousands of vulnerable people being pushed out of work and into delinquency.

I won't be surprised if even the Greenest of the lot will ultimately follow advice from bureaucrats on watering down proposed measures to, at the most, reduce future price gains to a "reasonable" growth rate, instead of crashing the market.

there is no reasonable growth rate now....

the mob is growing louder

Why do you think we would see "tens of thousands of vulnerable people being pushed out of work and into delinquency"? Unless the banks are foreclosing on owners I don't see the problem, and if you can service the mortgage why would they foreclose?

why would they foreclose now?

because they think tomorrow you won't be able to

We’re on that path right now... working poor and majority highly susceptible to increasing interest rates!

A hard correction can cause those too. When the market correct itself, more people will lose their jobs. Either way, we are screwed. It just matters that which one is more devastating.

Simply not being able to afford to house yourself, to never even consider the idea of having your own home, being forced to be the fodder that rapacious investor's gorge on, is enough to turn people to delinquency, so what do you want, for it to carry on and keep escalating or for an end to be in sight?

You mean 13 not 30..

Doubtful, after watching Grant Robertson answer questions in-the-house today.. next week's "announcements" are likely to be a fizzer.

See Link:
https://ondemand.parliament.nz/parliament-tv-on-demand/?itemId=216880

Yeah, looks like his bold call has been diluted somewhat.

Later today i was talking to a property investor and he was damn sure nothing will change don't know how.

10
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"All very sensible" so it's gonna be ruled out by Labour

27
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Labour has to do something and that very soon. Currently it is spending $1mil a day on motels - emergency housing and $5.5mil a day on housing subsidy which goes straight into the pockets of greedy landlords. This is our tax money people wake up!!!! When you cannot even get your first home, the government is taking your hard earned money and handing it to greedy landlords who enjoy capital gains while you struggle to get into your own home.

I for one am sick of talking and typing comments about it. If the announcements are not bold, I’d like to organise a march to Jacinda’s electoral office. May be we should have one around NZ.

15
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I’m in

I'm free tomorrow

The motor cyclists organised one a few years ago to the beehive. As was working in LH at the time I took the day off and joined in.

Yup. Commenting is cathartic, but I'm about done wasting time here.

I think the housing beast is pretty tough. My preference is to the bold end of effort.
The Greens proposed demand measures would have an effect - like LVR restrictions on investors have previously had an effect. I think it would take the froth off the market - maybe remove some of the Covid year gains. But I doubt it would do anything more than that.
The supply mechanisms are welcome. Kainga Ora should be used more for urban development work - they have been tooled up with new legislation. But I can't see how that would cause a sudden housing market crash. I think supply will have a longer term deflating effect. Maybe housing market expectations change - so who knows for sure...
Overall the Greens are to be applauded for coming up with a constructive package.

I think the housing beast is pretty tough

That's why it's stupid to double down on housing bubbles in the first place. You would have thought that the ruling elite of NZ would have learnt something from history. Nope. Too myopic and lack the ability to think long term.

11
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NZ really thinks it's different. To many, history means "the last 20 years in NZ". Is there a word similar to shortsighted, but referring to the past?

11
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CJ - yes, there is:

Economist

or property expert

Recency bias

the term you are looking for is "Ashley Church"

Build build build is the solution or the main one that will help solve the shortage

Buy buy buy the speculators will those extra houses

Is that a problem for you

Come to Hamilton, build, build, build has been on steroids for some while and guess what ............. nope, prices have not stabilized or fallen

fh...and the more houses we need to build the bigger the challenge. It is much easier to slash immigration and build 30K new houses a year than to continue to allow mass "net negative" migration and have to build 60K new houses every year just so we don't go backwards.

10
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So what if it does? What so this is soo much of an issue that we cannot possibly risk touching it?

NZ is one of the most overcooked property markets in the entire globe. Debt gluttony driven by impulse.

Its a septic growth sticking out the side of your face. Its ugly. It Needs removal. Now.

Problem is enough of society have confused the septic growth as a beauty spot and can't see the difference.

Isnt it strange how for the last ten years demographia has labeled nz housing as being overpriced... they try to justify that assertion with relative imcomes. Then eveyome gets on the wagon and repeats that to the point we all believe it. And what happens.... housing prices increase which by default implies the previous prices were actually too low

'housing prices increase which by default implies the previous prices were actually too low.'That's pretty strange logic,

And no more justifies high prices than Al Capone saying 'that he found he could get more money with a kind word and a gun, than just a kind word alone.'

Andd when you mean 'everyone gets on the bandwagon.?

House prices in NZ up until the early 90's, were always historically 3x median income, as was Texas. NZ is now about 7x, and Texas still about 3x.

Your group of 'everyone' is a small group.

Stupid examples I must say... have you ever considered housing affordability stats ... do you overlook it because it does not fit your argument. Btw everyone means everyone with an opinion

Of course in your reply, I'm sure we will hear why you think it's stupid. And its' because I have considered housing affordability stats. I quote what I do, plus having developed both in NZ and Texas.

And your definition of 'everyone doesn't add to your argument.

2020s are not the 90s. There have been so many changes since then in families, workplaces, bureaucracy, financial liberalisation, the list goes on.
3x median income was just a ratio plucked out of thin air based on settings from the past. Without a war, catastrophic natural disaster, or complete breakdown of the financial system we are unlikely to see 3x median income ratio again in NZ cities.

You need to read up a bit. Alan Evans is a great place to start, plus Alain Bertaud. Historically up to the '90s in NZ, it was 3x median income, not just the 90's. And still today, places that have retained those same policies, even with all the changes you mention are approx. 3x median income. NZ is the outlier, we are now fourth most expensive country in the world, relative to income. The Median multiple is used by the likes of the World Bank et al.

And the 3x multiple is a figure that results from when you are allowed to buy land in a truly free market, which allows land to be purchased at a price similar to the fringe lands' next best economic use, ie farmland. If the multiple is above this, there is normally some dysfunction with the policy settings.

And I have done the breakdown on NZ development costs in actual subdivisions, and if we changed our policies back to what they were, it is easy to get 3x median again.

But of course, we don't want to. That's all it is, policy.

Yes I'm sure it all made sense in the past when the magical 3x income ratio was coined. But as other posters have pointed out, that totally ignores financing costs, and it also ignores things like the reducing cost and increasing efficiency of technology. Unless you're on a very low income servicing costs are totally feasible at 4, 5 even 6 times income.

NZ is the outlier, we are now fourth most expensive country in the world, relative to income.
That's not true at all. Dig into the details of those surveys and they always show that the sample was of 5, 10 or 20 specific countries. Having lived in other countries I know for a fact that there are less affordable cities relative to median income. The surveys also tend to ignore the size of housing. If you look at the median cost p.s.m. then NZ cities don't even feature in the top 10. I'm not saying that NZ housing is cheap - far from it, but I object to misleading statistics.

You think we should relax city limits. I think we should intensify city centres to drive down median prices (without even needing to lower p.s.m. prices.)

Yes of course the stats don't include every country in the world, because many companies don't keep records or are not in English but they are indicative of markets that we compare ourselves to. And are more than any stats you have presented. Here is the latest Demographia survey here. http://www.demographia.com/dhi.pdf

It actually under-reports the problem, with not distinguishing between the number of incomes needed to support one household. In the past one household income used to be one income earner, now it is many two.

And I believe in fewer restrictions both up and out by Govt. policy, leaving it up to the market to supply what the individuals want.

And if intensifying only city centers worked, Hong kong would have the cheapest housing in the world, not the dearest. That has never worked in any city in the world. That not how land economic works.

And if houses are serviceable on 6x income, then they are more serviceable on less, so why would you want to pay more, or want others to pay more unless the difference is revenue to you. And I've done the figures, it's easy if policy allowed to do 3x median multiple.

The lack of these policies is what is eventually going to trigger the crash. Inaction is not an option.

1 yes.
2 yes
3 yes
4 - resounding 'no'.

Until the Greens advocate de-growth, they're wasting their - and our - time. We need to turn the clock back to a time where you could build your own house, but at a level which was much less complex. It is all the ticket-clipping and backside covering, coupled with population increase and sprawl area, that is the problem. Public housing without population curtailment, is self-reinforcing nonsense. Genter should know better than that. And at the right level, people can sort their own. I started with a 25ft by 10 ft ex-bach, one cold tap and no bathroom. Compare that to "Everyone has the right to a decent, affordable home". How many everyones?

All that said, these folk are making the rest of Parliament look like zombies; dead dinosaurs walking...

What is advocating "de-growth"? compulsory sterilization for people after they had one kid? Cutting electricity so people cannot consume? banning motor vehicles? rationing food based on assumed needed calories for individuals? rationing personal items to curtail compulsive consumerism?

It's a policy position that will never be popular with the overton window where it is right now, given that parties in NZ must receive votes to get into Parliament. Turkeys don't vote for Christmas, hence why the Green Party can't talk about de-growth in the way powerdownkiwi demands that they do. It's that simple.

I would have thought by now everyone would know that women who have control of their own lives and fertility have far fewer births, a situation we have had for some while, but we keep importing people, in numbers that far outstrip a birthrate that would not see a falling population, at the very least.

Walden Place, Papatoetoe, 120 sq.m, 3 bedrooms. It was a new house in 1970and was pure luxury for us pommie immigrants. Water gathered on the windows (but not ice like back in ol' blighty). Mum would wipe down with cleaner, open windows for fresh air, and as kids we'd sit next to the single radiant heater in the lounge. Fleece pyjamas and a hot waterbottle in the winter. Very grateful. Now it wouldn't meet the building codes and I couldn't rent it to a tenant (is it true HNZ stock is currently exempt from the new standards for rental accommodation?). Define decent housing? Most of my co-workers who rent wouldn't even consider this as a stepping stone.

14
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You could apply similar arguments to things like seatbelts and airbags and ABS and smoking and scaffolding. People value their health and safety much more than they did 50 years ago.

Drinking and driving laws

I think landlords still get it very easy compared to the health and safety laws for other businesses. What you put up with in your own home is irrelevant just like it is with any other business.

Basically we are soft. Surrounded by cotton wool, its everyone elses fault. Zero self responsibility. Seatbelts airbags and abs are null and void if you drive defensively and dont hit power poles. My daily driver was constructed in 1962, as far as I can tell Im still alive.

Did your mum stay at home most of the day as most did back then or did she work, having to leave the house early before any window opening could have a positive effect on the house? This is probably the number one reason why so many homes are locked up to the point of being hermetically sealed these days.

Worked. Worked in a factory then as a cleaner at Aorere College for extra money. House was fine. Happy childhood.

Worked. Worked in a factory then as a cleaner at Aorere College for extra money. House was fine. Happy childhood.

What you guys mean by CRASH, property price increase 40% from 2017 (labour comes into power) and no one have guts to get it reduce by 10%. If this is the case than don't change anything and take it to the moon.

AJ123 - member for 5 days - that's not you is it AJ?

Quoting in percentages always heralds spin. Alle same those who sagely quote sharemarket percentages as if linear.

The real floor, my guess, is about $200,000 average in today's $$$. So much of the 'real' (ex-parasitic) income is still paid for by the parasitic, so who knows where the real floor is when that activity stops.

13
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I've noted that this is the second time you have had a crack at a new commenter. Belittling their comment for being new to this site.

We were all new one day, and I would note that we have both been pretty consistent with our views from day one, so the length of membership on Interest.co.nz is no prerequisite for gaining knowledge and your response would hardly make anyone want to.

Unfair

I seriously wondered if out banned mate was back.

I knocked percentages - as I would with anyone.

Then I made a non-disparaging comment re floor. So?

10
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Frankly you should be banned

Why, for being the only person who understands what is really going on these days?

13
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It is not unfair. You dismiss everyone's views and think you have the grand answer. You've attacked a new poster previously, and you also did the same to me, in particular pointing out a spelling mistake I had made, while butchering a word yourself in your reply. You tell others to not be nasty or mean, while putting down everyone's thoughts and ideas. You are a gigantic hypocrite. And don't give me that shoot the messenger bull***, the only thing you are is a massive ****wit. And no, I'm not even mad. : )

... woweee... I'd hate to have to clean up the bloodstains around here if you did get " mad " .... loved the post , awesome : keep it up , cobber !

Increasing benefits just puts more cash in the pockets of landlords and increases the value of their investments. It just makes the problem worse.
There is only one thing that will fix the problem really. Build lots more houses by making them affordable. Principally by force-ably opening up a huge amount of land. The intensification idea is a dead end that has lead nowhere for decades now, and a heavy handed effort from the Commerce Commission to force down building material prices. A big change in the building regulations to remove the non tariff barriers to perfectly adequate materials and kit houses would be good also.

See my comment other thread - there is no such thing as land supply; it's all already supporting acreage.

Oh how I wish physics was taught compulsorily

Who cares what the Greens say. Even if they held the balance of power they would still let Labour neuter them. They would even supply the scalpel. They would never work with any other party. They are irrelevant.

The Greens provide the ideological cover for Labour to take stronger action. Not all of this will be done, but more will be done than in a world with no Green party in parliament.

The Greens are quite used to the thankless task of putting forward policy ideas for other parties to adopt once public support is shown.

It used be called flying a kite, but that would be Labour themselves doing it. Now they just pass the buck to the Greens

... I care that the Greens have pleasantly surprised me by coming up with a raft of ideas , some innovative thinking .... a little boldness .... all things which Jacinda Ardern's government are very sadly lacking ...

I am interested in "Requiring cash deposits for mortgages on investment properties, not just equity from other homes". At first glance this seems very sensible, but I'm not sure about the consequences. For example, can it not be circumvented merely by realising the equity before reinvesting? That is, if you want to use equity from house 1 to buy house 2, now you just sell house 1 and use the proceeds to buy two houses? Furthermore, with the common use of revolving credit lines, what is the distinction between equity and a cash deposit?

For example, can it not be circumvented merely by realising the equity before reinvesting? That is, if you want to use equity from house 1 to buy house 2, now you just sell house 1 and use the proceeds to buy two houses?

Yes. But having to sell a house adds a lot of friction to this whole process. It also adds a lot of dead-weight overhead, like real estate and lawyers fees.

It also does nothing for the case where you take out a loan against property A and get the cash from the bank 1, and then use that cash for a deposit on property B at bank 2. There might be some tax issues around 'purpose of the lending' in that scenario, though. This is what property investors have traditionally done with revolving credit loans - although these are a form of 'interest-only' loans so this may be restricted by the Greens other policy.

Edit: ah, I see you mentioned revolving credit loans at the end of your comment. The answer is 'none'.

Yeah it doesn't sound like that one has been thought through. As you say equity can be turned into cash by remortgaging or revolving credit.
What it may do though is stop the tax rort where you keep as much cash as possible in your own home so your rental makes a loss.

What it may do though is stop the tax rort where you keep as much cash as possible in your own home so your rental makes a loss.

Losses from rental properties are already ring-fenced so you can't offset them against other earned income, only against income earned from rental properties. This means if you have a negatively geared property you can carry the losses forwards to future years for when it starts turning a profit and offset the income taxes from the rent at that time. And I believe if you sell all your rental properties then these losses become stranded and you might have to forfeit them entirely.

But paying interest can be offset against paying tax on the rent though right? If your mortgage interest equals your rent you supposedly haven't made a profit (even if you make 100k capital gain in a month).

Yes, all expenses relating to the rental property, including mortgage interest, can be deducted from the rent gained from that rental property. Any remaining balance is counted and taxed as regular income.

If you make a loss, then previously (before 2018ish I think) you could deduct that loss from other income, eg your salary from your day job, and get a tax refund from the government. Now you can only carry those losses forward and offset them against future rental income

Exactly, so it has been best to keep all your equity in your personal house and as little as possible in your rental so the interest offsets the tax on rent. I guess this would change that if they force you to have say 40% cash equity in your rental.

All it does is create an incentive to borrow more ( up to the limit ) in the first place , keeping the rest in other form - instead of putting down a larger deposit to start with . Counterproductive and fungible.

The bright line test is already avoidable anyway.

Own house A and occupy it, buy house B as an investment property. Sell house A and move into house B, then sell house B which is now your owner-occupied property. No need to pay tax.

With a 5 year bright-line threshold, there's not a huge amount of incentive to do the above. But with the Greens policy proposal, where if you've held a house for 20-25 years, you could be looking at saving hundreds of thousands in tax, so doing the above is worthwhile.

I'm sure there are other elaborate things you can do as well, like transfer ownership of properties to trusts, or between family members, to avoid it. Again may not be worth the hassle for a 5 year test, but for an 'unlimited' bright line test, it will be worth doing.

And if you own 30 properties?

That's where I suggested that other structures like trusts and family members might come into play.

But if you've got 30 properties and you want to sell them all, and you're going to be on the hook for millions of dollars of tax, then you'll certainly spend some time on working out how to avoid the tax, won't you? And I already presented a way to do it.

You don't even have to sell the first house: if you want to sell house #24, move from house #1 to #24, leave #1 vacant, live in #24 for whatever the minimum amount of time is (6 months I believe), then sell it.

You can only use the "family home" exemption a certain number of times in a certain period. There's also carve outs for the time you spent owning the house but not living in it. A lot of this stuff has already been fleshed out. Plus there are other Income Tax Act nets you would fall into after the Brightline if you have a pattern of buying and selling.

Ta, wasn't aware of those details. Sounds like it may only be avoidable for small-scale operations.

There's no allowed number of times you can do that. If ir see a pattern then they'll have cause to tax you.

what a great way to live!

Totally incorrect.

If a pattern can be established you'll be on the hook. There's no max no of times you can do that and no min occupancy period.

The intent is key.

So set up your correspondence to show this, always say for you families use, why you need to sell, eg family needs a bigger house, etc. Never talk about the profit you might make etc.

Of course, you have to be sincere. So the quicker you can learn to fake sincerity the better.

This is the problem with all regulations that include any sort of exceptions (in this case selling before a given deadline), it is always more or less easy to circumvent those. A true CGT should not make exceptions, and should be promoted as what it really is, our civil responsibility towards solidarity with our fellow kiwis who might not be as lucky to have a home or their own. This could be used entirely for building estate housing with lower than market rents such as they do in many developed countries already.

Sensible as in opposistion Just like the favourite Jacinda Arden......but what happens when get power.............It becomes.......once upon a time.

Evidence please? Actually, the Green Party was able to deliver on almost all of the 20 points in the 2017 Confidence and Supply Agreement with Labour, the exceptions being due to NZ First. https://www.parliament.nz/media/4487/nzlp___gp_c_s_agreement.pdf

The bi-partisan passage of the Zero Carbon Act and the creation of an independent Climate Commission alone show the Green Party's commitment to change the status quo.

10
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give us a decent return on our money eg 5% in bank deposits or bonds and i will be glad to sell my properties as a boomer i just want the income for retirement, couldnt care less how much my property is worth and i would sell them all if i can get a decent secure income from somewhere else dont need the hassle of rented properties and have many friends that would do the same capital gain at my age is my kids gain.

Good point rjames. Agree that if interest rates rise, sav back to 5-10% then we will see a significant reduction in house prices, but also it will give boomers the incentive to put money back into deposits or bonds - where they probably should be. Not speculating in the housing market and adding demand pressures to limited supply.

For once we agree . Fiddling around with rules differentiating between FHBs vs investors , restricting equity deposits use etc. just leads to people dodging those. Higher interest rates in the only consistent solution.

Agree 100%. And guarantee bank deposits. Oh for the early 2000s.

"House prices will CRASH !!"
No they won't.
They were never likely to, and that's the annoying part of whatever the recent RBNZ and Government interference has created.
What will happen?
Not much!
Vendors will still put their property to market and buyers will make their best offer under whatever new restrictions they face. If it's not enough, there will be no transaction. Unsold stock will accumulate and become what it purported to be already - Long Term Investment Property.
The property market in this country has been ingrained with multi-decades of "Property ALWAYS goes up" and it's going to take a lot longer than any coming regulatory changes to immediately alter that.

If the Government has any sense it will 'do its worst' next week, because in the much longer term, it will pay dividends for all of us.

I see a lot of boilerplate rhetoric in your message, most of it is not even true, ask Irish, Japanese or Spanish people to start with a few, some of which went through exactly the same as we are going here right now.
Now is when the real estate cheerleaders say "NZ is different", let me tell you something, in all those countries they also though they were so let's be a bit realistic for once and stop feeding bull*hit to people.

So you reckon if all 4 points outlined in the article are brought in then the Property Market will Crash !!!?
Fair enough.
I don't see that happening for all the reasons I mention, and if politicians think as you do, then that's why changes haven't been made up until now.
It's Fear of a Crash !!! that stops change happening.
I believe it's an unfound fear and so welcome all the changes suggested in the article.

Fear of the unknown is what stops most change from happening, and then it comes anyway - at the worst possible time.

That's not what I said, something needs to be done to avoid it from happening and hitting us hard, otherwise at some point the string will be pulled too far and will break in a way that will be much more harmful than if we had done something already.

You wrote that I had used "boilerplate rhetoric" (= "noun Hackneyed or conventional language, usually expressing a generally accepted viewpoint.") "most of it not even true"
I don't see the bit about you saying "something needs to be done to avoid it from happening and hitting us hard"

As I suggested, I doubt any change will make the market "Crash !!!".
What would you do if you had a property portfolio and the 4 changes came in tomorrow? Sell on Friday? I doubt it.
You'd wait to see what happened; used time to re-evaluate your options and sell, or not, as opportunity arose.
Only if you tried to unload your holding on Friday with every other similar investor would a Crash!! happen, and I just don't see that occurring.

A rates rise would impact hugely on the market!
Say double it to 6%... all those recently traded houses will be serving that debt paying double interest.... new entrants would not get approval for same level as asking prices - what say you?

That would be great, buyers must know what they are getting into, markets can be volatile specially when profit margins are big, in which case they should account for the higher risks of their investments instead of asking the rest to bear on our own shoulders the risks they took for just their own profit.

If the Government has any sense it will 'do its worst' next week, because in the much longer term, it will pay dividends for all of us.

What does 'do its worst' mean? Preserve the status quo and hope that the whole property market / economy falls off a cliff?

"Do its worst" = Bring in any, and all change, required to remove artificially supported debt based speculation from the market. Leave no regulatory stone unturned. Don't leave any possibility of future changes if current ones fail in their intent - bring in all change at once. (NB: I have no problem with free market speculation at all. Even in the property market, as long as it is done with rules that do not preclude loss; real or implied)

Market work best with certainty, and if The Government can deliver a bottom to regulatory change, then markets will adjust to the new environment.

If house prices will never likely to crash. Could you explain what happened in GFC and Japan 1990s lost decade?

.. the dream mantra of investors in high flying markets ... whether its houses in Orc Land , or Bitcoin , or rare tulip bulbs ... " this time is different ! " ....

And , for a while it is .... but , not forever ... reality bites hard sooner or later ... it's not different ...

It is no brainner that any profit from housing speculation (sorry investment) should be taxed just like any other investment or earning. Specially when data suggest that just in one year people made more $2500000 !and in just one month in February people made $100000 in a month that $25000 per week.

BUT the policy has been framed by people with vested biased interest and continued as decession makers all have heaps invested in property so their is a clash of interest.

Understand that Jacinda has taken an oath that come what may, she will never I produce CGT as if she is from some sort of royal family, whose words are like writting on the stone, though that is a different topic that the very same Jacinda, when she was normal human being promised CGT, before taking a U turn.

So fine, the Queen has given a word and her words are supreme even if it screws kiwi as words from queen are more important than also WHY NOT introduce just like buyers have to sign a declaration for money laundering and residency status check, WHEN selling vendors have to give and UNDERTAKING, if they own any other house be it in individually or in parts, jointly or as a director in a company or in a trust and IF YES, when was it pirchased and the same to be send to IRD for verification - their should be no expection a s get away by saying that the house am selling is family home and investment property is different - should be straight if have two or more property and selling one, will be taxed- use BLT so the promise from esteemed and might Queen will not be broken.

Also DTI and INTEREST ONLY LOAN to be used as all measures required to control before targeting supply and any other nonsense that you want to try BUT First target Speculative demand.

Another day, another $3571.00.... Its a tough gig but someone has to do it. PS sarcasm

Its a bit tiring that parties keep going after investors like they are a problem. They provide a necessary service that is and should be heavily regulated. Should they a fair tax rate on their earnings? yes of course. But there is no reason to target them in other ways in the vain hope of allowing first home buyers into the market at the expense of renters.

The facts are house prices will continue to rise until they reach a point where returns on equity are a 5% or so above the risk free rate. Trying to fight this with rules that do not target the underlying issue is like pissing in the wind. The key driver here is interest rates (OCR decreasing from 0.75% to 0.25% is a lot bigger deal than going from 6% to 5%) but also rent and expectations for increases in rent, the primary driver for this is immigration and supply of dwellings.

If you want to decrease house prices (and you aren't the reserve bank) the easiest way is to reduce the return on equity. How? a land tax would work, even 0.1% on the value of the land would go a long way, but here is the important part sell it with a corresponding DECREASE in income taxes. One would think labour would want to tax capital more, so that those that provide LABOUR are better off? Land prices (and property) find a new equilibrium maybe 10% lower than current prices. Calibrate land tax to how much you want prices to fall by.

Failing the above solutions are obviously build more houses and control immigration. This is a longer term solution.

Agree. But instead labour increase income taxes.

Capital gains taxes won't work. Australia has one of the steepest CGT and that didn't stop it from breaking a new record of $1.06M for median house price. Here's a chart to that show; if anything, prices suddenly escalated higher when CGT was introduced.

https://ibb.co/tLHnHyP

In terms of limiting use of interest only, economic opportunities are destroyed within the economy and so will price discovery. This will impede growth expectations which may drive away more people from home ownership. As more people move away from home ownership, one of the fundamental and well-travelled paths to retirement is lost and the government will have to consider an exponential growth in burdens by dependencies in the ever-growing pool of retirees.

An artificially mandated debt to income ratio again destroys the efficiency of the free market. By implementing such mechanism, prices, debts and risks will no longer find its true equilibrium. There will be no real incentive to be productive in the economy from the housing perspective. By pegging mortgages permanently to the general income of its applicants, there'll be a perverse incentive to work less hours collectively in expectations of bringing house prices further down. That in essence is also why communism in its purest form will always fail.

Increasing benefits without a real plan for productivity and social mobility is the Greek version of running the country. However, unlike Greece, New Zealand is not part of the European Union but it could always try the International Monetary Fund when it does ran out of money doing this.

Getting Kāinga Ora to build houses will only result in a Twyford style 100K homes unbuilt 2.0. Kāinga Ora is not in the business of building homes and the great inefficiencies that will follow will be an expensive exercise. Increasing the debt limit to Kāinga Ora will only result in paying for an expensive lesson in building houses. The private sector should take the lead instead with the assitance of Kāinga Ora.

The Green party's four-point plan is nothing more than the promises of Nicolás Maduro when he took power in Venezuela.

May be it is 1.06 because of CGT or could have been much higher

Plus sort out the Council rules to increase development and then we're sorted.

Strip RBNZ of their powers. They never received single vote, yet they wield great power and influence over our lives without any real accountability. Government should call all shots and be accountable to voters. Otherwise we will see increasingly shifting blame and hard decisions from government to RBNZ as we have seen recently.

Old Julie Anne build me a cycleway or the Victoria tunnel gets it Genter.

“Kāinga Ora should be aiming for at least 5,000 new builds every year until supply matches demand and prices stabilise at affordable levels.'

But that is not how demand and supply works, either on the way up or down.

“Kāinga Ora needs to be properly supported to acquire land and redevelop it into thriving and accessible communities, with affordable homes, green spaces, and clean transport links.'

But you are acquiring land in an artificially restricted market you created, so you are paying too much for it going in.

It's like have a year 5 maths discussion with someone that still hasn't figured out 2 + 2 = 4. And even if they did would still argue that maths is a social construct and 2+2 can equal anything they want it to.

Let me try to think from the Green perspective... maybe you can get 4 chicken wings from 1 chicken because organic chickens can regrow their wings?

They are vegan chickens grown in a lab, in the CBD.

As another has said below, building more simply means that investors buy more, leaving lesser % for those not wanting to rent out, but in fact, live in property.
Hence, investor growth simply decreases the available OO stock available to buy.
Put the deposit rate back up to 3.5%. that would be an "incentive" to save perhaps ?
Auckland stock rose 13% 2013-18 and pop rose 15%

By the way, with a wider perspective , Auckland sales in last 5m simply playing catch up.
Put it in 4 year blocks:

2013-16: Auckland total sales were 122,879
2017-20: 98,027

2009-12: 98,490
2005-08: 119,043

So if they built a million properties tomorrow prices would still go up?

Might take some time my friend to build those houses....that's why demand measures (i.e restricting mortgage lending) is needed NOW

I presume Non Bank lenders would take up the lending.

I’d say Labour will act on one of these policies: they’ll raise benefits. And they’ll raise deposit grants for FHB’s. The taxpayer is on the hook for it all, from the looting of the monetary system occurring via the property racket, to covering up some of the blushes caused by runaway inequality.

Yep, tax payers footing the bill for social housing. No problem giving some a hand up, but as that right wing racist boomer with white privilege had a gutsful of whiners pleading hard done by with multiple kids whilst unemployed, still breeding and doing the drugs/alcohol. That is what strains NZ, and getting them out of HNZ stock is impossible.

This site is now full of gutter dirt throwing posts by infuriated renters all wanting to buy houses for 300k.

We even had a guy yesterday having a go a Clarke Gayford for owning a couple of houses in Hawkes Bay that he’s probably had for decades.
It used to be full of highly intelligent posts by successful and positive people. What a shame.

No lord Dowding

We just want to create money out of thin air and manipulate interest rates and claim it's a free market.

... " full of highly intelligent posts by successful and positive people ..".... really ? .... interest.co.nz ??? ... I think you're confusing us with the late " Whaleoil " website ...

Boo hoo, wishy wishful thinking by the green.. the greed voters have decided and govt shall comply.
If all youth voted to lower drinking age more? - and like JA said, they'll do what ever.. been requested by voters.

They'll do whatever..... Not fir viters but fir GREED OF POWER TO GET VOTE but her time is up and from here on will be steady downfall.

It is an insane day when the Greens are making the most sense in parliament...