By Alex Tarrant
Prime Minister John Key says the housing shortage in Auckland, which has led to rising rents in the city, highlights one of the reasons he is not a fan of a capital gains tax.
Key yesterday said he thought Auckland's housing markets was going to "take off" as the supply of new housing in the city lagged growing demand. Slow planning processes, lack of development finance and migration to Auckland were all contributing factors to rising house prices and rents in the city.
Interest.co.nz reported on March 12 that the median weekly rent for a three bedroom house in Auckland jumped NZ$55 in February to reach NZ$550, the highest since we started tracking data six years ago. Real Estate Institute of New Zealand (REINZ) CEO Helen O'Sullivan told the NZHerald that while the rise could be a blip, the city's housing shortage had not been remedied.
"It's getting harder and harder to find a place to live. We've got an increasing problem if we don't get more buildings soon," O'Sullivan said.
At his post-Cabinet press conference on Monday afternoon, Prime Minister Key said it was quite clear supply of housing in Auckland was lagging demand.
"The Herald’s been running a significant number of stories about shortages for people as they’ve looked for [a property to rent]," Key said.
“It’s one of the reasons why I’m not a great fan of capital gains tax," he said.
One of the changes of the government’s tax package - to not allow property owners to claim depreciation on buildings with an expected useful life over 50 years - had seen fewer people investing in rental properties in the short-term, Key said when asked whether the government would do more to help with housing supply issues in the city.
Government was working very closely with local government in Auckland to make sure the supply of land and supply for the building sector was operating efficiently.
“We’re looking at a number of legislative changes of things that we might want to do in other areas that would deliver greater efficiency in building. It’s more pronounced and isolated in Auckland than other parts of the country – we accept that," Key said.
The Productivity Commission's final report to the government on housing affordability is due on Friday. See our article on its draft report here.