By Bernard Hickey
Prime Minister John Key has downplayed moves in Australia at the weekend to toughen its rules restricting foreign buyers of property and to impose a new 3% tax on foreign buyers in Victoria.
Key said the restrictions had not worked to slow house price inflation in Sydney and New Zealand could not adopt Victorian-style taxes because of its free trade agreements with some countries.
Key also downplayed news that the Hobsonville Point housing development had increased the prices of its Axis Series homes by $50,000 to $65,000 to as much as $550,000.
Key was asked at his weekly post-cabinet news conference about Victoria's announcement on Friday of a new 3% tax on foreign buyers of new homes and a 0.5% land tax on foreigners buying land from 2016. Also on Saturday, Australian Prime Minister Tony Abbott announced possible jail sentences and fines of up to US$500,000 for foreign investors who buy existing properties in breach of rules forcing foreign investors to buy new properties 'off the plan'.
Key said the changes announced by Abbott reflected an attempt to get better compliance with existing rules, rather than any new rules. He appeared not to have heard of the Victorian announcement.
"It hasn't worked terribly well in Australia. Sydney house prices have been rising as fast if not faster than in Auckland so having a restriction in that area hasn't really worked," Key said.
Key was then specifically asked about the Victorian announcement and whether New Zealand should move to adopt similar measures to avoid being the odd one out, given Singapore, Hong Kong and Canada have adopted a range of new taxes or restrictions on foreign buyers over the last year.
"Australia has had stamp duties withholding taxes and the like. Australia has had those for a very long period of time and it hasn't really changed the appetite," Key said.
"It doesn't mean you don't raise some revenues out of it, or at the margins you could do something, but at the moment there's not great evidence that it's stopped foreigners that are wanting to buy," he said.
"If New Zealand was to do that, it wouldn't be able to extend to Australians, Japanese nationals or Mexicans, because they're already covered under the FTAs that we have, so you'd have to look at other countries."
Hobsonville price hikes
Meanwhile, Key was reluctant to comment on news of the fresh price hikes at Hobsonville, which take the price of a 2/3 bedroom home right to the limit of the HomeStart grants for affordable housing.
3News reported the price of 2/3 bedroom homes would rising by $65,000 to the $550,000 maximum allowed under the Government's KiwiSaver HomeStart subsidy, which was revamped with a bigger subsidy for first home buyers to buy new homes on April 1.
"There are a lot of first home buyers and first home buyers buying property there," he said.
"The Government is doing everything it can to reduce those building costs and you've seen all sorts of steps taken around imported duties and the like that reflect that," he said.
"There really is a massive range there. I really wouldn't want to comment."
48 Comments
It's not just houses, its not just farms, its not just about every commercial building it is also our very kiwi way of life http://www.scoop.co.nz/stories/PA1505/S00044/fears-camping-ground-may-b… that refers to Chinese purchasers of Whatuwhiwhi Top 10 campground and I imagine Hahei will go the same way.
Difficult or not, it has to be done - remember your own words John Key, the ones about tenants in our own land. DO SOMETHING
Key cant balance his own budget and he is saying that taxing foreign buyers will not deter them. Why would you not slug them with a hefty tax therefore and help balance the budget. It is also only fair, as these foreigners contribute nothing to the costs of running the country in which they are enjoying the benefits of investing.
He is obviously working to an agenda that does not include the best interests of the New Zealand citizens.
Can these government statement articles be tagged with "The Muppet Show"?
Foreign restrictions have been very successful in many parts of the world. If certain trade agreements mean you can't lock out foreign buyers then exempt Australia, Japan and Mexico for now and DO NOT SIGN ANY MORE of our sovereignty away for a few trinkets.
What good is a trade agreement if your population can no longer afford a place to live?
Restrictions "haven't worked" in Australia due to lax enforcement and that is very quickly changing, but of course, how much worse would it have been without the ones in place already?
Hobsonville. Surely "sound economic managers" like National could have figured out that throwing grants around would increase prices and go straight into vendors pockets. Of course they figured it out, its their modus operandi.
I wonder if ponytail man has figured out how long he has until the public pressure on foreign buyer restrictions becomes so overwhelming it will take down his tinpot government?
It hasn't worked in Oz - wait on they only brought the headline grabbing taxes in last week.
Key " I think at the end of the day most clear thinking New Zealanders will be able to see that I really don't give a toss - Asians will make much better citizens than the ordinary Kiwis I was elected to represent."
Dont overlook Labour's ability to snatch defeat from the jaws of victory however. Personally I think NZF did so well as disgruntled National supporters didnt want to vote for either big party. The Greens despite a good campaign gained no votes, yet they seem expectant this time.
Then how many one man bands/professionals/SBEs / swing voters own a rental? bet its quite a lot if the ppl around me is anything to go by. A whiff of a CGT whatever its merits and by by votes.
At the next election I will undertake to vote for the party that sets out a clear strategy to curb property prices
This should include , inter alia:-
1) Reduce migration
2) Levy a transfer duty on non-resident buyers
3) Tax foreigner investor rental income at source , and do it properly
4) Sort out the Auckland boundaries
5) Put a stop to the Council RORT in the costs of subdivision ( it adds up to $250,000 to the price of a section )
6) Tax vacant land and sections held by speculators through effective penalty rating on vacant sections
7) Encourage land-owners to free up vacant land for development through incentives such as rates rebates
if it pops he will blame the auckland council, overseas buyers, some kind of crisis somewhere in the world ETC ETC.
always has an excuse no actual plan to do anything.
i will not be voting national next election because of how they have squandered and mismanged the economy in their seven years, pleanty of time to put in proactive polices cut spending and get us back to surplus
Guess who?!
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11443540
John Key and Winston Peters know.
LOL
Wake up Mr Prime Minister, and do something not just pretend there is no problem. Usually there is smoke before the fire, so instead of wasting time saying nothing is wrong investigate what is causing the smoke and I am sure you will find the fire its not rocket science you know!!!
Key supplied the matches and kindling, phoned the fire brigade and asked them to stay at the station, aimed a hose of foreign petrol at the fire and is laughing at NZers as the inferno rages - "ow look I think we're doing everything we can.....Bronagh hold the hose for a minute I've spotted a pony tail"
New Zealand is getting exactly what it voted for.
You've got that around the wrong way keywest, the only thing happening here is Kiwi money going to foreign banks or foreign landlords, hence the recently announced biggest deficit in 6 years, that's to go with the record increases in government debt in the last 6 years, way to go National, just keep ruining the countries future to help your rich mates.
no it doesn't. They make profits or receive interest so the money goes back to them. The kiwi's that get the cash, pay hefty amounts of tax so it loses value immediately, and there's little of value in NZ for the majority to invest into (as the basic investments are all taken by the foreign money....)
The rent and profits will flow out of the country affecting our GDP and increasing our trade deficit., key as a former trader knows this and is keeping stum as he wont be around in 10 15 years when people realise that we have a problem and start to look for solutions.
I support National, but they are simply not making the necessary unpopular decisions.
Talk is cheap and nothing is being done to deter residential property investors. Australia may still have housing bubbles, but at least they have implemented some policies which benefit the economy and government. Firstly, NZ has simply talked about deterring Property investors through higher lending costs. This prejudices kiwi investors over foreign, as often foreigners buy with cash. If we are to believe government intentions on increasing the supply of homes to families(doesn't say that, just says supply. Investors are already buying new developments to rent out), then for a start investors should not be allowed to buy them. The government could also easily improve tax revenue, jobs and GDP by adopting the Canadian & Australian policy of foreign investors can only buy new properties thus producing jobs got builders, electricians, plumbers, and creating increased housing supply. This activity would increase GDP and also the foreign buyers should be taxed a meaningful amount of say 10%, payable to the government for the privilege of investing in NZ resi property.
This would improve housing supply, jobs, government revenue. Instead we allow foreigners to buy existing stock, drive prices up,making the banking sector more susceptible to downturns, turn kiwi's into perpetual renters, or debt junkies with minimal disposable income for Restaurants and NZ retail.
The government does not care, housing is a tax free investment, which they are funding, we welcome foreign cash to drive up Auckland house prices. Kiwis take on too much debt, reduce their disposable income, another bubble is frothing, the next overseas crisis will hurt NZ banks,NZ property values, and thus the NZ economy and businesses. The general populous now thinks that you are mad if you do not agree that property rises 10% a year, forever. People never learn, and how can they with a media, real estate industry and government that is whipping up a frenzy, or simply supporting the bubble trend by repeated inactions, hot air and denials. Shocking when you consider what a great country we are outside of the government inaction assisted Auckland property market. Even the RBNZ is fed up with government apathy.
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