Speculation is mounting that the Reserve Bank might signal further cooling measures against the overheating housing market as soon as next month

Speculation is mounting that the Reserve Bank might signal further cooling measures against the overheating housing market as soon as next month

By David Hargreaves

The strong resurgence of house price pressures in the Auckland market coupled with continued strength in the regional markets has economists speculating that the Reserve Bank might again be moving soon against the house market.

The RBNZ's next six-monthly Financial Stability Report will be released on May 11. That the report will express concern about the housing market is a given. What is less certain is whether any further measures to dampen the market will be signposted - or whether it may yet be too soon.

After new tax rules were introduced in October and then new RBNZ restrictions focused on Auckland housing investors were commenced in November, the RBNZ was keen to wait out the summer and see what the February/March housing sales data brought.

What it brought was a renewed headache.

After the Auckland market had a brief pause, digesting the new rules over summer, the March figures from Barfoot & Thompsonfollowed by those from QV, suggested the sleeping giant was awakening. Then came the Real Estate Institute figures for March - the ones RBNZ Governor Graeme Wheeler indicated the central bank was watching - and they confirmed, for the RBNZ, the worst.

What would rein the housing market in would be a rise in interest rates. But the RBNZ's faced with an economic situation - particularly in respect to low inflation and a high Kiwi dollar - that is putting downward pressure on rates. The Official Cash Rate currently sits at a record low of 2.25%, having been dropped to that by the RBNZ on March 10. The current expectation is that those rates will have to go lower - though the CPI figures released this week, showing some signs of emerging inflation, did arguably give the RBNZ some breathing space.

In all probability, however, the central bank is going to be forced to dip back into its 'macro-prudential toolkit' in order to attempt to quell the house price pressures.

In their weekly market focus newsletter ANZ's economists said that households were "clearly re-leveraging; we’re not seeing credit growth slow. Debt-to-income metrics are at all-time highs and rising, and saving is negative. That kind of behaviour cannot continue indefinitely".

The economists said that low interest rates were "clearly creating distortions".

"...And while the finger cannot be solely pointed at the RBNZ (we operate in a globalised world after all), it does mean that as the OCR goes lower, the hurdle to additional cuts should be getting higher and higher.

"It all means that in this world, the odds of further macro-prudential measures are increasing by the day. We note increasing chatter domestically on this front and we do feel there is inevitability about it. The RBNZ has a price stability mandate; that is paramount. But it also has a financial stability one and sometimes the two clash, as is the case right here and now."

The ANZ economists said they wondered whether non-Auckland investors were "set to come into the firing line".

"According to QV, investors currently account for 45% of total house sales across the country. A logical first step would therefore be to make the current Auckland LVR restrictions for investors a nationwide policy. In other words, all residential property investors, no matter where they were buying, would be required to have a 30% deposit. It’s tweaking something already in place, and hence easy to do. Targeting property investors is also more palatable than something that could affect owner occupiers or first home buyers."

But the economists also said that "something wider reaching" couldn't be ruled out either, particularly with the Auckland market showing signs of life once again.

"As prices rise, equity of existing property owners rises too, diminishing the impact of LVR restrictions. You simply revalue your portfolio. The RBNZ does have the ability to increase risk weights on sectoral lending or to introduce the counter-cyclical capital buffer (CCB), both of which are far broader-based than the current targeted LVR measures.

"But if the RBNZ really wanted to settle the investor and speculative side of the housing market down – and we think that's in the economy's medium-term interest – it should limit the amount of interest-only borrowing.

"Macro-prudential measures won’t be a panacea for housing market strength amidst supply shortages. Yet housing exuberance at present is becoming increasingly difficult to ignore. The RBNZ’s Financial Stability Report is fast approaching (11 May) and we await it with much interest."

In their weekly commentary ASB economists were also speculating.

They said that with the housing market "reigniting", the RBNZ’s investor and other housing restrictions were beginning to seem “long ago”. 

"The Auckland-centric investor restrictions, for example, have simply sent some investors further afield. Some data suggest that Auckland investor buyers accounted for circa 20% of Whangarei and Tauranga sales over the first three months of the year. 

"So the question is, how does the RBNZ push inflation back to target without further stoking the housing market?  If housing data over coming months confirm the re-acceleration, then we expect one way could be to broaden the investor restrictions later in the year from ‘Auckland only’ to nationwide.  Alternatively, the investor deposit requirement of 30% could lift to say 40%.

"These increased restrictions would free up the RBNZ to make the 50bps of OCR cuts that we expect in June and August this year. The above housing complications as well as the slightly stronger Q1 inflation data suggest that the RBNZ may see little urgency to cut rates. In saying this, we cannot completely discount an April cut," the ASB economists said.

And Westpac economists said that for a time, the RBNZ "took heart" from the fact that the Auckland housing market was cooling down; rising house prices in other regions were of less concern as there was no sign that valuations were becoming stretched.

"But with the Auckland market springing into back into life, the RBNZ may be wary of adding fuel to the fire by taking interest rates ever lower.

"That also means there’s a growing risk of another round of macro-prudential measures before the end of the year. The RBNZ has not yet raised that possibility, but the next twice-yearly Financial Stability Report on 11 May would be an opportunity to do so."

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?

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Just cut .5 let it crash and we can all move on,

Next move: investors require 25% LVR outside auckland, 35% for auckland (basically +5% for both, allowing for say 50bps lower in OCR). Buy some of that high yielding pn real estate while you still can

Not a moment too late then ?

The RBNZ is going to " do something next month"............ now that has the sound of real urgency to it .

The RBNZ don't have any say in immigration policy so it eludes me as to what measures they could conceivably introduce .

We have had 22 months of prices spiralling upwards , on the back of a tsunami of migration.

Where have the RBNZ been all this time ? Did they not know about this ?

Do these folk not understand the simple principle of cause and effect ?

What effect will 60 ,000 new migrants in 52 weeks cause to housing demand ?

Not going to happen, immigration is the problem but those in power to make the required change are blaming everything else BUT addressing the real problem.


Although it makes some sense it won't make much difference as the foreign investors are cash buyers. Just means things become more unaffordable for the natives.

Wake up ShonKey.


...so much woffle, noise. Its all getting tiresome.... the regulators will do zilch. And with NZ's top Real Estate agent currently in China peddlng NZ assets as fast as he can, the next generation will be homeless regardless.

Precisely. This isn't about our institutions being incompetent, they're highly incompetent and highly corrupt.

Why are they waiting another month. They have had long enough to ponder things.


Best way to get house prices under control would be to upgrade to a Labour / Green / NZFirst government.

biggest problem with that is that 50% unemployment is unacceptable :(

Now I haven't been in the country long enough to remember it myself, but I'm struggling to see much evidence for that http://www.stats.govt.nz/browse_for_stats/snapshots-of-nz/nz-progress-in...

Looks like the last labour government from 1999 - 2008 did pretty well on that measure.


You are correct; historically National increases unemployment.


thats to put downward pressure on wages for there donors

Are you serious? Look at the world economy from 2000-2008. Kim Jong Il and Robert Mugabe could make the sun shine during those years. Hardly a benchmark for competency.


Well labour did manage to get unemployment to 3.6%, pay off all net govt debt, prevent a rise in poverty, run 9 consecutive budget surpluses, buy back kiwi rail, bail out air nz, and initiate a guarantee for depositors in banks. All that Muldoon has done um er a sorry, I mean john key.. Is borrow to the hilt and inflate a property bubble by 80%

It's a cycle.... National creates the debt and labour pays it off. National fleeces the nation's assets and labour builds them up. National lengthens the dole queues, and labour builds up trade training, national starves kids, labour feeds them, national allows people to develop 3rd world health conditions, labour prevents the conditions that cause them. 2008-2017. The real LOST DECADE

Best way to kill the economy would be to downgrade to a Labour / Green / NZFirst goverment.


please explain why?
history does not prove your theory

Because he thinks that that will stop immigration and give him a 50% crash in house prices. It won't. As you say, look a the history.

The only thing onwards and upwards this year apart from the bubble housing market will be the number of dairy farmers who will lose their farms to the banks


The economy isn't serving most of us now anyway. As a means of distribution it really just sucks up wealth for the top 1%. Housing being hoarded by the wealthy is just another example of this.

Let it crash, we need a reset.

God help us the day a GREENMAORILABOURFIRST coalition ever gets anywhere near forming a Government .

Who even lead such a ragtag bunch ?

If you think things are dysfunctional now , you aint seen nothing yet

Scaremongering. But I'll take dysfunction over evil any day of the week.

That's what Muldoon said in 1974

Thats a downgrade. We will see State housing areas for unemployed beneficiaries in central Auckland because they all deserve it. After that every unintergratable refugee will be let in.

Please leave the Greens out of this!
Also, people love ripping into John Key whilst conveniently forgetting that house prices MORE THAN DOUBLED under Clarke's Labour. Whilst Key and the Nats have been criminally negligent in sorting out this mess, Labour's track record is every bit as bad, possibly worse.

correct this mess is 20 years in the making with both governments following the same policys


It is a bit of a shame that all of this onus falls on the RBNZ to find a solution rather than the government doing their job and dealing with it. Whilst I see it as inevitable there will be a cut next week as the NZD is just too high, approaching .70 today, and increasing LVR is a good way to remove investors from the game it is only part of the problem, and that problem should not be for the reserve bank to solve.


Well said. As you say there is a much bigger underlying issue that RBNZ can't solve alone.

This will not be sorted until somebody addresses the artificial and corrupt supply constraints, of land and monopolies in building material supplies and the government fostered demand forces from immigration and foreign purchases. When these are sorted clearly the bubble will burst so they are too scared to do anything meaningful and in fact would probably strengthen these forces if the market looked like correcting. So in the meantime we are stuck with it and the consequences of the inevitable correction become more extreme. The Reserve Bank is limited in addressing these issues and can only really tinker around the edges trying to react to the symptoms. Frankly I doubt that Labour would be any better and probably just throw a lot tax payers money at addressing resultant poverty.
I wonder if National are waiting for some sort of global crash that they can blame for their massive sort-comings in this area.

Last week, someone here posted a link to an article in the Guardian.co,uk which pondered the UK housing supply issue revealing that over the last 5 years, housing supply went up by 10% while the population only went up 5%, yet house prices still went up, so it wasn't a supply problem at all

If we had a supply problem here in Auckland then all the migrants rocking up into Auckland at 40,000 per year would be living in tents and cars and caravans

Where are they staying ?

The author of that article has also created a helpful video that explains how it really works...


Surely you are not suggesting that we are building more houses than the immigration demand. There have been far too many articles saying that we are barely building half of what we need. Remember there is also the natural population growth demand, not just immigration. It does raise an important question however. Where are they living. Clearly it is causing considerable stress as we see in the papers. Sleeping in cars and vans, shared beds for students, living rough etc. One can only expect this to get worse.
I wonder also if we are getting any statistics on how many people are leaving Auckland. Anecdotally there seems to be a considerable movement away. Who can blame them? What other sensible choice do they have. This can carry on for only so long until we have the same level of problem throughout the country; then what.
The Guardian article has a lot of sense to it. We need cheep and plentiful houses far more than cheep money.

It will be sorted when we import hyper-deflation.

Well put. Exactly my thoughts.
The current supply and demand situation fostered by central and local body government is nothing short of corruption.

According to a report in our local rag 50 plus 1 & 2 bedroom apartments will becoming available soon with expected rents from $360 to$400 per week.Most of them appear to be in the Frankton,Dinsdale or Nawton areas.
Welcome to the new slumsville.

Dinge-dale. Those 3 areas have always been toilet. Some nice old villas/cottages in Frankton that would be great if moved.

Do we pay Graeme Wheeler to not keep inflation between 1%-3%? He seems to be doing a good job then.

We pay Wheeler to play with unicorns.

.. it's an inflation measure that doesn't include the biggest expense most of us have - shelter. It doesn't serve most of us.

it might have when home ownership was 78% but now its below 50% it needs changing

What is being done to increase the supply of houses from the ground up, literally speeding up consents and reducing the costs to support that actual supply issue? With new migrants at an all time high this should be the number one thing on the agenda to meet the demand.
I can almost guarantee the RBNZ will change something in their "toolbox" which will not actual alter the supply/demand issue at hand, being costly consents and limited and slow new builds. In the same way that nothing they have done so far in the past few years has worked!

How much land is sitting around Auckland which has not been made available? Just take a look around, there is plenty!

Who pays for the infrastructure?

No on is saying there isn't. However, bolting on suburbs will clog up motorways more than they are now let alone the other infrastructure required. At very least there needs to be a rail system to these green field sites and they don't pop up overnight.

Round 2....investors/speculators VS reserve bank

I guess first home buyers will enjoy the outcome if there's one?

More like...

Round 2:
Investors + speculators + foreign interests + National party
NZ Reserve bank.

I just hope they don't push Auckland money down south.

NZD hits 70 against USD nine month high . When will the RBNZ accept its a global thing.

It's a carry trade thing...nothing more.

yip, sure is. Too make it unattractive our rates needs to be sub 1% too. Hurry up and get it over with , Wheeler.

But will even that have an effect...... I suspect not.

Two things of note the BNZ increased it's two year mortgage "special' by 0.1% yesterday ( the BNZ also increased it's 9 month term deposit by 0.2%).

Secondly Bloomberg reports that the rich in London are renting rather than buying (i guess GBP1.7m stamp duty on a GBP10m house is a bit of a turn-off).

It will drop the $, trust me!

Although absolutely nothing to do with NZD/GBP FX rate, with regard to the comment on UK stamp duty - Like I said the other day, no one is keen on paying this increased stamp duty. People are extending their existing houses. An other poorly thought out policy by Osborne. Every window I look out of its loft and Hip to Gable Conversions as far as the eye can see.

I personally think the stamp duty hike by George Osbourne was a bit of a master stroke. It's certainly taken the heat out of the top end of the London housing market which was the reason he introduced it.

I think an overseas buyer stamp duty charge needs to be introduced here. LVR restrictions effectively a penalty on the poor. A large percentage of the buyers in the AKL market are for cash.

I don't. Average areas of London where normal Middle class people live, who have upsized a couple of times can't afford 6 months salary to give to the tax man. The cost of an extension is the same as the tax! What would you do to get a bigger house? In my area a bog stock 3 bed house is £1m now. All its done is cut supply to next to nothing and kill the housing market dead, not slow it. I agree about the LTV ratios. All that does is penalise FTB's with no equity. It will all look rather silly when an eventual slowdown comes and they replace all this minimum deposit guff with FTB interest free Govt loans. PCL is a Billionaires playground. I ignore whats going on there as it has no bearing on anything I can aspire to.

FWIW I think the PCL market is going to come back to the working middle classes. It just takes time for the policy to work.
I think the Auckland housing market is in a worse state than London. At least the government in the UK govt are doing something.

I'm curious, have you been here or is your view solely from the press? I ask because its a completely different view if you have had boots on the ground. I see absolutely no way PLC ever comes back to the realm of mortals. Its the worlds No1 city - period and the global elite want a place in PLC foir various reasons. Auckland doesnt even get a mention in the top city listings. Sydney is as close s it gets for "elite" cities. When flats the size of snooker tables rent for 8k NZD a month.


And sell for £200k (in 2010, more like 400k now)


I spend all my working life in London and still have interests there. Am a regular visitor. Auckland rightfully doesn't get mentioned as a top city. It isn't even in the top 200 cities globally. The phrase super city makes me chuckle.

Or maybe the rich are renting because they think the prices of top end property will decrease and/or the rent is able to be tax deducted from business activity. There are whispers the Panama Papers scandal will have wide-reaching effects,

Its a dog eat dog thing.

All these guessometists and whinging left-wing socialists make me laugh.....talk about having your cake and eating it too but it doesn't matter when someone else is forced to shout.......the I want affordable housing and Nanny State are incongruent !!

I don't want a nanny state - f**k off. It is killing the country. You pays your money and you takes your chance ( as an example the government shouldn't have bailed out AMI after the Canterbury earthquakes - people paid lower premiums and because AMI didn't have enough cover - the policy holders should have been left to carry the bag , not the tax payer - I said this to a friend of mine who was insured with AMI - you should have seen his face - talk about some sense of entitlement).

Umm, why should policy holders be accountable when it was the AMI investors that should of? Are you not being unfair there and pointing to the wrong culprits? AMI policy holders had no idea they were being short changed. I totally agree that AMI should have been left to go under and of course that would mean policy holders would have to fight their own battles to get their policies fulfilled. But making them out to be complicit in insurance fraud is a stretch

I don't think he mentioned anything about insurance fraud.
And AMI was a co-operative, thus the policyholders were the investors - this is one of the reasons it did go under, as it didn't have a strong enough capital base due to being a co-op.
He is saying that the premiums you pay are for both the comfort of knowing you are insured, and that the company will be able to pay out in the event of a claim. If you are paying lower premiums and getting the same insured, then maybe it is the company stability you are sacrificing.

Of course Nanny State is killing the country but honestly did you actually read what most posters write when it comes to housing? So why tell me to F -off?? All these friggin demands for more regulations/taxes is only going to cause more of the same damn problems we have now......and house prices will just push higher and higher.........and that is why I said Nanny State and affordable housing are incongruent........what we have in NZ and in every other country is that left-wing socialists are always demanding interference somewhere and this interference always has ramifications and house prices is just one of the available examples........When will NZ'ers wake up and realise that minority groups like your AMI policy holders example need to address their own problems and not keep making the State do their begging which puts us all on the hook for the incompetent people with that sense of entitlement?? And what about all those leaky building home owners who bought their bloody dream home all lovey-dovey crap and nonsense idiot romantics who fell head over heels and the rest of us pay through taxes and rates for their purchased problems......all this bailing out the idiots just create more idiots and those doing the contributing via the rates, taxes and fees are being penalised for being responsible people who undertake due diligence.......

NZ is living way beyond its means.....we cannot continue with a system that bails out foolish people constantly.......the left wing socialists have taken away a persons right to learn and grow from their own mistakes and transferred the problem to those who navigate the waters with care and this transference of the problem then stunts personal growth in those having to find the compulsory payouts.....this behaviour is banned in the Universal Declaration of Human Rights and the 1688 Bill of Rights........and all existing rights are protected in NZBORA........

NZ journalists need a boot up the backside.....they encourage this entitlement mentality!

There is only one way to cool the market. Stop the investors - whatever it takes. No one will do it. No one's got the balls.

Agree, that and slow immigration,. could be done in a week.

How do yo slow investors? LVR restrictions maybe?
I'm not a big fan of CGT - a typical rate of 15% will hardly be a deterrent given how much property typically rises... And it's full of possible unintended consequences.
I think supply side stuff is pretty important. If the settings are right the Unitary Plan could, over time, make a difference.
How bout this - govt builds a lot more 'social' housing, but its not really social housing. It's more along the Euro model. They could charge market rents, but the key thing would be bringing supply to market to augment what the private sector does.
Increase income tax above $120K to 40 cents in the dollar, to help fund a big building programme.
(PS I earn 150K so would be affected by this - I don't have a problem with some higher taxation if there are clear tangible benefits)

One way to slow the property investors would be to do what Australian banks do in Australia and have higher residential mortgage interest rates for investors versus owner-occupiers.

The parent banks of the New Zealand banks all do this. The only difference there versus here is the attitude of the RBA versus the RBNZ.

And where the heck are people going to live Murray86? There are loads of people who need rental accommodation for their short-term needs. What would you do put them all in caravan parks? You won't solve this housing issue by getting rid of investors as you are just creating another housing issue.

There will always be rental properties. There always has, there always will be. I an argueing for a brake on greed. The problem with too many commenters on this site and others are they have vested interests in the status quo and are terrified of any regulation, and they and a a few others I suspect are an all or nothing advocate. In other words they think any regulation will cause a total crash. I am arguing for the admission that the free market has failed, and allowed to much greed and manipulation. It is essentially anarchy and serves as a reminder of what the purpose of Government is; to enact laws and regulation to protect the common people from the predations of the influential, wealthy and powerful. Since the 60s and 70s they have instead acted to protect the power and privilege of the wealthy, as well as their own self interests.

Balanced regulation, such as capping rents would not cause a total crash, doesn't cut out investors but instead ensures that any service in the provision of a rental home is affordable, both for the individual and the tax payer. As it stands at the moment too many people neding to rent are doing so because they can't afford to buy because hous rices, and rental costs on the average income mean they can never save enough, nor borrow enough. This is monopolistic behaviour at it's worst.

It is regulation that has caused prices to escalate.....The RMA, LGA, Building Act and Code, the Taxation system, WFF and other accommodation supplements etc......believe me none of these things are a real FREE MARKET at play so why blame it on a free market when we don't actually have one?
If the entire industry is deregulated you will have cheaper houses but that is not what the vested interests want!! What we have is complete regulatory failure.

The purpose of Government is to up-hold constitutional rights not manipulate and interfere.

The affordable housing issues are legislative and policy issues from past changes.....yet no-one wants to unwind those changes. Even changes to the Real Estate Agents have an effect on house pricing.....all this new licensing business stifles competition.

Let people buy land where the want and build what they want......let people build their own homes. I agree we have monopolistic behaviour but it is the regulators who are monopolistic and none of them are taking responsibility for the price increases they are causing!

56% of people in Auckland rent. Do you think they are all doing that by preference or because investors have pushed the price of a starter home beyond what first time buyers can afford? If you "got rid of investors" the houses wouldn't disappear, however, Remuera coffee shops would be a lot more pleasant without the ma an' pa property speculators chortling.

I didn't say get rid of investors, I said stop them. There is a big difference. It is uncontrolled property investment that is the problem. Having said that we do need to get rid of some investors, namely foreign ones. The others need a serious brake on them, they are greedy parasites subsidised by the tax payer, and I am seriously offended by that. I for one would cheer when AK house prices tank. The only ones I'd feel for, and suggest the Government could consider helping would be the first home buyers who are and have continuosly lived in their house since they bought it.

"Do you think they are all doing that ...." here goes the all or nothing perspective I mentioned. No they are not ALL doing that, but I hazard a guess that today most are. There will be some who still choose to rent, but the rest are trapped, especially if they are earning less than $100K, and the stats tell us most are.

Property investment is controlled. Controlled by the banks on lending, controlled by the free market on what rent you can set, controlled by the tenancy tribunal on living conditions which are acceptable, controlled by the tenants on choosing which houses they wish to live in, controlled by the IRD on how much tax and capital gains you pay. What murray86 will have us believe is that their is no affordable housing in AKL which is simply not true, there are plenty of $500k - 600k range units / brick and tile properties in AKL for 2-3 bedders. It is now more affordable than ever to finance a house in over 7 years due to low interest rates. stopping investors is the same as Mugabe taking the land off farmers in Zimbabwe...such socialist clap trap. P.s. every time I make a comment I get called a fraud or a fake, not sure why, considering that my tenants are active and productive members of the NZ economy and without me would be living in damp social housing with their hot water cylinder on the blink...

And who owns those damp houses KW?

You do gordo

No I only own houses that my family live in and they sure are not damp. The Wellington one was bought 10 years ago for family purposes. It is in Thorndon and up until late last year was not worth a great deal more than I paid for it. A few things that property has taught me. Tenants do not respect the owners property. Just have a look at our carpet. You can give your childrens friends heavily discounted rents until the cows come home and to a person they will leave eventually and not one of them will thank you for your kindness. Is that a Y trait? I think tenants think all landlords are wealthy and have oodles of money to pay for maintenance and repairs.

gordo, you are all over the shop...by "you" I mean the tax payer...you hurl abuse to investors and what do you know you are one! (probably an accidental one by the sounds of it)

I feel for you keywest. I get the same treatment from other commenters. My tenants live in lovely neighbourhoods and take regular overseas holidays as well. Murray86 wants me to reduce their rent.

.... replace all this minimum deposit guff with FTB interest free Govt loans. ObeseBallerina

I vaguely remember, long ago, there was something like this in NZ. I recall a schoolmate's parents having a government 3% loan. I wonder if you could do that again? Maybe just a 1% loan with capital repayments and fairly strict criteria, like you need to have lived in NZ at least 20 years or something.
I wonder what it would do to the housing market?

When the market slows it's coming. The poms use it, the Aussies too and the bones of it are in place in a State bank in NZ. Watch this space, it will be expanded.


it was called state advances, the state loaned 95%
National championed home ownership, believing it to be the aspiration of most New Zealanders. It moved quickly to allow state housing tenants to buy their homes and raised the number of State Advances loans for private house building. By 1954 state home loans accounted for 34% of all new-home mortgages. Demand for housing continued to outstrip supply.

The Q is why should Govn interfere with a private arrangement. In effect the tax payer takes on the risk of default by ppl most likely to default.

yes but the house would just be transferred to the state pool. HC.
so does the state/tax payer lose in the end.
they run a similar system in Singapore for citizens only, where the state builds and sells to low income workers, the deposit is from your compulsory retirement fund. you are allow to sell after 4 years.
the rest are kept by the state and rented at a % of your wage.
that way rather than everyones income pilin into housing they have plenty to spend in the shops

It seems everyone except this government understands demand is something that needs to be addressed.
It's interesting having a government, that effectively doesn't really want to govern, and won't make any hard choices that could annoy some people, they just want to do the nice things that make them popular, gutless is a word that springs to mind for our government.

Evil is another.

Strong word, I think there is a saying I like, something like, never put down to evil what incompetent can achieve. As a professional I have to prove I can do the job and its expected, as a Pollie you just have to "prove" you can get the most voters to vote for you.

I am quietly distressed at times when I think of the fact that most people put their faith in governors whose only skill set seems to be popular appeal.

Yes calling national evil is a bit strong, if so then half the population that voted for them would also fall into that category. I think lots of things short of evil would be applicable to both though.

Totally agree, but frankly Labour were no better. I think its down to the middle ground swing voter who is increasing in numbers. If you dont buy that demographic you are toast. OAPs are set to double, that suggests another big buying opportunity, I'd suspect NZF is going to get bigger and more wasteful as they do.

Stamp Duty 10-15% for investors (local and foreign) purchasing existing housing stock. Zero stamp duty on new homes. 2nd homes and housing bought using a company would be taxed at 10-15% stamp duty also.

This will help stimulate new builds and dramatically reduce competition for First Home buyers when buying existing housing stock. Surely that has to be a good thing. Would take pressure off the demand/supply imbalances that currently exist. Any stamp duty taxes can be used to pay for infrastructure etc.

Your Stamp Duty concept is actually abuse......Taxes are not meant to be collected for the purposes of manipulating markets. Taxes are meant to be utilised in up-holding constitutional rights!!

What are alcohol and tobacco taxes then?

same as fuel excise tax

Those taxes are abuse also.....

Of course taxes and credits should be and are used to manipulate markets. Govn decides on the outcome it wants, sets policy and then uses various methods to see that outcome is achieved. Want to stop ppl smking? increase tax, want to encourage investment make gains tax free. Want to encourage wind power? off tax credits for a period of time to drive adoption, perfectly reasonable.

Steven you need to read the laws before you go commenting! All of the taxes we have come from ignorance of the laws and constitutional rights. Governments do not have the right to implement anything they like......Governments are meant to up-hold the constitutional rights of the people as outlined in the various documents that make up constitutional rights.....People who assume that something is the way it is because that is the way it is being done are the problem and then couple that with the arrogance of the entitled and you have created a bed of fleas that is breeding faster than rabbits in a drought.

Taxes are not meant to ever be used to manipulate markets and this is dishonesty for this to happen. It is left-wing dogma that ensures the lies and manipulation endure...there is no free market when you have government policy that manipulates and interferes in the market and yet people like you blame capitalism for all the woes of the world because you fail to grasp constitutional rights and responsibilities!! Reasonable doesn't even enter the arrangement we have!!

Envy taxes! - let me guess, you want a cheap house?

Your suggestion makes such perfect sense Joe Public and I just can't understand what stops the government. It won't affect existing investors, will stop new investors from investing at the top of the market. It won't crash the market as demand is too high among potential FHBs and they will get renters to vote for them by showing some balls. They have introduced something similar in the UK and there hasn't been a housing collapse there - it may just reign house prices in a bit. National would certainly get my respect if they introduced such a tax. At the moment I just think they are pathetic.

This article illustrates how the UKs new policy will help FHB http://www.theguardian.com/business/2016/apr/18/buy-to-let-landlord-surg...

Cheers buzby its amazing that the media don't run with the Stamp Duty solution as it appears to be the the most obvious solution.

it will reduce demand and increase supply and :
- assist FHBs as it will reduce investor competition and thus demand for existing stock (Demand down)
- it should reduce price growth and perhaps reduce prices on existing stock. This would further benefit FHB's as they wouldn't need to take on as much debt. (as opposed to the existing scenario where prices continue rising 10% p.a)
- it encourages new builds (supply up)
- provides additional funds for infrastructure for those investors willing to pay the stamp duty who buy existing stock.
- it would be a simple tax to calculate. Sales price * stamp Duty Rate.
- it would be a simple tax to collect.
- existing investors that go on about providing a service will have love the idea of building new homes to service the community

I really cant see any downside


I have one question - can anybody provide me with any real world example where a stamp duty has lead to lower housing prices?

Why did one of the homes in the TV series " our first home" make a 100k profit and the other two made about 20k each profit. Was one of them in a much better location than the other two?

20 k split between 4 people for 9 weeks work that's 550 per week each.
that's not taking off the tax RE fees, if they had borrowed money interest, lawyers fees.
be easier to collect the dole.
interesting the same houses made more with nothing done to them
And here is the Wotton's one.
04 Sep 2015 Whole $580,000
21 Aug 2014 Whole $385,000

The Roughans one (two storey) was bought in May last year for $580,000 and they bought it only 4 months later and paid $670,000.

Reserve is set to take into account all the fees etc... as well as a "decent" profit to the production company. So the profit should be theirs to keep - barring some tax as it was a pure do-up for profit.

Contestants also receive a daily payment while on the show. All up they probably made a bit under $1k each a week. So an average salary.

My guess is though, that they could of bought the same houses done nothing over the course of the 2 months and still sold them for a similar amount - so in theory more profit.

Is "Holding Houses" the next reality TV show?

that could be a new show, contestants buy houses do nothing then sell them 6 months later to see who makes the most.
that would be embarrassing for the incumbent government and its do as little as possible approach

We joke, but I can already see this on air by the end of the year.

They can fill in the broadcast time by having the camera follow people around while they yap on relentlessly about house prices, kitchen renovations and the cost and features of things like new washing machines and stoves. Will be just as boring as it is in real life. Sounds like a job for TV3.

They will need an extra host or two to manage all of that. Preferably an ex sports star or used car salesman. You know - someone who is a property "expert"

Richie McCaw, obvs. Hope Mark Weldon gives us a cut for doing his job for him.

they could have a weekly backyard barbecue, where they discus current events in the RE industry YAWN

I'd call it 'The Block - Capital Gain Wars'.

For the weekly challenges the contestants could fly to China to spruik their properties. Bonuses given to the team who taps into the most laundered money streams.

Additional challenge points given for helping the buyers sneak their money out of China and avoiding the CCP. Points deducted if arrested by CCP.

Not sure on the location. But I also wonder is it like the Block - i.e. the houses are sold fully furnished? That could impact price.

Mr Wheeler has been the most interventionist governor we've had yet what good has it done. So all this talk of more rules, more stamp duty etc. etc. will probably just create more work for clever lawyers and accountants.
As has been alluded to before, we already have the tax rules to hit the "investors" chasing cap[ital. gains. Clearly if you buy an "investment property" on a negative yield you are chasing capital gain, thus it should be taxed. Whether that is on sale or even as annual revalued stock as is the case with many other businesses (such as retailers, sharemilkers...) could be determined. That would quickly make Mom and Pop investors think again.
I personally have the same questions about supply and demand as raised by JC, because people are for the most part living in houses in Auckland. there are not 100,000 people living in the streets. Obviously there are issues, the dollars involved drive developers to build expensive houses to maximise return.
I do believe we need to take NZ land and housing off the world market. We have a lot of problems in Auckland but at least we don't have to worry about car bombs (yet) so are a very desirable acquisition for foreign millionaires. China alone has around 1.5 to 2.5 m millionaires, maybe more (depending on who you listen to) so there is no problem for the world's rich to buy a haven to bring their families to if they need to in the future. It is the world money that can drive prices.
Our first immigrants (Maori) thought they were getting great prices for their land 150-200 years ago, what price hindsight?
Take down the for sale signs and tax the sham investors.

Many people I talk to in Sydney are astonished to learn that NZ residential property has a completely free market and has been whored out to the Chinese at a massive cost to any young couple or family. All the established property owners have been rubbing their hands with glee at their new valuations. But the long term damage to the place is so evident and I am glad my family is well set up in Aussie. They are still buying here as they always look to circumvent anything but at least there are multiple rules in place to stop them. Every single Kiwi will regret everything thats happening now in the next 10+ years or so when the NZ as you know it has been lost for good.

Capital gain tax is in place and is not a big enough deterrent (at the levels it is set at) otherwise we would not be in the state we are in with prices. Investors will buy regardless of capital gains tax or not just like workers work regardless of personal tax or not. 70% of the profits is better than no profits at all.

Stamp duty 10-15% on purchase is the only way to really deter investors from purchasing existing housing stock and using their money "to help provide a service to society" by buying new builds and encourage supply growth. So in this case FHBs buying lower quartile properties will only be competing with other FBH's and not 40%+ investors that they are currently competing against.

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