Labour to be careful with how it manages housing supply and demand policies, new Finance Minister Robertson says; Ardern & Parker not keen on stamp duty, looking at ways to block non-resident foreign house buyers

Labour to be careful with how it manages housing supply and demand policies, new Finance Minister Robertson says; Ardern & Parker not keen on stamp duty, looking at ways to block non-resident foreign house buyers

Labour will ensure its housing policy is handled in a “careful and managed way,” new Finance Minister Grant Robertson has said in response to a question on whether he was worried about house prices and market confidence declining due to Labour’s suite of measures to tackle affordability.

Robertson made the comment on TVNZ’s Q&A programme Sunday. Labour would “[make] sure that we address the supply issues; we build the affordable houses, but we also crack down on the speculation,” he said, adding there had “been enough discussion about that in New Zealand over the last few years.”

“In the end, it’s actually about New Zealanders, particularly young New Zealanders, being able to get into the housing market and the security that that provides. I think people understand that,” he said.

Robertson’s comments came after Prime Minister Jacinda Ardern on Three’s The Nation last Saturday acknowledged that the housing market could continue to cool slightly as Labour’s policies tackling supply and demand issues come on-stream.

Stamp duty won't stick

Meanwhile, the new Labour-led government continued to hint that it’s not all that keen on introducing a stamp duty for foreign buyers, and is instead looking for ways to block non-resident foreigners from purchasing existing housing stock through different means.

On Monday morning, Ardern said Labour was looking to resolve the issue of how the policy takes shape in the next couple of weeks. Whatever stance Labour takes might butt up against several free trade agreements New Zealand has signed or is in the process of negotiating. 

Ardern is due to head to the annual Asia Pacific Economic Cooperation (APEC) forum in Vietnam November 11 and 12, where the ongoing Trans Pacific Partnership (TPP) trade deal is set to be discussed.

One option open to the government is to impose a stamp duty, as the previous National government negotiated the ability to do so in several agreements. But Ardern indicated Labour wasn’t hot on the idea. “Have been told that won't work,” she said on Newstalk ZB Monday morning.

New Trade Minister David Parker also played down suggestion of a stamp duty. Talking to the NZ Herald, Parker hit out at previous Trade Minister, now US ambassador, Tim Grosser, saying National had “wedged” Labour in on the ability to ban non-resident foreign house buyers under trade agreements, despite Labour having held the stance for a number of years.

Labour is set to legislate for the ban in domestic legislation in its first 100 days in office. Parker indicated that the ban could take different shapes before and after TPP comes into force. He is set to travel with Ardern to APEC alongside new Foreign Minister Winston Peters.

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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Land Value Tax. The tax working group will recommend it.

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Problem is - while land adjusting the balance between land tax and income tax is likely a good idea - it'll be really hard to get NZers to vote for it in 2020, at least until the point where NZ is once again a place where fewer own the land than don't.

It was once used in NZ to get land into the hands of Kiwis, but we have a bunch of people who've made a lot of tax-free money off the abandoning of this and other policies used throughout the 20th century to foster affordable housing, and they seem to resent the idea that NZ might be better to work to achieve affordable housing once more.

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Yep, a tax policy overhaul will be recommended for a third time by the tax working group, but will never happen.
Politicians much prefer to have some bastardised ever changing system that they can campaign on tweaking every 3 years.
Plus, good luck trying to convince 90% of the population that an overhaul of tax policy doesn't mean that their net tax liability will increase. Evidence from the recent elections highlights just how stupid and impressionable the constituents are.

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If Joyce is still around - and probably even if he's not - we're likely to see more Tea Party-like propaganda with a very loose relationship with facts, agree.

The spruikers here constantly state Auckland is a global city so isn’t it about time there was a land/property transfer tax of say 1.5% like normal cities have ?
Or does that not suit the flipping houses fake economy National provided for its spruiker party followers ?

Global city just means being a node into a significant economic region. Auckland is rated as a Beta + global city. Pretty sure they don't have to have all the same tax laws even though they share similar characteristics.

A land tax would precipitate a collapse in housing values in my opinion

And that's just one of the many benefits it would bring.

Yes if you don't own a house, no if you do

You mean, no if you own multiple properties, or want to downsize your current property. For most owners, it's pretty irrelevant. For those considering upsizing, lower prices are likely to be a benefit.

"A land tax would precipitate a collapse in housing values in my opinion." Trying to frighten the masses?

A land tax is a double taxation and so it will simply never happen because its stupid at every level. It requires complex exemptions for various sorts of business, unemployed, underemployed and old people and it leaves us all serfs in our own country.
The TWG had no philosophical grounding for such recommendations and considered things only within the context of trying to balance to a lower income tax, and lower business taxes.
I assure you a land tax would be a huge left wing own goal that will land on the middle class.

Land tax is also one reason why many Kiwis own their own home today.

The old people issue is resolved by allowing them to bundle up any land tax they cannot afford for the state to take out of their estate when they die. Simply not an issue for them. Unemployed/underemployed, why is land tax a particular issue for them any more than council rates are an issue now? They may have to downsize or free up assets which is unfortunate but I'm sure happens already when people hit hard times.

"The TWG had no philosophical grounding for such recommendations."

ahh, what?
There is plenty of philosophical grounding for a land tax.
Plus, it requires non of the exemptions that you say it does.

And, I can't at all see how it leaves us as "serfs in our own country". Does it mean that tenants become the land owners property? Does it reduce worker mobility? Does it force labour upon the tenants?
What a weird proposition.

Already have a form of Land Tax in Rates, simple to administer, rebates for those with hardship / elderly if needs be. Simple, effective, unavoidable (also less manipulative than just CV for rates). Increases holding costs for land so incentive to develop earlier. Needs to be offset by a reduction in other taxes (specifically income tax) and it will be a winner.

Rates are about 0.15% and they're levied against capital improvements too which are counterproductive. A proper land tax where the effects become noticeable is 1-2%. A 5% land tax would do wonders for our countries productivity.

Just stating my opinion, Didge, I believe I'm allowed to do that

You are but we are allowed to provide counter evidence if we believe something different - it's called a discussion

Of course, interesting to hear that you don't believe that a land tax would depress house prices

Whether it's a crash or a fall would depend entirely on how big the tax is and how it's implemented.

It would likely make rents cheaper too, as it would encourage more productive and intensive use of land.

All that aside, government revenues should come from natural resources first and foremost.

Ocelot, I'm not sure that it would lower rents. If you own a house and rent it out, and you have to pay more by way of a land tax, you will have to recoup some of that expense, and the only way you can do that is by collecting more rent

Or, as you suggest above, the price comes down meaning lower interest/mortgage payments to compensate. Investors who got in at higher prices may have to suck this up or be undercut by new investors.

mfd, if the value of a house comes down, the mortgage on it still remains the same...

Yes it does, but new investors will have smaller mortgages if prices come down...

That's not the case for all houses bought after LVT is implemented. Here's an explanation of how LVT works to reduce rents.

Thanks for the link Ocelot, very interesting article. It seems to hinge on the assumption that, I quote: "Now, we replace property tax with land tax". I wonder what property Tax the author is referring to ? Rates ?

Well rates are levied against buildings as well which is counterproductive. It should be levied against land only and be 1-2% (instituted incrementally).So if council rates were a 0.5% land tax, and we also had a central government land tax of 1.5% used to offset income tax we'd see far better equality and productivity in this country. It would be a massive boost to GDP.

IF Labour FUDGE this and DON'T STOP foreign speculators (as per election promises and hints) in the NZ housing market, the NZ (massively biased media) will be all over them (and with a RARELY GOOD reason) and this will give Natz a hope of getting back in Govt, which presently they have non in the foreseeable future.

If NZF and Lab don't follow thru on this they may as well shut shop.

Id like them to add in no purchasers on overseas funds, otherwise students, or Accountants/lawyers fronting overseas money will continue to run amok. Oh you have $3 million to buy this house, please show $1m in tax paid in NZ.If that cannot tax paid NZ funds..... declined.

Policy should favor the NZ domestic tax payer. To not do so is just selling NZ taxpayers out.

No matter what policies Labour says it is going to do, it will find any reasons to NOT implement any polices that crash NZ property market.

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Having a rigged property market where prices are never permitted to fall encourages mal-investment.

A nice little haircut should make the greed squad god fearing once again.

Too true. Not thing will change. Money talks at the end of the day...

Labour is going to make nz housing affordable. Everything it does IS going to slow the market. It’s happening already. There only 2 ways to make housing affordable. 1 wages go up and not just the tinny small % on the minimum wage getting a little bit more, or 2 house prices drop considerably. The government can say what it likes but one thing they would never say is they expect the housing market to drop. It is the government don’t forget. As the market drops they’ll come up with other excuses as they go knowing all along it had to happen and national are to blame . Don’t forget what peters said, blame national if this turns to shit and it will. It’s impossible to do the things labour are going to do without crashing the market. They’re trying to take it down slowly and after a few years most of the people of nz will be happy. Even new investors or old long term investors should be . There will be a small % of investors that brought over the last 2 years that mighted be very happy but shouldn’t be a high number

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It was absolutely criminal that Grosser stymied future governments rights to decide who could and who couldn't purchase land here. I will never forgive them for that, because even if this government manages to re-negotiate some aspects of the South Korean agreement, particularly, it is not going to be that good a look.

Yeah...just whose interests were they looking after when they did that, eh?

God only knows, but I actually suspect it was them thinking that somehow or other their views counted more than anyone else's and to prove they point they were going to cast it in stone.

;'''Looking at ways to block non residents foriegn house buyers'''
Now i don't want to be picky ,but Labour have had 9 years on opp to work on this,but are still looking at ways.So during the election when they said they would do it they didn't really have anything in mind.I must say that that is disappointing.

That is a good point but untill recently there was only lack luster leadership in Labour. Let us hope that has changed.

They've been aware. Do a quick google and you can see they'd already bounced the idea against existing trade agreements. You can search for it in relation to article 139 of the FTA with China and the ability it gives to maintain the pre-existing relationship with Australia while making changes to others.

When you get to implementation stage of any initiative you normally then go through the next level of detail, right?

dp

Any dilution of the promised and agreed to policies will undermine the credibility of the new government, so early into its start. I hope they think several times before issuing statements and intentions which are already confusing many. Action speaks better than just words. Over exposure is dangerous, without delivery. Remember 'under promise and over deliver' is the key to winning hearts and minds.

National make no promises and make things worse.

I see what you did there.

So National has 9 years and did nothing, but Labour has had a couple of days, but 9 years in opposition.

I will raise you on the disappointment with Labour to disbelief with national. But with National its what you learnt to expect. Another day and nothing is done. 9 Years of nothing, but make NZ a third world country.

Perhaps you should write, put NZ on the path toward becoming a third world country, because NZ is obviously not a third world country right now, is it?
Yet NZ has improved in many ways over the last nine years....

NZ ranked #14 in best countries in the world list:
https://www.usnews.com/news/best-countries/new-zealand

What record homelessness, under funding of infrastructure, low productivity, mass immigration of low skilled workers, house prices unaffordable for FHB, low wage inflation, hospital ques..

What does some list tell me. I actually lived in NZ and had all the pitfalls that the National government brought to NZ.

You can nit pick particular words if you want but thats cold comfort for people sleeping in cars, tents and on the street.

You don't even live in NZ. So sick of these sorts of comments. Going on and on about the homeless and high prices in Auckland while living overseas. NZ is more than Auckland. These people choose to be homeless in Auckland. We have empty state houses in other places. Affordable houses within commuting distance of main centres. Very low unemployment. Aucklanders are very happy about the level of equity in their homes.

On the supply side - the election promise to remove the RUB seems dead on arrival. It looks like the Greens were opposed.

Is there any evidence (actual evidence) that foreign buyers push up the price of property here? If so, how much? 0.3% 3% 30% ? Last time I checked there wasn't, and I had a good look. Seems to me the biggest driver of capital gains are Kiwi residents themselves, you know, that 107% of GDP in household credit we took on? Yeah, that is the single biggest driver of capital gains in residential.

Foreigners indirectly push up the price of property here, we export to them, and use that national income stream to service a large stock of mortgage debt.

Anecdotal evidence does not make for good policy. Neither do xenophobic responses to an internal, self inflicted issue. Its all about debt, it ain't that hard to figure out.

It may or may not be the main driver. But it is a driver.

Allowing foreign buyers to purchase our existing residential stock is kiwiphobic. The majority of voters now agree. Good riddance.

Furthermore if only 3% per annum but all properties are held in overseas hands then each year we lose evermore. I await the coming register with interest.

Yes, the new register on foreign owners is a very important tool.

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Foreign buyers (non residents, temp visa, student visa) accounted for over 40% or purchases at the peek. At the same time another 40% was being snapped up by investors. That left just 20% of home sales going to New Zealanders to live in.

20 FUCKING PERCENT.

I know the article you are referencing.

"The data released by Land Information New Zealand (LINZ) this afternoon showed that 474 out 11,955 houses sold between January and March went to non-residents."

3.9% to non-residents.

"Last year, the Labour Party prompted a public uproar after producing data which showed that up to 40 per cent of Auckland houses were being sold to people of Chinese descent, who only made up 10 per cent of the city's population.

Labour's estimate was based on people with Chinese-sounding surnames and did not differentiate between non-residents and residents."

""It also excludes trusts and businesses. A further 45 per cent of the Auckland sales were also excluded because of exemptions for those buying family homes and those who signed contracts before the law came in."

Mr Tywford said that the data was "effectively useless" as a contribution to the housing debate."

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1163...

Link for those who want to read it for themselves.

If Labour does not act on foreign / non resident buyer the question that all Labour Supporter should ask is WHY DID WE VOTED FOR THEM. Atleast with National, it was clear that they will take no action whatsoever on foreign buyer.

If Labour goes back or try to cut edges with foreign buyer issue.............will be finished.

gooki, there's no reliable data on foreign buyers, period. That's why Labour have committed to set up a registry of foreign buyers

We will see if Jacinda has the influence to ensure that she makes good on her promise.

I suppose you can always just apply a 100% stamp duty for each residential property sold to an overseas buyer which would have the same effect.

Sounds like Labour is laying the groundwork for all the excuses as to why they cant ban foreign buyers. They'll be like all the other Govts, full of broken promises and total disregard to their voters. In the end they'll just implement a bunch of new taxes to pay for all their social dogooder policies, of which, everyone will pay, not just foreign buyers.

Let's give them the benefit of the doubt for now

WHY

Why not?

Because they are our new government and even if we didn't vote for them, we're all in the same ship (called team NZ) and we all have to do and hope for the best.

You're optimistic then?

Moving from the IDEAS PHASE (affordable housing for everyone, jobs for everyone, fairer tax system etc..)
to the IMPLEMENTATION PHASE, (actually setting policies that will achieve the "ideas"),
Herein lies whether Labour will get a 2nd, 3rd... turn in government, or not

Oh, the peanut gallery will be whinging in three years, "Labour failed! There's still poverty and there are still people without jobs and there are still people who can't afford a home! Dancing Cossacks!" as if these things can be changed with the flick of a switch. Some things take a generation (or more) to change, but the best way to never get there is to never start.

Labour campaigned for banning foreign / non resident buyer to ease the demand side of the problem - who believes that non resident buyers are just 3% (Only National and they are gone for the same reason as no one likes to be manipulated by the government whom they vote)

So whatever measures that they may choose but will have to ban foreign / non resident buyer from existing housing market - If they try to soften the stand be be ready to face the backlash as the same reason will apply to labour also as no one like to be manipulated and lied.

Whatever they do extra is good but they cannot play with foreign buyer issue and it applies to Winston Peter also.

Yes, they will face fury if they do not manage to do something, and that will be even if the true blame will lay fairly and squarely at National's door, for putting us in this position in the first place.

So you're saying if Labour campaigns on banning foreigners from buying existing houses and then fails to deliver the policies, it's National's fault.
BTW I think Labour WILL deliver

It would be interesting to know why a stamp duty won't stick.

Cause the stamp is old and moist

Political parties always embellish their policies before the election and water them down, or find excuses for not implementing them, once in power. Trumps wall is a classic example. Anyone with half a brain understood it was never going to happen however it appealed to the masses.

We're in a similar situation here. A policy of banning foreign buyers appealed to the masses however executing such a policy isn't straight forward.

This new and spendy "Government" of ours seems to be hitting a few brick walls early on........

But there's a seriously big brick wall it's likely to hit around Sept/Oct 2020 - if it lasts until then.

If trademes listings keep growing at this pace without sales picking up Auckland’s listings will be at 15000 in 3 months. Scary . 2008 all over again without the bonus of lowing interest rates and local buyers prices massively out of the market

Hi O4 normal.

Interest rates are likely to still be low in 3 months time.

Further, there are still plenty of cashed-up buyers in Auckland and Wellington.

> But Ardern indicated Labour wasn’t hot on the idea. “Have been told that won't work,”

I wonder how surprised they are going to be when they realize that these bans will also not work.

Biggest problem is:
There are soooo many people who own 20-40 even 100 investment properties. Government should introduce annual capital tax = x% of capital value of house for these people. Also No investment property in Auckland Central, it means anyone who has one property in Auckland central are not allow to buy a investment property in Auckland central. For other area, 1 or 2 investment properties is totally fine, no capital tax for first or even second investment properties. 5% of CV as annual capital tax for 3rd one and even 10% for 4th.etc. By doing that, those people who own 30-50 investment properties will put these houses out on the market.