Felix Marwick: Politicians lack will to deliver tough medicine on housing

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Image / iStock
Image / iStock

New Zealand? Are you listening? Because we have to talk.

You've got a problem. You're an addict, It's not completely your fault, but this property addiction of yours is getting out of hand and someone needs to do something about it before its too late.

Sure, it's not all your fault. I mean, what other option did you have to build a nice nest egg for your retirement? You tried shares but the '87 stock market crash hit you harder than a junkie missing a fix.

And finance companies - well, let's not touch on those. Given the way they went down in the 2000s (like the Warrior's playing anybody) it's perfectly understandable you chose to spend your money on a drug called property.

True, the powers that be made it all so very easy for you too. You were raised in a society where buying property was seen as a sure thing, the capital gains were solid and the taxation on those gains was marginal to non-existent.

The dealers (by which I mean the government) made it easy didn't they? Did they think of stepping in to control your habit? Did they consider stopping you from indulging in you past-time as it skewed the economy, and diverted valuable funds to a non-productive sector? Of course they didn't. Everyone was getting rich and it was far easier to believe the fantasy than deal with the reality that lay just around the corner.

So it's no wonder you snorted the property dust until it dissolved your septum.

The time is long overdue for you to get your cure. But there's some bad news, the intervention you need probably isn't going to happen. Because as much as our politicians don't like the squeals of the affluent middle class being squeezed out of the property market (they can just hear the votes slipping away), they probably fear the consequences of negative equity even more.

You see, we've all got high on our burgeoning property prices and no politician and no Prime Minister will likely have the courage to take our fix, and our paper wealth, away.

Labour abandoned its capital gains tax because it wasn't a vote winner and National's efforts on a foreign resident land tax, if it eventuates, is likely to be piecemeal and ineffective.

Because in a political system that's driven by what's popular rather then what is right, no-one in power is prepared to dispenses the tough medicine.

Felix Marwick is a political reporter for Newstalk ZB.

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- NZME.

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