Matthew Backhouse

Matthew Backhouse is an APNZ news reporter based in Wellington.

Clear message sent to property developers

Photo / Richard Robinson
Photo / Richard Robinson

Property developers who "sit and wait" for land values to increase have been sent a clear signal that the Government will act to bring more housing into the market, Finance Minister Bill English says.

The Government last week announced new measures to increase the supply of housing, including the ability to take control of planning and consents for new houses if councils were too slow in freeing up land.

The Budget measures come after the Government signed an accord with Auckland Council which aims to add a further 39,000 houses to the region over the next three years - more than double the 15,000 new units built over the last three years.

Mr English told TVNZ's Q+A programme this morning that the legislation sent a clear signal to property developers who were sitting on land.

He said property developers were assisted by planning rules that all but guaranteed large appreciation in land values if they "just sit and wait".

"They're getting a clear signal from the legislation ... that the council and the Government are willing to act to significantly expand the supply of houses."

Mr English said planning laws were also hurting first-home buyers.

"What's stacked against first-home buyers are planning laws that are explicitly designed to drive up housing values, and that is the case in a number of our faster-growth markets.

"They're explicitly designed to ensure that house prices go up so that they [councils] can afford the intensification and the very high-value, high-cost urban design that goes with that."

Mr English said the new legislation made it clear that if councils' tools did not work well, then the Government had the power to issue consents itself.

"Now, this is the most significant step that a government's taken around working with councils in a long time."

Mr English said interest rates were likely to rise from their 50-year lows - but said he was not not warning first-home buyers against buying at the moment.

"The Reserve Bank has the tool of interest rates ... the governor has expressed reluctance to use it at the moment. He hasn't been increasing interest rates. So we will just have to see where that goes over the next couple of years."

Both Labour and the Greens want a capital gains tax on investment properties to help ease the pressure on the property market.

Greens co-leader Russel Norman told Q+A that the housing problem was an issue of both supply and demand - including overseas demand.

He said Hong Kong had introduced measures to constrain overseas demand with a 15 per cent surcharge on non-residents buying property.

Dr Norman said that was intended to "turn down the tap a little bit" and take some of the heat out of the market.

Labour finance spokesman David Parker said restricting foreign ownership of residential property was not Labour policy - unlike restricting foreign ownership of farm land - but the party would consider all good ideas.

He said New Zealand had very poor data on foreign ownership of residential land because nobody gathered it.

"That's where you need to start, is gathering that data and see how big a problem it is. You're not going to cure these problems with house prices until you deal with the underlying drivers of rampant house price inflation."

- APNZ

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