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Home / Business / Companies

Editorial: Time for action on housing affordability

NZ Herald
14 Apr, 2017 05:00 PM3 mins to read

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More flexible planning rules and a large-scale intervention like Labour's Kiwibuild policy for new homes could change industry norms here. Photo / Mark Mitchell

More flexible planning rules and a large-scale intervention like Labour's Kiwibuild policy for new homes could change industry norms here. Photo / Mark Mitchell

Opinion
We should reconsider a broad-based capital gains tax or at least an end to negative gearing.

A year ago today the Herald began a series called Home Truths: Tackling NZ's affordable housing crisis.

We talked to house hunters struggling to buy their first home in Auckland's runaway property market and asked experts what they could do to improve their chances.

We analysed the causes of the problem, from scarce land supply to speculators flipping houses for capital gain.

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The series aimed to start a more focused national debate about how all New Zealanders could work together to solve one of our most urgent social and economic problems.

Twelve months on and with Auckland's median house price up this week by a further $70,000 to $890,000, it's fair to say the results have been mixed.

The series had an immediate impact on both the public and politicians.

Stories poured in from frustrated house hunters - particularly those who had previously felt marginalised by Government statements that this was a good problem to have, as everyone (read "older home-owning voters") was getting richer.

Politicians and business and community leaders climbed in with a range of possible solutions, many of which we explored in our coverage.

The Government has since talked up several initiatives, including making better use of Housing New Zealand land, but the most radical moves have come from elsewhere.

Banks effectively stopped lending to foreigners, which has apparently taken the steam out of sales to overseas-based Chinese buyers.

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Labour is talking tough about lowering immigration numbers to relieve pressure on all the city's infrastructure, a genuine dilemma that needs to be handled carefully.

The Reserve Bank has also asked for powers to impose a UK-style debt-to-income ratio on buyers, a move which might well slow price growth but would also hurt first home buyers hardest.

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There are many other possible solutions and we canvassed several of them at the end of last year's series.

For the council's compact city strategy to work properly, we first need to free up more land for well-planned developments on the city's outskirts - otherwise rising land prices will continue to fuel more speculative buying in an upward spiral.

We need to get roads, water and sewerage into new developments much faster, through private sector involvement or the use of local taxes if necessary.

Smaller, mass-produced homes are essential to reducing building costs and providing the accommodation that most buyers actually want.

It could take more flexible planning rules and a large-scale intervention like Labour's Kiwibuild policy for 100,000 new homes to change industry norms here.

And while it seems unlikely in today's political climate, we should reconsider a broad-based capital gains tax or at least an end to negative gearing, which allows property investors to offset rental losses against their other taxable income.

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Another good step would be tenancy law reform to improve living conditions for our growing population of long term renters who cannot afford to buy.

Like the rest of us, politicians make their decisions on the facts that matter to them.

The biggest potential for improved housing affordability in the next 12 months lies with the growing number of 18 to 40-year-olds locked out of the property market.

But that's also why change so far has been glacial - because MPs know that when this year's election comes around, most of this group won't bother to vote.

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