POLL: NBR readers' verdict on house prices solution

NBR ONLINE readers believe increasing the land supply and making resource consents easier is the key to bringing rising house prices under control.

Last week the government issued a response to the Productivity Commissioner's earlier assessment that housing can be made more affordable.

In a poll conducted on NBR ONLINE last week, readers were asked: What should the government do about rising house prices?

The result:

  • Nothing. Let the market run its course (26%).
  • Introduce a capital gains tax (17%).
  • Increase subsidies for home buyers (2%).
  • Increase the land supply/make resource consents easier (55%).

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5 Comments & Questions

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I do not believe that there is such a huge shortage of houses. We do not see too many people living on the street.
Obviously the problem lies with too many landlords owning numerous rental properties and shutting genuine owner/occupiers out.
There should be major disencentives for people to buy rental properties, a capital gains tax being part of a package to make it uneconomical to own rentals. This will never happen, of course, because too many politicians own rentals. it is a matter of self interest

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We have owned a house in Sydney which we have rented for over 10 years. In that time it has been vacant for a total of 3 days. At times the rental vacancy rate in Sydney is less than 1%.
The 2012 Demographia International Housing report ranks all major cities in Australia as severely unaffordable with Sydney topping the list with a rating of 9.2, Melbourne 8.4 and Adelaide at 6.7. A ranking of 3.0 or under is considered to be affordable. Auckland by comparison ranks at 6.7, read it at http://www.demographia.com/dhi.pdf
Australia has had a capital gains tax on housing for years, as well as an assortment of other taxes including land tax and stamp duty.
The report makes the point quite clearly in its section entitled
"Housing Affordability: Incompatible with Restrictive Regulation"
that
"The economic evidence indicates that this trend (severe housing unaffordability) is strongly related to the implementation of more restrictive land use regulations, especially measures that create scarcity in land for housing"
This myth that somehow a capital gains tax will free vast swathes of housing stock up from unscrupulous landlords and suddenly make the kiwi home ownership dream more affordable is simply not backed by any evidence from overseas where these taxes have been implemented.
The key issue is the availability of land for housing, period.

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Excellent work Anonymous. There is too much left wing nonsense being spouted as they seek to create more of a divide and create a "crisis" to give themselves a position.
A CGT will just push up rental prices so as to make investors a decent return on their money. Plus the investor has to actually sell to attract the CGT. There are not too many countries around the world where you cannot make a return from residential rentals without relying on tax refunds.

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If you want to lower house prices then restrict the availability of cheap money (ie raise interest rates, restrict loan to value ratios etc). It really is as simple as that. Interest rates set at emergency lows is gasoline on the fire. All the waffle about planning restrictions etc is secondary. House prices fell from late 2007 to mid 2009. Why? Because interest rates were pushed up and cheap money was restricted. As soon as interest rates were slashed - Kiwis think about jumping into property, its like Pavlov's dog - cheap money = buy a rental property.

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Doesn't work. All you would do is penalise kiwis. Those buying huge numbers of central city homes are cashed up Asians.

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