Govt asleep at the wheel in ‘dangerous territory’

The Government’s ideological refusal to properly address the demand side factors is driving the unsustainable Auckland housing market into ‘dangerous territory’ and creating major risks for the economy, the Green Party said.

“The Government must tackle the demand side factors driving unsustainable house price inflation – like rampant property speculation – with measures like a proper capital gains tax and restrictions on overseas property investors, but is choosing not to,” Green Party finance spokesperson Julie Anne Genter said.

“When the Reserve Bank Governor uses phases like ‘dangerous territory’ to describe the Auckland housing crisis, as he did yesterday, the Government needs to wake up and take action.
“This has long been a problem for Aucklanders looking to buy their first home, but it’s now become a wider problem that puts the whole economy at risk from a sharp correction.

“40 percent of Auckland houses on the market are purchased by investors. We need to be honest about the fact that property speculation is the leading cause of the Auckland housing crisis and closing the tax loophole on housing is necessary to dampen speculation.

“The Government’s two-year bright line test will not fix the problem and can easily be gamed.

“It is disingenuous for the Government to continue blaming everything on a supply shortage. Supply side measures take time but demand side interventions can be effective very quickly.

“The Government should be doing more on both the demand and supply sides – including a proper capital gains tax, restrictions on overseas buyers, better tenancy protection and standards for rental housing, and building more high quality, medium-density housing around frequent public transport hubs,” said Ms Genter.