National fiddling while Auckland burns

The National Government’s failure to take meaningful action to curb property speculation is creating a serious risk to the financial and economic stability of the country, said the Green Party today.

The Financial Stability Report released by the Reserve Bank today echoed warnings in the IMF mission statement yesterday that rampant house price inflation, fuelled by property speculation in Auckland, is a serious risk to the New Zealand economy. The Reserve Bank stated in its report, ‘Rising investor activity has been an important driver of price developments, and international evidence suggests that investor loans have a higher tendency to default in the event of a major downturn in the housing market.’

“National’s failure to take action on housing speculation has left our economy at risk, and is locking out a generation from being able to own their own home,” said Green Party finance spokesperson Julie Anne Genter.

“National finally took a tiny step in the right direction with the two-year bright line test, but the reality is the proposed law before the House has too many loop-holes and is too limited in scope to make a substantial difference in curbing speculation.

“During the debate last night, the Green Party proposed constructive amendments in line with Treasury’s initial advice, which would improve the effectiveness of the legislation. But National voted them down.

“National is continuing to back property speculators making short-term profits, rather than working to unwind the risk to our wider economy that this price bubble is causing,” said Ms Genter.

“The Government must step up and do the work to help contain rising house prices in Auckland. We would be happy to help them. Removing the tax loopholes for property speculation and building more homes would be a good start, as the IMF recommended yesterday.”

Link to Financial Stability Report:
http://www.rbnz.govt.nz/financial_stability/financial_stability_report/

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