Reserve Bank policies will inevitably heat housing market, Government must implement tax reform to cool it down

The Government must use levers to prevent further over-heating of the housing market, which will result from the Reserve Bank pumping another $28 billion into the economy in the form of cheap loans to banks.

“Cheap bank loans are good for helping businesses, but lead to further sky rocketing house prices if not counter balanced by a tax on capital or wealth inflation,” says Green party Co-leader James Shaw said today.

“Low interest rates right now are benefiting property speculators and dealing a crushing blow to average wage earners who hope to be able to afford a home.

“We’re seeing people with two or three properties getting cheap credit to re-mortgage and buy a fourth and fifth investment property. That pushes up house prices, shutting out first home buyers and creating even more wealth imbalance between the haves and the have nots.

“For this reason, Government must implement measures to soften the impact of these measures.

“This could be by taxing capital gains or wealth to discourage property speculation and slow house pricing increases. This needs to sit alongside a ramping up of the supply of affordable public housing where close to 20,000 families are waiting for a home.

“Inequality doesn’t just happen. Decisions by Government, and the Reserve Bank alike, can either accelerate growing inequality, or even the playing field.

“We’ll be talking with Labour about what we can do to take the heat off the housing market, particularly now New Zealand First is not in the tent to slow or stop progressive policies that will improve the lives of New Zealanders.”

ENDS

 

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