Labour's new policy of stopping non-residents from buying existing New Zealand houses is unnecessary and would be easy to get around, says Olly Newland.
Newland, a property investor, authorised financial adviser and author, told interest.co.nz in a Double Shot interview he thought it was "very sad" that things had come to this.
Over the weekend Labour Leader David Shearer said a Labour-led government would crack down on non-residents buying existing homes as part of a package designed to make housing more affordable for New Zealanders. Non-residents, apart from Australians, would only be allowed to buy houses off the plan or sections that a house was going to be built on, Shearer said.
"There's no need for this because the number of foreign investors who bought houses in New Zealand and don't live here is miniscule," Newland said. "It's absolutely tiny and I just don't think it (the policy) is necessary at all."
Shearer said Inland Revenue Department records show more than 11,000 overseas investors own properties they don't live in, and an estimated 2,600 homes were bought last year by non-residents.
How to get around Labour's policy
Newland said he didn't believe non-residents buying New Zealand houses had driven up prices.
"And just because some countries have these sorts of policies doesn't mean that we should adopt it. I just think it's a waste of time. It'll affect so few people it doesn't matter and there are so many ways around it it doesn't matter," said Newland.
The obvious way around the policy was for an overseas resident to have a New Zealand resident within the country act on their behalf, he suggested.
"Hold the property in trust for them, if that's what they want to do, and come to a private arrangement. It's very simple to get around."
Concern among politicians over the Auckland housing market has mounted in recent months as prices have continued rising. The Real Estate Institute of New Zealand Stratified Housing Price Index, which adjusts for some of the variations in the mix that can impact on the median price, shows Auckland house prices were up 19.8% in June compared with a year earlier. And the Financial Markets Authority has warned of an Auckland residential property bubble.
'Let the major (pricing) readjustment run its course'
However, Newland says the property market doesn't need regulating.
"It's self regulating. In 18 months, perhaps two years from now, the market will steady and go quiet. That's all the sort of regulation we need. If you start interfering you have unintended consequences down the line," said Newland.
"There's a limit to how much prices can go up. We're having a major readjustment that should be allowed to run its course, and then it'll level out and become a normal market where they'll be gentle rises of one or two percent per annum or something like that. But that's a year or two or three down the line yet."
"If you start pushing in one area, you'll get something going wrong in another area," Newland added. "Leave the market alone, it'll rise and then level out by itself."
Buying a home 'a basic instinct'
The Reserve Bank has said it's "seriously considering" using macro-prudential tools to help moderate house price inflation pressures, with restrictions on banks' high loan-to-value ratio (LVR) loans the tool with the best scope to dampen the current strong demand for housing, as well as reduce risk to bank balance sheets.
Newland recently wrote about 10 ways to avoid such restrictions, saying there was nothing new about them, given loan restrictions existed in some shape or form during the 1960s, 1970s and 1980s. Lots of "creative ideas" where cooked up to get around them then and would be again.
"If people want to buy a home for themselves it's a very basic instinct. They find ways around it (restrictions). And what happened in previous times when there were loan restrictions (was) people would go to second tier lenders, second mortgages, third mortgages, fourth mortgages. They would go to their parents, they would go to get a second mortgage back from the vendor," Newland said.
"There's also low deposit dealers, all sorts of things were done because of loan restrictions and this will come back for sure if these sort of restrictions get too tough."
'Let the banks decide how much they lend'
It would be better to just leave the banks to decide how much they lend to their customers, he suggested.
"The banks are the ones who have the customers in front of them and know whether people can afford the 95% loan or not. It's the banks who are going to carry the can if things go wrong," said Newland.
Asked whether perhaps some borrowers needed protecting from themselves, Newland said you could say that but on the other hand you'd be depriving them of a home and "that's an emotional thing."
"The only way around the whole thing would be to allow people to rent long-term. Overseas you can rent a house for 99 or 100 years, in that case the lease you take back is valuable," Newland said.
"If we had that system here instead of the macabre dance of death that landlords and tenants have at the moment then we'd have a different scene altogether."
'Rents to double'
If LVR limits on bank loans are introduced, immigration keeps increasing and the number of people leaving New Zealand continues falling, against the backdrop of not enough affordable houses being built, then rents will rise, Newland added.
New Zealand had its biggest net monthly gain of migrants in four years in June.
"You've got all these pressures on the market and the obvious answer to me, subject to nothing nasty happening, is that rents will steadily rise and they should actually theoretically be double what they are now, but whether we get there's another matter," he said.
Asked over what time period he thought rents might double Newland said: "It's hard to give a time, but over the next five years they should double."
80 Comments
Olly the "spruker" - theres no conflict of interest with this guy.
No solutions again just trying to protect ones position and his like minded followers, pity really.
One can not deny that all the real authorities and facts are confirming that cost of housing relative to our economy is seriously unbalanced and could cause major collapse of the NZ Economy.
Banks are profit driven and have used low interest rates to rack up further property debt rather than pay it down as was intended in 2008.
Cheers
Yes Happy123,
Partly due to the support of a minority of people in power (or connected to) who also have similar interests, for which everything has and is being done to preserve their wealth post the 2008 GFC.
Elections comming up, the media identifying this as a main issues as it has come to a head, Key continualy tries to side step the issue, yet it does not go away, but keep grow larger by the day.
So we will see? Do we look after the few who have more than enough or the many people / families who need the help?
I agree, why do we go to one of the biggest property investors in the country to get his opinion on a policy that will make him pay more tax, and maybe lose some value on his investments?
This policy is one part of the problem and yesterday's discussion on National Radio's Afternoon program tried to suggest it is only and Auckland issue, but from Wanganui I can say it is here too.
Relax - you have nothing to prove.
We've had this conversation before.
We agreed on the underlying principles
You acknowledged I was one of the few here who understood it.
My topmost rule is always "listen to the chatter"
My second rule is listen to the guy with the "street smarts"
My only criticism is you aren't prepared to come out and explain why it is happening and why it will continue to happen while the current policies remain in place.
... do you really believe that Shear Labour's policies will cause the price of houses to drop ?
I don't , there's enough loophole room to drive house shifting truck through .....
... London-to-a-brick though , the election of a Labour government with it's current swag-bag of idiotic policies will cause the Kiwi dollar to crash through the floorboards ....
I have found a solution to worrying about the value of my home - I'm going to live in it! Can't belive no-one has come up with that idea before, buy a house you can afford and live in it regardless of the current value it may or may not have. Ahh, feel the inner peace...
Yes, I agree. Olly Newland seems awfully & overly self-confident to make such a prediction in 2013.
To him, tenants + houses + fiat banking system = Olly's milk cows!!
I think he'd need to live through more of (economic) history to know how this plays out.
Then again *maybe* in a past life the old man lived in 1790s France or thru the inflationary/deflationary crises in fiat China long ago!!
To be so confident that he can milk *double* from us (without some unintended consequences) is a bit insane. Speaking of insanity... http://www.zerohedge.com/news/2013-07-30/marc-faber-central-banker-actions-insane-people-dont-realize-theyre-insane
Rents doubling. Is that a prospect that you happily envisage for NZ??!
Even if this did happen, it would come with major consequences that you don't foresee. (Even worse long term.)
Olly's sanguine macro view in terms of the enviroment in which this might occur is probably entirely wrong. Think high inflation, interest rates and int'l bond market turmoil.
Be careful what you wish for - and be a lot less smug!
Your asset class may not the worst choice (with leverage, not the best either), but your outlook is entirely wrong. This should give you some idea - watch the whole thing, or at least the last 5-10 mins, esp. the quote displayed in the last 30 seconds. http://www.youtube.com/watch?v=65SH35IMzlI
Wager? OK - capital gains in NZ property will be well outpaced by gold in the next 4 years, from today's price . By the way I do own property, but conservatively.
It was a simple and deadly serious question
Smug? Really?. Dont forsee? Really? What asset class do I have? What outlook do I have that is entirely wrong? You have allowed your emotions to run away with themselves and displayed your prejudices. I am no accolyte of his. Not even a fan.
Have you considered "The canary in the coal mine" and Aesop's fable "The boy who cried wolf"
A statement attributed to Aristotle, when the sage was asked what do those who tell lies gain by it and he answered "when they speak truth they are not believed
Consequences - oh yes - for sure - all the townsfolk are too busy telling him he is lying
In the meantime
What if he is right?
What will happen?
how long will it take to build 30,000 houses in auckland to completion?, and
how long and what will it take to develop the infrastructure to go with them
what if the current flood of migrants becomes a tsunami before the 30,000 is built
He is the canary in the coal mine who has been telling everyone for years what was going to happen if they dont wake up to what is going on
I repeat - are you willing to bet against him
Chill. I have already answered your serious question. (look above re- wager)
Have a read of this. http://www.zerohedge.com/news/2013-08-01/most-important-number-entire-u…
"been telling everyone for years what was going to happen if they dont wake up to what is going on" - this reminds me of all the sound money/fiscal rectitude advocates in the US in many previous decades. (eg. David Stockman)
Believe me, Olly Newland is not the canary in the coalmine. He may have identified some issues, but he has ignored others.
If rents double it will be in entirely different circumstances to Olly's housing investors paradise. If you are not one of those smug over-leveraged property investors I apologise for assuming that you're smug. My previous prick of a landlord was one of them.
To sum up general public options on AKL housing issues:
1. Mainstream media made a news on people with Asian faces being dominant in North Shore City property auctions
2. AKL property price has been going up quite quickly
3. So, people with Asian faces pumped up AKL prices.
4. Now, Labour is saying it will ban foreign buyers.
A very simple but effective implication comes out above: ppl with Asian face = foreigners in NZ
This is a very uncomfortable proposition. As JK said, they may be 3rd generation NZers.
If NZ society is still puting Asian population at margin or treat them as aliens, there will be consequences in near future.
I bet you still remember that TV3 made an episod on 'Smart Asian Kids in AKL' (https://www.youtube.com/watch?v=nIkvuDABvw8). I tried not to be super sensitive but listen to the commentary carefully.
It's a nasty situation. While a citizen I am also an immigrant - I've never felt like this country has any tolerance towards migrants either, and a downright distrust of certain races. There is a deep racial undertone with Labours policies and stances which I am very weary of and it seems at odds with their stances otherwise. That's the problem of having weak politicians in opposition parties - they go reach out in desperation.
This country was never asked about changes to migfration policy and , as it happens:
Savings Working Group
January 2011
“The big adverse gap in productivity between New Zealand and other countries opened up from the 1970s to the early 1990s. The policy choice that increased immigration – given the number of employers increasingly unable to pay First-World wages to the existing population and all the capital requirements that increasing populations involve – looks likely to have worked almost directly against the adjustment New Zealand needed to make and it might have been better off with a lower rate of net immigration. This adjustment would have involved a lower real interest rate (and cost of capital) and a lower real exchange rate, meaning a more favourable environment for raising the low level of productive capital per worker and labour productivity. The low level of capital per worker is a striking symptom of New Zealand’s economic challenge.
”
http://www.treasury.govt.nz/publications/reviews-consultation/savingsworkinggroup/pdfs/swg-report-jan11.pdf
So are Chinese racists and xenophobics?, because going by what some people think they must be.
They already have this policy being considered, so if you are going to call Kiwis that, for even thinking about this policy, then surely you are also calling Chinese racists and xenophobics as well.
Philthy the 'racist' tag is a pathetic neoliberal ploy to stir up opposition. I have an asian wife, good friends of every colour and joined my father as a 10 year old protesting the springbok tour. I am most definitely not racist. Yet I support the labour / aus approach. The chinese govt might actually like policy like this too if chinese nationals have a harder time investing overseas and need to invest more in their own country
Fully agree Matt it's a totally spurious argument, and even though it's totally hypocritical, we keep seeing people trying to use it over and over again, Key being one of the worst offenders.
The obvious reason is, that they have no good arugment against it, so they use a nonsensical one.
It's a bit rich Olly to say that banks should be left to their own devices because after all they hold the can if it fails.
History shows us that Banks are to big to fail, even a small one like South Canterbury Finance when it collapsed in August 2010, triggered a $1.6 billion bail-out of investors deposits by the New Zealanders like you and me.
As you mentioned we've talked about Capital Gains Tax in the past, but, housing is not on an equal footing with other investment oportunities until the profits are taxed the same as other oppertunities so again it's a bit rich playing the 'it's housing it's emotional for people', card.
The main reason why property values have increase so dramatically in recent years is that Kiwi Saver came due for the public to withdraw funds giving first home buyers the deposite they needed.
It would take a person with far more time on there hands than myself to workout the impact of Kiwi Saver on house prices but there are about 4,000,000 people in NZ, if just 2.5% or 100,000 of them didn't own a first home and saved $20,000 each through Kiwi Saver and they all borrowed at 95% to purchase there home, them that adds about $40,000,000,000 to the property market.
Olly's historic predictions, which were on the money, that property prices would improve were simple common sense.
No comments on Olly's "rents to double" prediction?
If that happens in the next five years (i.e. far faster than wage inflation), then it will be a social disaster. Plenty of homelessness for a start, and lots of people, including middle class, queuing up at WINZ for emergency help to pay their rents (that effectively makes landlords beneficiaries, right?).
No, I predict that the rental market will not be able to absorb that kind of increase. People just won't be willing or able to pay. What do other readers think?
I appreciate that that's your view, YL. But the question remains: How will the general renting population pay for that increase, and what about the negative social consequences of such a rise (as I mentioned, homelessness and needing emergency help)?
As a landlord, would you personally raise your rents, and by what percentage? If so, I'd be interested to see your justifications on these social problems -- particularly as to how they coincide with the "doing God's work" approach that you appear to have taken! :)
Another point is that Olly has not qualified whether he predicts a rise only in Auckland or affecting the rest of the country also. What do other people think?
In my experience since the 1980s JetLiner, and in lots of places around New Zealand, rents over the long term rise by the same % amounts. Of course from different base levels.
For instance, if rents rise 10%, it's 10% everywhere.
Probably something to do with a common interest rate for all property markets in New Zealand.
Do you understand the concept of such things as marginal cost? Your Landlord would appear to be one of the probably few landlords with low debt. Most on the other hand (and the few I know) have hefty outgoings in the form of mortgages, the money doesnt sit in their bank accounts, its given to the bank. A landloard also has to save for a rainy day, ie a period when the property is empty, I think I saw a vacancy rate of 6%....plus costs like maintenance...insurance for malicious damage (covers Kate's P lab scenario) plus make a living at it...ie buy food pay for the house they themselves live in.
Now sure this particular individual does not appear to care about society, but franky there are ppl like this in all walks of life.
regards
Terrible statement there Maybar.
Of course I am concerned about society. So I do my bit by providing shelter for people who don't or can't own it themselves, at the cheapest price I can.
Shelter is like food... one of life's neccessities.
But have I only got a conscience if I provide it to people for nothing?
What do you do in society? I bet money ends up in your bank account :)
Re the money ending up in my bank account. I have given this great thought over the years and, quite frankly, I can think of no better place for it to be.
I give some of it away too... to the organisations I like. So the impact on society is actually pretty darn good.
God favours me with what I do too 'cause owning and leasing properties is so damn profitable. I can't stop the loot piling up in my bank account.
I urge you to invest in property too and then you can decide where to put your loot too.
Well in my view it's a ludicrous prediction. Rent increases will self regulate themselves to some extent eg. Even more young people might stay at home. Under his prediction the economy would tank too as renters would have no disposable income. Frankly it is an irresponsible comment and probably just designed to gain attention
I strongly criticised an infometrics article on this site... it was about 2-3 yrs ago.... predicting a 30% rise in house prices.
I thought it was a ludicous prediction....(since changed my tune )
I hear what Olly is saying about migration....
I heard what he said about rents doubling in 5 yrs... ( but it sounded like the comment was drawn from him... rather than it being "considered"... and maybe he should have said ...rents will rise dramatically.??)
I see how little progress is being made in regards to increasing housing supply....and when the so called building boom arrives ...then there might be an influx of tradesmen...also putting pressure on rentals.
So until things change... ( ie. affordable houses being built... using waymads ideas http://waymad.blogspot.co.nz/2013/01/how-to-fix-housing-mess.html .... ).... then rents will go up.
Supply and demand..... one of the ironclad laws of economics..... will prevail....and sadly ..it looks like rents will rise. ...and if population growth in Auckland is strong ...then it is easily possible that rents might grow strongly....
The only way renters will be able to cope...will be to move into smaller and smaller places.
This will be a crisis that has been a number of yrs in the making...
(Message deleted due to inappropriate language. Please keep it civil folks, Ed. You can read our commenting policy here - http://www.interest.co.nz/news/65027/here-are-results-our-commenting-po…).
Well I think whether he is right or not is critical. He talks as an 'authority ' on property, and for some mysterious reason many seem to trust this guy. Now if people buy up property on the basis of yields today that are crap but think they will be amazing in 5 years because of an olly prediction that never comes close to being true, then that's problematic. The guy probably doesn't care because he will be living in a honolulu condominium in a couple of years, neighbours with j key
No, its about economics and finance and health of our Nation's economy IMHO. Societal arguments should really be discussed in terms of cost and affordability, sure what we provide thats politics and Id suggest not hugely relevant to this site. By this I mean we shouldnt discuss raising WINZ payments but the economic effect, sure. Dont put emotion in the way of nature/science, it doesnt care...if we cant afford to do it whether its just or not is moot, we wont do it for long, if at all.
regards
Those upset about the reaction of many Kiwis to high house prices etc may consider their gut feelings about things; born out by this:
80% of our population growth in the last couple of decades has been the net inflow of non NZ citizens .
“Among policy and analytical circles in New Zealand there is a pretty high degree of enthusiasm for high levels of immigration. Some of that stems from the insights of literature on increasing returns to scale. Whatever the general global story, the actual productivity track record here in the wake of very strong inward migration is poor. In an Australian context, the Productivity Commission – hardly a hot-bed of xenophobia or populism – concluded that any benefits from migration to Australia were captured by migrants and there were few or no discernible economic benefits to Australians. And that was in a country already rich and successful and with materially higher national saving and domestic investment rates than those in NZ.”
http://www.treasury.govt.nz/downloads/pdfs/mi-jarrett-comm.pdf
Government policies blamed for house prices
“Immigration and tax breaks for investment in residential property are being cited as the underlying causes of steep increases in the cost of housing over the past decade.
New Zealand now boasts one of the highest rates of home unaffordability in the world as a result of prices rising far faster than incomes, and the government’s Savings Working Group blames that squarely on the policies of successive governments.
Although “the favourable tax treatment of property investment” accounted for about 50% of house price increases between 2001 and 2007, the working group said, there was also strong evidence that rapid swings in immigration brought about price-rise “shocks”.
There was a sharp spike in immigration in 2001, 2002 and 2003 and, said working group committee member Dr Andrew Coleman, it appeared that property prices did not fall anywhere near as greatly when immigration fell again.
The report added that there was little evidence that immigration boosted local incomes. In fact, the need to build roads and schools meant that net migration contributed to the national deficit. ”
http://www.stuff.co.nz/business/money/4622459/Government-policies-blamed-for-house-prices
The Savings Working Group were hand picked by the government -represnting academia and business.
Olly the Great!
The law is obviously there to be bent so if the rules include the potential to lose 100% of the value of the property by seizure would any overseas speculator risk that and the local henchmen given a possible fine/jail sentence, take the risk?
Nobody knows what would be the rules and they could be made as onerous as needed to curtail the attempt.
The obvious way around the policy was for an overseas resident to have a New Zealand resident within the country act on their behalf, he suggested.
"Hold the property in trust for them, if that's what they want to do, and come to a private arrangement. It's very simple to get around."
.......
and people have been taken to task for thinking Chinese are behind house price rises as they are the ones seen at the auctions when (really), they are Kiwis.. !?
and simple to legislate for? if we catch you, you get a 10% penalty on the value of the house, per year its been so operated. I cant see how fraud cant be delt with...sure there will be the ppl intent on dodging it, but really all you have to do is make more difficult than elsewhere and the money migrates to the easy place.
regards
In Victoria all land records are monitored by the State Revenue Office. Any property that is registered in the name of a Trust is subject to a "premium" rate of land tax. The Trustee has two choices. (a) accept the premium charge or (b) submit the names and addresses of the beneficiaries of the trust and the capital shares of the beneficiaries.
In China if you want to buy property as a foreigner you need to have lived there for a minimum of 12 months, you can only buy one property, and renting it out is banned. You must also produce tax receipts showing 12 months of residence. They are also setting up a national land registry to monitor this.
So John Key, you call Labour 'desperate' to implement a similar policy, is that what you think of the Chinese government? And most of the other governments around the world including Australia. It looks like the free trade agreements John key has been so busy signing are actually not free trade agreements at all, just free capital gain for the rest of the world, at the expense of kiwis.
However, Newland says the property market doesn't need regulating.
"It's self regulating. In 18 months, perhaps two years from now, the market will steady and go quiet. That's all the sort of regulation we need. If you start interfering you have unintended consequences down the line," said Newland.
.................
given that we are a globalised property market, how does Olly know what will happen. How much money will come out of China and into realestate in desirable locations?
Here's something else to think about.
If LVR restrictions are introduced you can say good bye to the building industry.
Affordable homes are almost always sold to first home buyers or the working class.
Cut out the twenty percent deposit buyers and watch unemployment increase as chippies, electricians, plumbers, painters etc get laid off.
As Olly so rightly said "unintended consequences"
Few developers build affordable homes, they build the biggest they can on the smallest plot they can. Because LVR is only part of the policy, both Labour and the Green's talk about building affordable homes, ie state funded but there is no reason std layouts could not be provided by private contractors via competitive tender.
regards
Not a question about scale. But would Labour's proposal will stop transaction like this?
http://mobile.nzherald.co.nz/business/news/article.php?c_id=3&objectid=…
"The banks are the ones who have the customers in front of them and know whether people can afford the 95% loan or not. It's the banks who are going to carry the can if things go wrong," said Newland.
Not true. Banks will be rescued by governments. I don't know what the kickback is, but I suppose it's cheaper to buy a politician or two, than to make sure you don't go bust.
Some months back I looked at what renting I have now would cost, looks around $500 a week...doubling to $1k a week? I looked at my income, I could just manage that $500, $550 would definately be too much Id have to move to smaller and cheaper, no ifs or buts. No way could I go to $600 let alone $1k, aint going to happen....and I cant see Im alone in that...and im lucky I have some disposable income, many dont.....
regards
Agree, what Olly doesn't appreciate is that rents are capped by income and are quite inelastic. Mortgage repayments are the same.
House prices on the other hand are easier to manipulate, just keep dropping the interest rates, house prices go up, mortgage interest remains the same.
So the only way rents are going to double in five years are if incomes do, and cant see that happening, they seem to have been fairly static for a very long time.
How much more however do you think government is willing to pump into accommodation supplements and WFF in order to keep this rental market ponzi going? They withdraw their funding and the market correction will occur near overnight in my opinion. The highly geared rental property investors will exit as fast as they can, and those with more equity will be forced to lower rents.
Problem for FHBs solved.
Stand back- here comes the next wave:
NEW YORK (CNNMoney)
Home prices continued to gain steam in May according to a closely-watched reading, even as mortgage rates climbed.
The S&P/Case-Shiller home price index was up 12.2% compared to a year ago, slightly better than the 12.1% rise in April.
It was the biggest year-over-year jump in prices since March 2006, near the peak of the housing bubble.
Prices in two cities - Dallas and Denver - hit record highs, topping even the peaks they reached during the housing bubble.
link:
http://money.cnn.com/2013/07/30/news/economy/home-prices/index.html?hpt=hp_t3
very relevant
It means it is now less attractive for the oligarchs and the princelings to buy in those locations so they will turn their attention elsewhere - particularly tax friendly places that dont have robust money laundering detection and prevention processes - guess where
National have been smart to not do anything to change the increase in house prices. It's simple, the more people who obtain debt, the less likely they want their income to decrease (Labour/Greens & taxes) or house prices decrease (CGT, Landtax). So the National base increases in line with the amount of debt. Genius.
Olly is a very intelligent analyst. Except that he has now lost the plot - making the mistake of believing that the principles determining price movements over the last 50 years will guide the movemnets over the next couple of generations.
For instance, he makes this ridiculous statement:
""The banks are the ones who have the customers in front of them and know whether people can afford the 95% loan or not. It's the banks who are going to carry the can if things go wrong," said Newland.
The banks never lose. They simply sell the house at a price that covers the mortgage, leaving their investment partner (ie the homeowner) as the one who loses.
And of course, the NZ banks are now funded and controlled by Asians and Indians - the very same groups that are flooding into New Zealand and taking properties out of the hands of our children. They are quite happy to offer low equity loans as they know they can recover their loan value and onsell the property to their kin. It goes on all the time.
What will stop this? Only the vote of real genuine NZers who have had enough and will push political parties to find creative ways to stop foreign pillage and convert it to real investment.
Any party which fails to adopt a policy of preventing overseas purchase of existing housing stock will take a big hit at the next election. Overseas "investment" means BUILDING new houses, not PURCHASING existing homes that are the natural target of young buyers. NZ investment laws MUST come into line with the Australian laws.
Olly has the timeframe right - but makes the mistake of preaching that the "market forces" will achieve the correction. It will be political forces alone that bring fiscal stupidity to heel.
Surely, Labour got this policy wrong or "Half Baked"
I am not taking a position in this article but merely pointing out the extreme anomaly of their policy.
If Labour were geniune or wished to achieve their desired objective, they would NEVER have said foreigners will not be permitted to buy existing houses... BUT, they will be permitted to build a new house.
Hence the anomaly: As has been reported, a small sectiion in Auckland can cost some $400,000 to $500,000. As the cost of bare land and subsequent building permits and approvals is, flowing on to existing house prices, any restriction imposed on buying existing houses, will merely ensure that those affected persons WILL create an unprecedented demand for sections and so drive up such prices at an even greater rate.
Problem not only unsolved, but now intensified.
I rest my case...
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