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Like a rolling juggernaut, our housing crisis has rolled over National, crushing it’s Dear Leader’s protestations that no problem exists in our country;
“No, I don’t think you can call it a crisis. What you can say though is that Auckland house prices have been rising, and rising too quickly actually.” – John Key, 13 April 2015
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Phil Twyford’s appearance on TV3’s ‘The Nation‘ on 11 July has finally put the problem of foreign ownership of property into a context that even the most dumbed-down, Reality-TV-watching New Zealander could understand.
It is mind-numbingly simple: with the most liberal foreign ownership laws in the world, foreign investors are pouring billions into our housing (and agricultural sector), hoping to make tax-free gains. In the process, prices are pushed up, out of reach of young, first-home buyers.
As I wrote on 11 July;
Our parents and grandparents never had to compete with buyers from Berlin, Beijing, or Boston. So it baffles me why we have saddled our children with this colossal hurdle. The only reasons that come to mind is greed and a misguided ideolological view of an unfettered right to sell to whomever.
Some are now proposing a “solution” to this mounting problem. BNZ chief economist Tony Alexander suggests;
“We should as soon as possible adopt Australia’s rules restricting foreign buying of anything other than new housing unless resident for 12 months.”
This is a “Clayton’s Solution” and merely shifts the problem from existing properties to new properties being built. It beggars belief how any seemingly well-educated, intelligent person can proffer this as a “solution”.
How is it a “solution” when, for example, 1,800 new homes are permitted to be snapped up by overseas investors, and in the process side-lining first-home buyers;
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This is not a “solution”. This is more of the same stupidity that has allowed our country to find itself in this mess in the first place.
Allowing foreign investors to buy new homes instead of existing homes simply transfers pressure on to new developments. It will also inevitably put pressure on existing, older homes being bought up by developers; demolished; and replaced by new houses or apartments. Consequence: Restriction avoided.
There is only one, clear, guaranteed way to stop our housing stock from becoming more and more the privilege of offshore investors:
1. Ban all sales of land to non-NZ residents or citizens. No exceptions.
Other policies that should also be enacted immediatly;
2. Implement an immediate stock-take of land-ownership, both agricultural and residential properties, so we know precisely how far the problem extends.
3. Implement a Capital Gains Tax on all properties (including the family home if sold within, say, five years).
4. Implement a law that foreign land owners are allowed to on-sell only to New Zealand permanent residents or citizens.
Half-measures such as National’s requirement for foreign investors to acquire an IRD number and bank account, or Tony Alexander’s naive suggestion will not do. The problem will continue to grow.
This is not ‘xenophobia’ or any other label bandied about by misguided individuals from the Left or Right. This is a matter of economic common sense.
I have no problem with citizens from Berlin, Boston, or Beijing wanting to buy New Zealand farms, houses, businesses, etc.
Just take up Permanent Residency or Citizenship first.
Sorted.
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References
Radio NZ: Key denies Auckland housing crisis
TV3: The Nation – Interview – Labour’s housing spokesman Phil Twyford
NZ Herald: Auckland’s property crisis – Foreigners should build, not buy – economist
Radio NZ: Up to 1800 new homes for Auckland
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I would go a step further and require that purchasers of real property new or old, whether a citizen or permanent resident, must provide evidence of 5 years’ residency in the country at some point in their lives before being permitted to do so. Simply to be a current “permanent resident” is a pretty low hurdle. Let’s make sure that the buyer has a long-term commitment to the country or is actually a New Zealander.
Otherwise helicopter residents are going to become common.
I see your point, Nick…
I came to New Zealand from Australia in 2007 as a retiree on an Australian Pension. Because house prices were higher in Australia than NZ, and housing was especially cheap in Dunedin, I was able to buy a house for me and a house to rent to supplement my pension. I fully intended to stay here but I had expected to be challenged by some Government Department to check my good intentions and was genuinely shocked at how easy it was. Embarrassingly an Australian friend of mine bought a house in NZ over the internet without having the least intention of living here.
I still believe that land shouldn’t be sold to anyone. Long term leases are the solution. This removes the speculative element from house owning.
That’s right Nick.
If people want to have the privilege of buying a house in N.Z, they better prove that they are making a long term commitment to this country.
Water tight regulations need to be implemented to prevent anyone from anywhere flicking in and out of our market like some Wall Street money trader !
Lets put the immigrants on a 5 year trial to see if they stack up. That will sort out the ones who are serious about becoming Kiwis.
Houses then become homes that are meant for living in .
Not just another tradeable commodity.
The more i think about what has been allowed to go on , the more steam comes out of my ears!
Phil Twyford- Andrew Little – LEGENDS
Agreed
Ask someone whos stuck in the renting trap paying the greater share of there efforts to a land lord (parasite) weather they care what the citizenship status of the owner is. Chances are they have to deal with a property manager (more Parasites) and never meet the owner. This foreign ownership tisk tisk is BS the real issue is people owning more land, houses than they need creating unfair competition for something absolutely essential and your birthright! I dont give a flying F@$K what it says in someones passport.
Land lords only spend $ on rentals if they have too, for them its all about return on investment end of story. There should only be owner occupiers. with real flesh and blood not trust funds, corporations or 2bit paper companies.!
Treat Land lords like the parasitic scum they are. Like we did too tossers that wore fur now its just un PC.
If your a tradie dont work on rentals or for people who own rentals perhaps charge them 10 times more and donate the difference to a charity and get a tax break for doing it. It starts with us dont wait for or leave it to govt to solve, those corrupt idiots couldnt agree on the color of shite.
Nice one Frank.
Your point about only allowing foreign ownership of new builds not being a solution is spot on. This is in line with the fact that the issue is not one of supply (which the media, politicians and people who can’t exercise their little grey cells keep regurgitating). There are enough houses for people to live in and increasing the supply just means more stock that will be snapped up by speculators (foreign AND local), anyone who can’t see this and buys into the government and media’s misrepresentations that more houses is the solution is just plain thick
The real solution is to REDUCE DEMAND (for untaxed gains in an overvalued property market).
So what about the investor visas that allow the uber rich two buy two properties and automatically become New Zealand citizens, or just buy an investor visa for half a million or something. Then there’s a student visa.
I’m not entirely sure restricting one area of our economy would actually prevent the serious foreign investment money from investing in NZ property for tax haven purposes, that is why foreigners invest in NZ property isn’t it? For tax dodging.
I think we should go one further and put a tax on all capital income. It might incourage investment in the real productive economy. And dirty government officials and business men who rip of there home country can still have a place to put there ill gotten gains.
[…] blogpost was first published on The Daily Blog on 14 July […]
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