Another ‘Claytons’ Solution to our Housing Problem? When will NZers ever learn?
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
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;
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.
Radio NZ: Key denies Auckland housing crisis
Radio NZ: Up to 1800 new homes for Auckland
This blogpost was first published on The Daily Blog on 14 July 2015.
= fs =
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