24 October 2013

Treasury backs Green’s call for restrictions on foreign house buyers

Treasury loan-to-value (LVR) documents released today show the Government isn’t listening to their economic advisors’ calls for restrictions on overseas buyers of homes to help dampen housing demand and rapidly rising house prices.

The Green Party has consistently called for restrictions on foreign buyers, as is common in other countries such as Australia and Hong Kong, as part of a suite of measures to reduce demand in order to make housing more affordable.

“The Government is tinkering with housing supply while totally ignoring Treasury’s advice on ways to dampen demand that would make a real difference to first home buyers,” said Green Party Co-leader Dr Russel Norman.

“Restrictions on foreign buyers is a simple step that would help to dampen the housing market and reduce prices. It’s smart advice that the National Government is ignoring.

“Other countries, including Australia, have taken the simple step of placing restrictions on foreign buyers, but our Government is ignoring serious advice from Treasury on this issue.

“The Government has its head in the sand on constructive ways to help New Zealanders into their first home. If we want to control house prices we need to take action on both housing supply and demand. The Government’s approach is unbalanced.”

Treasury made a range of demand side suggestions, in addition to LVRs, which includes another Green Party policy – a capital gains tax. The Green Party supports a comprehensive tax on capital gains excluding the family home.

“Treasury says a capital gains tax and restrictions on foreign ownership are part of suite of measure the National Government could take to get more Kiwis into their first home,” said Dr Norman.

“The proof of National’s failure on house prices is in the pudding. House prices in Auckland continue to skyrocket, despite some action on supply. The Government’s tinkering is failing.”

Link to Treasury advice:
http://www.treasury.govt.nz/publications/informationreleases/financialsector/lvr/pdfs/lvr-2674208.pdf

ENDS

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