Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 


Swiss army approach needed for knotty house price problem

Swiss army approach needed for knotty house price problem – leading economist

New Zealand’s over-valued housing market requires major reforms, says NZEIR’s principal economist Shamubeel Eaqub.

In a paper just published by the Journal of International Union for Housing Finance, Shamubeel Eaqub says there is no easy fix to the current over-valued housing market and long-term and complementary policy changes are needed. One key aspect is to make renting a home an attractive and viable option.

Shamubeel Eaqub is a keynote speaker at this week’s Making Community Housing Happen: The Impact Conference being held in Nelson. About 150 delegates are attending the conference organised by Community Housing Aotearoa.

He identifies four areas needing change - reforms in the rental market, reforms in the banking/financial sectors around lending criteria, changes to tax rules for property investors and changes to land supply rules.

“The over-valued market is a complex problem and it only can be solved with changes in all four areas, as they are all tied together.

“Regulation overly favours mortgages over other types of lending – this needs to change. We need to remove the tax advantages, both perceived and real, of real estate investment. We need to ease rules slowing housing supply. We need to make renting a palatable and comparable alternative to owning.”

Housing is the favoured investment choice with nearly 75% of all household assets in housing. The strong focus in property investment has been driven by a number of reasons.

“Housing is easy to access and there is a perception of safety and tangibility. New Zealand does not have a capital gains tax and bank financing is relatively easy. It is seen as a low risk, highly leveraged and untaxed investment option.”

In contrast, Shamubeel Eaqub says renting is seen as a poor substitute to ownership, New Zealand and Australia are some of the most restrictive rental jurisdictions. Unless changes are made home ownership will continue to be favoured over renting.

“Lease terms are short, tenants can be asked to move with short notice, leases can be terminated on almost any condition as long as notice is given and personal customisation is often difficult, such as allowing pets or minor alterations.”

He says the New Zealand dream of buying a house also needs to be challenged, along with what home ownership means.

“Investment in housing doesn’t have to be a bad thing, it is just now when housing prices are so high that there is a real risk that house prices will fall. Is it really a good thing for someone on a low income to buy in a market with inflated prices?

“If you are going to rent people still need an investment of another type and you can’t confuse housing as being both an investment and shelter – we have inflated housing into this dream of being everything, whereas saving for retirement should be in a different bucket.”

While Shamubeel Eaqub’s comments are linked to the broader housing market, he says there is a flow on effect to the social housing sector, which is an important part of the New Zealand housing landscape serving the needs of the most vulnerable in our community.

“If there is a distorted private market this will clearly have an impact on social housing. If houses are not a viable investment option because house prices are too high relative to rents, community housing supply – which operates with the same conditions – will be constrained.”

Community Housing Aotearoa Director Scott Figenshow agrees. “It’s no mystery why the community housing sector is constrained. For the housing reforms to be truly effective, they need to work across all market segments, and work in the cities as well as provinces. We believe a long term investment plan is a good place to start – one that will address the very issues that NZEIR raises.”

For the full article of Home Truths for NZ: A swarm of policy reforms needed, see www.housingfinance.org

ENDS

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

 

PARLIAMENT TODAY:

Nauru: Scholars Urge Minister To Act On Deteriorating Democracy

“Since the 2013 election in Nauru, there has been a series of disturbing developments on the islands that indicate a severe deterioration in the state of its parliamentary democracy and in the rule of law,” say the scholars. More>>

ALSO:

Foreign Affairs: NZ Begins Presidency Of UN Security Council

Prime Minister John Key has welcomed the start of New Zealand’s month-long Presidency of the United Nations Security Council in New York. More>>

ALSO:


Labour: Cash For Charter Schools, Mould For State Schools

“Recently released financial statements show the Whangarei charter school He Puna Marama received $3.9 million in government funding to the end of last year. Yet their audited accounts show they only spent $1.4 million on education, leaving almost $2.5 million over two years unaccounted for." More>>

ALSO:

Kiwirail Plans Shift From Electric: National Urged Not To Take Backwards Step

The National Government shouldn’t drag New Zealand backwards by replacing its climate friendly electric trains with carbon-polluting diesel trains, the Green Party said today. More>>

ALSO:

Capital Connection:

Harmful Digital Communication Bill Passes: Focus Must Be On Education

InternetNZ acknowledges the passage of the Harmful Digital Communications Bill into law this afternoon, and says that the sooner the education efforts at the heart of the legislation start, the better... More>>

ALSO:

3-Year Transport Plan: No Plans On Six Northland-Election Bridges

The Transport Authority’s decision to fund only four of the 10 bridges promised in National’s shameless Northland by-election bribe is a huge embarrassment for Transport Minister Simon Bridges, Labour’s Transport spokesperson Phil Twyford says. More>>

ALSO:

Gaza Blockade: Māori TV Crew Returning Safely From Israel

A Māori Television crew will be flown back from Israel after their boat was detained by the Israeli Navy while attempting to break the Gaza blockade. More>>

ALSO:

Family Violence: Increasing Reporting But Fewer Resolutions

“We are aware the Police have embarked on a significant programme of change in how they respond to family violence. The data suggests that adequate resourcing including investing in staff training, support and culture change will be required for this to be effective.” More>>

ALSO:

Health: NZ Children Still Suffer Rickets From Lack Of Vitamin D

Vitamin D deficiency continues to cause rickets in young New Zealanders, new University of Otago research has found. The researchers say that their finding suggests that at-risk mothers and children should be better targeted for Vitamin D supplementation. More>>

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news