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

Gordon Campbell: On The Wage Hike For MPs (and Paul Robeson)

Hard to tell what is more infuriating. Is it the 5.3% increase on the already bloated salaries of MPs, or their pantomime of outrage at being gifted with such a wonderful back-dated bonanza?

As usual, Prime Minister John Key has busily tried to distance himself from the political fallout, even though he happens to be the main beneficiary of the Remuneration Authority’s generosity. Finance Minister Bill English says with a straight face that it would actually be very hard to give the money back...

Even if it were true, it would actually be very easy for English and any other guilty colleagues, to give the extra money away. There are any number of food banks or homeless shelters who would be able to put the money to good use. More>>

 

PARLIAMENT TODAY:

No Designers Or Visual Artists: Flag Panel Members Announced

The Government has appointed 12 New Zealanders as members of the Flag Consideration Panel which will engage with the public about a possible new New Zealand flag, Deputy Prime Minister Bill English says. More>>

ALSO:

Labour MP Stands Down From Portfolio: Comment From Carmel Sepuloni

The first I knew of my mother’s charges was when I was called by a reporter yesterday. I spoke to Andrew and we agreed there is a conflict of interest at the present time which means I will temporarily stand aside from the Social Development portfolio. It’s the right thing to do… . More>>

ALSO:

Gordon Campbell: On Whether NZ Troops Are The Least Of Islamic State’s Problems

Given that it has been politically packaged and sold as a training mission, the Iraq deployment announced yesterday by Prime Minister John Key seemed to be mysteriously short of actual trainers... The other wing of the argument is whether a troop deployment is (a) the only effective way and (b) the appropriate time to combat Islamic State. More>>

ALSO:

143 Troops, Possible SAS Deployment, Legalities Unsorted: PM’s Statement On ISIL

Mr Speaker, today I am announcing to the House the Government’s decisions about our contribution to the fight against the Islamic State of Iraq and the Levant, or ISIL... More>>

ALSO:

Liu Saga: PM's Dinner With Controversial Donor

John Key must front up to New Zealand and say what he discussed with Donghua Liu when the disgraced businessman paid $25,000 for the Prime Minister to come to dinner at his Remuera home, the Green Party said today. More>>

ALSO:

Roads: National MP 'Concerned' At Overseas Driver Crashes

Waitaki MP and Parliamentary Private Secretary for Tourism Jacqui Dean said she was concerned at the number of fatal crashes involving overseas licence holders and she really felt that the time had come for more to be done. More>>

ALSO:

Parliament Today: Parole Bill Passes

A bill reducing parole hearings deemed to be unnecessary has passed. The third reading of the Parole Amendment Bill was completed by 104 to 16 with the Greens and Maori Party opposed. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news