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

Joint Statement: Establishment Of NZ-China Strategic Partnership

At the invitation of Governor-General Lt Gen The Rt Hon Sir Jerry Mateparae and Prime Minister The Rt Hon John Key of New Zealand, President Xi Jinping of the People’s Republic of China made a state visit to New Zealand from 19 to 21 November 2014.

During his visit, President Xi Jinping met with Governor-General Jerry Mateparae, and held talks with Prime Minister John Key. The leaders had an in-depth exchange of views on bilateral relations as well as regional and international issues of common interest. More>>

 
 

Parliament Today:

Savings Targets: Health Procurement Plan Changes Direction

Next steps in implementing DHB shared services programme Health Minister Jonathan Coleman says the Government has agreed to explore a proposal put forward by DHBs to move implementation of the shared services programme to a DHB-owned vehicle. More>>

ALSO:

More on Health Policy:

Auckland Unification: 'No IT Cost Blowout' (Just More Expensive)

Following discussion of an update on Auckland Council’s Information Services Transformational Programme at today’s Finance and Performance Committee, council has released the report publicly. More>>

ALSO:

Other Expensive Things:

Gordon Campbell: On The SAS Role Against Islamic State, And Podemos

Only 25% of the US bombing runs are even managing to locate IS targets worth bombing. As the NYT explains at length, this underlines the need for better on-the-ground intelligence to direct the air campaign to where the bad guys have holed up... More>>

ALSO:

Public Service: Commission Calls For Answers On Handling Of CERA Harassment

EEO Commissioner Dr Jackie Blue is deeply concerned about the way in which the State Services Commission has handled sexual allegations made against CERA chief executive Roger Sutton this week and is calling for answers. More>>

ALSO:

Gordon Campbell:
On Andrew Little’s Victory

So Andrew Little has won the leadership – by the narrowest possible margin – from Grant Robertson, and has already been depicted by commentators as being simultaneously (a) the creature of the trade unions and (b) the most centrist of the four candidates, which would be an interesting trick to see someone try in a game of Twister. More>>

ALSO:

China President Wishlists: Greens Welcome Xi, But Human Rights Need To Be On Agenda

“President Xi has made some progress on climate change, but he must also lift the Chinese government’s game on human rights issues,” Green Party Co-leader Dr Russel Norman said... It is important that our Government continues to urge the Chinese government to show restraint and respect human rights in both Tibet and the Xinjiang province.” More>>

ALSO:

Airport Security Breach: CAA Fines Minister

Minister Brownlee has been issued an infringement notice and is required to pay a $2000 infringement fine for breaching Civil Aviation Rule 19.357(b), which states no person may be in an airport security area without an appropriate identity card or document. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news