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

'Tea Break Bill' Passes: Gordon Campbell On Bad Labour Laws And Poor Safety

By co-incidence, one of the prime dangers of the government’s new employment relations law has been underlined by the release of the death and injury statistics among workers at New Zealand ports. These are highly profitable enterprises for the port owners.

The Port of Tauranga for instance, is expecting its current full-year profit to be between $78 million and $83 million and other ports are enjoying similar boom times – but they are also highly dangerous places for the people who work on or around the port premises. At the Port of Tauranga, there have been 26 serious accidents since 2011, and two deaths. More>>

 

Parliament Today:

No Charges: Outcome Of Operation Clover Investigation

Police have completed a multi-agency investigation, Operation Clover, into the activities of a group calling themselves “The Roast Busters”. The 12 month enquiry focused on incidents involving allegations of sexual offending against a number of girls in the Waitemata Police district and wider Auckland area... More>>

ALSO:

UNICEF Report: NZ Cautioned On "Stagnating" Child Poverty

An international report by UNICEF has found that child poverty rates in New Zealand have barely changed since 2008, despite similar sized countries significantly reducing child poverty during the recent recession. More>>

ALSO:

Funding Report: Two Pathways For Transport In Auckland

Commissioned by Auckland Council, the group was asked to investigate two possible pathways for raising $300 million per year ($12 billion over 30 years) to pay for the improvements needed to help fix Auckland’s transport system. More>>

ALSO:

Pay Equity: Equal Pay Win In Court Of Appeal

CTU: The Court of Appeal has made a historic decision paving the way for a substantial equal pay claim for aged care workers. More>>

ALSO:

Gordon Campbell: On The TPP Finishing Line, And Amazon’s Woes

If the Trans Pacific Partnership trade deal wasn’t such a serious matter, this would be pretty funny… More>>

ALSO:

TV3 Video: Three Die On Roads Over Labour Weekend

The official holiday period ended at 6am Tuesday, with three deaths on the roads during the Labour Day weekend. More>>

Employment Relations Bill: Govt Strains To Get Tea Break Law Through

The Government has been left with egg on its face - failing to get its much-vaunted, but hugely unpopular, meal break law passed in the first week of its new term, Labour spokesperson on Labour Issues Andrew Little says. More>>

ALSO:

Guns: Police Association Call To Arm Police Full Time

"The new minister gave his view, that Police do not need to be armed, while standing on the forecourt of parliament. The dark irony was that the interview followed immediately after breaking news of a gunman running amok in the Canadian parliament in Ottawa..." More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news