Housing affordability crisis needs fundamental rethink

Green Media Release 28th March 2007

Data released today showing the extent of the crippling housing affordability crisis is no surprise to people trying to get into the housing market and adds to the urgent need for the government to introduce a range of measures to address the underlying causes, says the Green Party.

“We know that there are a number of fundamental factors driving the housing affordability crisis in this country, amongst which are: foreign buyers, perverse tax laws, poor planning for Auckland’s growth, and a lack of supply of cheaper housing to rent and buy. These factors can all be addressed if the Government has the courage,” says Russel Norman, Green Co-Leader and Economics Spokesperson.

“Firstly, foreign buyers with substantially greater financial resources than the average New Zealander are driving up residential prices. Foreigners don’t pay stamp duty or capital gains tax in New Zealand like they do elsewhere, so they see our land as a cheap buy in a global market.

“If we are serious about letting average New Zealanders buy a home then we need to restrict sales of land to permanent residents and New Zealand citizens only. It’s done overseas and we should do it here.

“Secondly our perverse tax laws encourage speculation in investment properties, which is driving up prices in a speculative bubble.

“We need a comprehensive capital gains tax, which excludes the primary family home but covers investment properties, so that income earned from the sale of investment properties is taxed like other income is taxed. It’s only fair.

“Furthermore, the crisis in home affordability means it’s time to review the tax rules about loss attributing qualifying companies (LAQCs). LAQCs allow people to offset their losses on their investment properties against personal income tax.

“This means that young people trying to get into the housing market are effectively subsidising the tax offsets of those buying investment properties using LAQCs. This is wrong and pernicious.

“Thirdly, if Auckland is to continue to grow but not continue to become more unaffordable, it needs to grow by increasing densities around transport corridors rather than adding more urban sprawl.

“To allow increased densities around transport corridors we need to get rid of the ancient diesel locomotives and replace them with quieter, cleaner and faster electric units that will mean that more people can live in and around the electric rail transit corridors,” says Dr. Norman.

“Finally, we need to address the supply of cheaper housing, both for rental and to buy. The Government should be taking more responsibility for the supply side by building and acquiring more housing which can be made available for income related rental and for purchase,” says Sue Bradford, Green Housing Spokesperson.

“A rapid increase in the number of social housing units with income related rents would take some of the heat out of the rental sector and make social housing more than just the housing of last resort that it has become. State, council and third sector housing is an ever declining proportion of the rental market which makes it less and less an option for people and means that it has little effect on the price in the rental market. We can reverse this trend,” says Ms. Bradford.

ENDS

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