Bill English MP
National Party Finance Spokesman

21 June 2007

No silver bullet to cool housing market

National Party Finance spokesman Bill English says an international comparison of house prices and the tax treatment of housing in different countries shows there is no single answer to cool the property market.

“Michael Cullen knows very well there is no silver bullet. His plans to change the tax treatment of investment properties is a distraction from the economic climate that his policies have created.”

Mr English is today releasing details from an Australian Reserve Bank review of on recent developments in housing and housing finance in industrialised economies over the past decade or so. Alongside that Mr English has released a table compiled by ‘The Economist’ which looks at rising house prices around the globe.

“The stark reality is that despite the range of tax options on the table, there's no simple link between the tax on investment properties and house prices.”

Mr English says the Inland Revenue Department has confirmed that housing does not enjoy a preferential tax treatment over other forms of investment.

“This makes a mockery of Dr Cullen’s controversial tax plan.”

Mr English says Dr Cullen needs to start accepting some of the blame for running an economy with the highest interest rates in the developed world.

“Labour’s planned spending surge will keep interest rates higher for longer, and while the latest Reserve Bank figures show interest rate rises are having an impact on consumers, Government spending is set to continue on its steep upward track.

“The housing market appears to be responding to the messages being sent by the Reserve Bank, but Michael Cullen is taking the phone off the hook.

“Dr Cullen needs to get his own house in order instead of blaming the housing market.”

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