How will Labour’s housing policy work?

Labour plans to restrict purchases of existing homes to New Zealadners and Australians.

Steven Joyce asks a couple of pertinent questions about it:

 
Around 37% of Aucklanders born offshore. How would Labour tell the “real” foreigners from the ones that used to be foreigners? #foreignban
 

And how come Australians would be allowed? Are they not as foreign as “real” foreigners? ‪#‎foreignban‬ ‪#‎panickypolicy‬ ‪#‎notthinking‬
 
The answer to the second question is that Australia has a similar policy but excludes New Zealanders so Labour’s policy is reciprocal.
 
But that question leads to another: what if people come to Australia from another country, gain residency and then comes here? Will they be counted as Australian or even more foreign foreigners for the purposes of Labour’s policy?
 
And what if foreigners want to buy in places where property prices aren’t sky rocketing and might even by declining?
 
 

Prime Minister John Key said there was a limited number of overseas-based foreign home buyers.

“So the reality is that not that many people come in and buy properties that aren’t either permanent residents or aren’t going to take up personal residencies.”

There were also ways to “get around that system”, he said.

It was unlikely to be the determining factor in the shortfall in the housing sector, he said.

“The number of people who live overseas who are not going to be permanent residents, who are not going to be citizens…I would have thought is pretty small.”

Housing Minister Nick Smith said it was a sign of how desperate Labour and Mr Shearer had become.

“The oldest trick in the political book, whether it be over crime or unemployment or affordable housing, is always to blame the foreigners.

“There’s no evidence that overseas buyers are having any discernible affect over house prices.”

It was an “unprincipled” policy because it exempted Australia, Dr Smith said.

“They are the largest group of non-resident home buyers.”

One of the biggest faults of the policy is that there are easy ways to circumvent it:

Property commentator Olly Newland said the policy would not work.

Australians would be exempted from the scheme, because of a reciprocal arrangement where New Zealanders were able to buy properties there.

Mr Newland said that made the policy “a bit of a nonsense” because Australians bought the highest number of properties here of all foreign buyers.

“Secondly, of course, any overseas buyer would very quickly find somebody else to buy a house for them here in their name and hold it in trust for them.

“There are a thousand ways to get around it if they want to come here,” he said.

“It sounds good but in practice it just won’t work.”

Like a lot of Labour’s policies it might have superficial appeal but it won’t work.

 

10 Responses to How will Labour’s housing policy work?

  1. robertguyton says:

    It does sound good and it will work. New Zealanders like the straight-forward approach and this proposal from Shearer, coupled with two others from him around housing will be winning favour for him. The power company proposal too, is building Shearer’s profile as a leader who has the ordinary Kiwi in the front of the queue. Key’s meanwhile, is eroding as people react to his plan to extend the powers of the spy agencies to allow them to spy on all of us, all of the time and share all of our personal information with foreign governments. New Zealanders are quite rightly alarmed that any NZ Prime Minister would force such a situation on them.
    People do not want to be spied upon. People do not want house prices to sky-rocket because foreigners with cheap loans from their homecountry can out-bid New Zealanders. Mr Shearer is making good sense here.

  2. Paranormal says:

    RG – you are correct that Liarbours policies are resonating with those kiwis that want a hand out. Thinking kiwis however will see through Liarbours policies. Those policies of envy don’t work and will further destroy New Zealand’s wealth. You may deride that, but it is New Zealands wealth that creates the standard of living and pays for schools, hospitals etc.

    Unfortunately as a wise man once said, the country is in trouble when those that work for a living are outnumbered by those that vote for a living.

  3. Quintin Hogg says:

    The only places in NZ where this policy will impact are Auckland, Christchurch and Taranaki where there are shortages;

    In Auckland because not enough houses have been built over the past 10 years, there is by my estimate a shortfall of about 40-50k houses. Also at the moment there are very few houses on the market. Sellers have to buy in the same market and they are not prepared to.

    In Christchurch because of an earthquake or two,
    In Taranaki because the oil boom in the region has seen housing demand increase exponentially.

    Elsewhere prices are if people are lucky holding their ground otherwise they are declining.

    And the policy will be easy to circumvent by the creative.

  4. jabba says:

    you are correct QH .. most towns/cities in NZ have low priced housing and many people struggle to sell .. it’s annoying people claiming NEW ZEALAND has a housing problem .. it’s all about Akl and Chch

  5. JC says:

    MANBAN.. meet CHANBAN!

    But its worse than that.. here is the future for the provinces:

    http://www.interest.co.nz/opinion/65592/why-regional-towns-and-cities-are-hit-much-harder-ageing-and-what-it-means-councils-ra

    Apart from Auckland and Canterbury the territorial authorities will have more older than young people, houses will lose value and become unsaleable, rates wont cover the existing infrastructure.

    “Jackson raised the spectres of Detroit and some of the provincial areas of Japan, where the depopulation and ageing had caused a spiral of decline. Japan is the most advanced of the ageing developed countries. Some Japanese city councils have declared areas unsupported, with water pipes and sewage systems being decommissioned.”

    The CHANBAN will do little for Auckland because it doesn’t address the real problems of a congested city but a ban on foreign capital will kill any chance of helping the territorial authorities retain wealth, employment and people.

    And what about our annual 45,000 immigrants? These too must be told to stay at home because they cannot buy an existing house except for the very few who can afford to build.

    JC

  6. TraceyS says:

    The announcement is self-fulfilling. Overseas investors may flock here now knowing that the opportunity to invest could soon come to an abrupt end. That would push prices higher in the interim and make the ban even more warranted by Labour if it gets into government.

    “how will the policy work to dampen housing prices when it will apply to so few people?”

    By first exacerbating the problem.

  7. robertguyton says:

    Paranormal said:
    “RG – you are correct that Liarbours policies are resonating with those kiwis that want a hand out.”
    That’s a cheap shot, Paranormal, given that it’s clearly not what I said:
    “New Zealanders like the straight-forward approach…”
    How do you explain your dishonest attribution?

  8. jabba says:

    Housing in Otara, Mangere, Papakura, Manurewa, Papatoetoe, Otahuhu and suburbs out west have reasonable priced housing available. The thing is, as Jacinda Ardern showed, not many people want to live there. She wanted to live with the Nat/Act people ;-}

  9. Quintin Hogg says:

    jabba,
    Agreed. there are some very nice houses in those suburbs you mentioned, They are regarded by many, including clients of mine, as great platforms for those wanting to get onto the property ladder.
    the I want to live in Grey Lynn types have no idea

  10. jabba says:

    correct again QH. We moved from Wanganui to Akl in late 81. The only place we could afford was in Manurewa (the house was $20k more than what we got for our Wanganui home .. dam near crippled us). The house was in Mahia Rd .. many people may have heard of it. We lived there for 5 years before moving away (by then we had 3 kids). We were pretty skint. My wife worked evening/night shifts at Cobb & Co and as a house maid in a hotel in Parnell to help pay the bills. Tough times which is why the attitude of many these days annoy me.

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