May 13 2015

Reserve Bank forced to do AWOL Govt’s job on housing

The Reserve Bank is being forced into acting on the Auckland housing crisis because the Government is refusing to, the Green Party said today.

“It’s becoming increasingly obvious that it’s the Reserve Bank, and not John Key and his Government, who has the best interests of Aucklanders at heart when it comes to home ownership,” Green Party Co-leader Dr Russel Norman said today.

“This Government refuses to do anything meaningful to solve the Auckland housing crisis, so the Reserve Bank has to step in and try to do the Government’s job with the limited tools available to the Bank.

“Last month, the Reserve Bank called on the Government to close the tax loopholes that allow property speculators to run rampant in Auckland – that is, introduce a capital gains tax on investment property. The Government rejected those calls.

“Today, the Reserve Bank is taking action to try to curb rampant property speculation in Auckland, by restricting finance to investment property buyers in Auckland. The Government must follow suit by using the tools at its disposal.

“John Key, Bill English and Nick Smith all like to talk a lot about what the Government is supposedly doing to help the supply-side of the problem – that is, more sprawl. But sprawl is not the answer even on the supply side – it’s slow and expensive to build compared to high-quality compact urban form.

“While the Government sits back and twiddles their thumbs, house prices in Auckland go up by hundreds of dollars every single day – since National took office the median house price has skyrocketed from $425,000 to $720,000.

“The Government needs to follow the Reserve Bank’s lead and address the demand side of the housing crisis by placing restrictions on non-resident foreign buyers, as well as introducing a capital gains tax (excluding the family home) to remedy the unfair tax advantage speculators have.

“It is now easier for non-resident foreign buyers to purchase investment properties in Auckland than it is for New Zealand residents. Offshore buyers use cash or offshore finance so won’t be affected by the Reserve Bank tightening the rules on New Zealand banks.

“In spite of the limitations of the tools available to it, the Reserve Bank is trying to fix the housing crisis in Auckland.

“Will the Government follow suit, and make a bold and decisive move, or are they going to keep going with their do-nothing approach which is stopping Aucklanders from owning their own homes?

“It is also worth noting that two of the three systemic risks to financial stability as identified by the Reserve Bank, Auckland house prices and dairy debt, are encouraged and subsidised by this Government’s policies. As well as their disastrous housing policies, National has subsidised dairy’s water, greenhouse emissions and irrigation.

“National’s terrible economic management has now created two of the three risks to financial stability in New Zealand as identified by the Reserve Bank,” said Dr Norman.

ends

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