New Zealand readers say housing policy shake-up isn't radical enough

Last week we asked Guardian readers about the government’s attempt to rein in New Zealand’s runaway house prices. We heard from investors and renters, first-home buyers and retirees. While some readers – including investors – were supportive, many felt the policy changes didn’t go far enough.

Some pointed out that beefed-up grants to first-home buyers would make little impact in markets such as Wellington and Auckland, with young people still despairing of ever getting a foot on the housing ladder. Many said that the effect on renters had been overlooked, arguing in favour of German-style rent control. Others said they were afraid for their children’s future, while some wrote that they feared they would never be able to afford children.

Here is a small sample of the comments:

“I don’t think it does enough and has not given any thought to renters. My student loan from the government provides me $240 a week, my rent is $200, and I’m lucky to pay that little. Any increase will make life impossible for many other students and renters. The government seems to have forgotten us, and is determined to help first-time buyers. But those first-home buyers are currently renting. It’s poor policy that doesn’t go far enough to tackle decades of wilful ignorance about this crisis.”

Angus, 21, estudiante, Wellington

“The Labour party’s seemingly bold moves to address the housing crisis are akin to putting duct tape on a corroded pipe system. This plan won’t change anything for my partner and I, who are in the median income bracket. Renters like us will only continue to see our rents increase as the quality of the rentals decrease. Attacking high-end investors is good, but the only things that will truly address the housing crisis are: offering a different road to personal investment that isn’t linked to property ownership, rapid development of multi-unit housing, and comprehensive policy changes in housing quality, long-term leasing, requiring landlord certification, tenant rights, and rent controls.”

April Salchert, Wellington

“I bought my first home with my fiance almost a year ago but I would still welcome a drop in prices – we have friends still looking to buy and prices are increasing quicker than they can save for a deposit. sin embargo, I don’t think the changes will have a major impact on affordability. It may ‘level off’ the growth by cooling the investor/speculator market and allowing wages and savings to catch up but real change won’t happen until major changes happen on the supply side. We need thousands more townhouses and apartments on the city fringe and along public transport nodes, and to take major infrastructure spending away from councils and back to the government.”

Hamish, 31, Auckland

“I own several properties, and the new extended bright-line test and reduced tax benefits from interest payment deductions are likely to reduce capital appreciation of my properties, and will increase the operational costs of my rentals. Hence, the proposals are likely to adversely affect my finances. sin embargo, I consider the new proposals are fair and reasonable, and should have been introduced a long time ago to address rampant property appreciation in New Zealand (I’m not a Labour supporter). Personalmente, I have lost motivation in buying more investment property and may consider selling some of my existing portfolio. Other investors are likely to be thinking the same.”

Bruno Royce, engineer, Auckland

“I’m lucky that I’m already on the property ladder, but I worry about the prospect of my children (ahora 7 y 9) purchasing property when they are adults. I’m hopeful that the changes will halt the runaway inflation of house prices so that they are affordable for all hard-working Kiwis. I feel that further action should be taken to reduce/limit the number of rental properties a small percentage of our population own. Reading about people who have a large portfolio of properties making huge profits each month from hard- working renters who may never own their own property is sickening and needs to be addressed.”

Chris Whitaker, 43, teacher, Kerikeri

“I can’t see it making any change. We’ve been trying to buy a house for the past year and it seems every month prices go up by another $100k. The changes the government have announced don’t create any immediate pressure for people to sell investment properties. The whole country is caught in a bubble driven by fomo and there needs to be something that slows this down. As these chances aren’t creating any immediate need for people to sell investment properties, I can’t see it making any change. Also the amount for the first home owners’ grant in Auckland and Wellington is laughable if you have kids. $650k doesn’t buy you a place for a family.”

Small business-owner, 43, Auckland

“I will still never be able to save the amount needed to purchase property. My rent is still very high and I feel I will be paying others’ mortgages off for the rest of my life. Because of the lack of secure housing, I probably won’t be able to have children.”

Amy, 32, librarian, Auckland

“I own several properties and am in the process of liquidating my assets in the tourism sector. Prior to the most recent announcements I would have been buying additional rental properties with those funds and leveraging as much debt as possible. Now I will retire in debt. That means less competition for owner occupiers seeking to buy and I think my situation will be not uncommon among mid-sized investors. If I do invest in more property it will need to be new builds, which will incentivise construction and help out on the supply side. These reforms are in my mind not likely to be enough in the long term but are a really solid first step.”

Hamish, retired property investor, Auckland

“Although I support this new plan, what New Zealand needs is a massive increase in the amount of warm dry housing, potentially in apartments and townhouses. Barring that, we need stronger protections for renters so that people can have some stability rather than moving every year or two. Tilting the balance in favour of the renter with German-style rights to long-term occupancy is key, as well as a warrant of fitness scheme for rentals. Renters are treated like a disposable resource for covering the mortgage costs of property speculators – stronger tenants’ rights would cool the property market and reduce inequality between renters and home owners.”

Student, 34, estudiante, Auckland

“It won’t affect me, but neither will it significantly affect the surrealistic unaffordability of houses here. Any significant drop in prices would result in disaster for those who have bought recently, putting them into negative equity. Any stronger action by the government will lead to electoral slaughter because the well-heeled, multi-property owning class is much more electorally active than the underprivileged. What we need is a multi-party, election-proof agreement on high capital gains tax. And we need it to happen in about the year 2000 [not a typo]. No point in shutting the stable door after the stable has been flattened by a hurricane.”

Peter Calder, 68, Auckland

“The government moves are calculated to keep up prices while looking like something is being done. The extension of the bright line test and capital gain tax only kicks in for purchases from now, and doesn’t apply to new builds. The closing of the interest deduction loophole is going to take 4 years to bite, and doesn’t apply to new builds. So new built homes will all go to investors. Whatever new building goes on, it will never cope with the current backlog and annual 1.5% increase in population through immigration. True, building consents are at a high and level with 1973, but in 1973 you had a population of 3 million not 5 millón, and no shortfall of 80,000 a 150,000 houses.”

Office worker, 55, Auckland

My wife and I have 3 rental properties which form part of our income – I work part-time self-employed, and also have been a stay-at-home dad for 2 days each week. The new policy will leave us about $NZ9,000 worse off each year. I have no issue with the bright line test and capital gains tax, so this part of the plan is fine. But not being able to deduct expenses in the form of interest costs is hard to swallow and seems unfair given any other business can offset these costs legitimately. Whilst the plan will release some property for first home buyers it will actually increase rents and also does not address the real issue, there not being enough new houses built.

Self-employed, Rotorua

“Having finally bought a first house one month ago, we’re now terrified that the market will recede and we’ll be left with an unmanageable mortgage. If this happens or interest rates change, we will be in big trouble.”

Designer, 35, Nelson

“I bought a house in Wellington 10 years ago for $NZ377,000. I lived in it for 5 years then moved in with my partner and rented the house out. It is now worth $NZ940,000, which is insane. I keep it because if my partner and I ever split, I can move back there. If I sold it and then later tried to buy again because of house price inflation I could never buy something as good again. Also I might pass it on to my daughter. I make $NZ560 per week from rent and pay $2,500 tax annually. The changes mean I will now pay $NZ5,000 tax annually. I’m happy to do it because anything to reduce house prices is good. We have 3 kids (2 stepsons) and it is going to be impossible for them to buy.”

Early 40s, Wellington

“The plan as it has been explained intends to reduce the house price growth, not actually reduce the cost of housing in absolute terms. In much of the Wellington region (even out in the Hutt Valley) prices have been going up at over 25% pa. While these new and updated policies might reduce that to 15-20%, that won’t do anything to improve affordability when people haven’t seen a single pay rise in nearly 5 años, and many even having a pay cut last year that still hasn’t gone back up again. Esto, coupled with the extreme rents that are now taking 60% or more of people’s income, therefore preventing people from saving any more towards a deposit? This is not going to change anything.”

María, 40, scientist, Wellington

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