Key fails first home buyers

Written By: - Date published: 7:35 am, July 24th, 2013 - 34 comments
Categories: housing - Tags:

Yesterday, Key was wringing his hands, saying that the Reserve bank is likely to bring in loan to value ratio requirements without an exception for first home buyers but claiming that first home buyers were still his priority. If that were true, he would have done his part to tackle the real problems in the housing market: speculators, foreign buyers, and lack of affordable home building.

It’s all quite easy. The opposition parties have been talking about it for years (although the media coverage seems to be conveniently blind to that fact):

Remove the tax advantages that draw savings away from productive enterprise and into housing, and also let speculators outbid genuine home buyers. Capital gains tax is the main one. Removing tax deductability of mortgage payments for landlords is a further option.

Block foreign investors who aren’t citizens or residents of this country from buying existing housing stock. This is common practice abroad. In Australia, overseas money can be used to grow the housing stock, but not merely to pour fuel on the fire of house prices by increasing demand for the existing stock.

Build some affordable homes and give people a path to owning them. Labour’s got its plan to build 100,000 affordable homes. The Greens have their revamped State Advances/rent-to-own, which they call Progressive Ownership, to pass on the Crown’s low cost of borrowing to first home buyers. Together, that will make homeownership a reality for tens of thousands of families who are currently locked out.

Add that together, and chuck in LVRs with a first home buyer exemption, and you will take the fire out of the property market, turn investment towards the productive economy, and give young families a real shot at buying their own place.

But Key’s refused to do all of those things. His inaction has allowed a housing bubble to form. He’s left the real trouble makers – the speculators and the overseas buyers – alone. And, now, he’s going to cry crocodile tears  while the Reserve Bank punishes first home buyers for his folly.

34 comments on “Key fails first home buyers ”

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  1. vto 1
    24 July 2013 at 7:47 am

    A letter in the Press today kindly pointed out a fact to beat all facts when it comes to a snapshot of this government.

    Luxury car dealers have experienced unprecedented demand are unable to keep up. And food banks are experiencing unprecedented demand and are unable to keep up. Both are at record levels.

    Says it all.

    Key is a prize pig.

  2. framu 2
    24 July 2013 at 8:39 am

    i reckon this is one the nats are holding for next year

    let the problem get a bit worse, then blame the reserve bank and promise to bring in something to address it if the good people of nu zillund vote them back in

  3. King Kong 3
    24 July 2013 at 8:50 am

    When will the left get it through their thick heads that crashing house prices in order to suck up to these whining Gen Y arseholes, who demand a quarter acre of premium land in central Auckland for their first property, is electoral suicide.

    • vto 3.1
      24 July 2013 at 8:54 am

      Yes it is electoral suicide, for once you have said something worth reading.

      So given that electoral success is the sole driver for our dishonourable politicians there can be no cure. It is clearly in the best interests of pollies to have house values rising constantly and none of them want to bring values down.

      It is a never-ending loop.

      Where will it end? In tears. More people with no stake in society. No stake in society = give society the bash = unrest = polarisation.

      How to break the cycle?

      • King Kong 3.1.1
        24 July 2013 at 9:01 am

        Anyone who has watched any Sci fi will know that the solution for dealing with the wealth disconnect is simple.

        Make the poor compete to the death in sadistic reality television, keep them in deep underground work camps or employ an army of killing machine judges to dispense immediate justice when crimes are committed.

        • tricledrown 3.1.1.1
          24 July 2013 at 9:11 am

          primitive primate scientific research has shown those who read or watch a lot of scifi are more likely to be violent abusers!
          looking at your rant above I need say no more!
          So poor we John Key would never have made the grade if not for our generous welfare state providing him and his solo mother a cheap state house , a widows pension,free health care and a free eduction!

          • King Kong 3.1.1.1.1
            24 July 2013 at 9:16 am

            Yes I read that research.

            In the same journal there was also a research paper stating that those who read or watch a lot of leftie drivel are more likely to lack a sense of humour and not identify irony.

            • tricledrown 3.1.1.1.1.1
              24 July 2013 at 9:44 am

              KK you have been reading far to much scifi !
              I empathize with your small brains incapability to memorize much at all!
              on the other hand your creative writing skills are very good(made up story about lefties lies)theirs hope for you yet!
              I’ve seen no irony in your comments on this site only pathetic chest beating bullying it would be a pleasant change to see some Irony but especially some humour which someone with a primitive brain like yours is incapable of!

        • QoT 3.1.1.2
          24 July 2013 at 7:10 pm

          Anyone who has watched any Sci fi will know that the solution for dealing with the wealth disconnect is simple.

          Do you switch off the telly before they get to the bit where the heroes overthrow the elites oppressing them? ‘Cause that’s kind of the whole point.

          • David H 3.1.1.2.1
            24 July 2013 at 10:10 pm

            Are you sure he can turn a TV off? had a vision of him grunting, and picking nits out of his partners hair and eating them. Then I realised I was visiting the Zoo.

            Appearances and all that you know KK

    • Molly 3.2
      24 July 2013 at 9:08 am

      You describe only a small group of people who are negatively impacted by the housing affordability issue. Do you really think that they are the only ones?

      If so, you need to get out and talk to more people. Oh, and stop using the Herald as your primary source of information.

  4. burt 4
    24 July 2013 at 11:37 am

    If most people focused on lifestyle rather than asset accumulation we wouldn’t be having this debate. People suffer short term hardship paying mortgages on property that they can’t actually afford in the belief that the value will always go up and the stinging mortgage they have now will be manageable in a few years when their pay goes up and the property value rockets – because it always does right….

    Then shit happens and people lose everything.

    But hey… Let people take 150% mortgages and buy a new car to have with their new house because they were unable to save when paying rent ….

    Can you not see the whole sub-prime thing happening all over again if we let people who don’t have the means to save borrow more than they can afford ?????

    • Draco T Bastard 4.1
      24 July 2013 at 5:21 pm

      Then shit happens and people lose everything.

      Well, they don’t lose everything – they get to keep the mortgage that they can’t afford to pay and is no longer paying for a house.

    • David H 4.2
      24 July 2013 at 10:23 pm

      @Burt
      “If most people focused on lifestyle rather than asset accumulation”

      And if people focused on Lifestyle, rather than the accumulation of so much wealth, that they can’t even spend the interest and yet they still crave more and more and they don’t even pay their taxes. That’s the Problem.

      and the poor can’t save the deposit because they always need the money for other things. BUT the one thing that has to be paid is the rent, and with some of the exorbitant rents being charged I am sure that a mortgage repayment would be nothing like what a rent bill is. The problem is the deposit. This is why there have been very few mortgagee sales, because the mortgage payments are easier than paying rent in many cases.

      Now I see you brought King Kong’s Banana’s, so go feed him he’s hungry!

  5. burt 5
    24 July 2013 at 11:46 am

    Perhaps something else we need to consider in this debate: Banks don’t actually lend above 80% to help the people – they do it for profit.

  6. Sable 6
    24 July 2013 at 12:21 pm

    This issue was hot property when I lived in Sydney. If my memory serves the then Howard government addressed the issue by only letting foreign investors buy new property developments and not existing property. It seemed to work but I wonder if something similar would solve the problem here? I dislike this government but this is no small problem and its hard to know where the solution lies.

  7. Melb 7
    24 July 2013 at 3:22 pm

    “Remove the tax advantages that draw savings away from productive enterprise and into housing”

    What advantages? National has already changed tax laws so that losses on property investment are now longer able to be claimed against personal income.

    • burt 7.1
      24 July 2013 at 4:03 pm

      OMG – beneficiaries who have never paid a cent of income tax can’t do that – how unfair.

      • One Anonymous Knucklehead 7.1.1
        24 July 2013 at 4:22 pm

        Dear me it seems you’re right. I expect there are millions, if not billions of beneficiaries who’ve never paid tax, but would you mind telling us exactly how many there are, just to be sure?

      • karol 7.1.2
        24 July 2013 at 5:57 pm

        Eh? I thought tax got deducted from benefits in NZ?

    • Colonial Viper 7.2
      24 July 2013 at 5:31 pm

      What advantages? National has already changed tax laws so that losses on property investment are now longer able to be claimed against personal income.

      Capital gains for one. People still see their house and their investment flats as an appreciating investment.

      • Melb 7.2.1
        24 July 2013 at 7:40 pm

        And CGT is rarely applied to stockmarket investments or businesses. What’s the difference?

  8. infused 8
    24 July 2013 at 4:54 pm

    The only thing that should be done that I fully agree with is blocking foreign sale of houses if they don’t actually reside here in NZ.

  9. Draco T Bastard 9
    24 July 2013 at 5:16 pm

    Removing tax deductability of mortgage payments for landlords is a further option.

    Get rid of all tax deductions as they don’t make sense at all. All they do is benefit the few who get to structure their income to avoid paying the taxes that they owe.

    Block foreign investors who aren’t citizens or residents of this country from buying existing housing stock.

    What needs to happen there is that foreign ownership of anything needs to be banned outright.

    … to pass on the Crown’s low cost of borrowing to first home buyers.

    And it would be even lower if people would realise that the government doesn’t have to borrow. It really can just print the money (well, create it in the database).

    Build some affordable homes and give people a path to owning them.

    How about the government just builds them and then rents them out? Available to everyone on an as need basis.

    • burt 9.1
      24 July 2013 at 5:38 pm

      Get rid of all tax deductions as they don’t make sense at all. All they do is benefit the few who get to structure their income to avoid paying the taxes that they owe.

      Watch the people who can afford to leave the country – leave!

      Let me guess – we don’t want big earners who pay enough tax to support essential services doing either of the following;

      a) Living in this socialist paradise earning more than a beneficiary.
      b) Being allowed to deduct expenses from their obscene income.

      • Draco T Bastard 9.1.1
        24 July 2013 at 5:46 pm

        Watch the people who can afford to leave the country – leave!

        Doubt it.

        Let me guess – we don’t want big earners who pay enough tax to support essential services doing either of the following;

        And you’re making shit up again.

        b) Being allowed to deduct expenses from their obscene income.

        You may not have noticed, burt, but the majority of people can’t deduct expenses from their income despite the fact that they’re legitimate business expenses. Expenses like eating, having clothes to wear, a roof over their head etc.

        Here’s the thing about that – if the rest of business people were allowed to deduct their legitimate expenses then the government wouldn’t receive any taxes. As the majority can’t deduct those expenses and only a few can then we can only assume that such deductions were put in place solely to benefit those few. The only answer to such discrimination is to get rid of it and thus we need to get rid of all deductions.

        Besides, it’s the deductions that allow between $1b and $6b in tax dodging.

      • QoT 9.1.2
        24 July 2013 at 7:11 pm

        Watch the people who can afford to leave the country – leave!

        It’s funny though, they never do, no matter how many times they promise …

        • felix 9.1.2.1
          24 July 2013 at 7:19 pm

          Oh they definitely will though.

          Just as soon as they find somewhere with lower taxes, lower compliance costs, less bureaucratic red tape, and a fully functioning public sector to provide all the services they pretend they don’t require.

  10. Zaphod Beeblebrox 10
    24 July 2013 at 6:27 pm

    The problem with CGT is that it would make NZ houses more attractive to foreignersto own NZ property. The tax paid in CGT would merely be claimed as a tax credit (if indeed IRD would have any chance of getting CGT from a non NZ tax resident).

    So NZers would pay CGT but foreigners would not as well as benefitting from the cheaper price of investment properties when they buy.

  11. Lifts 11
    24 July 2013 at 10:50 pm

    Nice one and keep it up the nice writing……..

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