Can New Zealand Fix Its Housing Crisis?

PHOTO: Wellington, NZ. UNSPLASH

In the final quarter of 2020, 40 percent of all property sales in New Zealand were to people who owned multiple properties already.

New Zealand’s government will spend $3.8 billion on accelerating the pace of new house builds and introduce a suite of policies intended to curb property speculation in New Zealand’s housing market, which has become the least affordable amongst the 36 wealthy OECD nations.

“New Zealand’s housing crisis is longstanding and will take time to turn around. The last thing our economy and homeowners need is a dangerous housing bubble, but a number of indicators point towards that risk,” Prime Minister Jacinda Ardern said Tuesday.

“This package contains both urgent measures and long-term solutions. It seeks to deescalate the current risks in the housing market while setting in action a pipeline of affordable new homes to be built over the coming years,” she said.

The changes include the doubling of the bright line test for taxing residential property gains from five years to 10, the removal of a tax “loophole” for property investors, and loosening income criteria for first home grants.

Last year, Ardern herself touted New Zealand as a “safe haven” for investment. But since then, returning Kiwis and investors who parked their funds in real estate have contributed to pushing house prices up 23 percent in just 12 months, far ahead of wage growth.

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