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Friday, November 03, 2017

First step on housing


Surprising absolutely no one, the Labour-led Government has announced that it will ban foreign speculators from buying up existing New Zealand houses, a practice that drives up house prices for New Zealanders. In the video above, Prime Minister Jacinda Ardern talks a bit about that and its context.

Basically, sales of existing houses will be restricted to New Zealand citizens and permanent residents, as well as Australian citizens, though anyone can buy a new build. This will help reduce demand for existing houses, while also increasing the supply of new houses because the policy will effectively encourage the building of new homes.

Conservative critics have claimed—without evidence—that there will be almost no change. The reason there’s no evidence is because the previous National-led Government didn’t keep any statistics on foreign-based buyers of existing houses. Nevertheless, they claim it’s only 3% of all home sales. We’ll see.

Some New Zealand-based investors are also complaining that it will drive down house prices—but that has been the goal of both Labour and National for many years, so it’s hard to see why they’re complaining—or expect to be taken seriously when they complain about—something they should have seen coming. Housing investment ought to be treated as a long-term investment, anyway, just like shares in companies, and not something to be used for a quick profit.

The changes, which everyone knew were coming, are being introduced against the backdrop of the TPPA, which the previous government ratified. The new New Zealand Government wants to make changes to make it fairer for this country, including the change in foreign residential property ownership rules, as well as the investor-state resolution process the prime minister also mentioned. If they could change the intellectual property sections dealing with patents and copyrights, that horrible treaty might actually be salvagable. With the USA formally out of the TPPA, there’s no reason the remaining countries couldn’t remove all the terrible things the US government demanded be part of the treaty. We’ll see about that, too.

The bottom line, however, is that Labour promised they’d make this move on housing, and they’re delivering on that promise, backed by their partners New Zealand First and the Greens. Delivering us from the worst aspects of the TPPA is also necessary. The one thing that’s certain is that they can’t just acquiesce to the terrible things that the USA demanded. I hope they don't.

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