It will take up to 20 years to address the imbalance between incomes and house prices, Housing Minister Nick Smith told TVNZ’s Q+A programme today that it
“The target that I've given to my ministry goes back to those long term affordability measures - which is the ratio of incomes to house prices. That’s what really matters," Mr Smith said.
"Historically that number's been about four for New Zealand. Currently in Auckland it's seven. I've set that long term objective of getting it back to four. That means incomes are growing faster than house prices and you need that repeatedly over a period of a decade or two to get those ratios down," he said.
“If you look at housing ownership in New Zealand, it's been going backwards every single year since 1987.
"In other words the decline in home ownership from about 75% in New Zealand back to about 65% has occurred over that period. And if you're looking for some instant magic bullet that the government can wave and change those 20 year trends you're mistaken. It's about doing the hard yards in those important areas I've identified."
Dr Smith also said a capital gains tax would not make any difference to the housing market.
Yesterday, Finance Minister Bill English ruled out a ban on foreigner buying homes, saying his government was opposed to such a policy (although it had asked Treasury to access, it TV3 revealed). Mr English did not think it would make any difference to the housing bubble.
Labour's policy is to restrict foreign home buyers unless they build a new home.
“If we look at that comprehensive independent study that was done by the Productivity Commission, they didn’t raise issues of foreign buyers. It wasn't mentioned in their 200 page report,” Mr English said. A ban on foreign buyers would only address 3% to 4% of the market.
“They did a comprehensive look at this debate around the capital gains tax and they said no it won’t make the difference. So look across the Tasman to Australia. They’ve got restrictions on farm buyers. They’ve got a sort of a capital gains tax of sorts and their house prices have gone up by more than New Zealand in the last 12 months.
“The government's measures that we're taking in those five key areas identified by the Productivity Commission, land supply, materials costs, Council infrastructure costs, productivity and compliance costs – they are the bits. If you are serious about not playing political games, but making changes that will make housing more affordable for our kids and their kids, they are the five things to tackle.”
Watch the full interview here.
Should non-NZ residents be able to buy homes in NZ? Vote in our BUSINESS PULSE poll.