Housing policies will benefit first-time buyers – if they can afford current prices
Abigail Dougherty / Stuff
Labor series of new housing policies aim to calm New Zealand housing market
Economists, academics and advocates say the latest government measures to tackle the overheating housing market will help first-time buyers – if they can afford the current prices.
Thing asked some leading experts if the new measures would help those excluded from the real estate market to be able to buy now.
As Lucy Telfar-Barnard, a researcher at the University of Otago, says, the government has made it clear that the goal is to keep house prices stable.
“They don’t seem to [make] save deposits more easily while still paying high rents, ”she said.
“And they might not immediately reduce the cost of real estate, so not more affordable for those who can’t come close to current market expectations.
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“But if, along with the previously announced change in loan-to-value (LVR) ratios, they reduce investor enthusiasm for buying a property, there should be a little less competition from investors on the market. market, giving first-time buyers a somewhat greater chance. to have the best deal on a property.
Telfar-Barnard said she expected the removal of the loan interest tax deduction to be more of a blow to investors than the extended light line test.
“This change doesn’t start until October. Initially, I would expect homeowners to spend the next six months figuring out if they can absorb what is indeed a new cost – and then, if they can’t, see if they can increase. the rent to cover it.
Telfar-Barnard said the situation would become clearer next summer, when most leases are renewed.
“Will tenants pay further rent increases when rents are already so high?” If they do, many owners will stay in the market. If they don’t, some owners will sell.
“Only once we start to see a lot more new housing coming to term, and especially if interest rates go up a bit, could we start to see the conditions for a drop in prices. . “
Economist Shamubeel Eaquab called today’s announcements a political goal: to find the “Goldilocks” area where the housing market was under control, but not to lower prices.
Eaquab said he’s been more encouraged by today’s announcements than any others lately.
He said the policies that are getting the most attention today were mainly concerned with the first of the two drivers of house prices – speculation.
These included the doubling of the light line test on investment properties and moving end the ability of investors to offset interest paid on home loans with rental income.
Both of these would have an impact, which would be heightened when the Reserve Bank published its new lending rules in May.
Eaquab said the measures appeared to have upset real estate investors, so the government must do something right.
The New Zealand Federation of Real Estate Investors expressed their displeasure today by theorizing that favoring first-time home buyers would put tenants at a disadvantage..
“By removing mortgage interest tax deductibility and increasing the light line test, the government is prioritizing first time home buyers over tenants, ”the organization said in a press release.
Eaquab attributes this to investors with a whimper, and said the idea that more homes becoming personal property would reduce the number of rentals was a mistake – “unless you destroy the house when you sell a rental.”
Lots of changes that would affect the shortage of supply (the second biggest contributor to prices), including $ 3.8 billion for infrastructure and Kāinga Ora being authorized to borrow $ 2 billion to build more affordable and public housing.
Kāinga Ora would also be able to sell land below market value in the future under the changes provided there is social good or an increase in the affordable housing stock, Eaquab said.
In the longer term, these would be the main contributors to more affordable housing.
The managing director of the rights group Whānau Ora, John Tamihere, called today’s announcement “wonderful.”
He said the measures would benefit first-time homebuyers because they would prevent many investors from “playing with the system” through interest-only loans.
However, when it came to how the new measures would benefit Maori, Tamihere described the impact as “diddly-squat”.
“A third of our community receives some form of benefit and a third are working poor,” he said.
“In the evening, thinking about clear tests is just not on their mind.”