To make Property In New Zealand more affordable, government should focus on improving the supply of housing in the country. That’s the recent conclusion of a Reserve Bank of New Zealand study into the country’s housing market.
The New Zealand Herald reports that ‘the pace that new housing can be built is a ‘critical factor’ for house prices, and needs to be the focus of any long-term policy’ according the country’s central bank.
Suggestions to make Property In New Zealand more affordable
In its submission to the Productivity Commission's investigation into home affordability, the central bank said that recent research has shown that the New Zealand housing market has failed to respond to changes in housing demand over recent years.
The submission said: “Evidence suggests that significant supply constraints lead both to bigger house price booms and eventually to nastier house price corrections.
“Policy should focus on regulation that gets supply conditions in the housing market right and removes barriers that impede productivity gains in the construction sector."
The commission was asked to look into the factors that affected the affordability of Property In New Zealand and to look at ways if increasing the affordability of homes.
The central bank also said that a ‘sensible tax structure’ would also help and that inflation indexing the treatment of interest would reduce the benefits of property investment.
The submission continued: “A more appropriate tax treatment of the inflation would probably largely eliminate reported tax losses on residential rental properties even near the peaks of the housing booms.”
Property In New Zealand reached its peak in 2007 as house prices rose by 180 per cent in real terms between 1990 and 2007. In some urban centres and popular holiday locations, prices increased by over 200 per cent during the same period.
Since the global financial crisis, house prices have fallen by around five per cent although house prices had gone from around two and a half times personal income to five times personal income between 1990 and 2007. (HOMESGOFAST)
