New Zealand Introduce new property laws

By disincentivizing bigger land ownership (multiple IPs), end goal is increase supply of land on the market which will then reduce prices and affordability. Socialist or not, it's usually an end goal for governments to stop land being concentrated in fewer hands because it eventually affects their electability.

 

Is this this politics thread? Oops, it's economics and the two are entwined.

This last year we have been reading threads about the Australian states bringing in land tax on owner occupier's properties. Great idea, say the woke, let's tax rich people more. Gradually the idea becomes more and more mainstream and every state does it. The Commonwealth gov jumps onboard, after all they will also want to appeal to their younger voter base. Remember the catch-phrase: all Boomers are rich and greedy, right?

After a while the woke brigade is still screaming about all those rich and greedy home owners still keeping them out of home ownership. Those who choose to sell their excess housing - not just IPs but the highpriced Sydney and Melbourne homes that the left think should be taxed into oblivion - have sold it to other home owners who can afford the higher taxes annually and after a while the poor decide this has achieved nothing to allow them to buy in.

Here is an opportunity for the various govs to increase the tax rate to please their voters. Round two, then round three etc.

Unanticipated consequences of taking an exotic fashionable idea from overseas and allowing it to screw your own country's economy.

For context see a recent QandA show that aired about two weeks ago, the one with Stan Grant on the panel.

 

i agree
fundamentally you never want to provide a government with the ability to treat you as an annuity income stream. because they decide what the rate will be. if they need budget repair or to fund their next hairbrained scheme they will just increase the rate - and its easy to do because landlords are not politically organised and easily villified by the public

 

Another big difference that seems to be overlooked is one of Ardern's promises during the election was to fix house prices. Very different from our situation. I'm not saying the will of the public won't change to be more like NZ, but she's coming from a very different place compared to who we currently have elected and I don't see this being discussed much.

 

It's a fair comment. There was a very strong political and social element to NZ governments language yesterday. Rather than referring to the market segement as, "Investors", they were consistantly referred to as, "Speculators".

Similar language has been used by the left in Australia. Investor is a fairly neutral term, sometimes seen as contributing to the economy. Speculator is definitely a negative description, with an overall selfish implication.

 

Ardern's policies come from an ideological disposition of Socialism. She's working within a capitalist system, of which has benefited her and and most others, but is attempting to equalize the playing field; a foundational ideological position that Marx wrote at length about.

The equity approach is ****** in an outcome orientated perspective, whereby if an individual finds themselves at the bottom of the hierarchy it is the fault of structural inequities built into the oppressive system to keep people poor with the rich benefiting from this. At no point is the individual recognized as having agency and (partly) considered responsible for the predicament they find themselves in.

In order to overcome this oppressive system, the rich are pulled down, not the poor elevated. The reason comes back to the ideological argument on individual agency.

Ardern may have good intentions, but don't we all?Ardern is no Marxist in disguise, although she held a prominent position at university promoting Socialism; she's more of the bourgeois champagne Socialist type who benefits from the system but has a grudge and has answers to big problems that historically don't work.

We all recognize New Zealand has escalating house prices. Are they too high? Maybe. I don't have all the facts. However, as has been pointed out by others, Ardern's policies look to have a workaround whereby a company can be setup to avoid the tax implications. As we often see with equity based policies, the people who lose out are the aspirational working and lower middle classes trying to self sustain retirement by allowing pension funds to be redistributed among those who genuinely need it - arguably a Socialist ideological position . It's the big boys with the financial backing and knowledge who quickly get around it, meaning more are dragged lower than are climbing up.

These types of policies are popular at the moment. Society encourages one to see themselves as a victim of something.

Equity policies are no longer a feature of left wing governments either - conservatives are on board the train as the center moves notably left.

Finally, it's easy to point the finger at others, but remember there are always three fingers pointing back.

 

Its about economics and government. Speculation is ramping prices up and this occurs at the cost to taxpayers. It has an impact on affordability. The Government doesnt see why it allows its tax system to fund a large % of the cost of inflated speculation with the bulk of the demand fuelled by equity loans by investors and existing owners. Its pricing out others. And is funded by taxpayers through deductions. The issue will snowball. So they stopped the ball rolling down the hill.

One of the hallmarks of the Westminster system of Government is that decisions are constrained by popular vote. You can vote her and her team out or become elected and drive the change from within. Shouting socialist wont change any laws. And if the bulk of the population dont agree her position could be at risk and a new Govenmnet has to consider if it follows or changes that policy. And how to fund that. The proposed 10,000 newly constructed affordable homes is a outcome of the cuts to deductions so rolling back that commitment is likely to look bad. Sacrificing housing supply for investor deductions would be unpopular.

The problem is same as the UK and same here. World Governments will face the reality that COVID costs trillions in each economy. All borrowed money. The ride has to stop to let some off and to allow tax reform to shift some tax burdens. Property investors have to feel that funny feeling of having a snipers dot on their foreheads. Its not when but what will happen here.

The other largely unreported change they made a MONTH ago was the RBNZ issued a edict to lenders that investors must provide a 40% deposit for investment loans from 1st May 2021. Also a policy intended to dampen loan demand which has driven prices. It has created a lending bubble and a subsequent property bubble and is argued it places the NZ economy at risk. NZ, UK, Sweden and Singapore have all implemented credit curbs on property to dampen speculation.

NZ also lacks the robust super system we have and is largely reliant on its universal pension as a safety net. I cant help but wonder if propertyw as creatinga two tier wealth system that concerned Treasury.

Maybe its a matter of time before it happens here ?

 

Due to NZ’s proportional representation system, it’s pretty clear that the NZ PM and her government have the support of the people.

If she’s aware of the injustice of the social system (i.e. ‘woke’), then she clearly isn’t the only one in NZ. They voted her party in for a second term.