We’ve been told we have a housing crisis – and recently, property investors have been asked to foot the bill to have it remedied. I’m wondering though – what exactly is the housing crisis?

The following episode contains a segment from another podcast, The Department of Conversation with Pat Brittenden. Awesome podcast and you should check it out if you haven’t already.

In the last couple of weeks, I’ve been digging into these latest changes to tax rules for property investors and this so called housing crisis. I’ve also been having a lot of discussions with property owners of all shapes and sizes, worried not only around what these changes mean to them, but how it’s going to affect the economy as a whole.

The main narrative in this space has been that due to hyper-activity of property investors, home ownership rates have suffered – first home buyers have been locked out of a market as investors have been gobbling up the existing housing stock. This is partially true in most recent history I’m sure, but I’ve yet to see data that supports the thesis that first home buyers can win somehow, by making property investors lose.

In 1921, the proportion of households that own their home, was 59%. 100 years later it’s about 65% – (https://www.stats.govt.nz/news/homeownership-rate-lowest-in-almost-70-years). While I can see data on home ownership rates, I’m not certain there’s data on what share of the 35% of non-property owners, are actively trying to get into the market – I would have imagined this would be taken into account by policy makers though…right?

Contrary to popular belief, in some ways, it’s never been easier to get into the property market, thanks to a long term decline in interest rates. When you buy a property with a mortgage, you’re not paying the price, you’re simply agreeing to make a series of payments until the mortgage is repaid. Where the price is relevant however, is when you account for the deposit that needs to be saved – without 20% deposit, while it’s not impossible, it can be tricky to gain bank approval these days.

So – if there’s a housing crisis, where did it come from? Is it an excuse to justify yet another tax on those who have, ultimately for the net benefit of those who don’t have, after the Government clips the ticket? Surely one of the first steps in determining how to fix a crisis, would be to determine it’s source – What about the lack of new housing, or the fact our interests rates have to be kept ultra-low even though by all accounts, they should actually increase.

If there’s a crisis in the area of housing, I’m going to suggest it’s not property investors and home buyers that are to blame. Either way, a housing crisis shouldn’t be justification to make it harder for tenants to pay rent, first home buyers to get into the market, and everyday property investors just trying to get above average. If this Government needs more tax, shouldn’t they come right out and ask for it – rather than manufacture anger amongst the have’s and have nots?

A couple of things to be aware of in this episode today:

-There’s some explicit language. Sorry about that – please be aware if listening in the car with kids.

-If you listen or watch the version of this show on The Department of Conversation, not that I made a mistake with one of my comments. The National Party was not the government of the day when the rules around claiming donations were changed – it was Peter Dunne, and the Government of the day was in fact Labour – sorry!

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