A new report has proposed introducing a capital gains tax and limiting access to mortgages for high-income households as a way of combatting the country's housing affordability problem.
The report, by the Helen Clark Foundation, blamed a "speculative investment cycle" for putting house ownership out of reach for many New Zealanders.
"A decades-long boom in property investment has driven up housing and land prices to create windfall gains for property owners, the real estate sector, and banks," says Dr Jenny McArthur, the report’s author.
Dr McArthur says that boom has come "at the expense of families and people's basic need for shelter".
The key to slowing the rise of house prices was to limit the availability to debt, the report said.
Dr McArthur cited data showing that only a small proportion of mortgage debt is being lent to first-home buyers. However, there are large volumes of debt enabling high-income households to buy additional properties, Dr McArthur said. This leads to house prices steadily increasing.
"As long as the supply of mortgage debt outpaces the supply of homes, prices will continue to increase."
The author also acknowledged that although both major political parties have previously ruled out introducing a capital gains tax, "this policy must be brought back onto the agenda if we are to meaningfully address the affordability crisis".
By introducing these two measures, house prices would reduce over the "medium to long-term", the report concluded.
In order to protect against house values dropping below the amount mortgaged on it - a possibility if such measures were to take effect - the report suggested progressively refinancing a proportion of each of the existing mortgages of peoples' primary homes.
It also suggested the Government should up the supply of "genuinely affordable homes" by providing leasehold housing to be managed by hapū and community land trusts.
Dr McArthur highlighted the fact that only 28 per cent of Māori own their own home, compared to 57 per cent of Pākehā, and suggested "targeted funding, finance, and capacity development for developing papakāinga on Māori land".
