The Government's latest announcement to cool New Zealand's blisteringly hot housing market has caused a stir.
Cracking down on property investors by expanding the investment tax, injecting billions to boost supply and assisting first-home buyers with deposits are all part of the multi-billion plan.
A breakdown of the plan:
- A $3.8 billion fund will be used to help green light tens of thousands of house builds
- The Government will assist Kāinga Ora to borrow an additional $2 billion to boost strategic land purchases
- Income caps for the Government's scheme meaning first-home buyers only need a 5 percent deposit will be lifted from April so more people can access it
- The bright-line test - the tax on investment property - will be increased from five years to 10 years, but it will be kept at five for new-build investment properties. The family home will still be exempt
- The Government will remove the ability for property investors to offset their interest expenses against their rental income when they are calculating their tax
But some experts say it misses the fundamental issue - a lack of supply. Waikato University economics professor Frank Scrimgeour blasted the policy, saying: "It's a good idea but contrary to some of the reaction that it's not enough money, my worry is that, without the detail and a clear timeline, it won't be spent.
"It has a real danger of ending up like the shovel-ready projects and not happening - unless there's a strong connection with local government and Kāinga Ora."
