Criticism over new Govt housing policy

In 2016, Real Estate Institute of New Zealand recorded the median house price in the Bay of Plenty at $495,000. File photo.

The government's new housing policy has been slammed by Bay of Plenty first-home buyers, rental agents and property investors alike.

The sweeping changes designed to tip in favour of first-home buyers were unveiled on Tuesday and include increasing the caps for financial support and extending the bright-line test to 10 years.

First Home Coach chief executive Matt Taylor called the changes a "token gesture" for first-home buyers.

"[The government has] had all these suite of changes for investors, then they've tacked on these changes without much thought or analysis for first-home buyers," he says.

In 2016, Real Estate Institute of New Zealand recorded the median house price in the Bay of Plenty at $495,000.

The latest data from last month showed this had jumped to $848,000 - a 71 per cent increase in five years.

In Tauranga and the Western Bay, the price cap to be eligible for a first-home loan under the government's changes had increased by $50,000 to $600,000 for a new property, and $25,000 to $525,000 for an existing property.

Taylor says the price cap for first-home loans is too low, and needs to be increased to keep pace with house prices.

"[It's] just not good enough by the government here, [it's] really leaving Bay of Plenty first-home buyers out in the cold."

Meanwhile, Tauranga Rentals owner Dan Lusby received flustered calls from property owners soon after the announcement.

This included one from a owner who had decided to sell their rental property because they could not afford to keep it without offsetting their interest expenses against their rental income when calculating tax.

He says first-home buyers from out of the area would snatch up rental properties on the market, but it was unlikely that current local renters would be able to afford to buy a property in Tauranga.

The average house price in the Bay of Plenty was $848,000 and would-be house owners needed a $170,000 deposit for this, Lusby says.

"In all honesty, it will be very hard for them," he says.

Lusby anticipates the changes will decrease the supply of rental properties and push up rents in the city.

Tauranga Property Investors Association president Juli Anne Tolley calls the policy changes "ludicrous".

"[The changes] seem like knee-jerk reactions," she says.

Tolley says changes to interest deductions in combination with the bright-line test extension would trap property investors.

She believes investors - particularly those who have bought properties in the past five years - would have budgeted for a low interest rate.

She says investors will have to cover this cost with the interest deduction changes, which in turn would see investors sell off properties and get stung by the bright-line test in the process.

"Now they're losing [money] and going backwards on what they were establishing five years ago," she says.

She believed rents would increase with more landlords letting their properties as holiday homes or short-term accommodation, decreasing the rental supply.

"There will still be investors in the market, but it's going to narrow the field quite a bit."

Meanwhile, Western Bay of Plenty Mayor Garry Webber welcomes the government earmarking $3.8 billion under a Housing Acceleration Fund that will be used to pay for all the critical infrastructure required to make a housing development happen.

Webber wants a focus on building affordable homes, similar to a KiwiBuild development in Ōmokoroa where houses were priced less than $650,000.

He says the properties sold very quickly to first-home buyers and he calls for more price-controlled houses to be built in the Western Bay.

"A house over a million generally is sellable, but it's not sellable to those people at the bottom end who really need houses built to meet their need."

He supports the increased bright-line test, saying it was only fair to tax capital gains.

National MP for the Bay of Plenty Todd Muller says the policy did nothing to increase the supply of houses.

Muller says this is the root issue, with housing developments in Tauriko West and Ōmokoroa tied up in red tape, while Pāpāmoa East was running out of land.

He says a process by-passing the Resource Consent Management Act was needed in Tauranga, similar to what occurred in Christchurch, and called for a special agency to be assigned to Tauranga to achieve this.

-RNZ/Jean Bell.




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4 Comments

Take a look for yourself!

Posted on 25-03-2021 17:01 | By Speculating Sausage

I’m a little confused at where your getting these 50 properties under the cap in Tauranga. Anyone reading these comments need only jump on trade me and order Tauranga listings by lowest price and they will see the exact opposite. At a stretch I can see 7 properties (House and home) under the Tauranga housing cap. An apartment isn’t usually eligible for the 5% deposit. A relocatable house needs land.... The owner occupier properties are for those over 55 years old and in this market properties usually go for a lot more than the asking price. One good thing going for first home buyers stuck below the cap, is that not many investors are interested in a 1 bedroom home.

Totally!!!

Posted on 25-03-2021 15:45 | By The Professor

Slim Shady has just hit the nail smack on the head!!! Nothing more to add to those comments really.

Entitlement

Posted on 25-03-2021 11:59 | By Slim Shady

There are more than 50 homes currently on the market, in Tauranga alone, for less than the cap. They are more than suitable for first time buyers. Probably not as good as mum and dad’s place or where they’d like to live. Therein lies the problem. I’m sick of hearing them whine because their first home is not their dream home.

It was

Posted on 25-03-2021 11:48 | By Merlin

It was expected that the Investors and Real Estate people would not like these measures especially after they had it so good for so long.It is ironic the sounds coming from the previous government after nine years of saying it was just the market (No Crisis).Let us see what reults from these measures and then judge.

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