The Big Freeze: Ben’s Barometer July 2016
There has been a lot of talk recently about New Zealand’s ‘property crisis’. This ‘crisis’ refers to both the cost and supply of housing. Talks of capital gains taxes have been renewed, only this time commentators and some economists have suggested including the family home.
The problem when you attempt to disrupt a natural market cycle with policy is that,
in some instances, you will create uneven conditions for certain market sectors. This was evident in 2013, when faced with a rapidly rising Auckland market, the Reserve Bank forced banks to lower their LVR (loan to value ratios). The affect was almost instantaneous. But rather than having the desired outcome, it shut first home buyers out of the market. This left entry level housing stock open to investors with the ability to leverage off equity in other properties.
Another policy affecting first home buyers is their ability to access Kiwisaver funds to use for a deposit. Kiwisavers funds have been performing well in recent years and as such are reaching the kinds of levels required to secure housing in the entry level of the market. While this has helped first home buyers overcome the need to provide larger deposits, it too has put upward pressure on house prices.
So where to next?
There is one single act of parliament that would put a halt to rising property prices without doubt. That policy? A complete freeze on capital gains. This is not a new policy but one that has only become known to me only recently. While reading Amanda’s grandmother’s memoirs, she recounted a time during World War two where, having completed significant renovations on their home in Whanganui, they were forced to sell without ever realising the value those improvements had made to the property. The act was known as the Land Sales Act and was implemented to protect returned serviceman against increasing property prices. Maybe the government of today could implement something similar to protect first home buyers? Although I’m fairly sure that in the eyes of most that would be one step too far.
The Wellington Market
The Wellington market continues to have a good head of steam, with house prices rising month on month. Lack of stock is most definitely one of the contributing factors but not unsurprising for the winter months. What is different from previous years however is that demand for stock remains unchanged from the busy summer season. Open home numbers of fifty plus is now the norm and for that to change, something has to give.
Wellington Market Quick Facts
Average sale price by area:
July 2016 Fun Facts
This month we thought it would be fun to learn a bit about Matariki… If you have children in Kindy or Primary School like us, you probably have been hearing all about Matariki this month. But what does it all mean?
What is Matariki?
- Matariki is the Māori name for the star cluster known as the Pleiades
- Traditionally for Māori when it appeared just before dawn in late May or early June, it signalled the start of the Māori New Year
When is Matariki?
- Different tribes celebrated Matariki at different times. For some it was when Matariki rose in May/June. For others it was celebrated at the first new moon, or full moon, following the rising of Matariki
- In the 21st century it is the new moon following the rising of Matariki that signals the New Year.
- It began on 06 June in 2016.