Prime Minister Bill English has defended his government’s record on housing supply and demand responses, saying demand had both been underpinned by government subsidies for first home buyers while also being cut by way of loan-to-value ratio restrictions and introduction of a two-year capital gains tax which excludes the family home.
Supply was set to be boosted by government moves to allow increased land supply, although the building industry was saying it was maxed out at the current rate of 10,000 a year in Auckland. He used that argument to defend the need for continuing high immigration.
English brushed aside suggestions that wages would have to keep rising for 50 years with house prices remaining flat for affordability metrics to return to more acceptable levels in Auckland, or that house prices would alternatively have to fall 60%. It was good that prices were steady now, he said.
He also laid out why National would not even consider researching fundamental changes to New Zealand’s tax system, including asset taxes, saying such moves would hit superannuants with low cash incomes the hardest, and that he favours existing settings including labour income taxes because they rewarded work.
English was asked by Radio NZ’s Kathryn Ryan whether it was too hard for an increasing number of New Zealanders to start building an asset base, including equity in a house. He replied that there had been “moderate but consistent” increases in income. He pointed to the minimum wage rising by $8,000 since National took office, and that the average wage was up $13,000 – twice the rate of inflation.
“So, inflation’s been very low, you’ve seen these moderate but consistent gains in incomes, and then with respect to say, getting into the housing market, 30,000 people have already used the HomeStart support. We announced the package the other day – another 80,000 over the next four years, some of them with a grant of up to $30,000 from government will be able to get in,” he said.
This relied on the on-going strength of the economy, he said. “But I can tell you this: If you’re concerned about peoples’ incomes, then the answer is not more tax and more government spending.”
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