CGT for property investors would create interesting possibilities
We’ve been here before.
For two decades the Reserve Bank has raised its concerns about the risks New Zealand faces from the housing market. The perceived issues, all reasonable and valid, have included poor allocation of investment capital and the threat of economic and financial sector instability. Aggravating the problem is the banking sectors’ need to fund mortgage lending from offshore markets.
The recent surge in house prices, almost entirely an Auckland phenomenon, is well understood. Strong net immigration into Auckland, low interest rates, building supply constraints and renewed investor appetite have created a potent mix. In September 2014, the medium Auckland house sale was 8.2 times the medium household income, compared to a median global ratio of 3.8 times for large metropolitan areas. Prices have risen since then.
It seems the renewed investor appetite, despite LVR restrictions, is almost feverish and is creating considerable angst at the Reserve Bank.
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