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2. How do you stop house prices falling?

2. How do you stop house prices falling?

Answer

By phasing in the tax, not bringing it in overnight. Start the process, manage policy change responsibly, and give folks time to adjust. 

Showing 6 reactions

  • Michael Clark
    followed this page 2017-07-16 20:26:30 +1200
  • James Turnbull
    commented 2016-12-07 21:42:37 +1300
    This fictional income tax is a rort … people still have to houses to live and if NZ continues to be such an awesome investment destination for overseas people ( mom n pop investors as well as institution) then prices will not remain low in the long run.

    The beauty of retail rental investments is that rents ‘tend to increae’ anyway when housing is in short supply.

    The notion of this being offset by income tax … OK, so, how does that work on rental property ?

    The rental owner can defer all of their costs – including writing down their investment (even when the property increases in value) and the private home owner cannot do that.

    IF you want to tax people on this fictional income … well, then you also have to offer a tax concession for the ‘cost of that investment’

    Start with something that WOULD work … a taxfree cost of living allowance such as is the case in the UK

    The Herald on Sunday a few years back ran an article on the cost of benefits to tax payers such as Family credit … from memory – it cost way more than a dollar to collect $1 from a tax payer and hand it back to them as a credit. And it means a fairer system as people who don;t know all the complexities aren’t penalised by not claiming their entitlement. It also goes a long way to preventing fraud as it’s a simpler system.

    Then again there’s also the idea of a Banking Transaction Tax … and the Treasury would have the advantage of every dollar due being direct to the coffers every night … hows that for a cash flow dream ???
  • Tim O'Donnell
    commented 2016-12-07 20:45:57 +1300
    Smaller houses may become the “in thing”. Just enough to meet your needs.

    If they’re renting their property out why would they be selling? Just charge more to cover costs. Why would prices drop? People who can afford would just buy more rentals
  • Andrew Turner
    followed this page 2016-12-07 16:32:15 +1300
  • Oliver Krollmann
    followed this page 2016-12-07 09:40:16 +1300
  • Michelle Liefting
    commented 2016-12-07 09:36:24 +1300
    I think there could be an immediate drop in house prices at the higher end as people try to downsize. Do you have an online calculator so we can work out if we’d likely be better or worse off, as I think all home owners will initially assume they’d be worse off (i.e. not factoring in potential income tax cuts & mortgage offsets)?