As you may know, earlier this year I went overseas on a bit of a soul search, before coming back to lead The Opportunities Party. I was gone for almost six months in total, from the beginning of April through to the end of September.
I was travelling in South America which was dirt cheap. Even including a yoga and meditation retreat in the Amazon, my four months there cost less than $10,000. Then I had 2 months in Europe which cost about the same again. That is $20,000 all up, probably less.
Meanwhile, back in Aotearoa New Zealand, my house was hard at work.
I was lucky enough to buy my place at the bottom of the market dip back in 2011, during the depths of the Global Financial Crisis and previous National Government’s civil service cuts (which always hit the Wellington property market). It is a modest 80 square metre house, 2 stories on a long thin 120sqm section, right on a busy street. This is density Wellington style, in the formerly unfashionable suburb of Mount Cook.
I bought it for $432,000.
According to Homes.co.nz (the click-bait of the landed gentry) in March before I left my house was worth $635,000. Not bad for six years.
By September when I returned it was apparently worth $690,000.
That is a $55,000 untaxed profit. So while travelling my net wealth increased by $35,000. I should have gone on holiday for longer.
Nothing in this scenario would be different if we had a capital gains tax excluding the family home.
Whenever homeowners get these sorts of emails from Homes.co.nz we look at each other and shake our heads in disbelief. Isn’t it terrible, we say. What chance do the young have in this market, we lament. What can we do, we sigh. All the while the corners of our mouths are slightly upturned, suppressing a smile.
As soon as anyone suggests anything that might bring house prices down, even to levels we saw just a few years ago, we hit the roof.
Auckland’s housing market may have cooled, but the rest of the country hasn’t. In the context of New Zealand’s housing market, any increase in prices represents a tragedy for future generations. It doesn’t make us any better off as a country, it simply increases inequality and our foreign debt.
We don’t need to tax capital gain, we need to END capital gain.
If we put a lid on house prices for the next 10-15 years, then housing might once again be affordable. That is exactly what The Opportunities Party tax reform aims to achieve. In the meantime it will make 80% of people better off through cuts in income tax.
In the current political climate, most millennials have no other realistic option of getting on the housing ladder other than waiting for their parents to die. If young people stand up and be counted, and the older generations that care get behind them, then we could sort things out in a decade. If not, things aren’t going to get better and they might just get worse.