House price inaction anger

WELLINGTON: Greens coleader James Shaw has lashed out at Labour over rising house prices, labelling it ‘‘irresponsible’’ for refusing to entertain a tax on capital gains.

Labour leveraged the housing crisis to great effect while in opposition, but prices have continued to soar since it took power.

In the past year alone, New Zealand’s median house price has rocketed, climbing almost 20% to reach a record high $725,000.

Mr Shaw said the steep climb was being driven by the Covid19 response and yet Labour had not done anything to mitigate it.

‘‘It incenses me,’’ Mr Shaw said. ‘‘You’re getting these massive capital gains occurring as a result of the stimulus package and yet there’s no action from Government to try recover any of that or to mitigate it in any way.’’

Last year, Prime Minister Jacinda Ardern promised she would never introduce a capital gains tax (CGT) while prime minister. She also ruled out the Green Party’s proposed wealth tax during the election campaign.

‘‘It’s irresponsible not to entertain a tax on capital in some form, because, ultimately, inequalities . . . are being dramatically increased,’’ Mr Shaw said.

The comments follow the Reserve Bank’s announcement of a new programme offering cheap loans to banks, a move which is expected to further drive up house prices.

Act New Zealand leader David Seymour has savaged Reserve Bank governor

Adrian Orr for engaging in the ‘‘most unconventional monetary policy since [former prime minister] Robert Muldoon’’.

Mr Shaw said Mr Orr needed to be ‘‘cognisant’’ of the impact of his actions, but ultimately it was up to the Government to respond and counter any negative consequences.

‘‘Government needs to own the problem and deal with it,’’ Mr Shaw said.

Ms Ardern yesterday told reporters the precipitous climb in house prices was ‘‘unsustainable’’, but would not say that prices should come down.

‘‘A house is the most significant asset that most families will have, and, of course, in many cases, they want to make sure that asset retains its value,’’ Ms Ardern said.

‘‘But at the same time, we have to make sure people can access the housing market.’’

Ms Ardern said she was worried about affordability, stressing the plight of firsthome buyers was ‘‘top of mind’’.

‘‘I don’t want home ownership in New Zealand to be determined by whether or not your parents, for instance, can lend you a deposit. That’s not the New Zealand we believe in.’’

Ms Ardern signalled potential changes to the Welcome Home Loan scheme, saying the Government was looking at ways to help firsthome buyers build a large enough deposit.

She said the Government would also continue to build houses and strive to make it easier for developers to build houses. — RNZ

❛ It’s irresponsible not to entertain a tax on capital in some form

James Shaw