You raise some interesting points. I’ve heard some bluster about investors cashing up and leaving and I hope that’s exactly what they’ll do. However, I tend to agree with you that investors will just push prices up and just make everything worse – that tends to be the cut of their gib.

When the babyboomers finally get out of the way, they’ll just hand their ‘assets’ down to possibly an even more selfish generation (us!) so I don’t see any relief there.

I think Key is right for at least looking at the issue – what will ultimately happen, however is anyone’s guess.

Thanks for your ideas. Food for thought.

Labour is to be credited for Kiwisaver and the first home owners’ deposit subsidy, but unless incomes rise or home prices drop (probably a combination of the two), the Kiwi dream is out of reach even for me.

If I do nothing and make $100k from property inflation, i pay no tax.

How is that fair?

How about supply and demand? Assuming investors all cash up on mass (I doubt this will happen, more likely just push up rents as any business will seek to recover cost). Prices fall, but homeowners and first home buyers will still be paying more than investors. All new developments will stall as developers figure out they cannot cover council costs & credit, trade wages fall and tradesmen leave (do you think they will survive on small reno jobs). Less rental stock available will push up prices (we are already heading for a housing crisis).
Part 2 Yields will rise (rent up, price/supply down), new investors will enter (more foreigners than before). Prices rise again. So whats the point of going through this pain now and stripping the retirements savings of the boomers just when they need it. Just consider what the market alone will do as they do retire/die on mass & sell off (shares & property).
The other question is why would you seek to make the sharemarket look better by making property worse. What they are effectively proposing is to make one business class disadvantaged to all others.
As for my preference, a clean land tax, with kickbacks for superannuates, but I guess they can get this wrong just as easily.

You also forgot to divide the 3 bedroom house by 3 as you can get flatmates in a house.

And I guess we will disagree about productive, as long as you also call any other ‘lease’ business (Car hire/DTR) unproductive.

Let’s assume a hotel costs $120 a night, that’s the same price as a 3 bedroom place in Ponsonby per week and some apartments in the city ..

Anyway, thanks for sharing your ideas.

Well, I’m for basic economics so let’s assume we tax property, investors ‘flee’ the market, get real jobs and sell all their houses. Supply increases and meets demand (people would want houses to live in rather than rent) so the price falls over time to a market level borne out by NZ’ers ability to pay rather based on NZ wages and allows more renters to finally escape the rent trap.

Now new home owner former renter wants to plant a garden, so he goes to Mitre 10 to buy some tools, then say he wants to open a pie shop, employ a few kids, so he goes to the bank and secures his home against the loan …. maybe he wants to expand his property, calls a surveyor in.. etc etc. You’re never going to convince me that property investors are an asset to the economy and we need them. We need more home owners, sure – but we don’t need property investors. One is more engaged with the local community, the other is a parasite who lives in a better suburb and contributes to social disengagement in rental traps where his ‘investments’ are. Sure, I agree most businesses are secured against the family home, so why can’t we let more people actually have family homes rather than people just using their home to buy more homes?

Spare a thought for those people actually forced to pay half their salaries every week. They are just getting siphoned off and are tax sheep for people who don’t need the money as much as they do – most young expats will tell you that. Why should these people at the start of their careers be locked out to protect a few babyboomers’ investments? They’ll just give up and leave and we’re not talking about people in HNZ homes here, we’re talking about young couples who have to decide where to live and to whose economy they are going to contribute to for the next 20-30 years. And who can blame them when ‘market’ rents in Auckland (where most ‘first’ jobs are) for a place match the average take home wage? Where’s the future in that?

Did you realize that half of all businesses are started with credit backed by houses. Banks would rather secure their loans against your house than the “productive” business.

Does that tell you anything?

Since I’m not a property investor I guess then we can meet up at the hotel you’ll be using for accommodation and we can talk about overpriced?

Anyway, if you want to talk to someone who could dispel your “unproductive” myth just ask a developer, banker, agent, valuer, surveyor, council planner, Mitre 10 worker, prperty manager, tradesman and see what they say?

Tax it, kill it and start making NZ a desirable and affordable place to LIVE for those starting out and we’ll have at least one differential with Australia for our future.