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Overseas buyers breed generations of renters

I still remember the pride of buying my first house in Auckland when I was young.

I had to borrow from the bank. The house needed repairs, but I felt a real sense of achievement. Finally, I had a piece of this country I could call my own. It encouraged me to get to know my neighbours and put down roots in my community.

Sadly, it is harder for young people these days to own homes. The dream of home ownership is now out of reach for tens of thousands of young New Zealanders.

Many couples have told me that no matter how hard they work, they may never be able to afford their first home.

Houses in New Zealand are among the most unaffordable in the world. Under current conditions, our children will be a generation of renters.

That is why I recently announced that Labour will prevent offshore speculators from buying houses, flats and apartments here.

Right now, our houses are being advertised on websites targeting property speculators in South Africa, China and UK. These people have no intention of living here: they just buy our houses for profit and push prices up beyond the reach of ordinary New Zealanders. They get rent, and when they sell, a tax-free capital gain.

New Zealand gets nothing.

Restrictions on offshore property speculators are common around the world. Australia has similar rules, as does China, UK and Singapore.

Friendly policy

The policy will not affect New Zealand citizens, residents, people with work permits, or students. It will not prevent anyone who lives in New Zealand from buying a house.

Non-residents will still be able to build new houses because that adds to New Zealand’s housing stock, which is good for the country.

Through this common-sense policy, we will make sure that people living here get a fair go at getting into their first home.

As my colleague Dr Rajen Prasad has noted, all ethnic communities resident in New Zealand will benefit from this policy.

KiwiBuild Scheme

Blocking overseas speculators is just one in Labour’s suite of policies aimed at helping young people to buy. Through our bold KiwiBuild policy we’ll build 100,000 warm, dry, affordable homes and sell them to first time buyers. And we’ll tax home-grown property speculators to help take the heat out of prices.

As the Labour Party Leader it’s my responsibility to stand up for our young people. My dream is to see that every New Zealander is able to work hard and buy their own home as I did all those years ago.

I am proud that Labour is taking the lead on tackling housing affordability.

David Shearer was the Leader of Labour Party and Leader of the Opposition when he wrote the above article. He resigned from the leadership of the Party on August 22, 2013 but continues to be a Member of Parliament, representing the Mt Albert Constituency.

The Local Scene

BusinessNZ Chief Executive Phil O’Reilly writes:

Restrictions on development contributions will help achieve more affordable housing and commercial development.

A Local Government Reform Bill to be introduced to Parliament this year will reduce the development charges that councils can put on new sections.

Councils are allowed to levy fees on developers, which now average $14,000 per section but can be much higher.

Development contributions are part of the upward pressure on building costs and it is appropriate that boundaries are placed around their use.

It is important to avoid the use of development contributions as a simple revenue generator for councils, unrelated to development costs.

Stricter criteria are needed on the use of development contributions, including appeal rights against excessive charges.

This will not be a silver bullet for affordable housing, but it can be part of the solution. It would also contribute to the Government’s goal of improving the quality of regulation overall.

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