Canada proposes taxes on empty houses and vacant land
The interesting thing about the house price crisis is the determination of the media to ignore the real cause. Which is of course excessive out of control immigration as encouraged by the liberal left governments citizens have misguidedly voted into power over the last few decades in Canada, the UK, Australia and New Zealand.
Excessive immigration led to a shortage of houses, and investors of course capitalized on the shortage, leading to a run in prices. The problem is not rocket science, or though many in the media/ political class would have you believe it is.
Govts pretend they’ve got remedies for rising prices but they haven’t, as only time will fix it, and then only if population growth levels off. Its just a practical impossibility for most of these countries, NZ especially, to build houses fast enough to catch up to demand.
They don’t have the skilled manpower, they don’t have the materials, and in most cases, because of a massive growth in the new religion of environmentalism, they don’t have a regulatory framework that allows it. These problems will be exacerbated if immigration continues as is likely.
In an act typical of today’s political cynicism, the present Canadian minority PM Justin Trudeau called a snap election while the polls gave him a lead. Mainly as a result of the public’s perception that he has handled the Covid-19 crisis well.
A major part of his re-election campaign are his promises to bring down rocketing house prices. The measures Mr Trudeau proposes to achieve this objective include-
- a ban on all foreigners buyers for two years
- a 1% tax on vacant or underused foreign-owned houses
- an eventual expansion of that tax to cover vacant land in large urban areas
Other parties in Canada have jumped on the bandwagon. The New Democratic Party is proposing a 20% tax on foreign buyers while the Conservative Party agrees with the ban on foreigners.
NZ has had laws restricting overseas purchases since 2018. However there are no taxes on empty houses and vacant land. Of course its not a given that every New Zealand citizen wants house prices to fall. Many Labour MPs for example have investments in real estate. Including the PM herself.
Will Jacinda do as her soul mate Justin has done? Who knows. Maybe a poll will decide the issue. Given the huge number of empty houses in our larger cities though, its odds on the taxes Trudeau is proposing in Canada will eventually come to New Zealand.
THE REDBAITER on Gab 
We know how this works with the socio-commies presently in power.
1) Blame someone else. (Landladies [LLs], speculators, property developers, councils)
2) Invoke Draconian taxes, laws, measures and legislation, supposedly for the betterment of tenants
3) Lie about earlier promises then broken. (“I was overly specific” – Grant Robertson)
4) Claim the measures are better for both LLs and tenants, when they’re better for neither
5) When such measures fail, never ask, “perhaps we got that wrong?”
6) Instead, add more Draconian taxes, laws and anti-business legislation, claiming it was obvious the first lot were not enough, with the ‘extras’ thereby making matters even worse
7) As house prices and rents rise and LLs take houses off the rental market because of the danger that unruly and unmanageable socio-commie-government-voting and favoured tenants represent to their investment, quietly stack the de-homed into motels at double the usual room rate. (As well as buying a few.)
8) Take any expedient further means to distract attention from the real problems.
The one thing that the socio-commies never learn is from their past mistakes.
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All true, and don’t forget they’re actually buying real estate in the market at grossly over valued prices, thereby competing with the very people they say they are trying to help.
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Sorry, but immigration is only a small part of the issue. As demonstrated in the last 18 months where there has been very little immigration and yet land/house prices have taken off. The US has also had loads of immigration and large parts of that country are extremely affordable compared to what the same money would get you in NZ.
Vacant land tax policies are nothing new, but such policies are only a symptom of the underlying problem.
A larger issue is artificially low interest rates and restrictive land development policies.
If you’ve been to Alberta you’ll realise how ridiculous the policy is – there is an abundance of open space! So much so that in Calgary the motorways are basically constructed in advance of the suburbs reaching that far out of the city.
Hard to know when such a cycle might turn but there is a limit on the extent to which people can borrow.
I suspect the lockdown will not be good for maintaining genuine employment. Investment already starting to go elsewhere rather than be held hostage to quarantine delays and government intervention.
Sure the government is going to try and paper over the cracks with even more central bank created money handed out to non-productive sectors and artificial job keeper programs.
Ultimately this will be flow into inflation and cost-of-living pressure as you have more money chasing a decreased supply of real goods and services. The price of pretty much everything in NZ is a good example, particularly supermarket prices.
Then there is the largely unproductive section of the economy sitting on their land/house asset value.
Why work if your house is increasing in value supposedly by $1500 a week?
Paradoxically this explains the immigration dilemma as there are jobs that NZers won’t/can’t do and many qualified people have left already. eg. Many with heavy vehicle licenses or operators of specialist machinery have gone to WA.
This also speaks to decades of education system failure.
A qualified immigrant will do the job at a price NZ can afford and the unqualified will do lower paid jobs with a smile.
So you can’t begrudge them wanting a better life.
Ultimately the edifice is unsustainable. I think about what would happen if RBNZ is forced into a lose-lose scenario, where it either needs to defend the currency or prevent major bank failure. How would they do this?
If you look at the balance sheet at the foreign currency reserve asset position it only amounts to a range between $13 to $20 billion.
Compare this to Singapore with approx $1 trillion. In other words we are reliant on the economies productive sectors to earn our way in the world. But these industries are precisely the ones under attack by government policy.
So what would RBNZ do? Print even more money nobody wants? It would be like trying to piss into an inferno
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This is why I think immigration is the main factor-
NZ has never been able to build more than 4-5000 houses per year. A rate that kept up with natural population growth for year after year. Until the new millenium when immigration doubled the rate of population growth for almost two decades.
Therefore we fell behind on the number of houses we should have built. We needed 10,000 a year, but still only built the same number as before (4-5000). Therefore over that period we developed a shortage of at least 100,000 houses. And with temporary visas, we probably needed another 50,000 as well.
Until this shortage of 100,000 to 150,000 houses is overcome, prices will continue to rise, and housing will also continue to be an attractive investment for speculators. (Unless of course, and as you suggest, there is an economic collapse, which is highly possible)
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Yes I hear what you are saying, so there may be a delayed cumulative effect at work.
I would also argue that having 1/3 of a nations population in one city is a disaster.
I wouldn’t be an advocate for an unfettered immigration policy, but certainly think so long as you are attracting the right people in the right circumstances have no issue with it in principle at a capped number.
When you see stuff like this:
you realise how broken the whole market in NZ is.
The worst part is it really sets back future generations and there is no urgency to fix the problem.
Young people in the US have cash left over to invest/experiment in business and entrepreneurship or hobbies. While the equivalent generation in NZ is totally beholden to a mortgage. It’s damaging and we will never escape a productivity rut so long as this remains the case.
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Marxism is expensive
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Anyone remember the (I was overly-specific) promise of 10k affordable house per year?
Four years later and not even 1k over the ‘normal’ annual increase.
How short can voters’ memory be?
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When subdivision land to build on costs $1000 – $1200 a square meter then there is no chance of reducing housing prices. This is not going to change whilst we have the incumbents in power as they along with their Green mates hate any form of development and in fact any productive business and will continue to keep compliance costs for sub-division through the roof.
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