Guyon Espiner: It appears investors haven't been scared off the property market, borrowing
almost $2.6 billion last month, according to the latest Reserve Bank data, first home
buyers borrowed less than a third of that. Investors are now borrowing roughly $700m
more than they were this time last year. Green Party Co-leader Metiria Turei isn't happy
with this situation, she joins us now, good morning.
Metiria Turei: Kia ora
Guyon: Thanks for joining us Metiria Turei, now we're just talking about the level of
investors in the property market, still very, very, very strong, what is it that you would
do to, I guess, try to get more investors out of the market and allow more first home
buyers in?
Metiria: It's a medium and long term strategy. I mean, so what the data is showing us is
that in the last three months we've had the highest level, since the Reserve Bank has
been collecting data on this, of investors borrowing over first home buyers. So this
number, around 7,000 investors a month, versus less than 2,000 first home buyers, that's
been pretty consistent for the last three months or so, and it's at the highest level.
So nothing that the Government has done yet has worked to cool the investment. So let's
just have a think about what they haven't done, or what they should. One of those things
is a more comprehensive capital gains tax that extends much longer than two years. Two
years just simply isn't long enough. And you know, we've been arguing about this for more
than a decade, this is what's necessary. It would have a good short term effect, but you
also need other measures to make sure that the impact, that the good impact, lasts over
a long period of time. We've always said that we should have a restriction on purchasing
residential property to permanent residents and citizens. And I think whether that is
something that you put in place for the long term, or whether you put it in place for a
few years, then at least it's one of the ways of helping to cool overseas investment. We
also need to get rid of the tax exemptions. There's still two major ones, particularly
one called combined collateral exemption which allows big investors to use the equity across
their whole property portfolio to get around the LVR [loan to value ratio] rules. And that
really only applies to those big investors, and so they have this huge advantage that
they can get around the rules of the Reserve Bank.
Guyon: do you agree that housing in New Zealand is unaffordable at the moment?
Metiria: yes I do. And I mean this is, you know, I think everybody does. You're completely
bonkers not to.
Guyon: so which leads to the question
Metiria: yep, ask it
[laughter]
Guyon: I think you know what's coming
Metiria: yeah I know
Guyon: And it needs to be answered. Do you want house prices to drop?
Metiria: Yes. So you know, let's stop wriggling around
Guyon: by roughly what?
Metiria: We're...
Guyon: Cos you got in trouble last time you said this
Metiria: Yes I did, I did get in trouble
Guyon: No I remember this, remember it well. So this is pretty interesting and significant
in my view that you've said this right now. And good on you for being upfront, you're
saying that you want house prices to drop. And in my recollection you are the only politician
I've heard say this. In recent times. Because even Labour, they won't say it. So you are
saying you want prices to drop, roughly by what?
Metiria: We would like to see them come down to something closer to 3 or 4 times the median
household income.
Guyon: wow OK, so let's
Metiria: I know that's a lot
Guyon: And let's look at these figures, because it's important
Metiria: yes it is
Guyon: a million bucks at the moment for an Auckland property
Metiria: Yes
Guyon: Right, it's a 1 to 10 ratio. You would be taking, you're going down the Don Brash
track of 40, you know let's not compare yourself to Don Brash, we're talking about a 40 to
50% drop in house prices
Metiria: Over a long period of time.
Guyon: Aren't you?
Metiria: yep. And so we...
[cross talk]
Metiria: let's just.... no it's really important Guyon...
[cross talk]
Guyon: Hang on. And I'll let you go. It is important. I'll let you go but I just want
to clarify this.
Metiria: No the time frame is critical. Let me just describe this. The time frame is critical,
because what you do not want, and what everybody is trying to avoid, is any kind of bursting
of the bubble. Because families will be the ones who get hurt. So the only way to manage
this sensibly for families is to have a long term plan that sets a reasonable target for
house prices, which is around about 3 to 4 times the median.
Guyon: OK you can lay... I'll give you a couple more minutes on this, but firstly let's just
clarify this. You are saying this morning, and you can tell us your time frame, but you
want house prices to drop 40 to 50% in Auckland by what sort of time?
Metiria: They're going to be... well this is part of the piece of work that I'm doing
right now actually. And I'm looking at all of the policy, and all of the different ideas
from different people. So for example, we have a great report from the Chief Economist
from Auckland Council who is talking about five times by 2030. So you know, that's one
time frame that needs to be looked at and the policy framework has been set out. It's
quite a comprehensive report about how you could get there and the role of council. And
the role of Government. So this is why we can't, we mustn't allow us, me or you as media,
to get alarmist about this. We need to
[crosstalk]
Metiria: No we need to. Listen. We need to have a comprehensive plan that looks at making
housing affordable for families. Now we know it's not affordable now. So the only way to
prevent a bust, and to protect families in the short and long term, is to lay out a comprehensive
plan which means using every possible tool that we've got to slowly, over time, bring
down house prices so they are reasonable. Without necessarily making, interfering too
much with the value of people’s lending. I mean what we don't want is people getting
into trouble with their mortgages. That is absolutely not acceptable.
Which is why you need a plan.
Guyon: So is it fair to say then that you want that drop of 40 to 50% to occur over
a decade or so? Is that what you're talking about?
Metiria: Well I mean, this is why I'm saying we're doing the work now to have a look at
the different timeframes, the different analysts and economists and organisations are talking
about to try to bring that work together. What we don't have right now is a Government
that's even admitting that there's a problem, let alone putting in place a plan to deal
with it, to protect families. That is my commitment. That is what I want to do. But it can't be
done in an alarmist way, and it can't be done too quickly because we have to bring together
all the information we've got.
Guyon: Can you convince Andrew Little?
Metiria: Well, I mean we'll be talking with everybody about this at a point where we have
all the information that sets out what kind of plan is actually reasonable and work with
the whole industry. We've got to work with investors, we've got to work with bankers,
I mean you know this is not a single... this is why I'm really concerned about kind of
the language around this. We mustn't be alarmist about it, we need a plan. And the plan means
being real about the problem and working carefully with the whole of the New Zealand community
to figure out how to roll that plan out over time.
Guyon: Thank you so much for your time, we appreciate it.
Metiria: Sweet as, kia ora.