With the housing market defying all economists’ predictions - still on the rise amid the Covid-19 pandemic - there are calls for the Reserve Bank and Government to do more to ease the pressure on buyers.
“It's very, very busy - there's not much stock on the market and a lot of buyers,” Ray White Real Estate salesperson Mark Prunty said.
A few months ago, economists were forecasting double digit drops in house prices - now they are predicting double digit increases.
Part of the demand is driven by low interest rates, designed to stimulate economic growth. With rates set to go even lower, housing appears a good place to make and invest money.
Additionally, the Reserve Bank is considering a funding-for-lending programme to make it cheaper for banks to borrow money.
The central bank also removed loan-to-value restrictions (LVR) in April. LVR stops lenders from making too many loans to borrowers with a low percentage of their home deposit already saved up. It was seen as a way to allow more first-home buyers into the market.
Some of the ideas being touted to help more people onto the housing ladder include putting back limits on high-value lending, and doing a complete reform of planning laws to free up land and increase the supply of houses.
Infometrics senior economist Brad Olsen said the Reserve Bank may also start looking at debt-to-income ratio limits “just to make sure the heat from investors doesn't get so hot in the market that we do see house prices roar away”.
He said current planning laws can mean that while “building houses takes time and it takes even longer to get bits of paper shuffled around, it seems”.
Tax may be another way the Government can help bring prices under control.
“Capital gains, especially from property, are one of the only income sources that aren't treated in a similar way to other sort of income,” Olsen said.
“What I do wonder about is whether the Government would look at another form of tax, possibly a land tax.”
Olsen said he didn’t expect house prices to drop next year.
Labour ruled out introducing a capital gains tax in this Parliamentary term.
Jacinda Ardern also said during TVNZ's Final Leaders' Debate she didn’t want house prices to decrease, but wanted more affordable housing.