Finance Minister Grant Robertson is confident that the range of policies the Government outlined this week will put “downward pressure” on an “unsustainable” housing market but he admits that, when it comes to the impact those policies might have on rents, he “can’t predict exactly what will happen”.
In a bid to tackle the overheated housing market, the Government announced on Tuesday it will increase the time investors have to hold on to a property to avoid paying tax - the so-called “bright-line” - from five years to 10.
It will also remove the ability for landlords to claim a tax rebate for the interest they’ve paid on their mortgage.
A $3.8 billion "accelerator fund" will help with infrastructure for new housing. The cost of roading sewerage and connections for new subdivisions have often been cited by developers as a significant barrier to building more houses.
Robertson told Q+A that making that money available as grants, not loans, will make a massive difference.
"Councils tell us that's the most important thing we can do to help them add to supply," he said.
The Government has also raised the income cap for the First Home Loan scheme and higher price caps for the First Home Grants scheme.
Robertson characterised the Government’s policies as a bid to "tip the balance" in favour of first home buyers.
"This is a package that gets at both demand and supply and I think that's very important."
But he concedes that the packages’ impact on rents is unknown, because they are product of both demand and supply, and people’s ability to pay.
"I can't predict today exactly what will happen with rents, and actually our advisers have different views on that as well ... When it comes to rents there are a multiplicity of factors there and what we’re saying here is we’ll keep an eye on that - as we have throughout our period of time in Government - but nobody can say with absolutely certainty what it will do."