NZ government takes bold action to curb soaring house prices

PHOTO: New Zealand prime minister Jacinda Ardern, pictured here in 2020 with NSW premier Gladys Berejiklian, hopes first-home buyers will benefit from the wide-ranging changes. Photo: Dominic Lorrimer

The New Zealand government has made a bold $3.8 billion move in swiftly closing tax loopholes in a bid to put a lid on rising house prices in the country and stop property speculators entering the market.

It hopes the raft of policy changes will shift the balance of the property market more in favour of first-home buyers and owner-occupiers, with tax incentives for investors reduced from this weekend, Stuff reported.

The measures include an extension of what is called the “bright-line test”, which means some investors will pay tax on their capital gains when they sell properties and the removal of interest deductibility.

What the NZ government has done is effectively reduce the Australian equivalent of capital gains tax exemptions and remove negative gearing almost overnight.

Investment properties bought from this weekend onwards will be subject to a tax rate of between 33 per cent to 39 per cent on the condition they held for at least 10 years – an increase from five years – to rein in flipping properties by investors.

NZ property prices have recorded such staggering price growth in their local property market it has left some Kiwis wanting to move to Australia for cheaper housing.

While Australian home values rose 4 per cent in the past year to February to a median of $598,884, according to CoreLogic figures, Kiwis saw price growth more than double that pace.