Rants, Raves, Reviews

Labour fans the housing market fire

By Gary R, in , posted: 1-May-2007 10:42

Rather than taking the heat out of the housing market the latest broad stroke from the socilaist pen will keep the fire fueled and fanned for years to come.

Labour are going to use my money to buy equity in your first house. You now no longer need to scrimp and save for a house as most people have done. Instead you can turn up at that heated auction knowing that you have an extra $100K in your back pocket courtesy of Messrs Clark and Cullen. As we all know house prices are driven by supply and demand. Now Labour is creating more demand which will no doubt push up house prices making it less competitive for those who are not worthy of handouts to buy property. Seriously what the hell are they thinking? More and more we are seeing our financial freedoms controlled by this domineering socialist state that seems to think that handouts are better than hard work. Where is the fair return for my tax dollar when the government is simply relying on capital gain?

It will be interesting what the rules will be. For instance will the government come and inspect the property every 6 weeks to ensure that my tax investment is secure? What happens if the home owner trashes the house? If the home owner increases the value of the property by spending on a new kitchen and bathroom does the government automatically benefit from the increased value? What about subdividing the property does the government benefit? What happens if the home owner goes overseas and rents out the property, does the government get a share of the rent? What happens if the house is put into a family trust so that the children, grand children and great grand children occupy the house for the next 100 years? Does the government share the risk if the home owner defaults on the mortgage and the bank forces a mortgagee sale? On top of this handout does the recipient still receive an additional accommodation supplement? What about flatmate's living in the house paying rent does the government get a share? Does the homeowner take out insurance on the entire value of the house or just their own share of the value?

In my opinion I would have thought a fairer system would be this:
1. Interest free mortgages for 2 years, the interest saved is your deposit
2. A government equity loan for the life of the mortgage at the end of the mortgage you pay back the government with interest

This government is full of contradictions. Consider this from Mr Cullen in his speech titled 'Economic Outlook 2007 and Beyond'

'If we want the Reserve Bank to keep interest rates low for businesses and mortgages, we need households to spend less, save more.'

Thanks Michael we understand it but do you? Just throw another log on the fire while you're up.

Other related posts:
I Smell a Conspiracy
Disposal of Eco-bulbs
Welcome to Vuestar

Comment by stevonz, on 1-May-2007 12:38

Here, here - I'm with you Jama!

Comment by TinyTim, on 1-May-2007 14:07

Exactly, these schemes of helping buyers simply worsens the supply:demand ratio. They need to reduce demand, that's why a lot of people support capital gains tax on investment property.

Comment by blackpanda, on 1-May-2007 15:21

Good points raised.

I say the answer is for a significant reform of the banking and consumer lending sectors. Tighten up the equity requirements on home loans and make it significantly more difficult for individuals to borrow on consumer goods. Should help with inflation, and bring the OCR back down along with the NZ Dollar.

Im not an economist though...

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