Newland: Give first-time buyers GST break

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Property investment guru Olly Newland says radical thinking is needed to solve New Zealand’s housing affordability problem.

Monday, July 23rd 2012, 9:59AM 4 Comments

by Susan Edmunds

Newland, who predicts house prices may double over the next 10 years, says more must be done to get first-home buyers into properties and increase the country’s housing supply.

He says the current situation, with house prices increasing around the country, has been created by the cost of council charges when building or subdividing; the cost of raw materials; the thousands of homes lost due to the leaky homes scandal, the thousands lost in the Christchurch earthquake, population increases, the removal of tax breaks in the 2011 Budget, low interest rates, and the GST charges that come with new builds.

He says first-time buyers should be given a grant towards any low-cost new home and a GST rebate if they build a house worth less than $500,000.

Newland said this would make building a new home more appealing and help with the country's housing shortage.

“A newly-built $500,000 house (the Auckland average) carries a GST content of $75,000. So why build? Next door could be a second-hand house for sale, GST-free and often loaded with extras.”

Newland says a grant and GST break would help those trying to get a foot on the property ladder.

"Australia has something similar and stamp duty is rebated for first-home buyers. It's the same general idea and it works."

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