Newland: Give first-time buyers GST break

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."

Comments from our readers

On 24 July 2012 at 10:16 am Tony said:

You call that radical? I call it sensible. Its a great idea to offer new builds tax breaks provided they are owner occupied and lived in for a period of - say - 3 years perhaps? I like this thinking. A lot.

On 24 July 2012 at 3:02 pm doggo said:

How can house prices double if wages are widely flat and globalized economy dominated by low labour cost empires. Cynical investors who charge merciless rentals should show a social conscience. NZ banks also need to show a social conscience and stop peddling onerous mortgages like hamburgers. Perhaps credit agencies need to impose on NZ banks a restricting lending criteria as they are already doing in Europe.

On 25 July 2012 at 9:01 am Andrew said:

Part of Australia's housing bubble - that's now popping - was caused by first home buyers grants. The market simply factors in any increase to FHB's deposit size, and causes a bigger problem later on. And... If you copy someone else's idea, that's not radical thinking!

On 27 July 2012 at 8:58 am Paulus said:

Almost all countries with GST have split tariffs, and have had them for decades. A low tariff for essentials like housing and food, and a high one for luxuries. If we fell in line at least one factor would be addressed (and it has many other benefits in other areas besides). The 2 tariffs can easily be tuned to be made revenue neutral. The question is not should we do it, but rather why on earth are we not doing this?

Newland: Give first-time buyers GST break

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

Comments from our readers

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