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Labour’s housing policy likely to?be popular with?first-home buyers

Opinion Piece

More than a year out from the next election, Labour has well and truly nailed its colours to the mast with its housing policy announcement yesterday.

Speaking at an appropriate suburb, Auckland’s New Lynn where affordable houses were built in the 1960s, Andrew Little outlined the policy in which Labour has so much invested.

In summary, Labour wants to build 100,000 affordable houses in 10 years, half of them in Auckland. They would extend the present capital gains tax period on resales from two to five years and move to prevent landlords avoiding tax by charging rents below the mortgage cost.

In addition, overseas buyers will not be allowed to buy new houses and an urban development authority will be established to promote new development. Labour will commit $2 billion to the affordable houses and a further $100 million to the authority.

While there are no major surprises in the policy, it could catch on — especially with first-home buyers and their parents.

Little’s mantra, which we will hear a lot more in the coming months, is “if you don’t have enough houses you bloody well have to build more”.

Labour has been progressively rolling out its policy, the importance of which cannot be overstated. The runaway housing market and homelessness are probably the only real Achilles heels for a government that is on the cusp of a record fourth term.

While Prime Minister John Key has put pressure on the Reserve Bank to act on loan-to-value ratios for investors, it has told him to boost housing supply and look at immigration policy.

One problem for the Government in dealing with this hugely complex problem is that any policy that resulted in a slump in house values would have a serious effect on the equity of hundreds of thousands of home owners, most of whom would be its supporters.

National has taken the stance that many of the main planks in Labour’s housing policy, such as the urban authority, are already in its planning. But it will be closely watching public reaction to the Labour announcement.