Wednesday, 8 July 2015

Matthew Goodson agrees with me on stamp duties

Back in May I wrote a post on house prices in Auckland. My conclusion was that there should be a geographically-limited stamp duty (or a land sales tax) on house sales in Auckland, excluding owner-occupiers buying their first home. It would capture foreign purchasers (not covered by the RBNZ rules), and include both speculators and investors, and would be hard to avoid. Key to my suggestion though was ring-fencing the tax income, to be used to increase housing supply and supporting infrastructure development like water and roading.

In the New Zealand Herald this morning, Matthew Goodson (managing director at Salt Funds Management) wrote a long piece on "What to do about Auckland's housing bubble". He writes:
A simpler way to deal with investors' privileged tax position would be to re-introduce stamp duty on any house that is not purchased by an owner-occupier. The duty could be controlled by the RBNZ so that the rate does not move with the election cycle. It might even be made region specific. Whether levied on the buyer or seller or both, it would lower investors' expected return and should therefore lower the price they are willing to pay for a house.
A stamp duty also has the happy side-effect of raising income which could be used to build infrastructure to support new supply. Australian State Governments are raking in stamp duty proceeds at present and this is giving them a far greater capability to invest for growth than is the case in Auckland.
Which is pretty much what I said (it's good to hear someone else say the same thing, even if it makes you vulnerable to confirmation bias). Goodson concludes that "Stamp duty, possibly on investors rather than all dwellings, would tick many boxes". So, again I wonder why this possibility has not seen much airing in the policy debate on Auckland housing affordability?

More from my blog on Auckland housing:

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