(Refiles to remove the repeated attribution in paragraph 15)

* New Zealand government to announce housing policy measures

* Back to the Kiwis, investors are pushing prices up 23% in 2020

* FinMin takes into account a range of policy initiatives

WELLINGTON, March 22 (Reuters) – New Zealand is set to unveil measures on Tuesday to counter a surging rise in house prices that has pushed younger and lower-income buyers out of the market, and poses a challenge major for the government of Prime Minister Jacinda. Ardern.

The country’s success in the fight against the coronavirus has made it a haven for returning Kiwis and investors, who have parked their funds in real estate, pushing house prices up 23% in just 12 months, far ahead wage growth.

Billions of dollars in government stimulus and historically low interest rates have further inflamed the market, while housing affordability has fallen to its lowest level in nearly 20 years, making it the least. affordable from 36 rich countries of the Organization for Economic Co-operation and Development (OECD countries).

Finance Minister Grant Robertson has publicly said he is considering measures to restrict lending to investors and dampen potential returns, while supporting other types of investments, but analysts warn there is no is no easy fix.

“The finance minister will have to throw the whole kitchen sink on this problem,” said Brad Olsen, senior economist at Wellington-based economic consultancy Infometrics.

“The conversation that takes place in Kiwi households over the summer was not COVID-19, but housing. So he doesn’t need a silver bullet … he needs to shoot all the damn bullets at it.

House prices have doubled over the past decade and successive governments in the nation of 5 million people have struggled for years to find solutions.

Almost 1% of New Zealand’s population is classified as homeless or “severely homeless”, the highest rate among OECD countries, and almost double that of neighboring Australia.

While Ardern’s government was easily returned to power last year after virtually eliminating COVID-19 nationwide and a string of nationwide successes, the 2019 scrapping of its flagship KiwiBuild project to build 100,000 affordable housing has been a notable failure.


Ardern said on Monday the government would present a series of urgent and longer-term measures to tip the scales in favor of first-time buyers and improve the supply of housing.

“This is, I believe, a plan that will start to make a difference in this complex issue,” she said.

The changes being considered include restrictions on mortgage lending to investors with a high debt ratio and interest only, as well as an extension of the holding period of investment properties from 5 to 10 years to obtain tax compensations and lower tax rates on investments other than housing.

The Reserve Bank of New Zealand has already tightened mortgage lending rules and has been urged to consider housing when developing its policies.

These demand-side measures will have some impact, but do not solve the central problem – a clear lack of affordable housing, said Jarrod Kerr, chief economist at Kiwibank.

“I’m afraid the focus is too much on demand… I don’t think speculation is the problem, but it’s an easy problem to focus on,” Kerr said.

“The problem we have here is a chronic housing shortage and anything the government can do to increase the supply of housing will go a long way in solving this crisis,” he said.

Another headache for the government is rocking investors and homeowners who are sitting on the bottom line of the real estate boom.

“Housing is the most divisive issue right now,” said Olsen of Infometrics.

“While it is understood that prices have to come down, there are also a lot of Kiwis who don’t want their investments to fall into the red.”

Reporting by Praveen Menon; edited by Richard Pullin

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