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Capital Gains Tax

Numerous groups are calling for a capital gains tax to be introduced.  They mistakenly believe that this will slow down the property market and make housing more affordable. Over the past 3-4 years property prices have really only risen in Auckland, which is growing rapidly and in Christchurch, which is a special situation. Gains in other cities and provincial towns have been more modest. If we look across the Tasman, where capital gain taxes were introduced in the mid 1980s, house prices have continued to rise rapidly. One could argue that capital gains taxes across the Tasman, actually caused house prices to rise. The key is to making houses more affordable, is to increase the supply.  This includes making it cheaper and easier to subdivide sections and bare land, and to allow the building of medium density dwellings, as they do in places such as Sydney. A capital gains tax will not achieve this.

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