Speculation is mounting tonight that the Prime Minister is about to announce a major move on Auckland housing.

He is set to deliver the keynote address at the Lower North Island National Party regional Conference on Sunday and it is thought he will make the announcement there.

No details are confirmed at this stage.

But on Wednesday, Reserve Bank Governor, Graeme Wheeler told Parliament’s Finance and Expenditure Committee there were three options — a capital gains tax, stamp duties or “addressing” the tax deductibility of interest payments by property investors.

Mr Key will not announce a capital gains tax.

He in particular, but most in National’s caucus as well, are ardently opposed to the idea.

Stamp duty on property transactions is payable in all Australian states except Queensland.

Rates vary but are between $A40, 000 and $A55000 for a property worth $1,000,000 in New South Wales or Victoria.

But Victoria has recently imposed a surtax on the stamp duty for foreign investors buying real estate in Victoria.

They are to be subject to an additional three per cent tax on the property’s purchase price and a 0.5 per cent land tax on new and existing properties.


In 1988 New Zealand abolished stamp duty on all but commercial property and that was abolished in 1999.

A return to stamp duty would seem unlikely.

That leaves the possibility of not allowing property investors to tax deduct their mortgage interest payments.

That would be attractive to the Government since it might slow the market at the same time as it increased revenue at a time when Government revenue forecasts are declining.

Currently in Auckland (according to the Reserve Bank) over four in every ten houses sold is bought by a property investor.

Symptomatic of the intensity of the crisis in Auckland is a call today from Peter Thompson, the head of the city’s largest real estate company, Barfoot and Thompson  who suggested to the NZ Herald that anyone purchasing a property worth more than $1.5 million should  pay a deposit of around $500,000.

Mr Thompson also wanted properties under $500,000 excluded from the LVR (loan-to-value) restrictions to help Auckland’s struggling first-home buyers over the line, and admitted the risk of a market correction as prices spiral out of control.

Mr Key is expected to speak late Sunday morning.