IDEAS home Printed from https://ideas.repec.org/p/oec/ecoaaa/878-en.html
   My bibliography  Save this paper

Policies to Rebalance Housing Markets in New Zealand

Author

Listed:
  • Calista Cheung

    (OECD)

Abstract

A considerable housing boom has been a key feature of persistently large saving-investment imbalances in New Zealand over the past decade. Wealth is concentrated to a greater extent in property compared to most other OECD countries, leaving households and the banking system heavily exposed to a correction in land and housing markets. Supply rigidities and tax incentives that bias savings decisions towards property investment have amplified the increase in house prices, widening wealth inequalities in the form of larger homes for those who can afford them, but deteriorating affordability for the rest of the population. Substantial distortions via tax planning have been evident in rental property markets. Although the 2010-11 budget introduced measures to reduce some of these distortions, further reforms are needed to remove the significant tax bias favouring housing. The economic downturn has increased financial pressures on the social housing sector, with a shortage of public dwellings in areas of high demand. Regional supply constraints reflect inefficient land-use policies and long delays arising from an overly complex urban planning system. The adoption of spatial planning frameworks is a positive step forward, but they should include pricing mechanisms for land and road use that are aligned with broader policy objectives. This Working Paper relates to the 2011 OECD Economic Review of New Zealand (www.oecd.org/eco/surveys/NewZealand). Mesures pour rééquilibrer les marchés du logement en Nouvelle-Zélande Au cours des dix dernières années, le boum spectaculaire du marché du logement a été l’une des principales caractéristiques des déséquilibres importants et persistants entre l’épargne et l’investissement en Nouvelle-Zélande. La richesse est beaucoup plus concentrée dans l’immobilier que dans la plupart des autres pays de l’OCDE, ce qui expose massivement les ménages et le système bancaire à un risque de correction du marché foncier et du marché du logement. Les rigidités du côté de l’offre et les mesures d’incitation fiscale qui influencent les décisions d’épargne au profit des investissements immobiliers ont amplifié la hausse des prix des logements, creusant les inégalités de richesse qui se matérialisent par des logements plus vastes pour ceux qui peuvent se les payer alors que l’accessibilité financière au logement se détériore pour le reste de la population. Des distorsions substantielles imputables à la fiscalité sont devenues visibles sur les marchés de l’immobilier locatif. Bien que le budget 2010-11 ait introduit des mesures pour réduire certaines de ces distorsions, de nouvelles réformes sont nécessaires pour supprimer les biais fiscaux significatifs qui favorisent le logement. Le ralentissement économique a accru les pressions financières sur le secteur du logement social, entraînant une pénurie de logements publics dans des zones où la demande est forte. Le caractère limité de l’offre régionale reflète des politiques d’aménagement du territoire inefficientes et des retards importants imputables à un système de planification urbaine exagérément complexe. L’adoption de cadres d’aménagement du territoire constitue un pas en avant positif, mais cet encadrement devrait inclure des mécanismes tarifaires pour l’aménagement du territoire et des infrastructures routières alignés sur des objectifs politiques plus larges. Ce Document de travail se rapporte à l’Étude économique de l’OCDE de la Nouvelle-Zélande 2011 (www.oecd.org/eco/etudes/Nouvelle-Zélande).

Suggested Citation

  • Calista Cheung, 2011. "Policies to Rebalance Housing Markets in New Zealand," OECD Economics Department Working Papers 878, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:878-en
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1787/5kg8gj13xxf5-en
    Download Restriction: no

    References listed on IDEAS

    as
    1. Priit Vahter, "undated". "Does FDI spur innovation, productivity and knowledge sourcing by incumbent firms? Evidence from manufacturing industry in Estonia," Discussion Papers 10/09, University of Nottingham, GEP.
    2. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
    3. Masso, Jaan & Roolaht, Tõnu & Varblane, Urmas, 2010. "Foreign direct investment and innovation in Central and eastern Europe : evidence from Estonia," Bank of Estonia Working Papers wp2010-05, Bank of Estonia, revised 14 Apr 2010.
    4. Sascha O. Becker & Karolina Ekholm & Robert Jäckle & Marc-Andreas Muendler, 2005. "Location Choice and Employment Decisions: A Comparison of German and Swedish Multinationals," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(4), pages 693-731, December.
    5. van Ark, B., 1999. "Economic Growth and Labour Productivity in Europe: Half a Century of East-West Comparisons," Papers gd-41, Groningen State, Institute of Economic Research-.
    6. Molly Lesher & Sébastien Miroudot, 2008. "FDI Spillovers and their Interrelationships with Trade," OECD Trade Policy Papers 80, OECD Publishing.
    7. Jaan Masso & Priit Vahter, 2008. "Technological innovation and productivity in late-transition Estonia: econometric evidence from innovation surveys," The European Journal of Development Research, Taylor and Francis Journals, vol. 20(2), pages 240-261.
    8. Brixiova, Zuzana & Vartia, Laura & Wörgötter, Andreas, 2010. "Capital flows and the boom-bust cycle: The case of Estonia," Economic Systems, Elsevier, vol. 34(1), pages 55-72, March.
    9. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
    10. Jarko Fidrmuc & Daniela Grozea-Helmenstein & Andreas Wörgötter, 1999. "East-west intra-industry trade dynamics," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 135(2), pages 332-346, June.
    11. Janita Andrijevskaja & Tonis Mets & Urmas Varblane, 2010. "Knowledge-based entreprenuership in Estonia," CASE Network Studies and Analyses 407, CASE-Center for Social and Economic Research.
    12. Uwe Dulleck & Neil Foster-McGregor & Robert Stehrer & Julia Wörz, 2004. "Dimensions of Quality Upgrading in CEECs," wiiw Working Papers 29, The Vienna Institute for International Economic Studies, wiiw.
    13. Johannes Stephan, 2004. "The Productivity Gap between East and West Europe: What Role for Sectoral Structures during Integration?," Development and Comp Systems 0403004, EconWPA.
    14. El-hadj M Bah & Josef C Brada, 2009. "Total Factor Productivity Growth, Structural Change and Convergence in the New Members of the European Union," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 51(4), pages 421-446, December.
    15. Priit Vahter, 2006. "Productivity in Estonian enterprises: the role of innovation and competition," Bank of Estonia Working Papers 2006-07, Bank of Estonia, revised 11 Dec 2006.
    16. Koen De Backer & Vladimir López-Bassols & Catalina Martinez, 2008. "Open Innovation in a Global Perspective: What Do Existing Data Tell Us?," OECD Science, Technology and Industry Working Papers 2008/4, OECD Publishing.
    17. Kristina Toming, 2006. "Accession To The Eu: Did It Boost The Export Competitiveness Of The Estonian Food Processing Industry?," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 47, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    18. Paas, Tiiu & Tafenau, Egle, 2005. "European trade integration in the Baltic Sea Region - A gravity model based analysis," HWWA Discussion Papers 331, Hamburg Institute of International Economics (HWWA).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chris Hunt, 2014. "Household debt: a cross-country perspective," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 77, pages 1-13, October.
    2. Anne-Marie Brook, 2014. "Options to Narrow New Zealand’s Saving – Investment Imbalance," Treasury Working Paper Series 14/17, New Zealand Treasury.
    3. Reserve Bank of New Zealand, 2011. "Submission to the Productivity Commission inquiry on housing affordability," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 74, pages 30-38, September.

    More about this item

    Keywords

    capital gains tax; fiscalité de l’immobilier; household saving; housing markets; housing policies; housing prices; housing taxation; housing wealth; impôt sur la propriété immobilière; impôt sur les plus-values; land prices; land-use planning; logement social; marché du logement; New Zealand; Nouvelle-Zélande; patrimoine des ménages; planification de l’occupation des sols; planification urbaine; politique du logement; prix des logements; prix du terrain; property tax; urban planning; épargne des ménages;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oec:ecoaaa:878-en. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/edoecfr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.