Media statement

For immediate release

Thursday, September 25, 2003

First home buyers and investment properties

United Future spokesperson on Revenue and Finance, Gordon Copeland, says he has been misquoted in today’s Dominion Post article on home buyers.

“The article makes the bald statement that I have written to Housing Minister Steve Maharey and Finance Minister Michael Cullen ‘urging an end to tax breaks on investment properties.’ That is a vast oversimplification,” said Mr Copeland.

“My letter makes five key points, only one of which mentions taxation advantages, and then only to say that they should not favour residential property investment as compared to alternative investments.

“That is United Future’s position. For the sake of the New Zealand economy and its success, it is vital that investment decisions be driven, not by tax advantages, but by the underlying investment return which is available. That is also the position of the savings industry in NZ. We simply end up investing too much in one area to the exclusion of another (e.g. housing versus the Stock Exchange) if tax treatment is inconsistent.”

Mr Copeland said “The central point of my letter to the two Ministers was that the cumulative effect of a number of present economic realities (NZ’s high interest rates relative to the rest of the world, the resultant inflow of funds to NZ, the willingness of banks to lend readily for housing investment and current disillusionment with Stock Exchange investments) have brought about the current situation.

“As a result many first home buyers, some of whom are still struggling to pay off student debt, are faced with the stark choice of long term (perhaps lifelong) property rental or an impossibly high level of mortgage debt servicing. The outcome is negative for family life.”

ends

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