The call came from the Helen Clark Foundation report, which looks at New Zealand’s housing affordability crisis. It blames housing speculation, fueled by the availability of cheap credit, for driving up prices.

Report author, Dr Jenny McArthur, says this has led to a speculative investment cycle that must be deescalated to address the crisis and proposes solutions to disrupt the speculative cycle and safely lower housing prices.

These solutions include a capital gains tax, debt-to-income limits for high income households and a progressive refinancing scheme to reduce household debt burdens for the primary home.

However, NZ Property Investors’ Federation executive officer Andrew King says these are misguided calls with, potentially, unintended consequences. It has always been, and probably always will be, difficult to own your first home, he says.

“This proposal would be particularly hard on those who have purchased their first home over the last few years. If house prices fall, these young people could easily see their equity disappear and banks call in their loans.”

Additionally, it’s not a good idea to try and make it easier for today’s first home buyer by making the rental crisis worse,

King says.

“Over the last ten years we have seen many changes – including removing depreciation deductions, increasing LVR requirements, ring-fencing rental losses and making it harder to manage tenancies – that have made providing rental property more difficult."

The result of these measures has been to raise rental prices and make it harder for first home buyers to save a deposit. They have not slowed down house price growth let alone reversed it…

This new proposal will not improve this situation and therefore should not be supported.”