Frustrated home buyers want investors to be discouraged

Georgia Wilkinson and Dylan Ewing have frequently been outbid by investors as they try to buy a house in Auckland's Glen Eden. Photo / Getty Images

When looking for a first home, it's hard enough having to contend with all the other young families wanting their first step on the property ladder.

But it's all that much tougher bidding over a property an investor has bought, done up and wants to flick on for a profit.

That's the experience of Georgia Wilkinson and Dylan Ewing, a young couple looking for their first home in Auckland.

They've been searching unsuccessfully for a house for six months and they are certainly not the only ones wanting something done to cool the heated home ownership scene.

A Key Research-Herald on Sunday poll of 1000 people showed 55.2 per cent support the idea of a capital gains tax on residential investment properties, although most of those said it depended on the level of tax payable.

The proposal - part of the Labour Party's policy platform - is intended to discourage investors from putting all their money in real estate, making more housing available to families looking for homes.

At one auction recently, Wilkinson and Ewing didn't even bother bidding.

"We'd gone in with a figure in mind that we thought it was worth and the bidding pretty quickly went past that," Wilkinson recalls of the Glen Eden home.

"With a lot of the houses, an investor has been in, tarted it up and now they're flicking it off."

Not only does that mean profit for the investor, but it means the most affordable, do-up properties are being snapped up. "It's not good for first-home buyers."

She said almost a quarter of the properties she and Ewing looked at were being sold by investors.

It has made her think that a capital gains tax would be a good idea. "It would help. It seems crazy to me that Auckland is becoming one of the most expensive cities in the world to live in. If we don't get in now, we never will. That's unfair."

Labour leader David Shearer said the heat in the Auckland housing market, in particular, allowed people to make large, tax-free profits. "People are buying a property for $500,000, then a year later selling it for $550,000. That's $50,000 of profit with absolutely no tax."

But a spokesman for Finance Minister Bill English said those who bought property intending to make a profit were already taxed, and Inland Revenue had been given more resources to track and tax property speculators.

On the flipside of the debate, Steve Holmes bought his first investment property last July and now has four properties around Auckland.

He said he didn't buy to set up a property empire. As a builder, it was the easiest investment for him to understand.

Key Research-Herald on Sunday poll

Do you support a Capital Gains Tax on the sale of residential investment properties?

24% - Yes
31% - Yes, as long as it's not too high
33% - No
12% - Don't know

Key Research interviewed 1000 eligible voters.
The poll has a margin of error of +/-3.1 per cent.