The upper end of the British housing market has slowed this year, with homes worth more than one million pounds down by more than 15 percent compared with last year. That weakening has been attributed to changes in stamp duty rates introduced at the end of 2014, introduced to make the tax system fairer for people at the lower end of the market.
Annual price growth in Britain is tipped to further slow next year, to about 3.4 per cent, and Britain is facing a slowdown in the economy as household average earnings dip.
Inflation there is predicted to rise and wages slow, with real pay likely to be below 2008 levels even in 2021. Headlines about real wages have already dubbed it Britain’s “dreadful decade”.
Economies around the Western world face real challenges in the short to medium term. It can only be hoped that should any dire scenario play out in Britain it will not have too detrimental an impact on New Zealand, and the two countries do of course face very different challenges and trading realities, particularly in the wake of Brexit.
But the state of Britain’s housing market does have some parallels in New Zealand, and Auckland in particular.
While developers in an open economy are obviously welcome to do as they please in terms of buying and selling land, Javid’s threat will strike a chord with New Zealanders who are struggling to enter the housing market in this country.
It may well be that local authorities here will analyse any changes in the UK industry and consider similar tweaks to our own development laws. Many people will have sympathy for the idea of conditions being introduced to try to prevent land banking from happening.
Trump’s in. Interest rates have already started rising. New Zealand is very vulnerable.