Prime Minister John Key is standing by his statements that there isn't a housing crisis in Auckland and says the decision to tax property speculators was only made in April.
On Sunday, Key announced the Government planned a law change for October 1 that will make residential property bought and sold within two years subject to a capital gains tax, unless it was the family home, inherited, or needing to be sold because of a relationship split.
Key said increasing housing supply was still the best way to resolve the shortage in Auckland, and New Zealand wasn't the only country dealing with these issues.
"This isn't new, house prices doubled under Helen Clark's watch," Key told TVNZ's Breakfast.
"House prices are growing faster than we would like, but if you go to Sydney or Melbourne or any other major capital in the world and pick up the paper I'm telling you now that house prices are rising even faster or as fast and it's the main topic of debate."
Finance Minister Bill English was not convinced there was a housing crisis either, and said people threw that word around loosely.
"The prices look pretty high but people are paying them one way or another and we've got growth and supply coming to the market."
Labour leader Andrew Little described the policy as "panic stations at the Beehive" after a sudden change of heart by the prime minister, which has led to a "scrambled and last-minute housing measure".
"These are the actions of a bystander Government that has watched the Auckland housing crisis unfold and then done too little too late."
People buying and selling property for profit have always been subject to a tax on capital gain, but under the existing rules Inland Revenue has to prove making a quick profit was always their intention.
But as recently as April 13, Key was still telling media that he didn't think a capital gains tax was the answer.
That changed when IRD altered its position on the bright line test, a two-year period in which houses are bought up and sold for profit, and subsequently the decision to tax property speculators was made, Key told Radio NZ.
This on the back of IRD receiving $33 million in Budget 2010 for more inspectors to start cracking down on investors who bought and sold a lot of property in a short period of time.
Key said "genuine investors" would still be able to buy an investment property - "but if your intention was to buy and sell quickly and actually rort the system and not pay your tax, you now know you'll be caught".
As a result more houses would be available for "genuine" buyers, he told TVNZ.
English said the Government has been working away on tackling property speculators for some time.
As part of the policy overseas buyers would also be targeted by making them have a New Zealand bank account and tax number.
"It's turned out that requiring an IRD number and an offshore IRD number is a low cost, low compliance way of being able to credibly track people and therefore enforce the existing law," English said.
"It's become clear that it's been difficult for IRD to make sure that people who are churning through houses end up paying the tax they should be paying, particularly offshore."
Key disputes that the changes are a capital gains tax - because that already existed under the law.
Instead he described the changes as an "intentions tax" which he hoped would contribute to a more "gradual price rise" of housing in the future.
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