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IMF suggests the Government targets investors with a stamp duty or more comprehensive capital gains tax

By Jenée Tibshraeny


The International Monetary Fund (IMF) suggests introducing a stamp duty or more comprehensive capital gains tax would help cool New Zealand’s over-heated property market.

Completing a routine check-up on New Zealand’s economy, the IMF praised the responses of the Government and Reserve Bank (RBNZ) to COVID-19.

Yet it warned: “The rapid rise in house prices raises concerns around affordability and financial vulnerabilities.”

It said a “comprehensive policy response” was required.

On the demand-side, the IMF said: “Introduction of stamp duties or an expansion of capital gains taxation could reduce the attractiveness of residential property investment.

“The authorities should differentiate in these approaches between first home buyers and investors, while continuing to provide selective grant and loan assistance to first-time buyers.”

The on the supply-side, the IMF said: “Achieving long-term housing affordability depends critically on freeing up land supply, improving planning and zoning, and fostering infrastructure investments to enable fast-track housing developments.”

It warned a “pronounced correction” could be triggered by unsustainable house prices relative to incomes, a tightening of credit standards, or a sharp rise in mortgage rates.

The Government is expected to announce policy changes aimed at cooling demand by speculators within the next couple of weeks.

Providing more general feedback, the IMF said: "Decisive and unprecedented fiscal and monetary policy responses cushioned the economic impact and supported a swift recovery of activity to above its pre-crisis level. However, the recovery has been uneven, with some sectors and workers disproportionately affected.

"While no additional stimulus is needed at the current juncture, fiscal and monetary support should not be withdrawn prematurely given the still-uneven recovery and continued high uncertainty. The authorities should stand ready to deploy additional monetary and fiscal stimulus should downside risks materialize."

This story was originally published on and has been republished here with permission.