Yes I'm not saying property taxes are inherently bad, but this would need to be pretty high, such as property taxes of e.g. 5-10% of the market value. Probably a bit hard to swallow for e.g. people who have retired and have bought their homes ages ago for say $100k and it's now worth $1M and the pensions doesn't cover the $50k annual property. Moving would net the couple $900k minus a hefty chunk in profit tax, after which they can't afford buying a new home. We had this situation here and it's not good.
You could have a 10% market value property tax, and a deduction of 90% of that amount, for one home, on your income tax, then 75% for a second property etc, to make it both prohibitively expensive for foreigners, and a bit progressive for those owning multiple homes.
OK,fair call; I don't want to drive people out of their homes, I want to a) crash prices and b) keep them low, so I'd prefer to tax gains (even paper ones) in combination with other speculative disincentives (mainly the removal of the current incentives and special treatment). In an ideal situation no revenue is collected from capital gains because there are none to tax...
Your policy of "crash prices and keep them low" has the greatest impact on owner-occupiers. If you look at historic collapse of housing bubbles, it's the negative equity / underwater owner-occupiers who suffer losing their home or losing their mobility. Speculators simply shrug it off since they have the flexibility to move their investments.
An increase in average wage growth would support both owner-occupiers and first time buyers.
Most owners are not impacted by "crash prices and keep them low" because they have experienced enormous capital growth. Auckland prices have doubled in the last four years; a 50% crash would leave almost everyone in the property market before then no worse off.
Speculators can move their investments, but they have to accept the loss in order to do that.
An increase in wages without fixing the underlying drivers for property price growth will not support owner occupiers or first time buyers at all, because property price growth will match or exceed that growth.
Crash prices, keep them low and stable after, it will be rough and unpopular for a while but will eventually be the best outcome.
It's not a solution over any time period, because without fixing the drivers of the price growth in the property market any increase in purchasing power will be met with property price growth to absorb it.
