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They’re the people tasked with cooling a red-hot property market and tackling growing housing affordability, but home-owning politicians are benefiting hugely from a capital gains windfall - to the tune of $50m in the past year.

The Sunday Star-Times has crunched the numbers on the property interests of the country’s 120 MPs to determine how their private economic fortunes have grown in a year through this crisis.

A roaring housing market is preventing many New Zealanders from owning a home, and rapidly increasing the wealth of those that do, including nearly every MP. Charlie Mitchell crunches the numbers on those politicians who are enjoying a capital gains windfall from the red-hot property market.

MPs have pocketed $50 million in capital gains from their property interests in the past year amid a growing housing affordability crisis, a Sunday Star-Times analysis has found.

It represents a significant increase in wealth for many elected representatives, around 95 per cent of whom have land or property interests. The vast majority of MPs are accumulating more wealth from their properties than from their salaries.

New Zealanders have become increasingly concerned about the housing market, which has become the least affordable among peer nations. Public polling shows most New Zealanders believe housing is the biggest issue facing the country.

Although the Government has said it wants to slow the rate of house price increases, it has not said it would like house prices to fall. The Government has also ruled out implementing a capital gains tax, preserving a status quo which means most property gains are untaxed (National and ACT also oppose a capital gains tax).

Given the role Parliament – and, more specifically, the Government – has on influencing the housing market, the StarTimes has examined the property interests of the country’s 120 MPs to determine how their private economic fortunes have been affected by the housing affordability crisis.

It shows while first-home buyers and lowincome earners have struggled to penetrate the market, most MPs are enjoying windfall capital gains.

(An explanation of how the data was collected, what was included and excluded, and some of its limitations, is at the bottom of this article.)

Our analysis found MPs have interests in at least 256 properties, an average of more than two each.

As of July 1, those properties had a combined estimated market value of $356m, with a median value of $1.01m.

This is slightly above the national median house price. But given most MPs own multiple properties, it means the median MP has property interests worth significantly more than the national average – around $1.76m.

According to recent Reserve Bank data, the average household owns housing and land worth around $1m. (An important caveat: that figure excludes rental properties, so the comparison is not apples to apples, but it gives us a rough point of comparison.)

This represents a significant increase in wealth. At the same time a year earlier, the properties were worth $306m. By January, they had increased to $321m, then to $356m in July this year, an annual increase of 16 per cent.

Based on the past six months, the annualised rate of growth sits at 22 per cent.

The figure is likely higher than this. Capital gain can only truly be calculated when the gain is realised (ie, when the property is sold). For residential property, a reasonable estimate can be made – we used the mid-range valuation estimates from property website Homes.co.nz, which is based on nearby sales, valuations and other data.

This can’t be done for farms and commercial properties, which are not driven by the same supply-side constraints as residential housing. For that reason, we cannot estimate capital gains but have included their latest rateable value in our other figures.

If we remove these from the equation entirely, MPs’ properties rose in value by 23

per cent in the last year. In the past six months, that rate has increased to an annualised equivalent of 29 per cent.

It’s not surprising that MPs – who receive a minimum annual salary of $163,000, and predominantly come from urban centres – would have a significant stake in the housing market.

But for a Parliament that is historically diverse on matters including gender, ethnicity and sexuality, it is almost monolithic on property ownership.

Only seven of the 120 MPs have no declared or otherwise obvious property interests. They are: Damien Smith (ACT), Ibrahim Omer (Labour), Kieran McAnulty (Labour), Marama Davidson (Green), Peeni Henare (Labour), Ricardo Mene´ndez March (Green) and Rino Tirikatene (Labour). An eighth, ACT’s David Seymour, doesn’t directly own a house but is a discretionary beneficiary of several properties, meaning he may stand to benefit from them in the future.

The result is a home-ownership rate of 93 per cent, well above the rate for the general population, which in 2018 was 64 per cent, the lowest in 70 years (the rate is less than 50 per cent for people aged 20 to 40).

Simply owning property doesn’t tell the whole story. There are significant disparities within Parliament.

One MP owns a modest, 90m2, $300,000 home near Whanganui. Less than 50km away, another MP owns a $35m farm with an 1150m2, 17-room homestead.

MPs’ properties range from shoebox apartments, to a commercial building with a fish and chip shop as a tenant. Many own beach houses and cribs/baches, and a few own conservation blocks.

What is consistent across almost all properties is that they are going up in value.

For a Parliament that is historically diverse on matters including gender, ethnicity and sexuality, it is almost monolithic on property ownership. Only seven of the 120 MPs have no declared or otherwise obvious property interests.

There’s an unspoken ritual among the new members of Parliament following an election: if they don’t have property already, they buy a house.

It is not surprising, or controversial. Many will have received a signifi

cant pay increase to undertake a difficult job that keeps them away from their families. For an electorate MP, buying a house in their community is likely an important component of effective representation.

It does, however, immediately give MPs a financial stake in the housing market on which they have significant influence.

The median MP has made capital gains of around $330,000 in the past year, $237,000 of which occurred in the last six months.

An important caveat is this doesn’t account for improvements made to a property that increased its value. This is unlikely to be a factor in many cases – nearly every property has increased in value broadly in line with its surrounding area – but it cannot be ruled out, so keep that in mind.

The seven properties owned by National MP Christopher Luxon have increased in value by $2.7m in a year. It dwarfs his parliamentary salary and is equivalent to an hourly wage of $300.

In terms of annual capital gains, he is followed by Simon O’Connor ($1.52m), Gerry Brownlee ($1.42m), and Andrew Bayly ($1.38m), all National MPs.

The median National MP has property interests worth a bit over $4m, putting them firmly among the top 10 per cent of New Zealanders in terms of wealth. None has property interests worth less than $1m.

If we rank all MPs by the value of their property interests, National MPs take the top 14 spots, and none of the bottom 30. Despite making up a quarter of Parliament, their collective property wealth is worth more than the other parties combined.

This is in part driven by three people: Luxon, Ian McKelvie and David Bennett. The latter two have considerable farm holdings, each worth tens of millions of dollars. Luxon’s properties are worth $18m.

National, as the Opposition, has far less influence on the housing market than the governing Labour Party, which is not representative of the population, either. There are considerable disparities within the party, but its median MP has property interests worth $1.5m.

This ranges from four MPs with no property, to four MPs with property interests worth more than $3m each (Willie Jackson, Camilla Belich, Deborah Russell and Rachel Brooking).

ACT has a higher median property wealth than the Green Party, but that is largely driven by MPs who are beneficiaries of trusts that own property. In terms of outright ownership, both the median ACT and Green MP has interests worth $1.1m.

The Ma¯ ori Party’s two MPs have average holdings a bit under $500,000.

Because house prices have inflated so rapidly – and nearly every MP owns a house – we can see that most are earning more from their property interests than from their salaries.

The annual salary of an MP ranges from

$163,000 for a backbencher to $471,000 for the prime minister.

Most capital gains are untaxed, and the vast majority of MPs are accruing more wealth through property ownership than through their wages.

This is true even at the higher end of Parliament’s salary band. A notable exception is Prime Minister Jacinda Ardern, whose house increased in value by $290,000 in a year (against an after-tax salary of around $325,000) to $2.35m.

Deputy Prime Minister Grant Robertson’s Wellington home has increased in value by $320,000 (against an after-tax annual salary of $234,000). The same is true for Speaker of the House Trevor Mallard (capital gains of $345,000, compared to an after-tax salary of $208,000) and leader of the Opposition Judith Collins (capital gains of $400,000, also against a salary of $208,000).

Using IRD’s income tax calculator, it appears about 26 MPs – 20 per cent – earned more from their salaries than from their properties in the last year.

The quickest gains have been accumulated by MPs with Wellington property interests.

MPs collectively have 49 properties in the Wellington region, which increased in value by 30 per cent over the year. That pace has increased to the equivalent of 36 per cent annually over the last six months.

Property owners in Canterbury have also had rapid gains in recent months, nearing Wellington’s pace.

A final calculation we can use with this data is where MPs choose to live.

By cross-referencing their family homes with the social deprivation index, we can broadly see whether MPs live among those most likely to be impacted by housing unaffordability.

The index provides a number between one and 10 for a given statistical area. That number represents the area’s deprivation score, which is based on various factors including incomes, employment, housing quality, and qualifications. Each number represents 10 per cent of the population: a score of one is least deprived on the index, and a score of 10 is most deprived on the index.

(A cautionary note: The index is not perfect, and doesn’t tell you much at an individual level – it is an average of a population, which can vary widely within itself. What it does give us is a useful bird’s-eye look at the types of communities our MPs choose to live in.)

Most MPs own a family home in communities lower on the index. Sixty MPs live somewhere that scores a four or lower, while 40 live somewhere scoring a six or higher (12 MPs live somewhere scoring a five, and eight MPs who don’t own property are excluded).

Nearly three times as many MPs live in the 20 per cent of areas with the lowest deprivation scores than MPs who live in areas scoring in the highest 20 per cent.

The trend between parties is not hugely significant. The average National MP lives somewhere scoring a 3.4; ACT, 4.6; Labour, 4.9; and Green, 6.2.

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