Betting on capital gains: Housing speculation in Auckland

Michael Rehm; Yang Yang

Abstract – Tuhinga Whakarāpopoto

This paper examines housing speculation in Auckland, New Zealand, the second most unaffordable market in the world. The study considers rental property purchases from 2002 to 2016 within the Auckland region. The authors apply a simple cash flow model that emulates the before-tax investment calculations used during purchasers’ due diligence. From this model, the authors determine whether purchases involved speculation on capital gains or not and the authors estimate the degree of speculation at the transaction level. The authors find that housing speculation in Auckland is endemic and its housing market is a politically condoned, finance-fuelled casino with investors broadly betting on tax-free capital gains.

Other reports associated with this research

Rehm, M. & Yang, Y. (2020). Betting on house prices: Housing speculation in Auckland. Research Bulletin, 14 June 2020, for Building Better Homes, Towns and Cities – Homes and Spaces for Generations: Affordable Housing for Generations, 4pgs. Wellington: BBHTC.

Articles associated with this research – Karere Tūhono

Media article: NZ’s housing debt dilemma

27 November 2020: Newsroom Opinion article by Building Better researcher Dr Michael Rehm, University of Auckland

Housing debt is the catalyst behind our stratospheric house prices, and our policies to manage this will be central to either a managed descent or the triage that will follow a housing market crash… >> Read More

Media article: ‘Obscene’ housing Ponzi driven by banks’ greed

14 April 2021: Newsroom Opinion article by Building Better researcher Dr Michael Rehm, University of Auckland

The Reserve Bank is laying out its plans to stimulate the economy while reining in housing prices. Sidestepping a debt-to-income limit would amount to a poisoned chalice for first-time buyers as they assume massive mortgages and will be the first to fall into negative equity when house prices inevitably ease.. >> Read More

Keywords – Kupu Hāngai

house prices, economics, quantatative, investment, tax, housing speculation, property investment

Fields of Research – Āpure Rangahau

Economics, Income Tax Act


Date – Te Wā Whakarewa



Type – Te Auaha

Journal paper

Citation – Kupu Hautoa

Rehm, M. & Yang, Y. (2021). Betting on capital gains: housing speculation in Auckland, New Zealand. International Journal of Housing Markets and Analysis, 14, 1, 72-96. DOI: 10.1108/IJHMA-02-2020-0010