According to Radio New Zealand News, the Government has rejected a renewed call for a capital gains tax in the wake of new data showing that buying a home in New Zealand is less affordable than in most countries.

Following the release of the fifth annual Demographia survey (see yesterday's news item New Zealand homes "severely unaffordable"), Manufacturers and Exporters Association chief executive John Walley said imposing a capital gains tax on investment properties would encourage more investors into the productive sector and make housing cheaper.

Housing Minister, Phil Heatley, said the Government has no intention of introducing a capital gains tax.

Mr Heatley told Morning Report that such a tax would be totally inappropriate, as it would hit 'Mum and Dad' investors who form the majority of property investors, and have bought one or two properties to help finance their retirement.

The survey's co-author, retired Christchurch property developer Hugh Pavletich, said a capital gains tax would not address the underlying cause of the affordability problem.

He said the focus should be on overcoming a shortage of land for development and improving financing for infrastructure.