Post Election – What comes next in New Zealand?

Post Election – What comes next in New Zealand?

In the wake of New Zealand’s recent election results, the nation stands at a critical juncture, its housing market poised on the edge of change.

As the real estate industry closely watches the political landscape, the potential impact of the newly elected government on the property market looms large. Experts and economists alike offer their insights, painting a complex picture of what lies ahead for investors, renters, and aspiring homeowners.

The recent electoral victory of the National Party in New Zealand has sent ripples through the real estate sector. With pledges to overturn the foreign buyer ban for properties exceeding $2 million and to restore interest deductibility for investment properties, the party’s policies are expected to shape the future of the housing market. However, experts agree that these changes won’t yield immediate effects, with a gestation period of six to nine months predicted before the policies take tangible effect.

WHITEFOX Realestate

A Shift in Intentions: Psychological Impact on Buyers

Wayne Shum, a senior research analyst at Valocity, emphasizes the psychological impact of the change in government. He points out that the shift in policies alters people’s intentions, prompting them to prepare for future investments. Prospective buyers are likely to adjust their financial strategies, anticipating the upcoming alterations in the housing market landscape.

Renters Caught in the Crossfire

Nerida Conisbee, the chief economist at Ray White, highlights the challenges faced by renters amidst policy changes. Conisbee argues that making it harder for investors affects the supply of rental properties, adding pressure to an already strained rental market. She acknowledges the potential struggle for first-home buyers but stresses the importance of increasing housing supply to mitigate the conflict between investors and aspiring homeowners.

Moderate Impact on House Prices

Kelvin Davidson, the chief economist at CoreLogic NZ, provides a balanced perspective on the situation. He expects a moderate increase in house prices under the National Party’s policies. Despite the adjustments to the bright-line test and interest deductibility, he believes the impact on investors might not be revolutionary. High mortgage rates and low rental yields continue to pose challenges, suggesting that the market dynamics might not experience a drastic transformation.

The line on the bright-line

National Party finance spokesperson Nicola Willis told the public pre-election that the party would also bring the bright-line test back to two years. “Our plan will change the bright line test from 1 July 2024, meaning anyone who bought a property before 1 July 2022 will no longer be subject to the bright-line test under National.” Should this policy change it may entice more renovators and investors back into the market.

Global Factors at Play

Economist Shamubeel Eaqub emphasizes the broader economic context in which these changes unfold. He points out that New Zealand’s economic landscape is influenced by global factors such as synchronized global inflation and decisions made by the Reserve Bank. Eaqub suggests that the new government must contend with these global economic trends, which significantly impact the nation’s cost of living and interest rates.

A Mixed Economic Bag

Additionally, the incoming government inherits an economy described as a “mixed bag” by Eaqub. While facing challenges such as low consumer and business confidence, the country benefits from a relatively low unemployment rate and a growing number of businesses. With an eye on addressing these complexities, the government will need to navigate a delicate balance between implementing new policies and maintaining economic stability.

WHITEFOX Realestate

In conclusion, the impact of the recent election on New Zealand’s property market is multifaceted and intricate. While policy changes are on the horizon, their immediate effects might be tempered by global economic forces and the nuanced nature of the real estate sector. As the nation moves forward, adaptability and a holistic understanding of these factors will be crucial for both the government and the real estate industry to foster a stable and sustainable housing market for all.