Whoever you voted for in the recent election, there’s no denying that it was a pretty good outcome for Jacinda and her Labour Party. And if the same numbers hold up when the Special Votes are counted then we could see the party governing by themselves, a first in the MMP era.
Either way, the results of the election will no doubt have property owners and investors worried. It’s anyone’s guess as to what the government might do during their second term in parliament. However, we can make an educated guess about the future of the property market.
1) The wealth tax is gone
In the last term of her leadership, Jacinda Ardern promised not to introduce a capital gains tax during her tenure. Additionally, many New Zealanders voted for Labour to stop this tax from being actioned. This means that the country should be reasonably safe from the Greens’ wealth tax for the foreseeable future.
2) Have we seen the last of KiwiBuild?
It’s surprising to see that KiwiBuild still exists despite its colossal failure. The government might want to rebrand because it didn’t really live up to the expectations and became an embarrassment. The programme was set to build 100,000 new homes in 10 years in an attempt to ease the housing shortage. However, private developers seem to have done a far better job of offering more affordable housing during the time. KiwiBuild has struggled to gain any momentum and questions now surround its future.
3) Will we see a new focus on social housing?
Kainga Ora has been much more successful with building houses since 2017. While the foundations were laid by the previous government, it has been furthered by the current government. We can safely predict that social housing is probably going to take the spotlight after this election.
4) Will rental laws keep changing?
There were several amendments to the laws around tenancy in the last three years including the new Healthy Homes Act. The Residential Tenancies Act also saw its fair share of changes. Along with this, the Bright-Line test period was also extended to five years. Due to the large number of changes in the last couple of years, the likelihood of major changes coming post-election looks slim.
5) What happens to the mortgage rates?
Mortgage rates have been falling consistently this year and that’s one of the main reasons behind the ridiculous rise in the nationwide housing market. However, experts say that the rates still have some way to go before they come to a stop. The strategy behind this is to encourage New Zealanders to spend in an attempt to get the economy back up and running post COVID.
6) Will ‘Loan to Value’ restrictions return?
There are a lot of factors that are currently making it a favourable environment to buy a house. And one of those is the Reserve Bank lifting restrictions on the ‘Loan to Value’ ratio allowing people to get larger mortgages with smaller deposits. The Reserve Bank had initially stated that they would only lift these restrictions for a year. Although that seems logical, the exponential rise in property prices and sales is probably deterring them from reintroducing the restrictions.