In the world of politics, few events can rival the excitement and anticipation generated by a change of government.
Over the weekend, New Zealand experienced a transformative moment as National took the reins from Labour. This political shift has left many Kiwis wondering how it will impact their lives moving forward.
One of the most immediate concerns that’s likely crossed your mind is the impact on the housing market. New Zealand, like many nations, has been grappling with a housing crisis in recent years. The government plays a pivotal role in shaping housing policy, and its decisions can significantly influence the real estate market. So, what can we expect now that National is in power?
In this blog, we dive into the potential implications of the shift in government from Labour to National. We’ll explore the potential impact on house prices and interest rates, and what these changes might mean for investors and first home buyers.
Please note that the insights and analysis provided are based on predictions and interpretations of suggested policies by the new government. As mortgage advisers, we aim to offer informed perspectives, however, it’s crucial to remember that these are speculative assessments and do not guarantee specific outcomes. We will have to wait and see what policies are enacted and their impacts over the course of the next few years.
House prices and interest rates
Post election often brings a boost to the housing market regardless of the colour of the party in power. Many buyers and sellers choose to wait until after the election as there is a perception of more certainty. This surge in interest can drive prices upwards. However, it’s unlikely this would be to levels seen in 2020/2021, post Covid-19.
Rate rises are still largely driven by inflation in New Zealand. National have campaigned on getting the economy ‘back on track’ and bringing inflation back down within the target range. While it’s easy to talk about this, actually making it happen could prove challenging. This could result in further interest rate pain in 2024 as the fight against inflation continues.
So what does this mean for first home buyers, and investors?
National’s promise to unwind the Credit Contracts and Consumer Finance Act (CCCFA), restore 100% interest deductibility on rental properties and roll back the bright-line test from ten years to two years will be a big boost to investors of all kinds. This should see them re-enter the market after a few quiet years. These policy changes, if followed through, should assist with easing the housing crisis as more rental properties are made available, either by purchasing existing homes or developing new dwellings.
First home buyers could also see benefits come from the change in bright-line test. The change in timeframe may mean some investors will look to sell their properties sooner than they otherwise would have. This change may bring more properties to market that are suitable for first home buyers.
Kainga Ora, unfortunately, put a stop to the first home partner scheme earlier this month after unprecedented demand. There is concern that this is unlikely to come back given cost cutting measures by our new government. We hope that the existing first home loan scheme won’t be impacted as this would be a huge blow to prospective first home buyers.
As we navigate this dynamic landscape, it’s essential to stay informed and understand the potential impacts on our future. It will be interesting to see what comes in the following years. Watch this space….
For further insight and reading, please see some helpful links below:
NZA – What does the industry think of National’s Win?
One Roof – What this means for house prices
While we’re home loan experts, our blog posts are for general information purposes only and are not intended as financial advice. If at any stage you need personalised advice, get in touch on 06 8788 4444 or contact Ben or Mark.
