Elections

Impact Pending

In an article published at Landlords.co.nz today, Miriam Bell talks about the pending impact of a NZ First / National coalition. In our opinion the effect of NZ Firsts policies to reduce or remove the LVR restrictions + reduced immigration tied to international investors buying up property will positively impact the Auckland housing market allowing for increased local confidence in buyers and a more stable selling market. It's all guessing at this stage so lets see what Winston does. Full article below.

 

Wednesday 27 September 2017

Uncertainty is set to continue while coalition talks take place but one industry commentator thinks the impact of the election on the property market can be largely predicted.

By Miriam Bell

Property Institute chief executive Ashley Church said that NZ First’s position as “King or Queen maker” mean that its policy positions will feature – whether Winston Peters picks National or Labour as a coalition partner.

“While the coalition talks are all about negotiating positions, Peters will have considerable leverage over both parties. “So there are some bottom lines that we can reasonably expect to find their way into any final agreement.” In Church’s view, these are likely to include some type of ban on residential property sales to foreign buyers; a moratorium on capital gains taxes; increased focus on state involvement in increasing housing supply and the creation of one or more Urban Development Authorities.

Peters’ views on immigration are well known so a reduction in immigration numbers will be on the cards, he said. A reduction in immigration numbers could have an impact on demand pressures in the housing market. Additionally, Peters has said he wants to make radical changes to the Reserve Bank which would appear to involve making currency intervention a major part of the Reserve Bank’s role. It could also involve setting targets around housing and job creation. Church said that all of these policies would have an impact on the housing market – but the effect of some would be much more significant than others. “Reducing immigration inflows and amending the Reserve Bank’s targets, in particular, are likely to have a sustained impact on the market. “What’s less clear is whether that impact will flow through into the broader economy and slow down economic growth”.

While NZ First doesn’t have a formal policy on the Reserve Bank’s LVR restrictions, Church said he thinks they could be relaxed over the next 12 months. “NZ First policy puts a big emphasis on getting young people into their first home – so I’d expect to see the LVRs gone or heavily reduced as part of a suite of policies to achieve that”. In the heat of campaigning both National and Labour indicated that it might be time for the Reserve Bank to consider reviewing the LVRs. However, the Reserve Bank has said it believes that the LVRs are still needed. At the same time, many economists have voiced their view that, given financial stability concerns, the time has not yet come to lift the LVRs.


How will the election effect my investments?

Election time is less than a day away and a lot has changed in the last 6 weeks with it being interesting to see if the ‘personality politics’ that worked so well for National under John Key also work with Jacinda Ardern taking the reigns over a Labour party that until that stage had managed to continue to trip over itself over the best part of the last decade. Under MMP the two major parties will continue to battle for the centre with NZ First and Winston Peters in particular looking increasingly likely to play “Kingmaker” at the moment especially with the withdrawal of Peter Dunne from Ohariu.

It is interesting to note that most of Labours increase has actually come at the expense of the Greens and NZ First however as some of their natural voters may continue to shy away if they feel that either party has any real risk of missing the 5% threshold and thus potentially being a wasted vote.

Often people (including myself at times) tend to continue to vote for a particular party even though they don’t necessarily keep up to date with that or other parties actual updated policies and stances. If you want a quick assessment of where you actually might stand THIS quick quiz is worth taking and is also a bit of fun.

There are many components that need to be looked at when addressing a political parties policies with education and health in particular being of importance but keeping on our general businesses commentary in talking about the property market (including the rental market) and the economy I will focus on these areas.

Firstly click the following for more information on Housing & Rental Policies and for Economic Policies if you want a quick run-down on where individual parties stand.

A summary on how the two major parties are approaching property this election is as follows:

 

National:

 

  • Increase the HomeStart Grant by $10k for those eligible so it is $20k for an existing home and $30k for new builds
  • Develop fit-for purpose urban planning laws separate from the RMA
  • Make it easier for landlords to test properties for meth and evict tenants
  • Make tenants liable for careless damage to a rental property

 

Labour Party:

 

  • Ban foreign purchasers from buying existing homes
  • Extend the Bright Line rule from 2 out to 5 years
  • Stop investors offsetting tax losses against other income sources
  • Build 100,000 affordable homes over 10 years
  • Apprentice policy to take on circa 4,000 young people for on job training in construction fields
  • Remove urban growth boundaries in Auckland
  • Substantially increase number of state houses
  • Implement Healthy Homes Guarantee Bill
  • Abolish 90 day no-clause terminations of tenancies
  • Increase 42 day notice period for landlords from 42 days out to 90 days
  • Limit rental increases to once a year
  • Ban letting fees

 

Again if just looking at this with my property investor hat on National (or ACT) obviously are the best options as Labour have shown that property investors will be worse off under their watch with the extension of the Brightline tax rule from 2 to 5 years (I am personally fine with this) to numerous changes in regards to how tenancies will be handled (some that I am not okay with). The bigger issue is obviously what is already all over the media which was her avoidance to provide more clarity around taxation. We’ve seen the recent poll showing that National had spiked back up and commentary from the NZ Herald including pieces from Richard Prebble who used to himself be a Labour MP (before becoming a leader of ACT) and THIS piece which also shows that it was a large faux pas to not give more detail in regards to the actual intentions that Labour had although belatedly they have now backed off realising that voters want more certainty.

The question from now through to Election Day is whether voters will stay away because of worries around her political naivety shown by her handling of situations like this or whether the initial “stardust” that has seen her rise to become Labour’s leader continues.

Tony Alexander and Matthew Gilligan will be doing a Post-Election Special Webinar on the 26th September immediately after the election to discuss the results.