Election result could inject some energy into the housing market

PHOTO: Auckland, New Zealand. FILE

Following the recent change in government, those involved in Canterbury’s property market are sensing a bit less pressure on the rental market and a potential increase in buyers and sellers, but nothing overly dramatic. According to Andy Freeman, the managing director of Harcourts Grenadier, business has maintained a steady pace in recent months, with a focus on first-time homebuyers and somewhat limited property listings. He believes that the election’s impact on the market will be relatively modest, with the return of some investors and a boost in overall confidence. While there may be a slight uptick in demand leading to modest price increases, Freeman anticipates more of a market “bounce” than a full-fledged boom.

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The housing market in Canterbury has fared well compared to other parts of the country, with prices holding relatively steady. Despite a temporary slowdown during elections, the market has generally remained stable. The average home value in Canterbury currently stands at $733,500, which is 0.2% higher than three months ago but 3.1% lower than a year ago, according to CoreLogic. Rental prices have also seen an increase, with the average rent in Canterbury now at $515, up from $395 three years ago.

The National Party’s proposed changes, such as restoring tax deductibility on interest payments for landlords, lowering the “bright line” threshold for taxing property capital gains, and introducing a foreign buyer tax for properties over $2 million, are expected to have a notable impact. This change is considered a positive development by Nigel Barker, president of the Canterbury Property Investors’ Association, who believes it will benefit both tenants and landlords by reducing the cost of doing business.

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While the election results are in line with expectations, experts like Kelvin Davidson, the chief property economist at CoreLogic, don’t foresee any significant market shifts as a result. Interest rates will continue to play a pivotal role in the property market, with their current stability affecting rental yields and income. While rents may not decrease, they are unlikely to rise as rapidly under the new government’s rules.

Mortgage broker Jeremy Meachem from First Place Mortgages expects to see more investors entering the market due to National’s commitment to restoring interest deductibility. Although this may not have an immediate impact on homebuyers, who have been actively participating in the market for the past six months, it could make homeownership or upgrades more appealing for some as National’s upcoming tax cuts provide extra income to potential buyers.