PHOTO: National Party leader Christopher Luxon and wife Amanda. DAVID WHITE / STUFF
Property investors celebrated on Saturday night as National and ACT appeared poised to seize power and establish the next government.
Both parties have outlined policies that favor property investors more than the previous Labour Government. They intend to reverse certain controversial changes, such as reinstating investors’ ability to claim home loan interest as a tax-deductible expense and adjusting the bright-line test’s timeframe for avoiding capital gains tax.
National has also committed to permitting foreign buyers into the property market for properties valued at over $2 million, with associated taxes.
Steve Goodey, a property investor and coach, expressed his delight, stating, “I am a very happy camper.” While emphasizing that the election wasn’t solely about property issues, he acknowledged that the country’s direction under Labour had been unpopular due to COVID-19. This election outcome reflects a desire for improvement.
He mentioned that the real estate market was already showing signs of improvement, and the new government would further boost it. With a stable government in place and the upcoming holiday season, a sense of “all is right in the world” is returning, and the policies that had previously demonized investors may be reversed, fostering a more favorable environment.
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Goodey noted that the majority of his 50,000 Facebook followers were primarily concerned about the interest deductibility issue, with both National and ACT vowing to address it. He anticipated that this election result would encourage investors who had held back on adjusting property prices to be more optimistic about the market’s future.
In his view, it appeared that the “entire property market” had cast their votes for National or ACT.
Another investor and coach, Michael Burge, described the election outcome as “massive.” He had contemplated a different financial strategy depending on the election result, with a National and ACT win prompting him to consider purchasing more properties. Investors had felt unfairly targeted under the previous government, and this change was met with widespread satisfaction within the real estate industry.
Kelvin Davidson, Chief Property Economist at Corelogic, predicted that National’s policies might lead to higher house prices but cautioned that this might not significantly alter affordability challenges, high mortgage rates, or potential debt-to-income ratios in the coming year. He emphasized that the effects of interest deductibility changes would be phased over time.
Gareth Kiernan, Chief Forecaster at Infometrics, acknowledged that a new government could boost house prices but noted that affordability pressures and high interest rates would limit the extent of the increase. He suggested a potential 5% to 10% price rise but found it difficult to envision a more substantial increase.
Brad Olsen, Chief Executive at Infometrics, highlighted the significant influence of interest rates on house prices, asserting that they outweighed the impact of government policies.
SOURCE: STUFF