Property Investors to Thrive As NZ’s Real Estate Market Gears Up For Post-Election Resurgence
With real estate markets already improving across New Zealand, property investors stand to be the big winners after the recent New Election result.
The National and ACT parties appeared poised to secure a majority which is good news for landlords as both have pledged policies favouring property investors more than the outgoing Labour Government.
They intend to unwind certain contentious measures, including the elimination of the ability for investors to deduct home loan interest as a tax-deductible expense and an extension of the bright-line test, which governs the duration of property ownership required to avoid capital gains tax.
Furthermore, National has committed to permitting foreign buyers to enter the property market for homes valued at over $2 million, subject to a tax.
The transition in government may potentially yield some respectable capital growth after a challenging couple of years for the real estate market in New Zealand. In a media report, Gareth Kiernan, the chief forecaster at Infometrics, pointed out that a new government might provide a modest uptick in house prices, albeit constrained by affordability concerns and the limitations posed by elevated interest rates.
In the wake of the election result, Gareth suggested that it's plausible for prices to increase by 5% or even 10%, but it's challenging to envision a more substantial rise.
According to Keith Niederer, General Manager, NZ, Raine & Horne, many property owners are now feeling a sense of relief as the election is in the past, allowing them to focus on their real estate goals.
“The incoming government's intentions to alleviate certain tax disincentives will likely persuade more investors to reconsider real estate investments, while homeowners will be encouraged by this positive news and will start to proceed with their plans to list their properties,” Keith said.
“Consequently, we anticipate that the traditional spring selling season will extend up until Christmas and maybe into the new year as buyers and sellers get their skates on.”