tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Saturday, December 7th, 8:03AM

News

rss
Latest Headlines

Will Election 2023 have an impact on property market activity?

Research undertaken by Colliers International on residential and commercial property market sales activity immediately before and after the past seven elections highlights they rarely disrupt the property market from its existing trends, unless there are significant government property-related policies in the limelight.

Wednesday, February 8th 2023, 10:00AM

by Sally Lindsay

Given the current differing policies and views between the major parties, and the recent resignation of the Prime Minister creating policy uncertainty, there is potential for this year’s October election to have a rare influence on property market sales activity, but mostly for the residential sector.

Residential

In six of the seven election campaigns since 2000, there has been little influence on sales activity. However, the one exception was the 2014 election, when Labour promoted a capital gains tax (CGT) and restrictions on the ability of foreigners to buy residential property.

These policies contrasted with National’s, which were viewed as supporting the status quo. This divergence saw a slowing of sales before the election date and a surge following it when a National-led government removed the uncertainty in outcomes.
Market dynamics during other campaigns post-2000 have been influenced more significantly by regulatory, economic, financial, and demographic drivers such as changes to economic activity, lockdowns, LVRs, interest rates, access to finance, migration, and the availability of housing.

When assessing the existing housing related policies of Labour and National there are some similarities, but also divergence, predominantly on social and emergency housing initiatives and tax-related issues such as the extension to the bright-line test, and the removal of interest deductibility for landlords introduced by the Labour Government.

The RMA reform process, and infrastructure and funding programmes are also areas of divergence between the two parties influencing residential property markets.

What also impacts residential market activity is uncertainty. The change in Prime Minister nine months out from the election adds some uncertainty into the mix of policies that could impact the sector.

More announcements on policies will be released under the new Prime Minister Chris Hipkins in the coming months providing more clarity. However, current indications highlight some tweaks to the status quo.

An ongoing area of contention is CGT, but Hipkins clarified that he would be honouring the commitments that have been made for this term of parliament. Therefore, no changes are expected to be made in this area until mid-October.

However, no indication was provided on what a future term may hold if Labour were to be re-elected. Inevitably, clarification on CGT will be needed to quell any market concerns.

In the interim, investors may choose to hold back until the stance is confirmed, as well as the election result.

National has already said it will restore the ability of investors to offset mortgage interest payments against rental income and shorten the Brightline test.

Commercial

Analysis of commercial and industrial property sales activity and elections since 2000 shows little divergence in buying trends when analysed against election campaign periods.

This is potentially a result of the sector being less influenced by policy outcomes than the residential sector. However, there is an exception, which occurred following the 2020 election.

When analysing sentiment rather than activity, commercial property investors indicate there is some influence on the market from elections.

Colliers’ commercial and industrial property investor confidence survey results surrounding the 2011 election showed an increase from a net positive 4.4% (optimists minus pessimists) in the December quarter of 2011 to 15.6% in the March quarter of 2012.

Following the 2014 election, the September quarter figure of a net positive 25.1% increased to a net positive 30.6% in the December quarter.

In 2020, the election quarter result was 7.4%, which increased to 22.9% and 37.7% in the two following quarters.

This indicates commercial and industrial investor sentiment is affected slightly before elections more so than activity, but investors are quick to resume their pre-election activity levels soon after.

It also highlights the importance of economic and financial stability and low interest rates.

By way of example, the rise in 2021 sentiment and sales activity was a result of the record low OCR rate of 25 basis points and other quantitative easing measures in play at the time rather than the election. By March 2022 when interest rates were being hiked, investor sentiment declined to a net positive 5.4%.

Therefore, rather than any current election policies influencing commercial and industrial sector sales activity in the second half of 2023 and the first half of 2024, it will likely be short-term economic and financial disruption caused by high inflation, increasing interest rates, and a Reserve Bank preferring to engineer a recession this year rather than a soft landing.

Tags: property investment

« Slow 2023 start to residential marketConstruction costs rise expected in wake of floods »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
  • Advisors must take note of supervisor guidelines on AML/CFT
    “When I read this, the following memory plucked a note. Venue was a US financial planning conference maybe 30 years ago. Speaker...”
    1 day ago by Murray Weatherston
  • Partners kills its matrix
    “@Backstage, thanks. I agree there is no relationship to CoFI, though, from a service perspective, I have two other providers...”
    4 days ago by JPHale
  • Partners kills its matrix
    “Partners Life has decided to stop using its COM for advisers as it believes the system may breach the CoFI regulations which...”
    4 days ago by Amused
  • Partners kills its matrix
    “Insurance companies should stick to their lane. They are not advisers and even those that employ advisers should not be crossing...”
    4 days ago by Tash
  • [GRTV] The nitty gritty of Smart’s ETFs
    “Advisors should consider all gateways into investment markets including cheaply priced ETFs to provide access to low priced...”
    5 days ago by Pragmatic
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News
Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 4.94 - - -
AIA - Go Home Loans 7.49 ▼5.79 ▼5.49 ▼5.59
ANZ 7.39 6.39 6.19 6.19
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 5.79 5.59 5.59
ASB Bank 7.39 ▼5.79 ▼5.49 ▼5.59
ASB Better Homes Top Up - - - 1.00
Avanti Finance ▼7.90 - - -
Basecorp Finance ▼8.35 - - -
BNZ - Classic - 5.99 5.69 5.69
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One 7.54 - - -
BNZ - Rapid Repay 7.54 - - -
BNZ - Std 7.44 ▼5.79 ▼5.59 5.69
BNZ - TotalMoney 7.54 - - -
CFML 321 Loans 6.20 - - -
CFML Home Loans 6.45 - - -
CFML Prime Loans 8.25 - - -
CFML Standard Loans 9.20 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 5.69 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 6.95 5.79 5.59 5.69
Co-operative Bank - Standard 6.95 6.29 6.09 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - ▼5.99 ▼5.89 -
First Credit Union Standard ▼7.69 ▼6.69 ▼6.39 -
Heartland Bank - Online 6.99 ▼5.49 ▼5.39 ▼5.45
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.60 6.65 6.40 -
ICBC 7.49 ▼5.79 ▼5.59 5.59
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 7.25 6.89 6.59 6.49
Kiwibank - Offset 7.25 - - -
Kiwibank Special 7.25 5.99 5.69 5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 7.94 ▼5.75 ▼5.99 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 7.49 6.95 6.29 6.29
SBS Bank Special - 6.15 5.69 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 4.94 5.15 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.75 - - -
TSB Bank 8.19 6.49 ▼6.39 ▼6.39
TSB Special ▲8.64 ▲6.74 ▲6.49 ▲6.39
Unity 7.64 ▼5.79 ▼5.55 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society ▼7.70 ▼5.95 ▼5.75 -
Westpac 7.39 6.39 6.09 6.19
Westpac Choices Everyday 7.49 - - -
Westpac Offset 7.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 5.79 5.49 5.59
Median 7.54 5.99 5.89 5.69

Last updated: 6 December 2024 9:11am

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com