How National plans to reform the property and mortgage markets

With the election now in the rearview mirror, attention has turned to how the incoming Christopher Luxon-led government will impact the property and home loans markets.

In National's pre-election manifesto, the party promised voters it would:

• Restore full mortgage interest deductibility for property investors, from 50% in 2023-24 and 2024-25 to 75% in 2025-26 and 100% in 2026-27.
• Take the bright-line test back to two years, from its current five or ten.
• Simplify planning rules and make resource consents for houses cheaper and faster.
• Increase competition in the building materials market.
• Unlock land for housing, intensify transport corridors and build infrastructure.
• Support the community housing sector to grow and provide more accommodation.

National said this package of measures would “incentivise landlords into the market”, “get more houses built” and lead to a “supercharging” of social housing.

Ahead of the election, CoreLogic Chief Economist Kelvin Davidson said the reforms would encourage more people to buy investment properties but not significantly move the market.

“While a National-led government may result in house prices rising more than otherwise might have been the case, the impact might be relatively muted. For example, the potential phased reinstatement of mortgage interest deductibility would tend to add some demand to the market. But a smaller tax bill wouldn’t change the fact that rental yields are still low and mortgage rates high, requiring a new property investor to put a significant cash top-up into the property to keep it going. Accordingly, a flood of new investors doesn’t seem particularly likely to me,” he said.

National also promised it would partially repeal the ban on non-citizens buying local real estate, by giving them the opportunity to buy properties valued above $2 million if they paid a 15% buyer tax.

Mr Davidson predicted this would have minimal impact on the market, given that just 3% of properties were valued above $2 million.

Will there be a post-election bounce?

People often put major financial decisions on hold ahead of an election, as they wait to see how things will play out. Once the election is out of the way and people have more certainty, they tend to be more willing to take action.

It wouldn’t be surprising if the same thing happened now, and we saw a spike in property buying and home loans activity.

If you’d like to purchase a property or refinance an existing loan before the end of the year, it’s not too late. Contact me today to begin the process.