Predicting election impact
Wednesday 27 September 2017
Property Institute chief executive Ashley Church
Uncertainty is set to continue while coalition talks take place but one industry commentator thinks the impact of the election on the property market can be largely predicted.
By Miriam Bell
Property Institute chief executive Ashley Church said that NZ First’s position as “King or Queen maker” mean that its policy positions will feature – whether Winston Peters picks National or Labour as a coalition partner.
“While the coalition talks are all about negotiating positions, Peters will have considerable leverage over both parties.
“So there are some bottom lines that we can reasonably expect to find their way into any final agreement.”
In Church’s view, these are likely to include some type of ban on residential property sales to foreign buyers; a moratorium on capital gains taxes; increased focus on state involvement in increasing housing supply and the creation of one or more Urban Development Authorities.
Peters’ views on immigration are well known so a reduction in immigration numbers will be on the cards, he said.
A reduction in immigration numbers could have an impact on demand pressures in the housing market.
Additionally, Peters has said he wants to make radical changes to the Reserve Bank which would appear to involve making currency intervention a major part of the Reserve Bank’s role.
It could also involve setting targets around housing and job creation.
Church said that all of these policies would have an impact on the housing market – but the effect of some would be much more significant than others.
“Reducing immigration inflows and amending the Reserve Bank’s targets, in particular, are likely to have a sustained impact on the market.
“What’s less clear is whether that impact will flow through into the broader economy and slow down economic growth”.
While NZ First doesn’t have a formal policy on the Reserve Bank’s LVR restrictions, Church said he thinks they could be relaxed over the next 12 months.
“NZ First policy puts a big emphasis on getting young people into their first home – so I’d expect to see the LVRs gone or heavily reduced as part of a suite of policies to achieve that”.
In the heat of campaigning both National and Labour indicated that it might be time for the Reserve Bank to consider reviewing the LVRs.
However, the Reserve Bank has said it believes that the LVRs are still needed.
At the same time, many economists have voiced their view that, given financial stability concerns, the time has not yet come to lift the LVRs.
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