Impact on the housing market of a National change

Impact on the housing market of a National change

A change in government to bring significant changes to the players in the housing market drama. There are various aspects where it is obvious to see changes.

Tax Deductibility

The ability to use 100% of the related interest expense, as an expense before calculating tax is to return, on the investment property. The ability only exists for what is deemed a new build currently. Interestingly this will be bought in a staggered fashion similar to how it has been bought in. Meaning 100% deductibility will not return until its time for the next election.

This will mean that the cashflow looks a bit better for those investors holding on to older rental properties. This can mean that less investors may sell down older stock. However the interest rates and then future Debt to Income Ratios, likely to keep prices from screaming ahead.

Overseas buyers

Trading up your home in Auckland might get a bit more expensive if you want a flash school zone and a little bit of land. As properties at the $2m + might have more competition. Expect Auckland and Queenstown to be the main areas where will see the pressure build up.

90 day notice

The return of 90 day no cause eviction notice will likely return in some form. Being able to move tenants on easier can mean that landlords are willing to take a chance on more colorful characters. Although a very small part of the market, unruly tenants have become tricky to move on. Especially where currently a landlord would need proof, often evidence from neighbors who might feel intimidated.

Overall the changes should make it nicer for landlords and may even take some pressure off the rents. Especially for those properties in the lower end of the market, where new houses can mean over capitalisation.

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