People currently selling and buying their home are unlikely to be affected by any uncertainty from the September election - but some investors could be, according to new real estate research.
Traditionally regarded as a handbrake on house sales while vendors "wait and see" what happens, elections' effect on the New Zealand housing market has been overstated, says Bayleys research manager, Ian Little.
Bayley's Will The Election Impact The Residential Property Market insightsreport (www.bayleys.co.nz/electionimpact), analyses residential sales data from the Real Estate Institute of New Zealand (REINZ) - and shows sales in the quarter leading into an election do not exhibit the scale of slowdown widely believed to occur.
In the five elections held since 2000 (2002, 2005, 2008, 2011 and 2014), Little says the data shows little variance between sales in the election quarter compared to the pre-election quarter.
Only two elections (2008, by 0.3 per cent and 2014, by 3.1 per cent) saw sales slow from the pre-election quarter while 2002 and 2005 showed slight increases; 2011 saw a rise of 7.1 per cent.
"Sales volumes have fallen between 20-30 per cent over recent months, well before the pre-election quarter - so it is challenging to decouple general market trends with any impact this year's election will have.
"However, there is no reason for a vendor to delay listing or to think buyers are not actively looking in the next couple of months before the election - especially in the case of a property likely to be purchased by an owner-occupier," says Little.
Bayleys' analysis indicates the majority of buyers choosing to "wait and see" during election time are property investors, more likely to be impacted by changes in government policy.
Owner-occupiers tend to enter the market when driven by changes in personal circumstances, such as marriage, divorce, having a family, changing jobs, retiring and the like.
"On the other hand, if the purchaser is more likely to be an investor, delaying the release of a property to market until immediately after the election result is known may prove to be a more successful strategy."
"Market trends over the last five elections show investors are less likely to be influenced by an upcoming election if the housing policies of the major parties are similar," says Little. "However, should there be a divergence of policy, the incentive to delay purchase decisions increases."
Investors therefore may still hesitate to put a property on the market until immediately after the election because of political proposals which will alter tax obligations for investors if enacted.
However, Little says this sector of the market has already been reduced and will probably not be affected much more by the election outcome - unless current Reserve Bank regulations and banking lending conditions change.
"History is the best barometer for what to expect over the coming months," he says. "For investors, as in the 2014 election, there is a divergence in policies between the two major parties which will again see them pause for thought."
While Labour has not so far suggested a capital gains tax this year, it is advocating extension of the current "bright line test" from two years to five - meaning investors would pay tax on any capital gain arising from the sale of an investment property within five years of purchasing it.
Labour's tax policy includes proposals to close what it describes as a loophole allowing investors to write off losses made on their rental properties against other sources of income. Labour also wishes to restrict foreign speculators from buying existing homes.
National Party policy will likely be viewed as less onerous by the investment sector, Little says, so a lift in activity could be expected - although tighter lending restrictions will continue to moderate sales activity even if National and its partners again form the government.
The Bayleys research also showed that in all elections since 2000 - except for 2005 - the market has seen a significant spike in activity post-election, with 2008 (26.3 per cent) showing the biggest increase in sales over the election quarter, just ahead of 2014, with 23.6 per cent. Little says the 2008 election prefaced a 2009 rebound from the global financial crisis.
In 2014, once the government was formed and the housing policies were understood, investment activity increased substantially: "We saw a rise in investor lending from $1.2 billion to $1.7bn between August and December 2014," says Little.
Reserve Bank data shows the share of investor lending has gone from 35 per cent to 24 per cent over the past year - a reduction from $2.5bn in May 2016 to $1.2bn in June 2017. This suggests the pool of investors will already be lower in the lead-up to this election than in the past.
For more information: www.bayleys.co.nz/electionimpact.