Research 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 existing trends, unless there are significant government property-related policies in the limelight.

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 in the residential sector.

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.

DIVERGENCE

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 Prime Minister Chris Hipkins in the coming months, providing more clarity. Current indications highlight some tweaks to the status quo.

CGT DEBATE

An ongoing area of contention is CGT, but Hipkins clarified 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 is re-elected. Inevitably, clarification on CGT will be needed to quell 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 bright-line test.