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Election Promises, Prices, and Young Buyers

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Election Promises, Prices, and Young Buyers

The Auckland property market is buzzing with activity, driven by various factors including election promises, changing property prices, and an influx of young buyers. Here’s a summary of two recent opinion articles from Kelvin Davidson, Chief Economist at CoreLogic, and independent economist, Tony Alexander. We’ll take a closer look at recent developments and their impact on the real estate scene.


Election Promises and House Prices

The National Party has unveiled a set of election promises that could influence the property market. These promises include shortening the Brightline Test from ten years to just two from July 2024, reinstating full mortgage interest deductibility for all properties (phased in by 2026/27), and allowing foreign buyers for properties sold at $2 million or more with a 15% tax.

The impact of these promises on house prices is a topic of discussion. While these changes are expected to add some impetus to house prices, the overall effect may be modest. Shortening the Brightline Test may attract foreign buyers, but the actual number of buyers targeting New Zealand remains uncertain. Additionally, it could prompt some investors to sell properties to avoid capital gains tax.


Prices Rising and Falling

The CoreLogic House Price Index for August reported a modest drop of 0.2% in national average property values. However, regions like Auckland’s North Shore and Manukau areas saw increases, along with Upper Hutt, Wellington City, and Christchurch. Other areas, such as Gisborne, Whanganui, and Nelson, continued to experience price drops due to affordability challenges and high mortgage rates.

While the national average shows a decline, it’s important to note that the overall downturn in the market may be coming to an end. Still, the recovery could be slow and drawn out, especially if debt-to-income ratio caps are implemented in 2024.


Rising Employment

Stats NZ reported a 0.3% rise in filled jobs in July, marking the 15th consecutive monthly increase. This has kept the unemployment rate low and supported the property market. However, a strong job market could keep interest rates higher for longer, potentially affecting those with large mortgages.


Recession Uncertainty

The NZ Activity Index for July showed a 0.4% increase from the previous year, raising the possibility of some GDP growth in the third quarter of the year. While this is encouraging, concerns linger, such as Chinese economic weakness and lower dairy price expectations. The consensus remains that a modest double-dip recession could occur in the latter part of 2023, which may impact the official cash rate and mortgage rates.


Changing Mortgage Trends

Mortgage lending trends are evolving, with more people opting for longer-term fixed rates. However, longer fixed terms may carry the risk of overpaying if market rates drop towards the end of the term.


The Young Buyer Surge

A significant shift is happening in the property market, with young buyers taking center stage. The survey of real estate agents indicates a substantial increase in young buyers, surpassing the number of investors.

Several factors are motivating these young buyers:

  • A larger inventory of properties available for sale.
  • Accumulated deposits due to strong wage growth and job security.
  • Lower house prices compared to late 2021, despite rising rents.
  • Preference for existing properties over new builds due to construction-related challenges.
  • Easier access to credit following rule adjustments.
  • Growing awareness of potential changes in investor interest expense deductibility and increased foreign demand.


The Auckland property market is experiencing a dynamic shift influenced by election promises, changing prices, employment trends, and the active participation of young buyers. The market’s recovery may be gradual, but it’s characterised by optimism and opportunities for both buyers and sellers.