Phil Mackay
We (finally) have a new government, and with an ambitious programme of work they have quite a number of policies that are likely to affect the housing market, construction industry and the built environment.
Firstly, there are several noteworthy policies relating to property investment.
- The reintroduction of mortgage interest deductability.
- Landlords to be able to give 90 days notice of eviction, without stating a cause.
- Likely reduction of the brightline test from 10 years to two years.
These each make property investment more attractive and are likely to result in more investors entering or staying in the market. This in turn is likely to give more momentum to property prices, which are already on the way up again.
In a nutshell – good news if you own property, great news if you’re a landlord, not so great if you’re a first home buyer.
On the flip side, the coalition’s 100 day plan says they will “Begin work to enable more houses to be built, by implementing the Going for Housing Growth policy and making the Medium Density Residential Standards optional for councils.” In theory this policy could help to moderate housing prices, though probably in the medium, rather than short term.
One of the key components of the Going for Housing Growth policy is “unlocking land for housing.” Councils in major towns and cities will be required to zone land for 30 years’ worth of housing demand immediately. Along with some new tools for infrastructure funding, this has potential to increase the supply, and decrease or at least control the cost of new housing in the medium term.
Depending on your views on suburban sprawl and the use of productive land for housing, this may or may not be a positive change. Probably great news if you work in land development or civil construction though.
Finally, the coalition parties have talked quite a bit about improving housing affordability by reducing red tape.
The coalition has said that they will repeal the Natural and Built Environment Act 2023 and the Spatial Planning Act 2023, and replace the Resource Management Act 1991 with new resource management laws premised on the enjoyment of property rights as a guiding principle.
In theory this could also help to reduce costs and make housing more affordable. I’ll reserve judgement for now, governments have been talking about reforming the RMA for quite some time, but the devil’s in the detail.
Between these and other proposed policies, the current economic environment, and interest rates, no one can predict with any accuracy what the impact will be on our housing and construction markets over the next year or two. I’m sure the Reserve Bank, like many others, will be watching with great interest.
