Westpac New Zealand Economic and Sustainability Strategy Update
The New Zealand housing market
The Government has announced a suite of new housing market policies affecting both
demand and supply
New Zealand dwelling prices by region
Index = 1000 in 2007
Index = 1000 in 2007
2400
•
The most significant changes relate to the tax treatment of mortgage interest costs
2700
This will diminish the financial incentives for property investors and tilt housing market
conditions more in favour of owner occupiers
2500
Auckland
2300
2100
-Canterbury
Westpac expects these policy changes will prompt a flattening-off of house prices over
the remainder of 2021. That follows a period of very strong growth since the economy
exited lockdown
1900
- Wellington
1700
1500
Other regions
The major changes introduced by the Government include:
Removing the ability to offset mortgage costs on residential investment properties
against the income earned on those properties
This change will take effect from 1 October 2021 for properties purchased after 27
March 2021 and will be gradually phased in over the next four years for existing
property owners
The Government is also looking at exceptions for new builds
Source: REINZ, Westpac
1300
1100
900
2007
1900
1400
900
2009
2011
2013
2015
2017
2019
2021
House price level forecasts
Index
4000
3500
Index
4000
Current forecast
3500
The holding period for taxing capital gains on residential investment properties
(otherwise known as the 'Bright-line test') has been extended from 5 to 10 years
3000
Forecast from February 2021
3000
2500
Westpac
2500
forecasts
The holding period remains at 5 years for investors who buy new builds
2000
2000
A $3.8bn Housing Acceleration Fund is being established to assist with the development
of infrastructure (such as pipes and roads) to support new housing
1500
1500
Additional financial assistance for first home buyers with changes in First Home Loans
and Grants settings, including increases in income caps, as well as changes to regional
price caps
1000
500
1000
500
2010
2012
2014
2016
2018
2020
2022
2024
2026
Source: CoreLogic, Westpac
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