Investor Presentaiton

New Zealand housing market. Major policy shift. Changes to housing market policies The Government has announced a suite of new housing market policies affecting both demand and supply Economics New Zealand dwelling prices (index, Jan 2007 = 1000) Index 2500 Index Auckland 2500 The most significant changes relate to the tax treatment of mortgage interest costs This will erode the financial incentives for property investors and tilt housing market conditions more in favour of owner occupiers -Canterbury 2100 Wellington 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. Other regions 1700 1300 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 900 2007 2009 2100 1700 1300 900 2011 2013 2015 2017 2019 2021 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 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 The holding period remains at 5 years for investors who buy new builds 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 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 Sources: REINZ, Westpac Economics. Dwelling prices % change over period Region Pop'n Last 3 mths (to Mar-21) Last 12 mths Last 5 years (Mar-21) (to Mar-21) Auckland 1.7m Up 7.1% Up 22.5% Up 39.2% Wellington 0.5m Up 9.5% Up 31.2% Up 104.7% Canterbury 0.6m Up 7.7% Up 20.3% Up 30.1% Nationwide 5.1m Up 8.5% Up 24.0% Up 58.6% 107 Westpac Group 2021 Interim Results Presentation & Investor Discussion Pack Sources:REINZ, Stats NZ. Westpac GROUP

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