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We examine how the election will effect Housing Affordability

We cover the party policies and possible outcomes

With the election less than a week away I thought it would be
a good idea to cover off some of the housing policies of the different
political parties so that you could see what effect each might have on Interest Rates and also how affordable homes may be with different incentives.

Below is a brief summary.  Further detail on policies are available on the websites of the particular parties.  Overall there seems to be a move toward building more houses and helping make purchasing easier for first time buyers.


For the most part we will see the status quo if National are re-elected.  They have been steadfast in their policy to not interfere with the Reserve Bank policies and the Official Cash Rate.  Although they have made some changes to make land more available and encourage new development as you would expect from a party with a business growth agenda.

However, their most recent policy update over the weekend promises to increase the subsidy available to first home buyers.  This does come with some conditions though as the "Homestart Grant" of up to $10K per person would only be available on the conditions below
  • Only available to low and middle income earners
  • Must be for brand new house
  • Must have been in Kiwisaver for 5 years to receive full $10K


Labour have three major policies which would impact on our market.

Capital Gains Tax - If a capital gains tax was imposed under a Labour Government it would only effect properties other than people's own homes. This would not have a major affect on the property market itself, or interest rates for that matter. As most properties in NZ are owner occupied. However the long term effect would be less development of rental properties which could potentially increase rents.  There is another thought that the CGT could drive values down but with so much of the growth in property driven by foreign investment, we may not see this.

State houses - Labour wants to build over 10,000 state homes over 3 years. This would see a massive reduction in some lower end rental properties. Potentially meaning the lower end of the market could see an effect on house prices in the short term. Also with the demand for contractors and increase in building regulation this would likely see the cost of building privately increase.

Interference with the Reserve Bank - Labour have stated on a number of occasions that they would step in to change interest rates or housing policy if they didn't feel the Reserve Bank were doing an acceptable job. Whether this is just politics or whether they would actually act remains to be seen. The effects of the central government trying to influence these areas could be seen further afield then just with interest rates.

Green Party

The Greens developed part of their policy in conjunction with Labour so expect to see the State Housing developments supported. However The Green's idea of capital gains tax is frightening for almost every home owner.The main policy for the Green Party will be supporting low income earners in to home ownership. They have proposed a scheme where the Government will purchase houses and give low interest loans to low income earners. The most concerning part of the Green's policy is their capital gains tax. Although they haven't committed in writing to the full extent of this, their leader, Materia have been quoted as saying "There will be a redistribution of Wealth from property owners, to all New Zealanders".

Their policy on their website is not specific but there is mention of capping rents relative to people's income and to setting land prices in certain areas.

New Zealand First

New Zealand First are promoting a programme where small and inexpensive sections would be made available to first time buyers. Along with a Home Loan programme backed by the government for up to 25 years. Whether this policy could be implemented given the party's lack of influence remains to be seen.The other policy of note with NZ first is the restriction of foreign ownership of land in NZ. This could see an effect on property prices, especially in Auckland where the market is driven by strong investment from overseas.


Act's policies focus on freeing up more land and cutting red tape to reduce construction costs. Once again they could be effected by their ability to sway the policies of other parties but these polices could have a positive effect for the average Kiwi.

Act want to see more sections made available, especially in the main centres. They would enforce changes to subdivision rules so that more and smaller sections could be subdivided. The increase in availability of housing could drive further growth through infill housing.

Their desire to cut red tape could see a reduction in building costs.The housing policies for the other parties lack substance and they would likely struggle to influence the larger parties with their policies when negotiating a coalition.  

However you may wish to visit their own websites to make your mind up on that matter.

If you'd like to discuss your position to buy after the election then feel free to get in touch any time.

Adam and the My Mortgage team


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