Nobody will deny that Jacinda Arden's appointment as leader of the Labour party has shaken up the 2017 New Zealand election. National may not have the landslide foreseen just last week. There's no telling how the next seven weeks will play out – international experiences of Brexit and Trump have taught us that nothing in politics is predictable anymore.
It remains unclear what New Zealand under a Jacinda Ardern administration would look like, though it seems likely she'll toe the party line. In terms of the property market, what could this mean?
A promise of more affordable homes
Labour believes National's current affordable housing plans to be “woefully inadequate”. National's current plan of tearing down 8300 run-down houses in Auckland and replacing them with 34,000 new homes, for example, isn't seen as good enough: Labour promises to build 100,000 new homes across the nation, 50 per cent of them in Auckland. It's not obvious how the economics of this are possible or whether Labour could actually deliver.
A capital gains tax
New Zealand remains one of the only countries in the Western world without a capital gains tax on a person's primary house. Even though Labour has not yet expressed desire to introduce one, it would seem to be a likely option that would appease the party's voter base. The goal of capital gains tax would be not just to warn off property investment (National's tax for speculators was introduced in 2015), but to significantly cool the market. This would see a dramatic drop of quality homes for sale as only those who need to sell, would sell.
A screening process and more selling restrictions
Currently, a new homeowner who has used Kiwisaver funds must say they'll stay in their property for two years, though this is not policed. Labour would likely introduce a screening process for first-home buyers (to ensure they are genuine first-timers) and make them agree to a set of conditions, including not selling the house for five years. This has been proposed for Queenstown, where the party would like to build 1000 homes for first-time buyers.
If you take Labour at face value, its election would mean a slight boost for the construction industry, although it would be short term. National's strong existing policy is largely favoured in the building industry, and only one thing is current for sure: the next few weeks will be interesting as Ardern rolls her plans out.
Marshall Suckling
