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Some Thoughts From City Sales As To How the Election Result Could Affect Apartment Sales

Friday 22 September 2017, 4:02PM

By Beckie Wright

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City Sales are seeing many people holding tight to see what happens with the elections, and how the result could affect apartment sales, and their analysis indicates the majority of buyers choosing to "wait and see" during election time are property investors, more likely to be impacted by changes in government policy.

Market trends over the last five elections show investors are less likely to be influenced by an upcoming election if the housing policies of the major parties are similar. However, should there be a divergence of policy, the incentive to delay purchase decisions increases. Investors therefore may still hesitate to put a property on the market until immediately after the election because of political proposals which will alter tax obligations for investors if enacted.

While Labour has not so far suggested a capital gains tax this year, it is advocating extension of the current "bright line test" from two years to five - meaning investors would pay tax on any capital gain arising from the sale of an investment property within five years of purchasing it. Labour's tax policy includes proposals to close what it describes as a loophole, allowing investors to write off losses made on their rental properties against other sources of income.

City Sales’ Managing Director, Martin Dunn, says, “Labour also wishes to restrict foreign speculators from buying existing homes. National Party policy will likely be viewed as less onerous by the investment sector so a lift in activity could be expected - although tighter lending restrictions will continue to moderate sales activity even if National and its partners again form the government.”

City Sales’ argument is that if National remains it will generally be good news for investors as they’re largely against taxing investors more. National has somewhat introduced a capital gains tax but it’s hard to enforce and relies on a ‘bright lines test’ where it’s only really investigated if someone sells within two years of buying – and even then not necessarily. Labour is interested in a capital gains tax – more so than what already exists – so if they get into power they would look at enforcing this more so than national has done. The Greens share the interest in the capital gains tax.

Over the weekend Labour also said it would look closer into rentals (so affects property investors) and claims to say it will help investors with grants to keep their properties dry and warm. It’s hard to know what is a pre election false promise and what’s not. Latest polls from Newshub put Ardern and English neck and neck so will be very interesting to see what happens.

For more information on studio apartments, property management and rental properties Auckland, please go to http://www.citysales.co.nz .