The New Zealand Property Investor recently reported that the key to the National Party platform was ‘what it would not do’ in its second term.
The Party is against Capital Gains Tax (which is the policy of the Labour, Greens and Mana Parties).
Former Act Leader Rodney Hide wrote an article in July headed “Why a Capital Gains Tax is a very, very bad idea,” which does not have to be read to see that Party’s position.
National has not announced any planned changes to the Residential Tenancies Act.
A more recent examination of the parties’ policies reveals a bit more.
New Zealand Institute for Economic Research principal economist Shamubeel Eaqub was quoted recently as saying that the National-led Government’s main policy change was depreciation removal from all properties, including commercial, targeted at property investors to reduce their after-tax profit. “However, it is unclear if it will have much of an impact. The net rental yield on residential investment property is typically negative. Investors bought houses as an investment for capital gains. I do not believe this policy will have any meaningful impact on the housing market,” he said.
Other property and housing policies of the National Party focus on, first-home buyers, streamlining the Resource Management Act and selling shares in state-owned assets to give an alternative to housing investment.
CPI moves
From the September 2010 quarter to the September 2011 quarter, the Consumers Price Index (CPI) increased 4.6% (including the increase to GST).
During a period where many tenants will be happy to just be employed rather than seeking wage increases, many would have seen their true spending power go backwards in the face of these price rises.
Of the eleven categories on which the CPI is based, the housing and household utilities group rose 3.7% in the year to September 2011, making it the third biggest contributor to CPI change.
This was largely due to the increased cost of local authority rates and payments, which increased 6.6% nationwide.
In Auckland specifically, residential property rates would register an average increase of 5.21%.
The biggest increases will be felt in Mt Albert, Eden and Roskill (+15.94%); Orakei (+13.93%); Maungakiekie/Tamaki (+11.7%) and Howick (+11.17%).
Property owners with rental properties in these areas would pass on these increases to their tenants, adding still further to the increased costs of living and renting in Auckland.
Conversely, some notable decreases in residential rates have also been made, improving the attraction and returns for investors with rental properties in Waitakere (-15.18%); Franklin (-7.44%); and Manurewa – Papakura (-6.36%).
In the two-bedroom market, Auckland rental levels have continued their mild fluctuation around the $365-$368 level, with an average rental figure of $366 reported for October, representing an Auckland premium for such rentals of 24% over nationwide rental levels.
Rental fluctuations for larger properties in Auckland mirrored what we have seen for the two-bedroom properties, with average rentals rising slightly to $481 per week. Nationwide, the three-bedroom rents also rose slightly (to $350) meaning that the premium charged for such properties in Auckland is at 37%.
Source: Crockers Market Research, December 2011
