Trying to buy your first home is stressful enough, but what happens when politics starts messing with the property market at the exact same time?

Because this year we've got an election coming up and already there's talk of capital gains taxes, housing policy changes and whether politicians might try to influence the market.

Which raises a tricky question for anyone hoping to buy this year.

Should you speed things up or wait until the political dust settles?

And today's listener wrestling with exactly that.

They're ready to buy their first home, but they're worried the election could turn housing into a political football and change what they should be doing.

So what actually happens to the housing market in an election year?

And how much of the political noise really affects what's happening on the ground?

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Welcome, Vanessa Williams.

Are you ready for the letter?

I am indeed.

Thank you so much for having me here again.

All right, here we go.

Hi, Frances.

We'd love to buy our first home this year, but with it being an election year, we're worried politics is about to get in the way.

The government wanted more houses built, but now it seems they're walking that back and saying they don't want too much intensification.

Capital gains tax is being talked about again and my friends say the government won't like that.

House prices are down so we'll try to boost them in order to get votes.

So if I'm wanting to buy this year, is it likely that housing becomes a political football?

What do you think are likely changes?

Let's just talk.

Should I try to speed up the house buying process or should I delay and wait until it's all over?

We don't want to panic by, but we also don't want to sit on the sidelines forever waiting for a certainty that never comes.

Thanks.

Some really good points in this.

They've clearly been paying attention to the news cycle.

Absolutely.

A lot of good questions.

Right.

So if we start by sort of looking back at what history can teach us, what's happened in previous election cycles, do we know?

The last couple have been interesting ones?

2023, we were still sort of coming out the back of COVID and so there was sort of.

It's a little bit of a mixed emotion on that one.

And then of course we had the one right in the middle of 2020, or right at the end, I should say.

But being in the middle of all this Covid nonsense that was going on at that time and we had no idea what was going to happen.

So that was probably our most unusual election year.

For what happened in the property market was 2020, just because again, we were all trapped at home, we were all trapped in New Zealand.

And of course, the two things, Kiwis love property and travel.

You take away travel, boom.

We're all talking about property, especially because we're stuck in our houses.

So that was an interesting year because if anything we had an acceleration of the property market.

But I would say that was definitely because of COVID not the election year, but prior to that, because I've been doing this for so long, there's been a few more elections I've been part of since then.

But what typically happens, and you will probably see this happen across a lot of commentators, across a lot of markets, but certainly in the property market, is that Kiwis love to transact under more certainty than less.

And of course an election year, whether we have a whole bunch of housing policies or we have very few, typically we're always sort of thinking, shall I wait and see?

But all I would say is you don't want to sit in that backseat for too long and really regret a decision because you.

Every year that goes by, the market is going to change.

Now, the last three years, we have seen a very sturdy, very stable market.

Yes, it's come back from that very peak at the top of 2021 came back, dropped around 15%, give or take, across the nation.

But it has been very, very flat since the end of 2021.

So that gives buyers a lot more comfort and a lot more confidence.

Now, if you haven't found that confidence in the last three years, I'd really take a good hard look and go, am I gonna miss the window?

Cause that could that hesitation of probably one of the flattest property markets we've seen in certainly the history of real estate co nz.

But I'd probably argue at the history of the New Zealand property market to have very consistent flat market for over three and a half years.

If you're not a particularly risky person, I would start kicking into action if I was you.

Yeah.

And this is the problem, right, is you never truly know what's coming next.

And we see these political Promises bandied about, they may or may not be delivered.

Certainly it depends on who comes in and then do they deliver what they say they would?

You know, depending on various coalition negotiations.

But it's, as you say, so much of it also depends on where you're at and what the market has been doing until now.

How do you balance out those factors?

That's hard, right?

It is really hard.

If, you know, probably New Zealanders are going to halt, they might take a little bit more heat out of the market again, it might remain stable for a bit longer.

Why not be that person that goes, right, you know what, this is the year that we're going to get it sorted for ourselves, because would you rather transact in a more stable market or.

Or would you rather be regretting that timestamp, for lack of a better word, and go, oh, my goodness, why didn't we do this when there wasn't too many people walking in out of open homes, when we weren't negotiating with three or four people?

And what I will say is, though, you know, good houses, there are certainly some amazing houses out there that are certainly well priced, that are absolutely moving.

I mean, I get very regular updates around what's happening in my mother's neighbourhood and, you know, she said, vanessa, you'll never guess.

The property next door sold in a week.

We are starting to see those sold sign stickers pop up really quickly at the moment, especially for those that are well priced.

What do we know about supply?

What is happening with supply at the moment and how do we see it impacting things?

So we've got a very healthy level of supply at the moment.

There's around 36,000 homes available for New Zealanders to peruse and I would encourage you go and have a look out there.

There are some awesome homes available at the moment.

We are seeing sellers have got a lot of confidence in the market at the moment.

So looking at the latest stats, in February they were, it was up around 7.8% year on year.

So sellers are quite a bit more confident than they were this time last year.

And we're also seeing that flow into sales.

So sales numbers are actually really healthy as well.

Around that six to seven thousand homes are transacting every month.

We look at a low or a kind of a soft market.

It sort of sits between four, four and a half thousand homes.

So sitting between sort of six and a half to 7,000, you're really starting to see not only sellers being confident bringing their properties to market, but also buyers seeing that value and Transacting at the same time as well.

So while it's still very stable, but there's certainly movement, is what I would say.

Now what we don't want to do is miss this moment of stability that we've got right now.

And we see, perhaps we see some really positive political enhancements come to the property market.

Gives buyers a lot more confidence, gives businesses a lot more confidence, gives sellers a lot more confidence.

And then we start to see the property market take off again, which from a personal perspective, I'm not a big fan of transacting in a very frantic market.

Some people might love it.

I'm personally not a fan.

And if you're a first home buyer, typically you want to try and stay away from those markets only because like this lovely listener slash writer said to us, you know, I don't want to miss out, but I also don't really want to be in a frantic time going, oh my goodness, how do I make this happen?

So, yeah, I really think, take a good hard look at the market we're in right now and do what's best for you and your family and your financial situation.

Yeah.

And I think, you know, it's interesting that we're talking of first home buyers because one of the sort of rumblings that I've heard around the traps as I chat to people is that first home buyers, second seem to be the ones making headway in the current conditions.

Now, does that match what you're seeing?

Yes, that does match what we're seeing as well.

Last couple of years, while we have seen challenges in the investor market with the likes of more legislative changes around things like bright line tests or interest deductibility.

Look, I know those have changed over the more recent years, but you know, rewind sort of back four or five years.

Those particular legislative changes really meant a softening in the investor market, which then opens up opportunities across for, of course, for our lovely first home buyers.

I love it.

I love it.

And especially so many people who've thought that they weren't going to be able to make it and just a couple of little tweaks and I just, I get so excited for them because it is, it's a huge, huge hurdle on your money journey.

What about, you know, you mentioned there about sort of investors sort of pulling back on the market a little bit.

Are there any other factors that is helping out the first home buyers?

I guess that stability also plays into it too, the price stability, Right?

It does.

Absolutely.

The other thing, I would say, if your nest egg was sitting in the bank over the last couple of years and those lovely high interest rates that all U.S. mortgage holders were whinging about, you might have got a real injection on that deposit and really helped you to build that deposit as well.

So I think that would have also helped our lovely first home buyers price stability and as we said, kind of those legislative changes that perhaps softened that investor market, which is typically around the same sort of stock that first Home buyers are looking at.

We start to see that sort of open up, that sort of.

It's almost like a little perfect storm of those sort of three things coming in there with the lovely first home buyers.

What that might look like going forward again will sort of be determined by perhaps what our political parties want to promise us over the coming year.

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As they've pointed out in this letter.

I mean things like capital gains tax being talked about quite seriously and things about whether or not we want more housing, house building, greater intensification.

I mean do you hear those keywords?

Do those sort of.

If they do or don't go ahead, does that mean anything for the property market?

Would there be sort of flags there for you?

Yeah, I think if you're buying your first home or you're looking at transacting your family home, that capital gains tax probably won't impact you too much.

They are talking about that being a tax on wealth outside of the family home.

Of course the devil is in the detail.

We don't have loads of details at the moment, but the headlines would tell us that those that the family home would be exempt from any of those capital gains taxes.

The biggest thing I would probably be looking at, especially if you are a first home buyer, is what political parties are talking about with KiwiSaver at the moment.

We have the option to take out money from our Kiwisaver to utilise for our first home.

I haven't seen anything or heard anything, but it'd be good to just check that that is going to continue with the new governments or the new political promises, shall we?

Because again, if you are thinking about using that as your deposit, you want to make sure that's still an option for you.

I think Kiwisaver is going to be a big story around the political landscape.

I know that we've got some changes to the minimum requirements going in, which personally I think is great.

And the other thing I would say is that if that is looking likely and it does come in and the details suggest that it's going to hit investors hard, then perhaps again it might open up another set of stock for those first home buyers who might be able, if investors want to get offload that stock, those lovely investment properties, to perhaps negate that tax.

Then again, you might see an influx of supply come into the market.

Yeah.

And how much does it give the market the jitters, even just having the stuff talked about?

Because sometimes I feel like this stuff gets brought up and people get a bit jittery that it's even on the table.

But is that just me talking to people who maybe they say a bunch of stuff and they don't follow through, or do we actually see those jitters come through to the market?

Whether it's a specific jitter about a specific thing, I'm not sure.

But I think again, we go back to that uncertainty or change and that's just, you know, people's natural reaction.

When you are going to transact one of the biggest assets of your life, you're trying to make sense of a lot of things.

You're trying to.

If this, then that, you know, you're trying to do all the maths and, you know, it.

It does make it hard.

But again, sometimes, I mean, there's always going to be things that are outside of your control, there's always going to be changes, there's always going to be things happening globally that are gonna impact that we can't foresee today.

So sometimes it's just good to remind yourself, what is it that I can control right now?

What is it I've got available to me right now?

What is the best decision for me with the information I have in front of me?

Not all the crystal balls that I could possibly make up in my mind.

And again, as we always say on this podcast, speak to those experts, go back to your plan what do we want to achieve?

And does this decision help me to achieve what my plan has set out with the information that I've got from experts, you know, because you don't want to miss.

Is this market actually a really great market to transact in and I don't want people to miss out on it.

This is actually.

It's so similar to.

I was literally, I was being interviewed this time about, you know, Kiwisaver and what you do in uncertain times.

And very much my point was you make your decisions on Kiwisaver, on your life, not the headlines.

And I do think like the headlines can impact things.

I don't want to underplay that, but I feel like so much of things with money in general comes back to your life first and then the headlines is just sort of an additional bit of noise that you may or may not bring in into the mix.

But it has to be your life and those factors first are often the biggest impact.

So if we strip back the politics for a moment and you just look at the housing market, what's sort of your big takeaway on the housing market right now?

My headline for the property market.

Don't listen to the headlines, but listen to this headline.

No, my headline for the property market at the moment would be very stable market sellers are confident.

We have got a fresh lot of new listings available and there's also plenty to peruse from.

Buyers are still being very considered, but the good ones are being snapped up quickly.

So, you know, keep an eye on your local market.

There's lots to look at, but don't be afraid to pull the trigger on that transaction if it works for you and your money situation right now, because those good properties are getting snapped up.

Love it.

And if someone is watching the politics and they're a bit concerned, what do you think is the big one to watch in terms of noise versus might

actually move the dial?

Ooh, that's a really great question because I think a lot of it is noise, especially when you pull it right back down to your own personal level.

But I think the big thing for me is if I was a first home buyer, I'd be just watching those Kiwisaver legislations or the tweaks to the Kiwisaver that may or may not go ahead.

I think that'll be a big topic.

Capital gains tax.

Sure.

If you're an investor, I would be keeping a close eye on those.

The other thing that I would be thinking about is if there's any loosening or tightening of perhaps loan to value ratios.

If there's anything around the debt to income ratios or DTIs that we sort of speak about.

There's been quite a lot of changes that have happened over the last five years, and perhaps a political party might take an opportunity to review one of those if they do want to move the property market.

Great stuff for us to be watching and this year is going to be interesting.

I do.

There is a part of me that still loves to watch politics.

I don't ever miss being in the mix, but I do love watching from the sidelines and seeing how it interacts with our money.

So thank you very much, Vanessa Williams, our data queen from realestate Co nz.

Now, if this helped you, then first of all send it to a friend so we can all level up with money together.

And if you have a question that you want to get in front of one of our experts, send it through and we'll talk about your sit.

It's askranciscook.co nz.

Until next time, have a great day.

This podcast can only give you general information about how things work in most situations.

It's not individual financial advice.

If you're after that, a financial advisor is always the best bet.