OPINION: Whatever your politics, there’s no doubt that the outcome of the election represents a resounding success for the Labour Party and Jacinda Ardern. If voting numbers hold up when the Special Votes are counted, we’ll see her party achieve an absolute majority of the seats in Parliament – the first time that this has been achieved in the MMP era.
This will provide both opportunities and challenges to the new government. Gone will be the "handbrake" applied by Winston Peters and New Zealand First. Gone, also, will be the push to the hard left by the Greens. Labour may still wish to offer the Greens ministerial posts and even a role in the new government – but they will do so in the knowledge that they will not rely on Green votes.
So with this sort of power available to them – what might we see from the second term of Arden’s Government? Will it provide a mandate for a renewed push for the sort of progressive policies now being openly advocated by some on the left? Or will the Government take a more cautious approach, recognising that many people who traditionally support National voted for them as a reward for their Covid-19 response and as a way to ensure that the Greens did not hold the balance of power? Only time will tell.
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However, there are some things around which we can have reasonable certainty, particularly as they relate to housing:
1. There will be no wealth tax on your family home
Given Arden’s previous promise not to introduce a capital gains tax during her time as leader, and given the likelihood that many Kiwis voted Labour precisely to stop such a tax being introduced, I think it’s fair to say that it’s a given that neither the Greens' wealth tax (which was a form of capital gains tax), nor any variant of it, will be introduced by the Government in this term.
2. KiwiBuild is dead
While the name KiwiBuild may survive as the branding for a government programme, the original purpose of the programme, which was to build 100,000 new homes in ten years to make up for the supposed deficit in housing stock, will disappear. The comprehensive failure of this programme in the last term of this Government, a big increase in private sector building activity, and serious doubts over whether the housing shortage ever actually existed mean that this policy will probably be permanently shelved.
3. There will be a renewed focus on social housing
Since 2017, the Crown agency Kainga Ora has built thousands of new social housing properties, and while these were the result of the policies and actions of the previous National Government, Ardern understandably wasted no time in taking credit for them on the campaign trail. Watch for this to be the new housing focus of the new Government.
4. Further rental reforms will be limited
The first term of this Government saw significant reform of the rental sector including the introduction of the Healthy Homes Act, big changes to the Residential Tenancies Act, ringfencing of investor tax losses, and the extension of the Brightline test from two years to five years. Short of the very unlikely prospect of rent controls, any further reforms are likely to be limited to further tinkering with the Residential Tenancies Act.
Two other big developments are also likely. Neither will have anything to do with the Government - but they’ll get the credit for both.
5. Mortgage rates will continue to fall
Given the current strategy of the Reserve Bank, mortgage rates still have quite a bit further to fall – and it’s not out of the question that they could get as low as one percent over the next couple of years. This will put cash back in the pockets of Kiwi households which will stimulate spending and (hopefully) kickstart the wider economy.
6. The LVR restrictions will stay off
Despite the Reserve Bank saying that these restrictions were only gone for a year, I’ll be very surprised if we see them back anytime soon. That hasn’t made much difference yet as the banks had been taking a cautious approach in case house prices started dropping. That clearly isn’t going to happen – so expect to see the banks dropping their deposit requirements, over the next 12 months, making it even easier to buy a house.
- Ashley Church is a property commentator for OneRoof.co.nz. Email him at [email protected]
