ANZ’s latest Property Focus report suggests that while the New Zealand housing market remained hot in March, there are tentative signs of cooling.
“Recent policy announcements represent new downside risks to the housing outlook, but at this early stage it’s difficult to tell if the anecdotes we’re hearing about investors throwing in the towel are representative or not,” the report reads.
“Affordability and credit constraints mean the recent pace of house price inflation was never going to be sustainable, but now, with the policy headwind about to start biting harder, we think the slowdown is looming.”
The government recently announced a number of policy measures designed to address New Zealand’s housing unaffordability crisis, and while ANZ’s economic team expects those policies to “take the heat out of the house market a little faster than otherwise”, it will also be difficult to tell how much of that slowdown is due to the policies, and how much was going to happen anyway.
Those measures included removing interest deductibility from new residential investment properties from March 27 onwards, with a phase-out of deductibility on existing properties over the next four years, as well as lengthening the bright-line test from five years to ten years.
The report warns that, for property investors, the game has changed significantly.