In case you’ve missed the subtle signs (seemingly endless media coverage of Judith Collins, undisclosed racehorses and Dotcom), 2014 is an election year.
I recently caught up with Campbell Hastie of The Go2Guys mortgage brokers and, after musing Collins’ latest lashing in the headlines, our conversation turned to the effect election years have on the buying and selling of houses in this country.
Antonia Baker (AB): So Cam, what do you reckon the election means for buyers and sellers – is it business as usual, or are they likely to change their behaviour?
Campbell Hastie (CH): In my experience, when elections are looming people tend to take pause because there’s more uncertainty in their lives. They go into ‘wait and see’ mode because they want to know who the new government will be and what goodies may be put on (or taken off) the table. The net result, in my experience is that, while people will still buy and sell homes, there is a tendency to take a bit longer to make decisions.
AB: Are there any policies you think will make a particular impact on people’s behaviour?
CH: The recent budget had nothing specific in it for home buyers, but the general theme of restraint in government spending is a good thing. When the government spends money it has an inflationary impact (and we know how the RBNZ reacts to inflation – it increases the chances of an interest rate hike!), so fiscal restraint is good for home owners and hopeful home buyers. If National remains, then this theme does too.
On the left there’s talk of a capital gains tax which is unsettling if you’re an investor. So, those that are considering buying an investment property might hold off to see whether Labour gets in before they make the decision to purchase.
Immigration policy has also been getting a bit of air time in recent days and it’s one of those topics that can be easily made into election fodder. We know there is a strong correlation between immigration levels and house prices (check out my blog on this very topic), so any possible changes to that policy could cause further uncertainty among local buyers.
AB: If you were planning to sell your house, would you hold off until after the election?
CH: That’s a tough one to answer. In some cases there is a pressing need to move, so people are less likely to wait for election results – for example those who are moving city, or families needing more space to accommodate a new baby. For people in these situations, the fact that there is an election coming will be a secondary consideration, balanced against the need to find somewhere to live within a specific timeframe. If you need to sell your house, then just be aware you may need to be a little more patient with buyers.
On the other hand, those who aren’t under any pressure to buy or sell – for example investors – may choose to wait until after the election. At the end of the day, it really depends on the individual, their circumstances and how they feel about uncertainty.
AB: Lastly, how long do you reckon it’ll take for things to get ‘back to normal’ after the election?
CH: That’ll depend largely on the outcome. If National continues to govern then it will more than likely feel like ‘business as usual’ for the nation pretty quickly after the election result is announced.
If we see a Labour coalition, there is bound to be a longer period of uncertainty as new policies are bedded in. How long will really depend on the nature of the policies and how the market reacts to them.
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About The Go2Guys
Put simply, The Go2Guys get mortgages! They specialise in helping first home buyers in and around Auckland, but also work with those buying their next home or investment properties. For a free copy of their e-book ‘The Bank Said Yes’ visit www.go2guys.co.nz