Noise about the prospect of increasing interest rates is unlikely to dampen the property market much next year, says commentator Olly Newland.
He said it would be “business as usual” no matter what noises were made by politicians.
“Bear in mind that on the one hand everyone wants more houses built and prices to stabilise. On the other hand there are dark threats of increasing interest rates and more loan restrictions. It’s obvious that you can’t have both as they conflict with each other. If you increase interest rates and throw in more loan restrictions, you will smother any chance of building more affordable houses. It’s like going to all the trouble of mixing up all the ingredients for a nice cake and then putting it into the fridge to cook.”
Newland said warnings about rising interest rates and the new LVR rules were designed to slow a buoyant market by “jaw boning”, which could work for a short time.
But he said the pressure would remain on the housing market because of increased immigration, a housing shortage and the Christchurch rebuild.
The latest immigration statistics show a seasonally-adjusted net gain of 2770 migrants in November – on track to exceed 20,000 by the end of the year.
Newland said there was likely to be a pause in the market over the next few months before pressure built up again.
A capital gains tax, as promoted by Labour, would result in dramatic price rises as properties were pulled from the market, he said.