The Forces Shaping Our Housing Market Are Bigger Than Politics

With New Zealand's general election less than a month away, property investors could be forgiven for feeling bewildered. After years of changing rules, rising costs and economic uncertainty, they're once again weighing up political promises while making decisions about assets they may hold for decades.

Labour's proposed capital gains tax on investment properties is attracting attention. National has ruled out introducing new taxes, while the parties differ on aspects of tenancy legislation and housing policy. There is some welcome common ground, with Labour indicating it would retain mortgage interest deductibility.

These policies matter. But I wonder whether we're giving the election too much credit for determining what happens next in our housing market. From where I sit, there are bigger forces shaping the decisions of investors, homeowners and tenants and none will disappear on election night.

The first is simply how expensive everything has become.

In property management, the rising cost of owning and maintaining a rental home is impossible to ignore. Insurance, rates, repairs and compliance costs all add up, and landlords are increasingly conscious of every dollar. But tenants are feeling the squeeze too. Groceries, electricity, transport and other essentials are taking a bigger share of household incomes, leaving little room for higher rents. Landlords cannot keep absorbing rising costs indefinitely, but nor can they expect tenants to carry every increase. Something has to give.

We need to be more ambitious about making New Zealand a less expensive place to live, build and do business. That means addressing competition in essential industries, bringing down building costs and making it easier to deliver the infrastructure new housing needs.

Here in Hamilton, our growing city needs water, wastewater, roads and other infrastructure to support new homes. When developments are delayed or become more expensive, those costs eventually find their way into house prices and rents.

Then there's the cost of borrowing.The Reserve Bank's decision to lift the Official Cash Rate to 2.75 per cent in September was a reminder that inflation remains a challenge. For investors, interest rates can make the difference between a rental property being financially sustainable or becoming a significant drain on household finances. They also affect first-home buyers and developers, influencing what people can afford and whether new projects stack up.

Politicians cannot simply instruct the Reserve Bank to make borrowing cheaper. But they can avoid adding unnecessarily to inflation and address the underlying costs making housing expensive.

Employment is another big piece of the puzzle. When people feel secure in their jobs and optimistic about their incomes, they're more likely to buy, move or invest. When jobs feel uncertain, people tend to sit tight. Hamilton is fortunate to have a diverse economy, with agriculture, manufacturing, education, healthcare and other industries supporting employment across the Waikato. A stronger local economy means more confidence, more housing choices and a healthier property market. But that confidence comes from businesses investing and people finding work, not simply a change of government.

There's also what's happening beyond our shores. The ongoing conflict involving the United States and Iran reminds us how exposed New Zealand is to international events. Higher fuel prices, disrupted supply chains and rising import costs quickly affect household budgets and the cost of building and maintaining homes.

No government can shield us completely, but we can become more resilient through stronger energy security, broader export markets and sound public finances. For me, that's a more useful conversation than treating every election promise as though it holds the key to the property market's future. I'm certainly not suggesting investors should ignore tax policy or tenancy legislation. Stability matters enormously when making long-term investment decisions. But there's a danger in focusing so heavily on what politicians might change that we lose sight of the fundamentals - a rental property still needs to make financial sense, tenants still need affordable homes, and Hamilton still needs a steady supply of good-quality housing.

So, as November approaches, I'd encourage investors to look beyond the headlines and consider which policies will genuinely make New Zealand a more affordable and prosperous place to live. Governments come and go every three years, but the homes we build, mortgages we take on and properties we invest in can shape our finances and communities for decades.