Lockdown has done little to dampen the national enthusiasm for property, however. The dearth of houses and high demand is continuing to drive up prices, with the national average in September sitting at $977,456, a whopping 26.3% increase year-on-year, only slightly down on the 26.6% yearon- year increase in August.

But are there clouds on the horizon, set to dampen the flame of property values? A confluence of forces – proposed interest tax deductibility removal and interest rate increases – may seem like growth slowers, but is that really the case? Our lead story this month looks at the ways these two “interest issues” are likely to play out in the property market.

The details around interest tax deductibility were announced in late September. They outlined the definition of a “new build” property (which are exempt from interest rate tax deductibility changes) as being a property that received its code of compliance after March 27. Interest deductions will be available for the next 20 years after this date. New build properties also have a five-year bright-line test (as opposed to the usual 10 years) allowing them to be sold five years after purchase or build date, without brightline fees. Purpose-built rental properties, Kainga Ora and community housing providers are also exempt.

But while ANZ chief economist Sharon Zollner comments in our lead that these tax changes are “massive” from a policy perspective, she doesn’t believe they will make significant difference to house prices. But they have certainly soured investor attitude towards policymakers.

Interest rate rises are more likely to make a difference when it comes to house prices, some experts claim.

The Reserve Bank lifted the official cash rate (OCR) from 0.25% to 0.50% on October 5. It’s the first in a likely increase to 1.5% (or higher) and major trading banks have already increased their rates accordingly. Economist Tony Alexander believes the OCR is likely to increase to 2% in 2023, and that retail rates will rise as well.

It’s a few years off, but once interest rates rise more significantly, the market may start to cool.

Elsewhere in the magazine, our profile has taken a very different path from many investors, and has been awarded the title of Landlord of the Year from New Zealand Property Investors Federation for it.

Eschewing spreadsheets and apps, Fiona Baker works out her budgets on the back of envelopes. She brings cups of coffee (and gives out $20 notes) to tenants, and she knows the local building rules inside out. She loves houses that were built before 1940, and works her magic, alongside her husband Neville, bringing them back to life. We chat to her about her property journey and plans for the future; which includes, funnily enough, new builds.

Our second lead sees The Block winner Caleb Pearson sharing his tips for summer spruce-ups of rental properties. And in this month’s Regional Review, we visit the picturesque Hawke’s Bay and find out what’s been happening in the rental market in the lower-middle North Island.

We hope you enjoy this issue of New Zealand Property Investor and hopefully get the chance to enjoy some more warm spring weather. Take care and happy reading,

The team at New Zealand Property Investor magazine.