Grant Robertson told media that the Government will announce a rolling series of measures, including a tightening of rules around property speculation, last month. Speaking at the release of the Budget Policy Statement, he said that the aim was to dampen the level of demand in the country.

“The first of [the measures] will be on the demand side measures which will come in late February. We all know that building more houses, particularly affordable houses, is critical.

But we also can do more to manage demand, particularly from those who are speculating.” But Sharon Cullwick, executive officer at New Zealand Property Investors Federation (NZPIF) says that these measures are unlikely to work.

“The five-year bright-line test is already catching a lot of potential speculators,” she says. “And any rules are unlikely to stop the property prices rising, as there are so few speculators in the market.”

She does concede that more rigorous rules around property speculation may lead some potential speculators to think twice about what they are doing. Cullwick thinks it’s important to differentiate between property speculators (those who buy property to hold for a short time for profit) need to be differentiated from flippers who renovate to sell.

“We have a lot of flippers in our federation: they do a great job buying older houses that nobody wants and doing them up. It’s fantastic: it lifts the whole rental pool.”

But she is unsure if the measures will target flippers as well and is concerned that any extension to the bright-line test would be excessive. “A ten-year bright-line test would be too long. Very few people, even owner occupiers, hold onto property for that long.”

She believes that the Government would be better off focusing on building new homes. “Robertson needs to stop worrying about demand and concentrate on supply,” she concludes.