THE CAPITAL GAINS QUESTION
Backdropped by forthcoming legislation, the capital gains tax debate( CGT) is back on the political radar, with the Labour Party recently signalling that it will campaign on a proposal to tax gains on residential and commercial property, excluding the family home, from 1 July 2027.
While details are uncertain, history suggests that the mere discussion of CGT tends to temper speculative investor activity – but not stop it altogether. Snelling says it’ s more likely to reshape than restrict the market.
“ CGT whispers create a lot of noise, but seasoned investors see opportunities in cycles like this. If anything, the conversation may prompt some to acquire assets before potential tax changes take effect, particularly while interest rates are low and yields improve.”
He notes that in October, Ray White New Zealand signed more than 1,400 new tenancies, off the back of 15,000 viewing requests and over 5,000 applications processed across the network.
“ The numbers are compelling – they’ re proof that there’ s an enduring need for quality rental properties, and those that are priced right and well-managed continue to attract tenant demand.”
At the same time, Snelling says the macro picture is finally giving landlords breathing space.
The Reserve Bank of New Zealand’ s( RBNZ’ s) 50-basis point cut to the Official Cash Rate( OCR) in October, and an anticipated follow-up reduction on 26 November, have pulled mortgage lending rates to their lowest levels in two years.
Some lenders, such as SBS Bank, are now even offering rates at 3.99 per cent.
“ For investors, that’ s a meaningful shift. Lower financing costs are stabilising yields, while a flattening in operational expenditure – think maintenance and insurance – is making rental returns more predictable.
“ Stability is the word of the season. After years of disruption, we’ re entering a phase where both tenants and landlords can plan ahead with more certainty.
“ Rental prices have levelled, costs are softening, and the broader market is sitting at what I’ d consider to be the bottom of the trough – the point before things turn for the better.”
Zac Snelling, Head of Property Management, Ray White Group
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