Election 2026 - How it impacts House Prices

Hello and welcome along to another Property Live. It is so fantastic to have you here tonight on a Tuesday at 7pm to talk about the election. And the amazing thing, you know that we are in the age of AI, where as soon as we open the webinar, everybody's Firefly AI notetaker is here. Some of those AI notetakers could be from political parties wanting to take the notes on what we say and how it impacts property investors. Alex, it's great to hear you in the chat saying that you're so excited for this. Now, we always do a little bit of a test. We audio test before we get into it. As I always ask you, what colour is Andrew's tie tonight? Tell me in the chat what colour is Andrew's tie so that I can make sure that you're hearing what we're saying. I've got very. What did that person say? I've got black. Very echoey. Is it? Hang on, let me try this. Let me ask other people. Do other people. Other people find it very echoey. Let me know down in the chat. I see a lot of black. I see. Azure and eco. It's not really. No, Andrew, don't do that because it's going to bother me. Somebody else said no eco. So we're going to rip into it. My favourite thing to do with these webinars is not to spend too much time on housekeeping and get straight into it because we are talking about the election. We've got lots and lots of good stuff to talk about tonight. And the reason I want to talk about the election is all of the political parties, whether they're from the left or the right, they're all out there campaigning for votes. And good on them. That's exactly what they should be doing. But you might be sitting there as a property investor thinking, but how do your policies impact me? And sometimes when you go looking for the information, you might be met with some blank stares or some, here's how it impacts the people who we specifically want to help and are advocating policies for. But we here at Opus Partners and on this show, we're here for property investors. So we've cut through the noise to try and understand how does it impact you as a property investor? And we have ranked all of the parties into five levels of impact from the parties that would have a smaller impact on the housing market and the property market through to the parties that would have a much, much larger impact on the property market. Now, it's really important to point out that we are not ranking them in terms of who is good or who is bad because we're not here to tell you who. We're not here to vote for, right? We're not here to say, oh, this party is good and this party is bad. But what we can do is say, these are the policies. This is how it impacts the property market. And then ultimately, it's up to you to decide who to vote for. Now, before we get into those five levels of impact, I want to do a quick poll for you guys. Now, you're going to find that we are going to do a lot of polls throughout the presentation tonight. And Producer Dave will put this across your screen. And what I want you to know is, how are you feeling about the upcoming election? Are you terrified? You're really concerned? You're a little bit worried? You're not bothered? You're keen because there's good times ahead? Or you're so excited? Click the poll on your screen. Don't put it in the chat because we're doing it through a poll, even though a couple of people will say that they're there. Now, Sarah, I see you've said, please sort this out. But I've got Steve and Cherie both saying. And I've been kicked out. Was that you, David? Maybe it was my computer? No? Okay. Maybe. Oh, Glenn said this is a waste of time. He's out of here. He's only stuck around for three minutes of the 60 minutes. But that's okay. Sometimes what happens is some people might have something not working on their computer. So maybe you could log out and log back in. If you are finding it really challenging at the moment, we'll do everything from our end to make sure that you have a good experience. Okay. We're going to keep going on. So I'm going to end that poll and share the results with you guys. So we've got 14% of you who are terrified. 61% of you are saying you're a little bit worried. And a couple of you are saying, look, I'm not bothered. 2% of you are saying that you are so excited. And so that's very interesting. We're going to rip into it. But if people haven't been to one of these before, Andrew, they need to know that there's quite a lot of people here tonight. About 2,200 people have signed up. So they might be wondering, well, who are we? Yeah, we're pretty excited to see that many people here tonight. And obviously, it is a turbulent. It's a turbulent world pre-election that people do worry if you are a property investor or whatever you worry about coming up to an election. And just to give you a bit of background on us, Ed and I host New Zealand's number one business podcast, 12 million downloads. We've been doing it every single year, every single day for almost seven years now, over 2,500 episodes, 74 webinars. We've got 21 financial advisors across our team. That's for property and mortgages and insurances. And our book is currently in bookstores. Ed, he's our economist. He's a regular feature on Newstalk ZB and writes for Stuff now. Oh, bloody. Anybody, anybody who'll listen to me. He's a property investor, as am I. I'm the founder of Opus Partners. And I don't love to be on Instagram, but they make me do it here. Now, here's what you're going to get tonight. You're going to get the webinar for free, a Q&A for free at the end. Stick around for that because it's always particularly good. And we are going to do a recording. That will get sent out tomorrow. That'll be in your inboxes. But Andrew, I know you've got some things that are near and dear to your heart. Now, in the chat, we want everyone to be talking tonight and getting to know each other and have conversations amongst yourselves. Keep the chat in the chat. And for questions, if you put them in the Q&A, which is a separate part, down the bottom of your screen, you'll see Q&A. That'll make sure that Ed and I have got them in a separate category to answer them at the end. And the key thing as well, make sure you set your settings, to everyone, to be able to view, rather than just hosts and panellists, which is Ed, I and producer Dave. Otherwise, people can't answer the questions for you. Now, again, I mentioned it before, but I'm really keen to let you know, I'm not going to tell you who to vote for tonight. You're going to vote based on what you think is right, whether for you, your family or the country. And so we're just going to explain the policies. But we're not here advocating for any one particular political party. But what we are going to cover are three things. First of all, we're going to tell you about how, elections really impact the property market. We are going to rank every political party's policies from the smallest to the biggest impact. And I'm also going to talk about the one thing that matters more than who wins. But Andrew, I know you've been looking at some numbers, looking specifically about how elections impact the property market. Yeah, I think this is important because so many people that we're working with at the moment at Opus Partners, who help investors, get really nervous about buying before an election because of the uncertainty. And, there is actually some truth in the numbers. If you look at it, fewer people do buy before an election because of that nervousness about what the policy outcomes might be and more after the election. Now, does that mean it's the right or wrong answer? Not saying that at all. But people do dislike uncertainty. It's quite fascinating that routinely we looked at 11 elections in total, 11 MMP elections and did find there is this consistent pattern where people routinely purchase fewer properties before the election. And I think it's really interesting to see how much of a difference there is between the number of people buying before the election and the number of people buying before the election compared to after. Which is why, when I've been seeing articles at the moment talking about that "Oh, it's been a bit of a quieter winter", I'm like, well, it's got nothing to do with the weather. It's got all to do with the fact that we've got this election coming up. So it's normal that we would see about a 5% to 10% dip in property sales before the election compared to after. Do you think this year's been worse, given that we've got kind of more uncertainty around the world as well? I haven't necessarily seen it in the numbers, but I look forward to seeing them afterwards. The other thing that's interesting, though, is you've been looking at the breakdown based on whether a centre-right or a centre-left government comes to power after the election. Yeah, so now we're looking at not house values. We're looking at the number of transactions if we have a national or a Labour-led government. Now, it is true that historically more people buy after an election where national are kind of ruling. And the reason for that is probably they tend to have more landlord favourable policies that probably would be fair to say. Labour, on the other hand, it kind of stays at that kind of lower level in the immediate aftermath. The only thing that I'd add to that, though, is I think we're talking about maybe six national victories through five Labour victories within this analysis. So it is a very small sample size. And if you think about some of the times where Labour has come to power, they've often come to power when the property market is actually doing OK. If you think about the 2020 election. The property market was both hot before and after Labour came to power. So it's not necessarily that they were making some big impact on the property market. Similarly, National came to power in 2008 and the lead up to that election, the property market was very, very quiet and then it just recovered. So some of this national uplift is more to do with the property cycle as opposed to national good for property transactions, Labour bad for property transactions. Right. So so I like giving people the data because they're interested in it. And even though there are some caveats around it. But the other thing you've found is really about house prices. Yeah, this is really interesting. So if you think about whether or not one of those political sides is going to change the outcome in terms of your house values or your property values, it really doesn't make much of an impact. It tends to be that before an election and after an election afterwards, you tend to have rising house prices so you're like okay great every one's now understood the policies and house prices are going up. Actually, it seems we're on an upward trajectory most of the time, not all of the time, certainly not in the last four years. However, because property tends to go up in New Zealand over the long term, it makes sense that there's more data that shows property prices rise after an election than before. That's not necessarily because of the election. You might be able to draw a same line on the sand with saying Christmas or Easter causes that. The other thing that's interesting to point out as well is that doesn't always happen. So if we look at the 2023 election and the lead up to that, of course, property values started to come down pretty consistently. We were at the end of that downturn. They were recovering. National came into power. Property prices went up for a few months, but basically have gone sideways and tanked since then. So it's not necessarily always true that property values are lower before the election and then higher after. But on average, once we run the numbers, you tend to see that. So my main point here is the elections tend to impact property transactions, the number of properties that people buy and sell, as opposed to house prices, generally speaking. But with that, I really want to move from the scene setting to getting into ranking different political parties' policies based on impact. And at number five, at the smallest impact, I am going to put national in there. Now, why have we put national there, Andrew? I think the reason for that is because national, when they took over at the last election, they kind of undid a lot of the stuff that maybe was a bit harsher for property investors. Rightly or wrongly, this is their policy. Again, we're not telling you to vote either way. And a lot of people here might be first home buyers. They might not be interested in these things. But they did away with the interest deductibility carve out, which meant that it was more expensive for a landlord to own a rental property. And they bought the, right line test back to two years from 10 years. They introduced pet bonds. And you might be thinking, well, that was a good thing and a bad thing for landlords. Now, I don't, as a landlord, have the right to refuse unfairly a pet in one of my properties. I think that's good in my mind, but I can also take a bond for that. Fixed term tenancies changed back to after they expired. That was the end of the tenancy. The no cause, no, 90 day no cause terminations, are now back on the table. If you've got a tenant you want to get rid of. There were some changes to consentings in the RMA. So overall, a much more investor and developer friendly set of policies. So they've basically done everything that they needed to do. Or that they wanted to do, right? Yes, they've done a lot of that. One thing that I think a lot of people forget about, though, is just how much interest deductibility really made a difference for property investors. And this becomes quite important to talk about now, because we're going to have a discussion about that later. But I think it's important to talk about that now, because we're going to have a discussion about that later. But I think it's important to talk about that later. Because we're going to have a discussion about that later. later as well. So how did that actually work, Andrew? Yeah, and I see there's a lot of chat in the chat about that already. So basically, you were taxed as if you were making a profit without a mortgage. And most of us, let's face it, have a mortgage on our rental property. So if you had a mortgage of half a million dollars that you're paying 5% on, essentially, you were paying tax as if you didn't. And so by reintroducing the ability to claim that as a legitimate expense, you were better off by almost eight and a half grand a year. Yeah, 8,250 bucks less tax per year. And the simple way to try and figure out what the benefit is for you is you take your mortgage, you multiply it by your current interest rate, and multiply it by your tax rate, whether that's higher or lower than 33%. And that's how you get that benefit to you. So it was quite a major change. One thing that I'd just say as well is Labour's previous policy hadn't been fully phased in. So you as a landlord wouldn't have felt that your bank account was eight grand better off per year in this situation, because Labour's change had only been 50% phased in, right? Unless you bought after that. But for the bulk of the market, most people wouldn't have felt an $8,000 difference. It's more the avoidance of that additional tax as opposed to actually paying less tax in practice. It's all a bit heady, isn't it? But the interesting thing is, because the RMA is basically the only thing left on their to-do list, National don't do that. They don't do that. They don't have a lot of additional housing policies to bring in. And so because of that, they come in at level five, not much change at all there. The one thing that I'm also going to say, though, is we're going to exclude Te Pāti Māori from this list. I understand and looked with keen interest at their housing policies, because they obviously had their launch over the weekend. At the moment, they don't have a lot of housing policies. If you go onto their website, there's about three bullet points there around making it easy to build, homes and supporting more public and affordable homes, which are all good stuff, right? But there's not a lot of detail behind their policies. So just out of respect to them, I don't want to make a ruling on how much they want to shake up the market based on their previous elections policies, which were, I mean, there's some pretty big stuff proposed at the previous election, but just out of respect for them, I won't put them within the ranking just because there isn't much announced policy at the point. Again, not a dig, just saying what it is at the moment. Do you think we'll probably do a follow-up podcast if something substantial comes out on that? If something substantial comes out, it looks likely to come in, then sure, I'd be most happy to do that. At number four, I'm going to put ACT in New Zealand first. Now, they come a little bit in with National in terms of that. They've already made a lot of the changes that they wanted to make. For instance, New Zealand first, they brought in the granny flat policy. That's cool. ACT, they accelerated the interest deductibility policy. That's something they really cared about. But in four, there's not too much there for property investors. There's a little bit, but not a huge amount. One of the changes that I'm interested in at ACT is their top rate of 28%. So what they want to do is they want to bring down the trust tax rate from 39% to 28%, and also the top tax rate from 39% down to 28%. Now, the impact on some property investors, let's say that you've got a couple of rental properties, you own them in a trust. Well, if your tax rate goes from 39% down to 28%, that's 11 percentage points less tax, which basically means for every $100 of profit you make, you get to keep an extra 11 bucks in your bank account. Now, if you had 50 grand worth of trust income, 11% less tax, that'd work out to be about a $5,500 saving per year, about $105 per week. Now, the truth of the matter is most property investors only have one investment property. They're probably not making $50,000 worth of profit. Property on a trust? Yeah, out of their property. Not all of them are going to be in a trust. And so I've given you a scenario where somebody would save a lot of tax. However, it's not going to be everyone saving a lot of tax. So again, that's why they're at level four in terms of impact as opposed to further up the chain. Also, if you've made a loss for the last 10 years, it's highly likely you're carrying those losses forward. So even if you're making a profit now on paper, that might not be taxable anyway. That's an interesting. Do you know what the rationale behind that is? Between the lower tax? Like changing this, yeah. Well, they are a low tax party at Act, right? And so what they were trying to do is flatten the tax system. So rather than having, I think we've got five tax rates at the moment, 10.5%, 17.5%, 30%, 33%, 39%, they want a two-tier tax system, right? That's ideologically what they're trying to go for, right? And so it's not really a property investor policy, though it would have some impact, right? Just like how later on. When some policies want to increase tax rates, even on the personal income side, that can impact us as property investors. If we look at New Zealand First's to-do list, what's on Uncle Winnie's to-do list, he wants to. Can you believe he's got another election in him? Oh, 100%. This has got to be the last one, right? No, no, no, no. I've got some good friends who are big New Zealand First voters. I reckon he's got to go until he can't accept, right? I believe that without a word of a lie. I'm good on him for going. You know, still into his 80s, right? So what's on his to-do list? He wants to buy back BNZ, he wants to merge it with Kiwi Bank, and he wants to create the National Bank of New Zealand. Now, in terms of how much that shakes up the property market, maybe a little bit if you've got a bigger New Zealand bank there that can potentially compete. But at the same time, if you're merging BNZ with Kiwi Bank, you're almost taking out a competitor. So maybe a small shake-up, but not as much as some of the other policies that we're going to get in. So I put them at level four in terms of impact. Though there was a very interesting remit that got put forward at the most recent New Zealand First conference. And the policy that they're currently reviewing, it's not party policy yet, but they're looking at it. So I thought I'd mention it. It's looking at a scheme where the government might buy properties with first-home buyers. And the idea here is that the government has the ability to. To purchase property, or sorry, rather borrow money at lower rates than you and I can. And so maybe they could find a way to get cheaper loans for first-home buyers and purchase properties with them. Would that be through the new bank? There's no detail about whether it's through the new bank or not. Again, this was a remit at the party conference. It's not official policy. But one thing I did see is that Shane Jones, their deputy leader, said that they are looking into it. it at the moment, but they are aware of like, make making sure that there aren't unintended consequences. So one of the things I saw that he said is that it could have the effect of feeding a bit of a cost frenzy where developers start to see that government has a guaranteed buyer. So you sell for a bit more money. Yeah, and so property prices go up. That's not what they're going for. They want it to help first-time buyers, right? But watch this space, and as we get some more detail around these kinds of policies, remember, we will record podcasts about this. We'll have it available on the Property Academy podcast. For those of you guys who don't listen yet, we release a new episode every single day, and this webinar that we're recording right now, this will be released as a podcast as well if you want a bit of a refresher. That brings us to level three, and the third party, or the party we've got at level three, is Labour. Why have we decided to put them at level three? So I think the big thing for people who have been reading a lot about Labour's policy is the big one is capital gains. So, say, for example, you buy a property in 2027, and they implement the policy as it's written at the moment. Bear in mind, there's a whole process for this. So half a million dollars, and then fast-forward 10 years and it's worth a million dollars. Now, you might think, great, I'll sell it, and simple mass, I'm going to take my half-million-dollar profit. Forget about costs and everything like that. You keep $360,000, and the taxman gets $140,000. And so now you might be thinking, and I know there are investors thinking, I'm not doing this if I've got to pay $140,000 to the IRD. OK, but you do that every single day when you go to work, and you get your pay pack, and you give some money to the IRD. That's just life. But it does affect the amount of money you are going to take home. And again, we don't know whether or not there'll be any offsets, if you've made a loss for the last 10 years. Right now, there's no offset for that, but that might change. In Australia, this is a big thing. It's a big thing at the moment, and there's an inflation adjustment. But right now, we've kept it simple. A third goes to the IRD. Yeah, there's unfortunately not going to be any sort of inflation adjustment introduced under the Labour Party policy. I see that Ryan Bridge has been asking the Labour spokespeople about that. He was interviewing Barbara Edmonds, I think, just yesterday on this, actually, as well. But don't you have to go through that whole consultation process and maybe that might change, or am I being. I mean, what I've found is that if politicians are saying, well, this is our policy. We're not going to have an inflation adjustment. Don't count on it. Well, I wouldn't be counting on it at all. But one thing that I know a lot of property investors are asking us, Andrew, is, but what about properties that I already own? Yeah, and so quite a few investors are saying, right, let's get rid of our properties now before the election or directly after, before this policy comes in place, because I don't want to have to pay capital gains tax. If you bought a property back in 2015, and it's gone from $300 to $700, and then, fast forward, in the future, it's worth more money, that $400,000 that you've made in profit already, that's not subject to retrospective capital gains tax. If you're caught by some other tax, like the intention tax, that's different. But if any profits you make moving forward, they are taxed, but not the previous ones. Well, let's walk through that. So let's say you bought that property in 2015. By the time we get to 2027, it's gone up by $400,000. It's worth $700,000, all good. That's going to be. That's going to be untaxed. If we sell it for a million bucks, let's call it five years later, we've made an extra $300,000. So you're saying that first $400,000 is tax-free, that second $300,000, that's the amount that would be taxed. What's 28% of that? Roughly 100 grand. Those are some very, very rough maths. I was going to say it's about $80,000 that you'd be paying across to the IRD. Now, one question that a lot of people have asked me, though, is, but how. How would the government value it at $700,000? Like, on the valuation day in mid-2027, how do they decide what it's actually worth? We don't have that detail at the moment. It might be that it's your CV, it might be that the government pays for all properties to be valued like we have with an RV or a council valuation, but we don't have the details yet. We're going to have to wait for that. But the other thing that's important is it's not just investment property. We're going to have to pay for all the properties that are taxed, right, Andrew? It's everything. So, your holiday home, your commercial property, even if you've got, like, a mixed-use property, so a dairy where you've got it flat out the bank, and there's some complicating numbers there in terms of how much is used for your personal use. Your own home is carved out, but your holiday home, you might think, well, that's kind of like an extension of my own home. That will be taxed as well. OK, but there's a bit of a loophole, right? Yeah, there's a loophole that Chris Hipkins has already said he's going to exploit. Now, again, I'm just saying that tongue-in-cheek. If you don't sell the property, you're not going to be caught by the capital gains tax. And so, I mean, I think that's the policy, right? Good on him if he's ever going to sell his batch, right? This isn't a dig at him. It's just to say that if you don't want to pay the capital gains tax, one way to make sure that happens is not to sell properties because, of course, if you pass down your properties via inheritance, those aren't subject to the capital gains tax. And so what you might do as a property investor, if this policy came in, is buy properties, live off the rental income of those properties through your old age. Maybe if you want to top up and do some additional spending, you might even borrow against those properties for extra cash so that you can go on your holidays or whatever. And then you might decide to pass them on to your kids tax-free at the point at which you die. And then they would not have to pay the capital gains tax or at least not pay tax on the capital gains that you've made. Going forward, they would need to pay capital gains. If they decided to sell it and their property increased from $700,000 to $750,000, but the date at which you carked it and passed those assets on, they would be revalued and they would only pay capital gains tax going forward. Right, right. So if you inherit your mum's house and now it's in your name, what if it stays in a trust? I don't have the details about whether it's a trust, but what I do know is that fewer people are using trusts now. Yeah. Because it's so expensive. But inheritance is not considered, is not, well, in that case, it depends where the beneficiaries are. Anyway, we're going to go down a rabbit hole of entity ownership because if you're already a beneficiary, then you might already be considered an owner of that anyway. You'd get some tax advice. Now, it's important to say as well that I know that you are not voting for a party only or a property investor. You might be a nurse or a construction worker, a business owner, an employee. You could be a mum, a dad. Maybe we're going to have some kids here who can't vote yet, but they're listening as well. And it's just to say I know that we're only talking about property investment policy and housing market policy today, but I know that you're not just going to go on election day on the 7th of November, look at the different parties and say, well, which one's got the best property investment policy and which one's got the best housing policy? You're going to make that decision based on yourself as a whole person and what you think is right, whether for yourself, your family, your country or some other reason, right? But I know that this is not the whole thing today. And so we're not trying, so again, I'm not trying to say these are the policies, these people good, these people bad. It's about saying we know that these are the housing policies. We'll present those to you. But ultimately, we know that you're going to vote based on a whole raft of things. It was really interesting. I was in the election when we did this. Somebody messaged in to me afterwards and it's like, you know, even though I'm a property investor and Te Pāti Māori's policies at that point of time, we're not going to be particularly advantageous for this person. He was like, I vote for them because those are my values. I feel like they represent me. I'm like, that is a perfectly legitimate and a great reason to vote for somebody. It's not just about what's going to happen for your back pocket or you as a property investor. Having said that, I am very interested. In how you were going to decide who to vote for. So I'm going to get producer Dave to put another poll across your screen. And your options are, are you voting for people based on how it impacts your bank account, what you think is right for the country, who the leader is. Maybe you really like a specific leader. Maybe you always support the same party or whether it's something else. And maybe you'll let us know down in the comments. I'm really interested in how people decide or the primary reason somebody decides who to vote for. Right. No, you won't tell us. But have you decided already who you're going to vote for? Yes, I was on the radio the other day. Is it who I think? Well, I don't know who you think it is, but I'm not going to let you say it out loud. We can have a glass of wine at dinner and I'll tell you exactly who it is. But I was on the radio the other day. I was like, I always vote for the same party. Oh yeah, I already know. I picked up a party many years ago based on values. Same as me. Many jokes I could say, Andrew Nicholl. None of them I will say. And we're going to end that podcast. Poll in a three, two, one. We are going to share those results with you guys now. So 36% of people are saying you're voting based on how it impacts your bank account. So that's about a third of people. 51% are saying you're voting on who, what I think is right for the country. Not many people voting based on who the leader is. Christopher Lux is going to be very happy to see that only 2% of people are voting based on who the leader is. I was going to make that joke. That joke's fine, you're allowed to make that joke. Five percent of people say they always support the same party. And 5% of people say that it is something else. I think it's really good. I mean, whether you vote based on your own bank account or whether it's what you feel is right for the country, it's up to you. We all get a vote on election day, which I think is really important. And of course, if you want to learn even more about property and how different parties policies impact the election, we release YouTube videos. This is one that I released probably about three weeks ago, two weeks ago, maybe, Producer Dave. And I think it's got about 80,000 views or so, maybe not quite that many, where I've also broken down the party's policies. And you can join the conversation and start commenting as well. We release new YouTube videos every single Monday and Wednesday. That brings us to the second party that we're going to put on our list. So the second largest impact is the Green Party. Oh, I'm talking about the Green Party. And the reason that we have put them. At number two is, first of all, they are going to introduce a, or they want to, they're campaigning on a wealth tax. Now, this is where if you had assets above $10 million, excluding your family home, then you'd pay two and a half percent of your net wealth per year. So for example, if you're worth $20 million, then 10 mil of that, if it's excluding your family home, $10 million, you'd get tax free. The other $10 million, you'd have to pay an annual wealth tax. And that's what we're going to do. So if you have assets above $10 million, you'd get tax free. In that case, it'd be $250,000 on the 10 mil that is subject to that tax. Now, it's important to point out that's net, so net of any liabilities, right? Yeah, so it doesn't include mortgages. So if you're a property investor who's got $20 million worth of property, and you've got $15 million worth of debt, well, you wouldn't be paying that wealth tax because you've got 5 mil worth of net debt. And that's why Marama Davidson, the co-leader of the Green Party, is saying $99.5 million, 7% of people will not be paying this tax. Now, I've got to tell you, when we have done podcasts or webinars about wealth taxes in the past, I've always been really worried. And that is because previously, the thresholds were really quite low. It used to be $2 million was the threshold. And from my memory, and maybe you might correct me if I'm misspeaking here, from my memory, I don't think there was an exception, an exemption for your own home last time. And that could be a lot of people in Queenstown or Auckland. Yeah, so $2 million, I thought was quite a low threshold. At $10 million, excluding the family home, and bearing in mind that if you're a couple, that's $20 million then would be your threshold. I'm much less concerned about how this impacts the average property investor, because the average property investor does not have $20 million of wealth as a couple or $10 million of wealth as a single person. So that's individuals. What about trust? I don't have the data. I don't have the detail of trust in front of me. You've got a lot of questions about trust today. Only because I've got lots of stuff in trust, but I think that trust is still taxed and there's no own home threshold. I'd have to come back to you about that, right? But the other thing that is really going to impact property investors or would impact property investors is the interest deductibility on residential property. They want to remove that. So the changes that we mentioned at the start of this, where National has said that they have taken a lot of money from the state, they've taken away the interest deductibility and they have, the Greens want to reverse that change. So that's what they've called in the past the tax cuts on landlords or landlord tax cuts. That's what they want to bring back in the interest deductibility. Now, one thing that's really interesting to mention just about interest deductibility, though, is that although it often is framed as a tax cut for greedy landlords, it is important to understand that it can impact people you wouldn't think it impacts. I read a really interesting story just today about a couple who bought a property at the top of the market, peak of the market. They spent about 450 grand on an apartment in Auckland. Unfortunately, that couple then split up and neither of them could afford the property or the mortgage of the property on their own. And so they both decided to move out of that property. They turned it into a rental property. Now, all of a sudden, these people who bought this as their first home and now they're going to have to move out of that property. So they're going to now flatting separately because they're broken up. Typically, you don't flat with people you've just broken up with, but hey, if it saves you a dollar, maybe you might do it. These people would be accidental landlords and so would be caught by their interest deductibility. And so it's just to point out that sometimes you might think of landlords as greedy fat cats, depending on where you come from and your view on certain things. But sometimes these rules can catch people who you might not anticipate that it would. But one of the other things that I think that some people have asked me was how likely is it that this policy would come in because it really did impact property investors last time. And on top of that, I received an email just today from what was her name? I've got it down here. Barb. Barb sent me an email saying, you know, could you talk a little bit about how likely is it that that a policy like interest deductibility would actually come back in? Well, I've got a little a little trick for you for trying to figure out who might win the election. Now, one of my favorite things to do is look at the New Zealand Herald Poll of Polls. Now, if you haven't seen this before, you've absolutely got to go and have a wee look-see at this, because this gives you a sense of where the polls are leaning. And what I mean by that is if I showed you this graph on the left hand of your screen, what you see is a lot of dots and they're going everywhere. And some of the dots are blue and some of them are red and they're all on top of each other. What does this represent? This represents all of the various polls that get released. Now, isn't it funny? Don't you scroll through the news sometimes? And yesterday there was a poll saying that Labour would would be leading the government if an election was held today. And then another poll comes out the next day and National would be leading the polls or would be forming the government or leading the government if an election was held that day. And the thing is, there are all of these polls going on constantly. And so what the poll of polls does for the New York Herald is they smooth it out and they've built a prediction model looking at all of the polls and say, OK, what do they all average out to on a rolling basis? And this could give you just a little bit of a sense about which way the political winds are moving. Now, of course, here in New Zealand, we have a mixed member proportional system, which means that typically we have coalition governments. It's not often that one party has enough seats in Parliament to be able to form a government on their own. And so one thing that I really love looking at is the percentage chance that a certain coalition might have enough seats to govern. So if I went on today, as I did, to take a screenshot and look at what is the percentage chance that National New Zealand First Act would be able to form a government with their party votes alone, the answer is 51.5% based on their model. So about a 50-50. That's a 50-50 coin flip chance that they might have enough seats to get over the line. Obviously, if National New Zealand First Act get over the line, then a policy like intrastructability has effectively very, very, very limited chance of going ahead, effectively nil, because none of those parties are actually advocating for it. What about if someone changes? So say NZ First joins Labour, as they have historically, how does that change the outcome? Well, I don't have that specific graph on here, but they also do model that out. So for instance, that Labour, Green Party, Maori and Opportunity Party, if those all four parties got together, then they would have about a 39% chance, based on the polls today, of being able to form a government. Now, that doesn't mean that they would actually all get together and necessarily be able to do a deal. For instance, there might be a very high chance, if you were to run this model, that Labour and National would get together. They might have quite a high chance that they'd be able to form a government together. Where's the other 10%? So it doesn't add up to 100%, right? Because as I just said, there might be a 70% chance, and I'm making this up now because I don't have the number in front of me, but there might be a 70% or 80% chance that Labour and National could form a government together. That doesn't mean it's going to happen, but it's about could they have enough seats to potentially then do a deal, whether somebody does a deal or not. So there's only about a 40% chance at the moment that Labour, and former government, which is the only way that a Green Party policy like Interest Actability would be able to get implemented. But then you've also got to think about the coalition negotiations. Oh, by the way, I was going to say, with the poll of polls, just bear in mind that it's all based on percentage probability. So 60% of the time, it works every time. If you're a millennial, and remember Anchorman, or if you're a Gen Z, may the odds be ever in your favour. It's just saying these are percentage chances. It doesn't necessarily mean that 100% of the time something's going to happen. Is that Hungry Games? That's Hungry Games. That's Effie Trinket. I don't know about this. I take it that it's because you don't watch it. I knew this one. Yeah, yeah, yeah. It's because you're a millennial, not a Gen Z. I'm a little cuspy, so I get to be able to, I get to go either way. The other thing I was just going to mention is it does come down to coalition negotiations. So Deborah Russell, Labour's revenue spokesperson, has said their only tax policy that they're campaigning on is the capital gains tax. are saying that all of the National Party ads that we might have seen where they're oh, Labour wants to pile on tax, they're saying that's actually a lie, that's what Labour is saying. And so it's just saying we don't know what's going to happen after a coalition potentially forms. Labour's been a little bit coy about interest deductibility. They kind of have said, oh, we're still thinking about it. They haven't really ruled it out yet, but they're saying the CGT is the only thing that they are campaigning on at the moment. They did make a comment around stopping at 50%, though. Do I remember that right? They've made a lot of comments, but there's nothing firm that I'd want to point to and say, guys, this is actually what it is when you've got a couple of hundred people watching us and saying, give us the details rather than just what people are saying that they may or may not do. The main point is it might not be exactly as it's pitched today, right? Well, no, what I'm really saying is that there is no guarantee that even if there was a Labour-Greens-Opportunity Party-Te Pāti Māori coalition that interest deductibility would change at all from what it is. But you are correct that throughout coalition negotiations, even if the Green Party really wanted interest deductibility, there could be changes to what they are proposing today. However, we really should wait to hear what Labour specifically is going to do or what they are ruling in or out from interest deductibility, but they haven't made that announcement today. Which means that we are up to the party that would have the biggest impact on the property market, which is opportunity. And Andrew, you've been looking at the details. Yeah, this is a big one. And actually, I don't think I really understood the gravity of this until Ed before did the numbers for me. So this is where potentially you end up with having what is a land tax. Now, over in Brisbane, did you say? Melbourne. Melbourne. They essentially have that right now. So if you've got some land, then you're taxed on that on top of your rates. Now, rural land, I mean, that's going to have an impact, particularly because of the high value. But on the land, the component of any property that you own, there will be a tax and that's for all property. So just to put it into perspective, if you're talking about a $450,000. Yeah, I'll pull up that slide for you. I've got to click through some because you're really jumping around. Oh, sorry. But if we talk about that $450,000 piece of land, so say you've got a million dollar rental property and $450,000 of that is a land component, that 1.75%, I mean, tax, land tax, even though it seems like an insignificant amount, that is $151 extra per week that you're paying over and above your rates. And this is essentially rates on top of rates, right? Yeah, and the important thing to note is that this includes the family home, right? So this would include holiday homes, family batches, all of that kind of stuff, not just investment properties or commercial properties. We see that here in the post where they say, this includes the family home. And this is why, we've put TOPS policy at the number one biggest impact because National's policy, they always exclude the family home. Act New Zealand First, Labour and the Greens, they're excluding the family home. Interest deductibility doesn't impact the family home. Their wealth tax, they're excluding the family home from that. Only TOPS is really coming in and saying, we are going to introduce a tax that does touch the family home. Now, it is important to recognise as well, for any TOPS voters out there, you should be pulling me up on this, because they are also suggesting that there is what's called a citizen's income, right? And so while you might pay some additional tax on your home, we would all get, or not we would all, but most of us would get an income from the government as well, effectively a benefit from the government, a universal basic income. And that would mean that some of that land tax might be offset by that income, but it won't be offset for everyone. What is true is that this would be a major change to the property market. And so even if we, if we go on Opportunity Party's website and look at the impact that they think this would have, they think the land value tax would bring house prices down by a projected 10 to 15%. Now, bear in mind, that is on top of the current downturn we've been through. So if you're in Auckland and your house value is currently 22 to 24% lower than it was at the peak of the market, then perhaps that might come into your decision as well. That might sting you a little bit. If you're a first-time buyer, you might think the other way and be like, well, I can't wait for those house prices to be even cheaper than they already are because you want to get into the market. So it does impact us differently. And what if you're a retiree and you don't have that cash coming in? So there is the ability to offset that and pay it later at death when that property is sold as well. But that'll be different for each person. The one thing that's really interesting is the Opportunity Party's stated impact on landlords. So if we jump on their website, I was pointing this out to the New Zealand Property Investors Federation the other day. They've got landlords and they've got landlord Larry on there, right? And so this is a New Zealander that they've kind of created and said, how might they react to the Opportunity Party's policies? And in the highlighted part here, you can say they literally say he's going to take quite the haircut this financial year, not just because he's got long, luscious hair in this particular caricature of him. But what they're suggesting is that they do want to see landlords sell their properties and or develop those properties and sell them to landlords and sell some of that real estate off. So they do want to see quite a substantial and sustained shift in the property market. Some people would say that's very good. Other people say that's not so good. He looks like a skinny Donald Trump. I was going to say he looks like a fat Andrew Nichol. But those are the five levels of impact from national all the way up to Opportunity Party who would have the largest impact. But I also promised you that I would want to talk to you about the one thing that matters most. Or matters more than who wins. And what I wanted to draw your attention to is sometimes we landlords are called speculators who are flipping homes on the same day of purchase. Or I saw another headline from the New Zealand Herald that said greedy landlords have been put on notice. And what I've really wanted to do over the last probably couple of years is try and pull some research together around what property investors really want. And we just released last week the What Investors Want report and what they're doing. Where we looked at 4,381 financial plans. So these are property investors' financial plans that they've put together with a financial advisor to understand what are their true motivations. What are property investors really investing for? Because underneath a lot of these political parties' policies are some assumptions around what landlords are and what they do and what their motivations are. And there are a couple of quotes that I pulled out from some of those real financial plans that I wanted to talk to you about. One person said that they want financial freedom later in life. That's why they're investing in property. They don't want to be stressing about where the money is coming from or whether they can turn the heaters on in winter. Another person said that for them, they're investing in property for financial freedom. They want to be able to see their family once a year and not have to worry whether they can fly back to South Africa to see their parents and worry about whether they're taking money from somewhere else. Another person said that they're investing in property because they want to go to the grocery store without having to worry about whether they can put the corn chips into their grocery basket and whether they're going to be able to afford it. They just want a bit more of a comfortable life. And this really spoke to me because it made me realise that property investors are really just normal people who are trying to do their best to live a comfortable retirement later on. Now, as part of that research, one thing we found is that the average person, the average property investor, wants to spend about $100,000 in retirement. And one thing I want to get Andrew to speak about is from that research, where that $100,000 comes from. Yeah, just bear in mind, that's as a couple. So if you're getting the NZ Super as a couple after tax, you get about $44,000 a year. So that's a big chunk of it, but not all of it. If you've been putting money into KiwiSaver and you're going to follow that through right to the end, it's about $18,000. That does leave quite a big shortfall. And so for a lot of people, that $38,000 either has to come from other investments or a lifestyle adjustment. And the main thing we wanted to point out here is property investors are really just trying to create that extra $38,000 a year on average when we look at these plans to be able to live that little bit extra in retirement, right? So the NZ Super, KiwiSaver's doing some really heavy lifting. They're not looking to necessarily get $100,000 of rental profits to go off to Fiji based on their tenants' money. That's not necessarily what they're looking for. They're looking to plug a very specific hole to get some of those extras. That's what we found. And the other finding was quite interesting, Andrew. Yeah, so 92% of the plans that we put together, those people have got a wealth gap. Now, the cool thing about that is there is still a big chunk of people that are already on track for their goals if they stay the course. But for those 92% of people, they do have to take action. And so we do have to identify what it is to get them there. And what that really means is if they keep with their current, money and investing habits, they won't be able to fill that full 38% gap that they're looking for, right? So they wouldn't be able to quite get to that $100,000 median that people are looking for in retirement. But it really spoke out to me that people are investing in property for that retirement. And one thing that's really interesting was around how many properties they need to get there. Yeah, so when I started investing 20 years ago, everyone said you need 10 rental properties to be able to get there. to get a comfortable retirement. might have been true or easy to achieve back when it was easy to get lending and properties were a lot cheaper. Most investors need about three rental properties to close their wealth gap. Isn't that amazing that 50% of plans need two to four properties, the media needs about three properties to close their wealth gap. So they're not mega landlords, right? Yeah. So if I think about stuff series where they were talking about mega landlords, I think that was somebody with 25 properties plus. Now, if you've got 25 properties plus, all power to you. I'm not having a dig at you. But it's interesting to try and put research out there to say, hey, look, if we look at 4,381 landlords or would-be landlords, we peer into their minds, into their wallets, what is it that they actually want? Are they this kind of other group of people who are just trying to rort the system and take advantage of their tenants? Well, that's not what we see. We see mum and dads with two to four rental properties trying to plug a hole in their attire. So they can live a little bit more comfortably. And I know this quote stood out to you, Andrew. Yeah. So this one was particularly interesting. The fact that people actually, they're not trying to build up so much money that they are the richest person in the graveyard. They just want to be able to enjoy their lives now and not be land barons. But there was something, and this really spoke to me as well. And when I was talking to some of the journalists about it, they're like, we love that because it's so evocative that it's not that people are necessarily greedy fat cats, they're just trying to get a little bit of that. Now, one thing that I know that the election doesn't change is how long it takes to build that plan, right? And one thing that I want to ask you just before I keep on yabbering on is what age do you realistically want to be financially free by? I'm going to get producer Dave to put that across your screen and you can all vote on that and have a little good old chit chat. Gosh, there's a lot of comments in there as well. So what age would you ideally want to be financially free by? And the reason why I said realistically is because, I mean, I would have loved to be financially free at three years old, but it's not going to happen because I don't have a time machine and it didn't happen for me. But realistically, you know, what's a good goal for you if you were to push yourself? We're going to close that off once half of you have responded to that in three, two, one. We're going to close that off and put that across your screen. So amazingly, 36% of people would ideally love to be financially free by 60 and 21%. It's about even between 24% saying 55, 21% saying 65. Guys, you would not believe it. That pretty much lines up with the research that we did in the report is that a lot of people want to retire before 65, ideally, if they can push their way to get there. But people aren't saying that they want to be retired at 50 years old. They are realistic about it. They want it to be around that 60. But one thing that's really important is if you want to retire at 60, one thing that was really consistent throughout that research when we were looking into property investors' minds and wallets and plans is that it takes on average 20 years for those plans to come to fruition, right? Yeah, and that's regardless of when you start. So if you're 40, generally speaking, it's going to be 20 years before you can see the fruits of your labour. So you're going to be 60. If you're starting much later, that same number applies. So if you're going to wait five years and you start at 45, it pushes out to 65. If you're going to wait till 50, it could be 70. And the reason I point that out for you here is elections are obviously important. They come around every three years, but there's always a reason to wait, right? Now, whoever ends up being the kingmaker in the election come November 7th, what's not going to change is that you guys still want to retire at 60, right? Now, if I said, do you want to retire any earlier if your favoured party gets into power? You'd probably say, no, I still want to retire at whatever number you list. What about if the opposition, maybe a party you really hate or dislike or don't like their policies, if they come into power, does that change when you want to retire and be financially free? Probably not either, right? We still want to be financially free no matter who ends up coming into power. And so the main thing that I want to say is, even if you're thinking, look, I'm interested in investing in property, but I want to wait. I want to invest after the election. So the thing that I'd say to you is the election's actually only three months away. Now, we know from that data that I showed you right at the beginning of the presentation tonight, we know that after the elections, the property market tends to get a little bit more lively. It takes a couple of months before it really starts to kick into gear. But if you're really worried, like the 13, 14% of you who said you were really terrified about the election, you could always create a plan, start getting into a position to invest if you're at that stage within your portfolio. And then you could always decide whether to invest and to take action after the election. One thing that I'd just caution you on is waiting till your party that you prefer gets into power and then start getting into the position to invest if that's what you want to do. Because by the time you get there, you're going to be investing in February when we know that that is the time after the election where lots of people start re-entering the market because they then have more certainty. Now, just before we open it up for questions, I'd like to take a moment to thank you for joining us today. We'll see you in a few moments. Thank you. Thank you. Thank you. Thank you. Next one, if you're looking to expand your portfolio. And the thing I want to get across to you, because even some people have listened to my podcast for a long time, people say, but how much do you charge? There is no cost for a portfolio planning session. We create property investment plans for free for investors. And the reason we do that is we don't want to put any barrier in the way of people going ahead and getting financial advice. Now, that leads to a keeping the lights on and doing webinars if you do not charge for those portfolio planning sessions the vast majority of the time. Firstly, if you come through and get a plan and decide to buy a new build investment through us, well, we might charge a marketing fee to the developer so we could get paid that way. If we help organise the mortgage, we have a mortgage company, Opus Mortgages, we might get paid a commission from the bank if we can organise a loan for you to buy that investment property. On top of that, we've got Opus Property Management. If we help you rent that out, then we take a normal property management fee of the rent that we collect. And on top of that, we have Opus Accounting, which is a normal accounting company. If you use us, we charge your fee just like lots of them. So the main point to say is we've got different ways that we keep the lights on, but I just like to be very upfront and honest about how is it that we're able to offer zero dollar portfolio planning sessions and still keep the lights on. Now, if you are interested in one of those portfolio planning sessions and creating that plan before the election, I am going to put one final poll across your screen, which is are you keen to book in one of those free portfolio planning sessions or not? If you click the top one, I'm going to send you a link to book a time tonight. If you click the bottom one, no worries, we won't be offended. If it's not the right time for you, we just won't send you a link. If you're a current client, sometimes clients say to me, Ed, I really want to click yes because I like you, but I've just had a portfolio planning session. That's okay. Just click no. It doesn't bother me in the slightest. We just won't send you a link or not. So Producer Dave will put that across your screen and you can just make whatever is the right decision for you. Now, we are going to come to questions. We're going to stick around for the next 20 minutes answering those. And Andrew, you've been looking at the Q&A. What is standing out to you? There's been a lot of talk around the age of eligibility. So right now you can cash in your KiwiSaver and you qualify for the super if you've been in NZ for 15 years as a taxpayer. Is that right? No, it's not 15 years. I'm fairly certain. Something like that. If you qualify, you get the super from age 65. So there has been talk about that age going, getting pushed out in the future. There's nothing about policy around that, right? Yeah, of course there is. National wants to take it out to 67. Right. ACT Party wants to take it out even more aggressively. New Zealand First doesn't want that to happen at all. Do you think that will happen? Well, I mean, I don't think. It's been kicked around for a long time. I wouldn't have thought that New Zealand First would go ahead with it. But one thing that I'd say is they don't want to make any change until 2044, right? So they don't want us to move for another, what's that, another 18 years. Just bear in mind the last time when Bill English was the Prime Minister, they jumped, Bill English did change the policy and said, we are going to move out the age of eligibility. Of course, that got changed though. And I think if you're worried about that, then that's why you have to take control of your own financial future. If you don't want to be beholden to the government telling you what age you can retire, then you have to have other assets. Well, and the other thing is, the vast bulk of you said that you wanted to retire before 60%. 65 anyway, right? I think it was about 24%, but roughly a quarter of you said, hey, look, I'm happy to be financially free realistically by 65 plus, right? So some of you guys who are saying that might be relatively close to retirement. But if 75% of you are saying, bugger that, I want to be financially free well before that, then you would want to take control of your investing so that you can make that happen because your KiwiSaver and NZSuper won't be available until 65 at the moment. And of course, depending on how old you are, I mean, if super annuation got changed under National's current policy, I would personally would be impacted, right? So it would be pushed out for me to 67. Have they said that KiwiSaver would be tied to that? Well, KiwiSaver is currently tied to the age of eligibility is my understanding. Well, I mean, it could be anything, right, Andrew? But at the moment, it would be pushed out to 67. And then there's a lot of questions around the percent. There's a lot of questions around the percentage that you'll be charged on capital gains tax. So that depends on your personal tax rate. So there's no. No, it's not. It's 28%. Oh, okay. So it's not like Brightline. Okay, I misunderstood. No, Labour's policy is a flat 28% for capital gains tax, yeah. The other thing that's important to just point out is you might be really worried on valuation day, let's say it's June or July 2027, right? And you might have bought a property at the peak of the market like I did for, I think, $900,000. And let's say that the property is worth $700,000 today, right? So the value of that property is dropped by 200K. On valuation day, is the value for capital gains tax going to be the lowest $700,000? Or is it going to be the $900,000 that you paid for the property? Because, oh my gosh, if it's based on the lower value, 700 grand, and then maybe you sell it at $900,000, what you originally paid for it. You're still low. You didn't really make a capital gain, but you're still going to have to pay 28% on that $200,000. Nah, mate. It'll be based on the original purchase price if your property's gone down in value. That's what Barbara Edmonds, the Labour finance spokesperson, calls the median rule. She was talking a lot about it on Ryan Bridges' show the other day. I was at the gym last night preparing for the webinar. I was doing my deadlifts while I was listening to Barbara Edmonds talk about tax. It was a wonderful, wonderful way to spend five to 10 minutes. And there's been a lot of questions around Australia because obviously they've got their new capital gains tax, or at least they've got their capital gains tax. Or at least it's been broadened and how that's affecting their market. And will it affect ours? Oh, sorry. I was looking at the things. What was the question? So whether or not the Australian rules and how they might impact house prices, if that's going to flow through to here? Oh, I think very unlikely. And I'll tell you the reason why. Because if you're sitting in Australia, let's say that we don't have any capital gains tax over here like we currently do now. There are, of course, we've got the Brightline test, we've got the intention test. But broadly speaking, we don't have what most people would recognise. We don't have what most people would recognise. We don't have what most people would recognise as a capital gains tax. Now, of course, if you're an Australian and you decide to buy investment properties over here, you are taxed on your worldwide income. So the New Zealand government, the IRD over here might not be clipping the ticket, right? However, when you repatriate that money across to Australia, they're looking at you, or even if you didn't, they're looking at your worldwide income. So you'd be paying tax on that anyway. So I'm not certain or I'm not confident to say that we're going to all of a sudden see a flood of Australian investors coming over here and buying up New Zealand. So I'm not certain or I'm not confident to say that we're going to all of a sudden see a flood of Australian investors coming over here and buying up New Zealand property. The other thing I've been pointing out is I've been talking about it. I was recently on the Darcy Angaro's show, the Everyday Investor podcast, and we were talking about this. And one thing I pointed out to him is you would be a grade A idiot if you're in Australia to sell your investment properties right now. And the reason I say that is because if you sell that investment property, you can never get your tax benefits back. Whereas if you are currently a property investor and you bought those investment properties before the budget day over in Australia, you are grandfathered into the old rules. You get to keep your old negative gearing rules. You get to keep the old capital gains tax rules. But if you sell that property and buy it back even three days later off whoever you just sold it to, you will never get those tax benefits back again. So there's likely to be this lock-in effect where people are like, I'm not selling that property. I'm going to lose all of the tax benefits. So I wouldn't be too confident to say all of the property is going to be sold back. I'm not going to lose all of the property. Investors over in Australia are going to sell up and buy here. That is quite different from the interest deductibility rules that originally were brought in by Labour in 2021 because that did apply retrospectively to people in the market. Yeah. Nathan had a good question. What happens if I've got a rental property and then I move into that as my own home and now I sell it? So my understanding is that the Labour are going to use the old bright line test rules, which is a property is considered your main home if you have lived in it for more than half the time. A property is considered a rental property if you have lived in it for less than half the time. That can work for you. For instance, if you bought a property, you owned it for three years, then you moved out of it. It was a rental property for two years. You then sell that. If that is the rule that they apply, which is currently how bright line test works, then what would happen is that property, you could sell it for tax free. Whereas if you had a rental property, you rented it out for three years, then you moved into it for two. Well, actually, that would be subject entirely to capital gains tax. So it works for some people, works against some people. So a lot of people are asking, can it change afterwards? So say capital gains tax comes in, can it change in the future? So the answer is yes. Will it change? Well, I mean, who knows? I mean, yes, is the short answer, isn't it? If we think about income tax rates, they've changed lots. Last time Labour came in, they introduced the 39% tax threshold. And early in 2023, they changed the tax thresholds again to give people tax cuts, depending on what you were earning. But many New Zealanders got some tax cuts because they adjusted the thresholds. So just like all sorts of taxes, the bright line test went from two years to five years to 10 years, back to two years. Of course, it will change. There's a question, will capital gains tax push the price of property up because people want their tax on top of the value? Well, the thing is, like whatever happens to suppliers, ultimately, buyers still have to pay the price, right? One thing that's really interesting is we don't have a capital gains tax here in New Zealand, and we haven't for ever, basically. If we look at Australia, they've had a capital gains tax in some shape or form since 1985. Now, if we look at Australian house prices versus New Zealand house prices, they've basically gone up at a very similar clip over the last 40, 41 years. So what we haven't seen is Australian house prices lag behind New Zealand house prices, because we have looser tax rules, at least when it comes to capital gains on investment properties. Similarly, we haven't seen Australia shoot ahead deliberately because of the capital gains tax. Ah, people are charging more because they want to get their tax. I hear people say that. I don't really buy into that, right? Because ultimately, there's a lot of competition in the property market. I'm not certain that property investors as a block can increase prices or recapture that tax they're going to pay. And there's a few people asking about the valuation process. So we point out before, there is no set valuation process. We don't know what that would be in terms of that baseline value for a property you own today. It might be the government value, although they seem pretty out of date, and they're all over the show based on different regions. So we're not sure. Yeah. And just by the way, I saw somebody say, I can see a big black screen and I can't really see Ed, but we're really small. We've pinned ourselves to be really large for you guys. You might have accidentally turned something off. If you go down and you pin where we are, you can change our settings and make us big if we're small on your screen. What else is interesting? Immigration. How does immigration affect house prices? Well, it's really interesting. I was looking at one of our pieces of research and podcasts a little while ago, and I remember Westpac coming out and saying that a 1% increase in immigration or our population due to immigration over a short period leads to an 8% increase in house prices. However, I'm not sure if we've really seen that effect over the last couple of years. If I went back the clock about two years ago, I remember Westpac predicting about an 11% increase in house prices because we had so much immigration going on and then we actually didn't see that impact at all. So if I look at the data Westpac put out, I'd say a 1% increase in the population from migration leads to an 8% increase in house prices. Not sure if we've really seen that or whether that relationship is holding, given everything else that is going on in New Zealand. But all things being equal, a higher population does tend to increase to higher house prices, all other things being equal. Having said that, it can also create a supply response where developers build more houses because of that. I remember an advisor once saying there was a pigeon rule of economics that a 1% increase in, and oh no, that was about interest rates, it wasn't about migration, but they were similar numbers. I won't go down that rabbit hole then. Someone's asked what they should do. They're 21 and they've got some cash and they want to know, should they buy a new build or should they buy a property and add value? That's where you have to get personalised financial advice. We can't do that here tonight. Generally speaking though, if you're starting out, you probably want to build your wealth with whatever skills you've got. So if you're a builder or you're a plumber, you're handy and you're going to buy a property to live in, I'd probably start by buying an older property and adding value. If you're a mum and dad and you've got a mortgage, you've got kids and you've got jobs and you're busy, that's when the buy and build and hold, that's probably a better strategy. Amy and Jamie have asked, I've only just realised that their names are on, but Amy and Jamie have asked really good questions. She said, with the capital gains tax, would it take into account under Labour's policy substantial improvements done to the property? So what would be included, or let me give you an example calculation. You buy a property for $500,000, you sell it for a million bucks, right? So you'd look at that and say, cool, $500,000 profit. Let's say that that's going to fully be taxed by 28%. Not going to be the case because in order to sell that property, you might have had to stage it. You might have had to pay the real estate agent for some marketing. You might have had to pay the real estate agent's commission. So all up, that might add up to, I'm going to use simple numbers, $50,000. So if it costs you $50,000 to sell that house, rather than making a $500,000 gain, now all of a sudden you've made a $450,000 gain, and that's the amount that you'd be taxed on. It's not just simply, what did you buy it for? What did you sell it for? Your lawyer's fees come into that both when you buy and potentially when you sell as well. On top of that, let's say that you were renovating a property. If you had $100,000 worth of renovation expenses, I'm just going to make it really simple. Well, now all of a sudden you didn't make a $450,000 gain, you made a $350,000 net gain. So that additional spending does come into it. So if you are a renovator and you are buying properties, you're doing them up and maybe selling them 10 years later, those original costs will come into it. The original costs won't be inflation adjusted. Right. It's just a very simple calculation. Would there be any carve out for like just general maintenance? So obviously if you're maintaining a property over 10 years, that wouldn't count. But if you do it all at the end, that would count. No, because maintenance is included within your rental deductions. So if it's a rental property, you don't get to count it twice, right? You don't get to count it once within your rental return, which happens every year. And then again, when you sell it, right? But capital expenditure, perhaps that would come into it, right? Because capital expenditure, like if I was to replace all of my windows and turn them into double glazing, that would be capital expenditure. So I wouldn't be able to claim that as a deduction on my normal rental property. Lots of people asking about how this will impact rents. And I do think that if you do have the inability to claim your mortgage again, and there was a land tax, that probably will have an impact on rents over time. But again, you can't just increase your rent and say, I've got higher costs now. We didn't see that with, you know, interest rates going from 5% to 7% and then all of a sudden it being passed on. No, but having said that, we did see a bump with interest deductibility. Now that could have just been like coincidence, right? Because at the same time, policies come in and go out and it's not necessarily that you can say, ah, hey, that's what caused rents to go up. But it is true that when interest deductibility changed back in 2021, we did see quite a spike for rents over the next few years. Now that that policy has been changed, we're seeing quite a rental market. I'm not trying to point to that and say, ah, nationals changed to the tax policy. That caused rents to flatline, we should be very grateful for them. That's not what I'm saying. Sometimes these things are coincidences, but it's interesting to see that these things have kind of lined up, yeah? What else have you got in the questions that's really jumping out to you? I'm loving how like, like some of these are like really quite in depth. I'm like, oh, we're into the policy questions. Another one that somebody's just asked is, what do you think, is going to happen to the property market in the short to medium term if Labour gets in? I know historically the market's gone up more under Labour, but I feel that the market's at a different time at the moment. It's not a knife edge. We've got confidence, fear of overpaying the number of listings. I will come to and get your take on it, Andrew. The first thing I'd say is your underlying point is actually right. Funnily enough, and I made this point recently, I was on Duncan Garner's today. Luckily, Andrew actually watched that, which was quite nice. I almost feel like you're my parent watching that. So proud of you. Well, thank you. I'll take that, won't I? And what I was saying to him is, funnily enough, over the last 33 years of data that I've got, at least, I can see that house prices have gone up faster under Labour than national. That's different from a lot of what people would think. Now, I was saying to Duncan, look, it's not necessarily that Labour's policies cause house prices to go up faster under Labour than national. I understand that some property investors might make that argument. But I understand what you're saying. Is that going to continue in the future? Now, what do you think? This is just a very big, long setup for you. Over the short to medium term, what do you think the policies or the impact would be on the property market? I think the biggest thing is people will probably ride out a policy they don't like. So if capital gains tax comes in, there might be people that wait for the next election cycle to see whether or not they're going to sell the property and get around paying that tax. Oh, like, for example, if national was saying, OK, we're going to repeal that, we're going to come there. But with interest deductibility, right? People don't necessarily sell en masse because they'll say, oh, well, I'll wait to the next election and see what happens. The other thing that I'd just say, it was really interesting. We had Michael Yardney on the podcast recently. He's a big Australian property educator. And one thing that he said to me is, look, every time a new policy, because he's been investing since like the 70s, right? And so he was saying every time a new policy comes in, and whether that's a change to any gearing or a capital gains tax or a land tax in Melbourne, whatever it happens to be, initially, it has quite a bit of a shock factor on people. And then eventually they get over it and life moves on. And it just makes me think of the negative gearing changes we had in New Zealand, where we have what were called and still are called the ring fencing rules. And that initially had an impact on people and their cash flow, because they could no longer get a tax benefit based on their annual rental cash flow. But after a while, I'm not sure anybody brings that up. It's been brought in. So sometimes what happens is it might have an initial shock factor, then the shock wears off and people decide what they're going to do next year. And I think for a lot of investors that I work with, even though they'd rather not pay an extra tax like capital gains tax, they'd also rather have the 67% or whatever it is in terms of net income. And whilst, you know, it means that they're not going to get as much money later on for their retirement, they can easily add another rental property on maybe somewhere along the way. And that closes that gap. Yeah, Jeff's asked a really interesting question. He said, if property prices only go up by, say, 2% over the next five years, aren't we better to, say, sell all of our properties and go into ETFs? Well, it kind of depends, to be honest with you, Jeff, on where your situation is, right? Because over the long term, property prices have tended to go up by more than 2%. If you're in Southland right now, you'd be very excited because since the property prices are up 22%. So you'd be like, oh, yeah, I'm right into Invercargill property prices. Even if I look at Christchurch, that's up about 12% over the last three or so years. So I always caution people against saying, as I was talking to a journo the other day, house prices aren't flat everywhere. In some areas, they're still declining. In other areas, they're going to be increasing. The only thing that I would really caution against is thinking that exchange traded funds are going to continue to return the astounding returns they have. Over the last 10 years, right? One stat that I've been sharing with people a lot, and we've got another podcast coming about it over the next couple of days, is that the S&P 500 has returned 13.1% per year, compounding over the last decade. That is an astounding return. If we look at a whole heap of decades over time, that's like a 1 in 20 return. It's a very unusual or rare return to get it so high. Now, it could continue for the next five years, right? I don't have a working crystal ball. That tells me how much the S&P 500 is going to go up over the next five years. I wish my crystal ball worked. Unfortunately, I'll have to work on that happening. But I'm just saying it's really hard to look at over the next five years and give an intelligent answer about what the right decision is, whether you sell and move across. I'll give you an example of what I mean by that, Jeff. For some of my investment properties, if I sold them today, because they've gone down in value, I might not actually get that much out of it, right? So selling an investment property or some of my investment properties today wouldn't give me that much additional capital after I pay the real estate agent and my legal fees and all the selling fees to go and take that money and put that into the share market. And then I'd be taking a hell of a risk as well about whether that's going to go up or down over the next five years. That's a very short period to be in the share market for. Perhaps you might decide to go for a more risk-averse fund or a lower risk fund, like a balance, for instance, if you were to have that shorter timeframe. But it's just to say there's lots to think about. You should really talk to a financial advisor before you go selling a property and banging it all into a particular fund. And then someone's asked, is capital gains tax inevitable? I think at some stage it will come in, but whether or not it will stay, I wouldn't be on that. Oh, it's so funny because I always take the opposite view of like, no taxes are inevitable, right? People have been talking about a capital gains tax in New Zealand for God knows how long. We've never had it come in, right? And people were talking about capital gains taxes at each of the the past elections that I can recall. Not last election, actually, because they didn't come out with a capital gains tax. But there has been talk about capital gains taxes for decades. We haven't got one. I don't think it's necessarily inevitable. Yeah, but we kind of have something at the moment with the bright line. Yeah. We've got time for one more question. What is jumping out at you, Andrew? Lots of people asking around timing of selling assets or buying them i think that again is something you need to talk to a financial advisor because if you ever try and time the market to get it perfectly you'll be wrong ed and i both bought at the peak of the market we've hopefully bought the downturn of the market you've got to figure out what's right for you and also hold for the long term fantastic we're gonna wrap it up there thanks so much for being with us you're gonna be able to catch the replay and it's amazing that here on a tuesday night we've still got over 400 people listening to the webinar i love you but was wrong with you thanks so much we'll see you at the next one see you later guys