NZ property prices decline after investor tax changes

In March we witnessed two key reforms come into effect designed to take the steam out of New Zealand’s inflating property market.

First, the Reserve Bank of New Zealand (RBNZ) reintroduced loan-to-value ratio (LVR) mortgage restrictions, which from 1 March 2021 required both investors and owner-occupiers to hold bigger deposits:

Second, and more importantly, the New Zealand Government on 23 March announced major property tax reforms targeted at investors, specifically:

  • extending the term of the Bright Line Test for taxing capital gains on investment property from five years to 10 years; and
  • fully removing the tax deductibility of mortgage interest payments on residential investment properties.

Today, the Real Estate Institute of New Zealand (REINZ) has released its house price results for April, which recorded a 1.8% median decline to $810,000 nationally (chart from

NZ median house prices

NZ median house prices fell 1.8% in April.

According to the REINZ’s acting CEO, Wendy Alexander:

“While the national picture represents the busiest April in 5 years, the reality is that we’ve seen the number of sales decrease when compared to March. While in part this is what we expect to happen when moving from March to April, there is definitely a wait and see approach from a number of investors and also some first time buyers”…

“Some of these falls in sales volumes are likely to be early signs of the LVRs slowing the market, some will be attributed to the changes announced on 23 March and some are likely to be the fact that we have the lowest level of inventory for an April month since records began”…

“As we head further into the cooler months of the year and the second tranche of LVRs comes into effect, we would expect to see further stabilisation of the market in the coming months”.

Auction clearance rates also fell sharply over April and asking prices on’s portal declined by $18,340 (2.1%) in April.

Thus, it appears that the housing policy changes are beginning to bite.

Unconventional Economist
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