1. Capital gains tax back on the menu
Labour’s election promise to bring in a capital gains tax of 28% on the sale of properties (family homes and farms excluded) from 2027 dominated the news last week. It’s not worth getting too exercised about this issue just yet, given that Labour would need to get into power first and the election is still a year away.
However, I’d make these points for now. Firstly, CGT is not an effective tool for limiting house price growth (it hasn't stopped house prices from rising in other countries, including Australia).
Secondly, CGT revenue might take a while to accumulate and may be limited as trendlines suggest property investment returns will be lower than they have been in the past.
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Lastly, the presence of CGT could well limit investor activity and raise home ownership rates, provided that the people who otherwise would have rented are willing and able to buy a house instead. In the end, Labour might be happy with that outcome.
2. Property values inched up in October
The Cotality Home Value Index for October showed a rise in national median values of 0.2%. Auckland dropped modestly again, but the rest of the main centres were either flat or up, with several provincial cities rising too.
It’s still too early to conclude that this is the start of a new upturn just yet, but the odds of moderately rising house prices in 2026 do seem to be increasing. The factors for that include better affordability (values remain 17% below the peak), lower mortgage rates, a drop in the stock of listings, and the prospect of rising GDP and falling unemployment next year.
Cotality chief economist Kelvin Davidson: "It’s still too early to conclude that this is the start of a new upturn just yet, but the odds of moderately rising house prices in 2026 do seem to be increasing." Photo / Peter Meecham
3. The worst has probably passed for the labour market
On that note, last week’s filled jobs data from Stats NZ was encouraging, with a rise of 0.3% in September, following a small lift in August too. Those are obviously minor increases and may ultimately be revised down in subsequent releases. But even so, upturns have to start somewhere, and for now, this is great news, with the lagged effects of lower interest rates potentially (finally) starting to come through in the economic data. Hopefully, there’ll be more evidence of this in the benchmark Q3 labour market figures from Stats NZ this Wednesday morning.
4. Better news for construction, too?
Stats NZ will publish September’s new dwelling consents data on Monday. There have been tentative signs in the past couple of months that these figures are starting to rise modestly again, so hopefully we’ll see more of the same.
5. Still floating or fixing short?
On Thursday, the Reserve Bank will publish its lending data for September. I’d imagine some people have still been opting to lock in a portion of their debt for longer than 12 months, but given that the OCR has continued to fall recently as well as mortgage rates themselves, it wouldn’t be a surprise to see a fresh lift in shorter-term lending in September’s data.
