• TobyPascoe

Property: Labour vs National

There are two camps in New Zealand when it comes to house prices. The first camp is first-home buyers or those seeking to step into property investment. The second is investors who currently hold property. Each of the camps hopes for the property market are vastly different, with the first wishing for house prices to stabilise or even drop and the second hoping for house price growth to increase capital gains and equity. Unfortunately it creates the 'us and them' phrase, or what people see on the surface as 'the rich get richer and the poor get poorer". Very gingerly here I step into the political arena and analyse the governments of the past and their effect on the New Zealand property market.

Firstly let me be frank and lets not beat around the bush, Labour is seen as good for camp one and National for camp two as supposed supporters of investors. I am either way on this; after all it was National who brought in the 'bright line test', effectively New Zealand's version of a capital gains tax. If you were an investor in the 2000's you would have quite enjoyed having a Labour government as house prices grew approximately 95% in that time, the quickest in the 30 years since 1990 that I will analyse. The results of data collected from Statistics New Zealand, Core Logic and REINZ will surprise you so buckle in.

House Prices.

During the National government of 1990 - 1999, which was led by Jim Bolger and later Jenny Shipley, the median New Zealand house price grew 60.09% or 5.37% year on year.

Labour, led by Helen Clark, followed up over the next nine years to 2008 with growth of 94.69% or 7.68% year on year.

John Key and National rose to power again in 2008 as the Global Financial Crisis took hold of the world. Over this period Auckland transformed into the Sydney of New Zealand and the rest of the country was dragged along with it; median house price growth over New Zealand was 67.20% or 5.88% year on year.

Finally Jacinda Ardern's Labour led coalition government has overseen price growth of 22.34% or 6.95% year on year. Wasn't Labour's 2017 campaign promise to sort out housing?

Overall since 1990, house prices have averaged 5.63% year on year under a National government and 7.50% under Labour. If this was to continue at those figures, the median house price at the next election would be $795,546 under National and $838,550 under Labour. It is important to note that 2021 is predicted to have strong price growth with some economists predicting up to 10% gains. Labour would not necessarily be responsible for that as increasing population, low interest rates and less LVR restrictions in a post Cover-19 era are putting pressure on the supply and demand equation.

Result: Under Labour house prices grew 1.87% quicker per year than under National.

Wages & Affordability.

When I spoke to a few people about the interesting stats from different governments, I got replies of "well how have wages compared" and it is a fair assumption that under Labour your pay packet would have grown along with house prices. You would be right; however only by 0.38% per year.

Since 1990 under a National government the average wage grew 3.06% year on year and with Labour 3.44%. Not a lot of difference when converted to monetary terms.

So how has this contributed to the gap between house prices and incomes in New Zealand? At the end of the day this is what really matters to Kiwi's - affordability.

Between 1990 and August 2020, under 18 years of a National government the gap between house prices and income grew by 2.5. Under 12 years of Labour it grew 2.15. In per year terms due to their respective stints in government, National averaged a 0.14 increase per year, and Labour a 0.18 increase per year.

Result: Under a Labour government, while Kiwi's had slightly more money in their pocket, the house price to income gap grew quicker with them than under National.


Statistics New Zealand estimates that approximately 610,000 households rent the home they live in. That equates for 35% of all households in New Zealand. The cost of rents has a big impact on Kiwi's living.

Under National's time in government across 30 years, rents grew at 4.42% year on year and under Labour 4.33%

What is interesting however is the possible impact Labour's healthy homes standards have had on the cost of rentals over the last three years. The increased costs put on landlords to improve the state of their properties for tenants has seen a 17.5% increase in rent prices from when Labour took office in 2017. This equates to a 5.52% year on year increase over that time, compared to 3.64% under Key and English, and 3.93% under Clark.

Don't get me wrong; healthy homes are an absolute must but it is also important to understand the impact of new legislation on investors as well as on what comes out of renters back pockets to afford a rental.

The majority of landlords, actually 79%, in New Zealand are investors who own one rental property. They are vital to housing in New Zealand, the government simply cannot keep up with providing all the housing that is needed - Kiwibuild was an example of an attempt and look how that turned out. In saying that, National's Key and English didn't do any better with their sell off of state housing.

It shows the very difficult job any government has in striking the balance between enforcing higher standards, but keeping rental and housing costs affordable.

Result: Rents grew faster on average under National, but have increased quickly under the current Labour government - the quickest in 20 years.

State Housing

National governments across 30 years have built 6,058 state homes, however the Key and English government did take an axe to the nations supply with a sell down over their nine year tenure. Labour governments have built 6,198 homes and Jacinda & Co have another 2,756 under construction or in the pipeline currently.

Disappointingly statistics released by the Ministry of Social Development show since 2015 there has been a 452% increase in applicants on the housing register.

Result: Labour has maintained better stocks of state housing but waiting lists have exploded since taking office.

Property Investment

This is an interesting one and as I stated at the beginning the general consensus is that National is better for investors. However they did bring in the 'bright line test', effectively a capital gains tax that takes 33% of any profits made on an investment property if sold within five years (was two, however Labour extended it to five in 2018). I wouldn't say that is ideal for landlords.

Labour on the other hand introduced 'ring-fencing' tax policy in its current government term, changing the ability for property owners to claim losses in their rental property and put it against their other income each year to get a tax credit. The healthy home standards and the most recent major changes to the Residential Tenancies Act are already having an impact on rent prices across the country. I fear that pressure on investors and landlords to improve homes, not being able to evict un-social tenants fairly enough and lesser tax advantages could lead to an even bigger problem and 'gap' in New Zealand due to private Mum and Dad investors pulling away from providing rental accommodation.

Result: National verbalises all the intentions of a government that supports investors and Labour has shown strong support for tenants and living standards. In reality it is a coin toss each way. I'll leave it to you to judge.

Labour vs National.

What camp were you in at the start of this? Both fight hard for their political allegiances, believing that National and Labour favour certain sides of the coin however it would seem that what we perceive isn't actually reality. There are a lot more metrics we could analyse and compare however when it comes to the very key statistics of affordability over 30 years, National had lower house price growth and slower house price to income ratio growth, indicating it should be better for first home buyers. Labour in turn showed qualities that investors would enjoy such as quicker house price growth and most recently the quickest rent growth in 20 years. Surprising isn't it?

What camp do you align with now?

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