Matt’s Property Predictions For 2024 Ft. Matthew Harris Episode 153

In examining changes in government policies, Matt offers insights into the previous administration’s aggressive stance towards property investors. Under this regime, tax reforms and anti-investor rhetoric created substantial financial burdens for investors. However, Harris highlights recent policy shifts initiated by the new government aimed at reversing some of these punitive measures.

• Impact on Investors: The previous government’s tax reforms and rhetoric negatively affected investors, straining their finances and confidence in the market.
• Recent Policy Reversals: Harris discusses the new government’s efforts to alleviate the burden on property investors by rolling back certain tax measures and adopting a more investor-friendly approach.
• Implications for Investors: These policy reversals offer hope for investors, potentially easing financial pressures and fostering a more supportive investment environment.

Matt underscores the significance of interest deductibility in property investment, highlighting recent changes in policy. While acknowledging the unexpected nature of these changes and the lack of prior consultation, Harris views them as positive steps for property investors.

• Importance of Interest Deductibility: Harris emphasizes the crucial role of interest deductibility in property investment, as it directly impacts investors’ financial viability and profitability.
• Phased Restoration: Under the new policy framework, interest deductibility is gradually being restored, with a timeline set for reaching full deductibility by 2026. This phased approach provides investors with clarity and allows for adjustments to their financial strategies.
• Implications for Investors: The gradual restoration of interest deductibility offers investors a more stable and predictable financial landscape, enhancing confidence and encouraging continued investment in the property market.

Matt delves into the nuances of the Brightline Test, originally implemented as a measure to curb property speculation. This test, initially designed to assess the tax implications of property transactions, underwent a significant extension in duration in 2021, effectively functioning as a capital gains tax for investors.

• Historical Context: Harris provides valuable historical context regarding the Brightline Test, elucidating its original purpose as a mechanism to deter short-term property speculation and promote more stable market activity.
• Extension and Impact: The extension of the Brightline Test’s duration to ten years in 2021 had profound implications for property investors, effectively subjecting them to capital gains tax obligations on a broader range of property transactions.
• Recent Revisions: Harris discusses recent revisions to the Brightline Test, with the government’s decision to reduce the duration back to two years. This adjustment aims to alleviate the burden on property investors and stimulate market activity by fostering a more favourable environment for property transactions.

Matt delves into the profound shifts occurring within the rental market, largely influenced by recent amendments to the tenancies act during the COVID-19 pandemic. Harris elucidates how these legislative changes, while intended to safeguard tenants’ rights, have imposed significant burdens on landlords, prompting behavioural adjustments and potentially exacerbating rental shortages.

• Legislative Amendments: Harris provides insight into the specific amendments made to the tenancies act during the COVID-19 crisis, highlighting both their intended benefits for tenants and the unintended consequences for landlords. These changes have reshaped the dynamics of the rental market, requiring landlords to adapt to new regulatory environments.
• Behavioural Changes: Harris discusses the behavioural changes observed among landlords in response to the amended tenancies act. These changes range from adjustments in rental pricing strategies to alterations in property management practices, reflecting the evolving landscape of landlord-tenant relations.
• Rental Price Projections: Drawing upon his expertise, Harris forecasts a significant uptick in rental prices, driven by various factors including escalating property costs and inflationary pressures. He suggests that rental prices could surge by as much as 30% by the conclusion of the year, signalling substantial changes in the rental market landscape.

Matt offers insights into the projected trajectory of property prices, painting a nuanced picture of the market’s evolution in the coming year. With a forecasted annualised increase of 6.5%, Harris outlines the factors contributing to this growth and anticipates a potential uptick in prices towards the end of the year as interest rates moderate and market conditions stabilise.

• Annualised Increase: Harris projects a notable 6.5% annualised increase in property prices, indicating sustained growth within the market. This forecast reflects his analysis of prevailing economic conditions and market trends, providing investors with valuable guidance for strategic decision-making.
• Influence of Interest Rates: Harris underscores the impact of interest rates on property prices, highlighting their interconnectedness with broader economic factors. As interest rates are expected to decrease over time, Harris anticipates a corresponding positive effect on property prices, driving market activity and facilitating growth.
• Economic Implications: Emphasising the pivotal role of property transactions in driving economic growth, Harris elucidates the broader implications of property price trends. He underscores the symbiotic relationship between property prices and the overall economy, illustrating how fluctuations in the property market can reverberate across various sectors.

By contextualising property price forecasts within the broader economic landscape, Harris equips investors with valuable insights into the dynamics shaping the New Zealand property market in 2024. His analysis serves as a compass for navigating investment decisions amidst evolving market conditions, fostering informed and strategic approaches to property investment.

Matt offers candid insights into the challenges inherent in managing a property portfolio, drawing from his personal experiences to illuminate the complexities investors may encounter. Against the backdrop of rising interest rates, Harris emphasises the importance of adaptability and proactive financial management in navigating the evolving landscape of property investment.

• Rising Interest Rates: Harris acknowledges the impact of rising interest rates on property investors, acknowledging the challenges they pose to financial planning and portfolio management. By highlighting this hurdle, Harris encourages investors to remain vigilant and responsive to changes in interest rates, emphasising the need for ongoing assessment and adjustment of financial strategies.
• Importance of Reassessment: Harris underscores the necessity of regularly reassessing financial projections in response to changing market conditions. He emphasises the dynamic nature of property investment and the importance of flexibility in adapting strategies to mitigate risks and capitalise on opportunities as they arise.
• Attention to Detail: Reflecting on a personal experience of identifying a transposition error in financial calculations, Harris underscores the critical role of meticulous financial planning. This anecdote serves as a poignant reminder of the importance of attention to detail in property investment, highlighting the potential impact of seemingly minor errors on overall portfolio performance.

By candidly addressing the challenges of property investment and advocating for proactive adjustments in response to changing conditions, Harris equips investors with valuable insights and strategies for success. His emphasis on adaptability, reassessment, and attention to detail serves as a guiding beacon for investors navigating the complexities of the property market in 2024.

Matt’s insights offer a comprehensive understanding of the New Zealand property market in 2024, providing invaluable guidance for investors. By staying informed, adaptable, and proactive, investors can position themselves for success amidst evolving economic conditions and regulatory changes.

Navigating Government Policies: Harris discussed the impact of government policies on property investors, particularly highlighting changes in interest deductibility and the Bright Line Test. Understanding these policy shifts is crucial for investors to adapt their strategies effectively.

Rental Market Dynamics: The amendments to the tenancies act during COVID-19 have significantly impacted the rental market. Harris predicts a notable increase in rental prices due to rising property costs and inflation, emphasising the need for landlords to stay abreast of market trends.

Adaptability and Financial Planning: Harris’s personal experiences underscore the importance of adaptability and meticulous financial planning in managing a property portfolio. With rising interest rates posing challenges, regularly reassessing financial projections and attention to detail are paramount for success.