Market predictions indicate that 2024 will herald a property sell-off by many investors, even though prices are rising and the risk of further interest rate increases has all but evaporated.
At the heart of concerns is the new National Coalition Government’s plans to shake up the real estate investor market.
Under its election policies, the Nationals pledged to roll back the Bright Line rule to two years from July 2024.
This would allow investors to avoid tax on property sale profits after two years of ownership – the rule is currently set at 10 years.
The Nationals originally introduced the Bright Line policy in 2015, with a two-year guideline, to stop speculators from flipping rental properties for capital gain rather than committing to a long-term investment.
When Labour came to power it increased the Bright Line policy to five and then 10 years ownership.
According to media reports, many pundits predict that when the two-year Bright Line election promise kicks in mid-2024, there will be a sell-off by mum-and-dad investors tired of the 7% interest rate and looking to avoid a capital gains tax.
Those expected to be caught in the rule change include holiday homes, properties left empty by homeowners working overseas and local tax payers who own overseas properties.
Primary residences are exempt from the Bright Line rule and it does not apply to properties acquired before October 1, 2015.