The 2026 election looms large in investor psychology. Our latest sentiment check shows 80% of respondents say their confidence will hinge on the outcome. Fair enough; policy matters. At our recent investment panel, experts are unanimous about what actually sets the market’s direction: interest rates, not political noise. Jarrod Kerr, Kiwibank Economist, said that rates are “by far the greatest driver of house prices,” while policy tweaks “influence the edges.” The trend is set by the rate cycle.
This isn’t ideology talking, it’s a hard lesson learnt from the COVID years. Prices surged out of the pandemic, then corrected when the fastest hiking cycle in a generation took the OCR from near zero into the mid-5s. Tax changes and compliance shifts were consequential for after-tax returns, but the inflexion came when money got expensive.
Two lessons you can take away from this
1) Build an interest-rate-first playbook. Underwrite to today’s debt costs, not yesterday’s. Model downside at higher-for-longer and upside from a shallow easing path. If rates ease, prices may firm; if they do not, thin deals get exposed. Either way, your risk comes from debt structure more than debates about deductibility.
2) Treat policy as a second-order modifier. Deductibility tweaks and bright-line settings shift the level of returns, not the direction of the cycle. Even in markets where capital-gains chatter surfaces, macro settings and rates carry the day.
Execution beats excuses
If you do not lift a paddle, you do not buy the asset. If you do not do the work, you do not bank the yield. Investors who bought on 2.99% forever projections have learnt the difference between brochure maths and cash flow. Discipline and due diligence are not optional.
What to do now
- Refinance strategy: ladder maturities, keep optionality, and stress-test...
