Article: Property Investment
The Votes Are In And More Of The Same Is Likely with Frank Newman
The smiley face hoardings are down and the votes are in. The result is more of the same and through the vagaries of MMP National gained a greater share of the vote but ended up with a much slimmer working majority.
The big winner when measured by change in party vote was the effervescent Green Party, up 3.9% on their 2008 vote. That undoubtedly has come from Labour, the biggest loser on the night, down 6.86%. At least some of the Labour vote also appears to have migrated to NZ First, up 2.74% on their 2008 vote.
Winners
1. Greens + 3.9%
2. National +3.06%
3. Conservative +2.76%
4. NZ First +2.74%
5. Mana +1%
Losers
1. Labour -6.86%
2. ACT -2.58%
3. Maori -1.04%
4. United Future -0.26%
Labour’s vote was its worst since the first MMP election in 1996 and apparently the lowest since 1928! Surprisingly they appear to have pointed the finger of failure at their leader, despite it being generally accepted that Phil Goff did a good job of promoting Labour’s policies during the campaign. No one seems to have raised the possibility that it may have been the policies and the negative and mean-spirited nature of their campaign that caused such a historic failure. Describing the trickle down theory (in their campaign launch) as “the rich pissing on the poor” is not going to win over a largely aspirational and forward thinking middle New Zealand. Perhaps Labour should have taken the advice of their former leader and Prime Minister David Lange who described a capital gains tax as the sort of tax you introduce if you want to lose not just one election, but the next three! Labour is a brand that will take some time and blood spilling to renew if it is to protect itself from being further cannibalised by the Green’s.
The second biggest loser was the ACT Party, which will formally be pronounced deceased and buried when it changes its name (probably to the Liberal party). Just as Labour is delusional if it thinks changing their leader alone will improve their prospects, ACT is naïve to think that changing a name will resuscitate the party. The name is not the problem.
Another winner of the campaign was the rise of the Conservative Party (+2.76%). Although the vote was wasted as they failed to secure an electorate seat it has shown an opportunity exists for a party other than ACT to sit on the right side of the political spectrum. It could well be the Conservative Party that has a cup of tea with John Key in 2014.
A lot has been said of the poor voter turnout. Nearly one in four did not vote; 74% compared with 80% in 2008. In the seven Maori seats less than half the registered voters actually voted, turnout falling from 64% in 2008 to 49% in 2011. While politicians are likely to blame voter apathy it could equally be the result of a growing disrespect for politicians and for the political process generally.
So what can property investors expect from the next three years? At least over the next year it is likely to be more of the same. National has not foreshadowed further changes to property legislation – it appears to be satisfied that the changes it has already made will collect more tax and take the enthusiasm out of the sector.
We will hear what National’s priorities will be when the Prime Minister addresses the new Parliament in February but welfare reform is likely to be high on the agenda. It will also have its hands full getting the state owned electricity companies ready for partial sale and dealing with the deepening international economic crisis which will necessitate some government restraint.
It certainly is a very tough economic environment and 2012 is likely to be tougher than 2011. Some businesses that have managed to hold on may not be able to do so for another year. This will create problems for commercial landlords, as private sector tenants leave, down-size, or default on their rental payments. It is also likely that government agencies will rationalise to cut costs including their leasing requirements.
Residential landlords however are likely to be less affected which highlights the lower financial risks of residential property investment compared to commercial.
Frank Newman is the author of numerous books on investment matters and the creator of the NZ Investment Game which may be ordered at http://www.investmentgame.co.nz. He is a director of the accounting firm Smart Business Centre. He may be contacted at .(JavaScript must be enabled to view this email address).
