NZ Economy Stronger Than It Seems, But Investors Remain Cautious

Independent economist Tony Alexander warns against falling into the trap of thinking New Zealand's economy is struggling. Despite popular debate suggesting the country is stuck in a rut, data shows the economy has grown 1.8% over the past year and job numbers have increased by 1.1% annually.

The main concern for property investors is not interest expense deductibility, as Labour's promise to restore it may bring back only a small number of investors at the margin. The survey conducted with the Property Consortium found that only about one in ten respondents are concerned about this issue.

Other concerns include rising council rates and insurance costs, which affect nearly 15% and 13% of respondents respectively. A significant proportion of investors, 72%, plan to hold their properties for at least five years or never sell them, suggesting that tax-free capital gains are not the primary motivation.

The outlook for housing remains wide open for young buyers due to a strong upside risk to interest rates and minimal prospects for price rises. Alexander emphasizes that there is strength in New Zealand's economy but popular perception differs from reality.