ASB guide shows sharp splits on deductibility, capital gains, and first homes
Mortgage advisers are heading into Saturday’s general election with an unusually wide range of housing outcomes in play, according to ASB’s 2026 election special report.
The policies at stake range from tax treatment for property investors to new support for first-home buyers. Those choices come against a soft market, with national property values down 1.3% in the year to September and more than 18% below their peak, according to Cotality.
The bank’s policy table, current to 26 October 2026, shows sharp differences on how residential property is taxed. The report doesn’t predict an outcome.
“We are not in the business of picking winners,” wrote economist Wesley Tanuvasa and senior economist Mark Smith (pictured left to right).
Investors: deductibility and capital gains
Landlord interest deductibility is the clearest dividing line. National, ACT, and NZ First would keep it. Labour would also keep it but introduce a 28% capital gains tax on investment and commercial property on gains accruing after 1 July 2027, with family homes and farms exempt. The Greens would remove interest deductibility and bring in a 10-year bright-line test. However, Labour has ruled out supporting the Greens’ tax policies.
The Opportunity Party (TOP) proposes a 1.75% urban land value tax, which ASB’s guide lists alongside house prices 10–15% lower. Te Pāti Māori would introduce a 2% vacant house tax and a 33% land-banking tax.
First-home buyers and renters
For first-home buyers, National would raise the First Home Loan income cap to $300,000, while NZ First proposes Crown shared equity. Te Pāti Māori’s 5% stamp duty would exempt first homes. ACT opposes first-home subsidies and focuses instead on deregulating land supply.
On rentals, the Greens propose a 2% cap on rent rises. Labour backs stronger renter protections but no hard cap, while NZ First and ACT oppose rent controls.
Borrowing costs, bond yields, and the RBNZ
Beyond housing policy, ASB warned that the next government’s fiscal plans could affect wider borrowing costs. Core Crown debt has risen from below 6% of GDP in 2007 to more than 40%, and government interest payments now total about $10 billion a year.
The economists said any fiscal outlook that tests Treasury’s 50% debt-to-GDP “prudent limit” over the next three years would put downward pressure on New Zealand’s credit rating and upward pressure on government bond yields.
“There should be a coherent plan to prudently reduce this, no matter which side of the aisle governs,” the ASB economists wrote.
Westpac has made a similar point, saying in its pre-election analysis that “the hurdle that must be crossed to justify raising debt is higher than it has been for years.”
Rate settings could also shift. Labour would restore the Reserve Bank of New Zealand’s (RBNZ) dual mandate of price stability and maximum sustainable employment, while National would keep the single price-stability objective. ASB sees little practical change in how the central bank would run policy. It said, however, that investors may price in a softer approach to inflation, which could lift longer-term interest rates.
A slow count, but limited disruption
With fragmented polling, either major party may need at least three coalition partners to govern, based on the Herald-Motu Research poll of polls cited by ASB. The bank expects government formation could take some time, but doesn’t expect that to stall the economy, saying firms and households are generally pragmatic about election uncertainty.
“We think NZ will manage just fine,” the economists wrote.
The report also cautioned against reading too much into polls. “We note that political polling is subject to significant volatility,” it said.
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