The government's new housing policy has been slammed by Bay of Plenty first-home buyers, rental agents and property investors alike.
In 2016, Real Estate Institute of New Zealand recorded the median house price in the Bay of Plenty at $495,000. File photo Photo: 123RF
The sweeping changes designed to tip in favour of first-home buyers were unveiled on Tuesday and include increasing the caps for financial support and extending the bright-line test to 10 years.
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First Home Coach chief executive Matt Taylor called the changes a "token gesture" for first-home buyers.
"[The government has] had all these suite of changes for investors, then they've tacked on these changes without much thought or analysis for first-home buyers," he said.
In 2016, Real Estate Institute of New Zealand recorded the median house price in the Bay of Plenty at $495,000.
The latest data from last month showed this had jumped to $848,000 - a 71 percent increase in five years.
In Tauranga and the Western Bay, the price cap to be eligible for a first-home loan under the government's changes had increased by $50,000 to $600,000 for a new property, and $25,000 to $525,000 for an existing property.
Taylor said the price cap for first-home loans was too low, and needed to be increased to keep pace with house prices.
"[It's] just not good enough by the government here, [it's] really leaving Bay of Plenty first-home buyers out in the cold."
Meanwhile, Tauranga Rentals owner Dan Lusby received flustered calls from property owners soon after the announcement.
This included one from a owner who had decided to sell their rental property because they could not afford to keep it without offsetting their interest expenses against their rental income when calculating tax.
He said first-home buyers from out of the area would snatch up rental properties on the market, but it was unlikely that current local renters would be able to afford to buy a property in Tauranga.
The average house price in the Bay of Plenty was $848,000 and would-be house owners needed a $170,000 deposit for this, Lusby said.
"In all honesty, it will be very hard for them," he said.
Lusby anticipated the changes would decrease the supply of rental properties and push up rents in the city.
Tauranga Property Investors Association president Juli Anne Tolley called the policy changes "ludicrous".
"[The changes] seem like knee-jerk reactions," she said.
Tolley said changes to interest deductions in combination with the bright-line test extension would trap property investors.
She believed investors - particularly those who have bought properties in the past five years - would have budgeted for a low interest rate.
She said investors would have to cover this cost with the interest deduction changes, which in turn would see investors sell off properties and get stung by the bright-line test in the process.
"Now they're losing [money] and going backwards on what they were establishing five years ago," she said.
She believed rents would increase with more landlords letting their properties as holiday homes or short-term accommodation, decreasing the rental supply.
"There will still be investors in the market, but it's going to narrow the field quite a bit."
Meanwhile, Western Bay of Plenty Mayor Garry Webber welcomed the government earmarking $3.8 billion under a Housing Acceleration Fund that will be used to pay for all the critical infrastructure required to make a housing development happen.
Webber wanted a focus on building affordable homes, similar to a KiwiBuild development in Ōmokoroa where houses were priced less than $650,000.
He said the properties sold very quickly to first-home buyers and he called for more price-controlled houses to be built in the Western Bay.
"A house over a million generally is sellable, but it's not sellable to those people at the bottom end who really need houses built to meet their need."
He supports the increased bright-line test, saying it was only fair to tax capital gains.
National MP for the Bay of Plenty Todd Muller said the policy did nothing to increase the supply of houses.
Muller said this was the root issue, with housing developments in Tauriko West and Ōmokoroa tied up in red tape, while Pāpāmoa East was running out of land.
He said a process by-passing the Resource Consent Management Act was needed in Tauranga, similar to what occurred in Christchurch, and called for a special agency to be assigned to Tauranga to achieve this.