A political scientist fears the Government's proposed housing policies were made "on the fly" without nailing down the exact details of the package.
The package announced on Tuesday will bring about a suite of changes, including extending the bright-line test to 10 years. That means anyone who purchases and then sells a residential property - excluding the family home - within a decade will pay a tax on any gains.
But property investors are furious with the changes, saying it could be renters who end up the big losers following the announcement.
Investors can also no longer offset interest paid on home loans against their rental income, which will significantly increase their tax bills.
"We've been saying this will reduce the supply of rental property, this will put up rents," NZ Property Investors' Federation president Andrew King told The AM Show on Wednesday.
Victoria University politics lecturer Bryce Edwards told Newshub the axing of tax deductibility for landlords appears to be added to the Government's policy at the last minute.
Dr Edwards said that shows how "frightened" the Government is of the pressure it's under over the housing affordability crisis.
"It does really suggest that this policy has been made on the fly - we're seeing the Government come out with this major policy announcement without actually working out some of the details, which is concerning.
"I suspect that even though this has been worked on for months, the Government was sensitive to the idea that their package wasn't going to be seen as being radical or up to the size of the problem.
"The Government hasn't actually gone out and got their officials to come up with the details … they're just grasping to get some new policies to look like they're doing something about it, and that could be a problem if these policies don't end up to be properly thought out."
Announced changes have left many scratching their heads, with one property commentator on Tuesday calling the package "desperate".
And according to several economists, extending the bright-line test won't fix the housing market by itself.
Dr Edwards said the Government looks like they've jumped the gun.
"Really, we won't know for a few more months until we see some proper investigation into the changes - it's a bit like the blind leading the blind at the moment."
He said the issue of the bright-line test will continue to be an issue of major debate between the Labour Government and the Opposition National Party. National leader Judith Collins said on Wednesday the bright-line changes would be reversed if they were elected.
"Labour, I think, will be quite comfortable with the criticisms from National," Dr Edwards said.
"The more we see criticisms from National and especially from landlords and property investors, I think the happier the Labour Government will be because I think voters are quite dissatisfied with property investors at the moment."
Meanwhile, Finance Minister Grant Robertson insists the family home won't be caught in the bright-line test net - with National saying families will be affected.
Robertson told The AM Show's Duncan Garner the family home doesn't apply.
"The change that we are making is that for periods of time beyond 12 months - you have a 12-month buffer in which you might be needing to move around or do something - beyond that, we will measure the bright-line test for the actual amount of time a property is your family home or not your family home."
Robertson said he's confident the package will make a positive difference to the market. He said the changes were about evening the playing field.
"What I'd say to those who are landlords and property investors is that we are all in this together.
"We have to have a market that works; that's fair for tenants, that's fair for landlords as well.
"There's still plenty of returns for people who are in this."
