A property economist believes National's proposed pullback on the brightline test could tempt some property investors to sell up if they were left "off the hook" from a capital gains tax earlier than expected.
Late last month National unveiled its $14.6 billion tax relief plan of reprioritising spending and introducing targeted revenue measures.
In its tax policy announcement, National said it would bring the brightline test back to two years from the current 10 years.
Currently, if someone sells their residential property and has owned it for less than 10 years, they may be subject to pay income tax on any profit from the sale. The rule also applies to tax residents who buy overseas residential properties.
CoreLogic's New Zealand chief property economist Kelvin Davidson believes a shorter brightline test could entice property investors to buy and may woo others to sell.
"Some investors would no doubt be tempted to make their first purchase or expand their existing portfolio by the reduced risk of having to pay capital gains tax if they needed to then sell within a short horizon."
Davidson said there would likely be some existing investors currently struggling with cashflow given higher mortgage rates, who don't want to sell because a capital gain tax bill "would be even worse".
"If they suddenly found themselves off the hook for that bill, some extra listings and sales could follow soon after."
If elected National would keep the foreign buyers ban for all houses worth less than $2 million and introduce a 15 percent foreign buyer tax for houses worth more than that.
Davidson said there's no real way of knowing how many foreign buyers would look to Aotearoa and estimates about 3 percent of the country's housing stock has a value of $2 million or more.
Though Davidson said the shorter brightline test would "add some appeal".
"There may also be greater effects in areas that we already know are popular with foreign buyers, such as Queenstown where about 10 percent of properties are valued at $2 million plus," he said.
"The extra demand could just exacerbate the shortages of stock at 'affordable' prices that already exist."
