The 2026 election looms large in investor psychology. Our latest sentiment check shows 80% of respondents say their confidence will hinge on the outcome. Fair enough; policy matters. At our recent investment panel, experts are unanimous about what actually sets the market’s direction: interest rates, not political noise. Jarrod Kerr, Kiwibank Economist, said that rates are “by far the greatest driver of house prices,” while policy tweaks “influence the edges.” The trend is set by the rate cycle.
This isn’t ideology talking, it’s a hard lesson learnt from the COVID years. Prices surged out of the pandemic, then corrected when the fastest hiking cycle in a generation took the OCR from near zero into the mid-5s. Tax changes and compliance shifts were consequential for after-tax returns, but the inflexion came when money got expensive.
Two lessons you can take away from this
1) Build an interest-rate-first playbook. Underwrite to today’s debt costs, not yesterday’s. Model downside at higher-for-longer and upside from a shallow easing path. If rates ease, prices may firm; if they do not, thin deals get exposed. Either way, your risk comes from debt structure more than debates about deductibility.
2) Treat policy as a second-order modifier. Deductibility tweaks and bright-line settings shift the level of returns, not the direction of the cycle. Even in markets where capital-gains chatter surfaces, macro settings and rates carry the day.
Execution beats excuses
If you do not lift a paddle, you do not buy the asset. If you do not do the work, you do not bank the yield. Investors who bought on 2.99% forever projections have learnt the difference between brochure maths and cash flow. Discipline and due diligence are not optional.
What to do now
- Refinance strategy: ladder maturities, keep optionality, and stress-test ICRs at one to two points above current rates. If you cannot survive that, the deal is weak.
- Yield before narrative: price rents to market quickly and professionally; do not rely on next year’s policy to bail out this year’s underwriting.
- Opportunity scanning: uncertainty is a feature, not a bug. It creates mispricings for buyers who can move while others wait for certainty that never arrives.
“Election cycles change the rules at the margin. Interest rates change the game,” says APIA GM, Sarina Gibbon. “If you want resilience in 2026, anchor your portfolio to debt reality, not political hope.”
Investors should absolutely care about the general election, especially when four in five of you say your confidence depends on it. Just do not confuse confidence with cash flow. Put rates at the top of the checklist, let policy improve the margin, and execute with discipline. That is how you keep the upper hand in 2026.
Watch the full discussion: Hangs In the Balance: How to Keep the Upper Hand in 2026 on APIA TV.
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