Property values set to rise as knockers talk up budget’s impact
The knockers set in as soon as the government’s budget was released, but some property investors are picking the rise in GST will help boost values, while the watered down clamp down on depreciation will not scare away “astute” investors.
Thursday, May 27th 2010, 12:00AM 
4 Comments
by The Landlord
Investments and Projects managing director Arron Davis says the inflationary effect of greater GST will push everything up, including housing, while the personal tax cuts will help stoke investor confidence and encourage investments to loosen the purse strings and start buying property.
"An increase of GST has a direct impact on the cost of developing new sections and producing housing right across the board," he said. "With an annual shortfall in required housing already in New Zealand and a lack on new product available, more demand will be placed on the existing stock driving up prices."
Davis talked down the impact of changes to depreciation rules that prevent investors from claiming on buildings with a lifespan of 50 years or more, saying it was only the cost of construction that has been removed, and investors can still claw back tax losses on their chattels.
"Owner occupiers and investors alike wanted to see just how much of an impact the budget really would have on the market," he said. "Now that it has been released and the changes were very minor it will be business as usual and the thousands that have been holding off will now be reentering the market place."
Actuary firm Melville Jessup Weaver said the measures announced in the budget were "relatively mild compared to some ideas" that were bandied about earlier this year, and the New Zealand Property Investors' Federation's Andrew King said the changes would give residential investors a second bite at the cherry in the IRD review of depreciation on fit-outs.
Commercial property investors are expected to bear the brunt of the depreciation changes, with a KPMG report forecasting they make up about three-quarter of depreciation claims.
| « Momentum building in house market, according to ANZ | Free Investment Property Showcase Events: Auckland, Wellington and Christchurch » |
Special Offers
Comments from our readers
irregardless of you fools passing on your increased GST costs in a stagnating market, people won't pay if they can't pay.
get used to the new reality.
the old one ain't ever coming back...ever!
Any first time buyer considering plugging into this matrix called "home ownership" must be crazy.
Many experts are predicting a double-dip housing crash. You don't really need to be an expert to see that it is unsustainable. Wages are decades behind, the baby boomers who actually own properties will have to sell eventually or their children will causing higher supply than demand. Check out Detroit!
The fundamentals are quite clear and obvious. See below, there is more to it than what property costs today or next week – it’s the real cost over a few decades!
http://www.imf.org/external/pubs/ft/fandd/2010/03/pdf/loungani.pdf
I don't think they will crash, however, but it will take about 2-3 decades to see the return of capital gains in properties - so what is the point? You are just handing your money to the bank!
Another bonus with renting is the freedom, if the renter gets a job in another location tomorrow they can just up and go.
Commenting is closed
|
|
Printable version |
|
Email to a friend |
