New Zealanders have brushed off concerns that a capital gains tax will dent the property market, with the results of a new poll showing most Kiwis believe house prices will rise over the next 12 months.
The research by Colliers International found that more respondents expect median house prices to rise than those who expect it to decline.
However, it also indicated there was less confidence in the market; the number of those expecting house rises had gone from a net positive of 23 percent in December to 15 percent now.
The survey results also show Kiwis are gloomy about house prices in Auckland, with the majority respondents expecting house prices in the city to fall. It comes as REINZ house sale figures for last month show 17.9 percent year on year slump in Auckland house sales.
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The Colliers survey was undertaken during the release of the Tax Working Group’s final Future of Tax report, which recommended New Zealand adopt a capital gains tax for investment properties.
When asked how much sale prices would be impacted by the introduction of a capital gains tax, 42 per cent of respondents indicated less than 5 percent, while 37 percent stated more than 5 percent.
Just over a fifth of respondents expected a capital gains tax would have no impact on sale prices.
Chris Dibble, research and consulting director at Colliers International, says all regions recorded a lower overall result than the previous survey.
“Queenstown held onto its top spot for the tenth consecutive quarter, with a net positive 39 percent of respondents expecting house price growth.
“Tauranga/Mt Maunganui remained in second place, with a net positive 30 per cent, while Wellington has held onto third place, with a net positive 26 per cent.”
Dibble says median price expectations in Auckland overall were negative for the first time, with a net negative 10 percent.
“This reflects the current market conditions, with REINZ data showing median prices have decreased by 0.5 percent over the past year.”
A higher proportion of respondents still expect median prices to increase over the next year in Wellington.
This was also the first time that respondents were more positive about Wellington new apartment median prices rising over new terraced and detached houses.
Pete Evans, national director of residential project marketing at Colliers, says more survey respondents believe that new apartments, terraced and detached houses will show median price growth compared to existing dwellings over the next 12 months across all regions.
“The lack of supply due to planning and resourcing issues is a problem for the government, developers and builders,” Evans says.
“KiwiBuild is providing new supply but the current undersupply of new dwellings in almost all regions is unlikely to be resolved in the short term.”
Drop in house sales
REINZ data released today showed just 5954 properties sold last month throughout the country compared to February last year when 6576 properties were sold. But in Auckland, the fall was more severe, down from 1654 residential properties sold last February to just 1358 last month.
REINZ chief executive Bindi Norwell said February this year bucked the trend.
"At a time when sales volumes are normally strong, when we look across the country, 13 out of 16 regions actually saw an annual fall in the number of properties sold. Traditionally children go back to school and people return from their holidays and housing activity picks up, however, February 2019 has been an exception to this rule," she said.
Auckland's median price fell 0.6 per cent between February 2018 and February 2019.
Norwell said that was due to a slight fall in the number of $1m+ properties sold. Some areas recorded price growth including Auckland City where prices increased 3.9 per cent to $1m, the highest price for Auckland City for 20 months.
The trend for fewer national sales in February was due to "the raft of legislative changes impacting the housing market at the moment, the increasing difficulty in accessing finance, despite a record low OCR and very low mortgage rates from the banks, and vendors' pricing expectations", Norwell said.