Kiwis think house prices will rise on back of CGT rejection

Almost half of New Zealanders believe house prices will be boosted by the Government’s dismissal of capital gains tax, a new survey has found.

The results of the survey, conducted by Colliers International, are the first public judgement on the the Government’s decision in April to reject the Tax Working Group’s recommendation to implement a capital gains tax.

Fifty-two percent of those who responded to the real estate firm's latest Residential Property Market Outlook Survey said they believed the decision would influence residential property prices, while 34 percent said no. The remaining 14 per cent were unsure.

Chris Dibble, Research and Communications Director at Colliers International, says 84 per cent of respondents who stated that prices would be influenced by the decision expected them to increase.

“Now that the Government has rejected the tax in this or any future term, sentiment is gaining positivity,” Dibble says.

The survey also measured sentiment around house prices around New Zealand.

More respondents expect median house prices to rise than those who expect it to decline.

Ten of the 13 regions monitored recorded a higher net percentage result than the previous quarterly survey.

“The latest survey shows overall expectations for median prices have stabilised at a net positive 16 per cent, up slightly from 15 per cent in the March 2019 quarter.

“This is the first result since the March 2018 survey that the national net positive result has not decreased.”

Queenstown took out first place for the location respondents expect higher median sale prices over the next 12 months.

Fred Bramwell, Residential Sales Director at Colliers Queenstown, says there has been a shift in residential market dynamics, but overall the market remains steady.

“Over the next 12 to 18 months we anticipate a period of value consolidation and a realignment towards a buyers’ market, however currently, well priced and presented properties are continuing to attract strong interest and multiple offers.

“There is still plenty of demand in the market driven by tourism, the area’s growing population and the ongoing construction boom.”

Tauranga/Mt Maunganui remains in second place for residential price sentiment, while Wellington has held onto third place.

In Auckland, a lower proportion of respondents expect median prices to decrease over the next year compared with the last survey.

Median price expectations in Rotorua overall saw the greatest improvement in the latest survey, with a net positive 21 per cent compared with 7.2 per cent in the previous survey.

A total of 9,614 responses were utilised to construct the survey.