Can you hold your breath for 6 weeks?
For those in the industry, the slowing effect that the election had on the property and other markets comes as no surprise. When people feel uncertain about what the future has in store they tend to put life’s big decisions on hold.
Property supply and ownership were major political issues this time with Labour campaigning on the introduction of a capital gains tax for properties excluding the family home. Contrary to popular belief New Zealand does in fact have a capital gains tax. This tax is payable upon the sale of any property that is purchased and sold for the intention of earning capital gains. Where the problem lies for the IRD is proving the intent behind property transactions. Historically they have only been successful levying this tax from the purchase and resale of vacant land. Now that the election is over we should see the housing market emerge from its holding pattern with the same momentum of traditional spring markets. Housing shortages in certain areas have seen the government keen to incentivise new builds, so they are now offering financial assistance for those looking to undertake such projects. In addition, purchasers of property such as build packages in new subdivisions will not be subject to the same LVR restrictions as the general population. Couple that with the Kiwisaver first home deposit subsidy and they make an attractive option especially for first home buyers.
The Wellington Market
The local market is coming off the back of some of the lowest levels of listings in years. Properties attracting the strongest interest include family homes whereas those in the first home bracket have seen little commitment from buyers. Based on survey results from credit reporting bureau Veda, this will come as little surprise. It appears that mortgage applications by Gen Y are down over thirty per cent year on year with the youngest members of the population opting to put their hard dollars into other sectors, such as travel. For a property cycle to function well all levels of property need to sell to enable people to upgrade and downsize as their needs change. With National’s re-election, little change in the public sector and interest rates tipped to remain fairly steady, we should see an increase in demand for property in Wellington leading into Christmas.
Wellington Region Property Statistics
Wellington Median Sale Price
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