House price growth sentiment positive despite CGT proposal
Residential property price growth expectations remain broadly positive despite the Tax Working Group’s proposal for a wide-ranging capital gains tax, new Colliers International research shows.
The latest quarterly Residential Property Market Outlook Survey, released today, found a net positive 15 per cent of respondents expect median house prices to increase over the next 12 months.
This means more respondents expect median residential property prices to rise than those who expect a decline.
However, expectations have softened on previous quarters, down from a net positive 23 per cent in December 2018 and a net positive 26 per cent in September 2018.
The Colliers survey was undertaken during the release of the Tax Working Group’s final Future of Tax report, which recommended broad reform of New Zealand’s taxation system, including a well-signalled capital gains tax.
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 per cent, while 37 per cent stated more than 5 per cent.
Just over a fifth (22 per cent) indicated a capital gains tax would have no impact on sale prices.
The Tax Working Group’s recommendations are only proposals at this stage, and a significant process lies ahead before any tax changes are introduced by 2021.
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 per cent 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 per cent.
“This reflects the current market conditions, with REINZ data showing median prices have decreased by 0.5 per cent 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.”
International’s Residential Property Market Outlook
Survey drew on 5,962