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What are the top 10 factors that will shape the property market for the year ahead? CoreLogic Head of Research Nick Goodall shares his top tips.
Tuesday, January 1st 2019, 12:30PM
1. LVR changes.
LVR loosening comes into effect on January 1. Goodall is “cautious” about the potential impact. He says “banks are likely to stick to tough lending criteria, so the pool of potential borrowers who can meet those requirements may not be that big.”
2. Foreign Buyers.
The foreign buyer ban has been in place since October, and Goodall expects foreign purchases to fall to close to zero. Yet he believes foreign buyers could still play a role in funding apartment blocks and off-the-plan residential property: “The numbers won’t be massive, but ultimately, everything helps when it comes to increasing NZ’s housing stock.”
3. Capital Gains Tax
The Tax Working Group submits its final report in February 2019. Goodall predicts no short term impact from the move: “It’s important to note that the government would then have to accept that recommendation and also survive the next election (2020) before any tax would come into law.”
4. Ring-fencing of rental property losses for tax relief.
Ring-fencing of property losses against income is expected to change, as of April. Landlords will still be able to offset losses against property profit. Goodall doesn’t believe it will have a major effect on the market: “It’s targeting the speculative end of the market who are in it for the capital gain. It will be really interesting to see if this triggers some existing landlords to leave the sector.”
The government-scheme is set to kick into full swing next year, with a target of 1,000 affordable homes by the middle of 2019. Goodall wonders whether KiwiBuild homes will be snapped up by first home buyers, or sold to other buyers, such as investors, if FHBs turn up their nose. Goodall believes KiwiBuild could affect the construction sector: “In a year in which several major companies went bust, and development funding became a bit harder, could this means firms pivot their focus – perhaps towards smaller dwellings (independent of KiwiBuild, or pre-fabrication? One to watch.
6. Building Consents.
The country is in the middle of a housing boom, with more apartment blocks being built than ever before. CoreLogic estimates that of the 12-13,000 consents per year, only about half are resulting in a genuine chance in the stock of housing.
“In short, consents and actual construction volumes need to stay high – or perhaps even rise further to make a real dent in the current shortfall of housing. That could be problematic in 2019 for an industry already running at full tilt,” Goodall says.
Continue reading this article at the original source from GoodReturns.co.nz
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