Property market slow as investors await tax reform

The housing market has failed to start the year with the traditional January rush of new listings, and Waikato investors say proposed tax changes and interest rates are holding buyers back.

QV spokeswoman Glenda Whitehead said sales were normally at their lowest during the Christmas period, but there was usually an increase in listings in January, leading into the busiest time of the year in February and March.

"This January the expected increase appears to be absent," Ms Whitehead said.

In the Waikato investors seemed to be holding off buying as they waited to see what happened with proposed changes to the tax system and saw interest rates rising. The QV statistics show nationally property values increased another 4.4 per cent in the year to January, compared with the same time last year, but are still 4.3 per cent below their 2007 peak.

In Hamilton the average sales price was up 3.5 per cent with an average sale price of $350,772.

The national average sale price rose to $409,807 last month from $404,671 in December.

President of the Waikato Property Investors Association Nancy Caiger said people were starting to get a bit cautious, particularly about interest rates. She said although the official cash rate was still low banks were already starting to increase their rates on one-to-three year fixed terms. This was married with uncertainty regarding proposed changes to tax on investment property.

"Because of the proposed changes it's hard to measure what your returns are going to be."

She said agents were still citing finance as the biggest hurdle for home buyers, with reports of some deals falling through because banks would not approve the finance. She said all would be revealed tomorrow when the Government announced exactly what changes to the tax system it would make.

Hamilton central and the northwest had the biggest gains, with values up 5.8 per cent to an average of $321,356. Hamilton's southwest had the smallest gain, an increase of 2.3 per cent to an average sale price of $312,621.

In the regions, Hauraki had the largest fall of 6.9 per cent to $268,624, although sales were extremely low so the statistics may be out.

Values in most of the main centres had continued to rise in recent months and were now all more than the same time last year.

Auckland regional values were up 7.3 per cent and Christchurch prices were 6.3 per cent higher.

Ms Whitehead said sales and listings were lower than expected in a "patchy" January.

Valuers had noticed an increase in activity in some sectors of the market and a fall in others.

The lack of activity last month could be because of more people taking leave at Christmas and returning later from holiday.

Ms Whitehead said most of the sales, particularly in the main centres, were driven by existing homeowners and first-home buyers, rather than investors. Last year's competition among buyers over the limited number of properties appeared to ease last month, she said.

- © Fairfax NZ News