WHAT TO EXPECT FROM 2019 PROPERTY MARKET
2018 has been an interesting year for New Zealand’s Property market. With steady volumes and values indicating reliable growth across New Zealand, however notably the market interest mostly concentrated on the recent government policy and measures to curb property conjecture.
Below mentioned are the summarized key topics on the property and economic outlook for 2019.
Lightening the restrictions of the LVR from January 2019 onwards will be the initial landmark. However, the effects the changes that might have on the market will be watchful as it is expected that the banks will follow the tough lending standard, which may result in fewer potential borrowers who match the requirements.
The ban on foreign buyer has already been placed in October. The data activity of quarter 4 of Stats New Zealand will be out on February 2019 and that will reveal the effects of the ban on the market. Concerning how large the foreign buyer market is in New Zealand it hangs around 1-2% of the net ownership changes (purchasing less selling).
Emphasizing more on the ban, if effectively policed, purchasing by foreign buyers should have fallen away towards zero.
Although it’s less spoken, it’s essential to note that there are loopholes. Foreign buyers can still buy into NZ if they are buying off the plans and holding apartments in bigger developments (20 apartments or more).
Ring-fencing of rental property losses for tax relief.
Moving ahead to April 2019, the idea is to ring-fence rental property losses for tax relief purposes. At present, if you’re a property investor and you make a loss, you can utilize that loss to reduce the amount you’re taxed upon other income sources. The new motion is basically stating that any losses can still be applied for tax relief, but limited to the asset class of property.
So, landlords can still use losses to reduce tax across their current property portfolio by applying losses from one property against profit from another property and/or from one year to the next. What is no longer permitted is applying that loss against other forms of income.
The scheme has had its fair share of difficulties initially, but it is hoped that they really ramp up the momentum in 2019, both in terms of construction volumes and buyer take-up of the houses actually built.
The easing in the net migration balance, which is supposed to continue further in 2019, will help to take some of the steam out of property demand and dampen the pressure on the construction sector. However, the effect may only be small and slow because the net migration is still very high and will take a fair time to decrease.
The official cash rate will remain at 1.75% in 2019 (and probably most of 2020) and that should help interest rates to stay reasonably low and stable.
The million dollar question that every property investor wants to know. Will prices move up, down or stabilize? It is anticipated with similar patterns to 2018, with average prices across the country rising by 3-5%.
To summarize, there is a LOT to look ahead in the coming year.
If you’re thinking of buying or selling, or you are a property owner and looking for someone experienced and specialized to do the task to look after your property, you know where to go for that!
Please do contact us now on 09 985 5706 or [email protected]
Happy holidays from the MetroNZ Property Management team, see you back in the New Year!
Information retrieved from www.corelogic.co.nz