The Government announcement 'tilting' the market to first home buyers falls well short of fixing the immediate issue of housing for those people currently renting and trying to save for their first home, and those people thinking of renting.
Firstly investors have dropped off in numbers, partially because of the Ministry adopting changes to the Act which effectively take the landlord’s control over their investment property, and tilt it towards the tenant. The increase from 45 days notice to 90 days notice of termination, the introduction of rental increases annually, and tenants being able to make 'minor changes to a property'. These investors are predominantly Mum and Dad investors who buy property as a retirement fund so they only ever really own one or two properties and they are happy to do that. But now, not only are these people unable to sell without incurring what is effectively a capital gains tax for 10 years from purchase, they also cannot offset the interest on borrowed monies against the income for the property. Those people will not see residential property as a great investment which seems in the governments opinion, a great way to slow the market down. The flip side to that though is we still have a real shortage of properties for rent. This will certainly make things worse.
Our auction rooms are seeing far fewer investors than normal. This new policy will not assist the market in any way shape of form. It will not slow the market down. Supply and demand does that and right now we just don’t have enough properties for those returning from overseas and those new to the market.
EVES. Exceptional. Every day.