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The Collapse Of The NZ Real Estate Market May Only Be Days Away

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Brian Dalley
Brian Dalley

If what you read is true - Hold On, a collapse of the New Zealand Residential Property Market may only be days away as property investors ready themselves for the government’s much-awaited 2010 budget.

Will they or won't they come down hard on residential property investors - the very people building rental properties and leasing them back to the government at a time when it is reported immigrants who cannot afford rental housing on their own and are doubling up on accommodation, or even living in vans due to a shortage of affordable accommodation?

Some are further cutting costs by spending nights in their vehicles parked on the side of rural roads or in public car parks, rather than going to campervan parks or camping grounds.

That is what happens when incentives are threatened and property investors put things on hold.

Will slamming property investor’s with unfair tax increases elevate the problem or will the opposite occur and see tenants paying more?

Sure, no doubt a few are cheating the system just like in any business. However, a blanket approach is certainly not recommend as the current tax system is fundamentally workable in its current form.

It has been reported that uncertainty over next week's Budget with its potential for tax increases for landlords is being blamed for a sluggish property market.

Not surprising really. Why would someone put their foot in the door having been told it could very well be slammed shut? And hard.

I could be wrong. After all, we are relying on politicians to do the right thing and they won’t get any brownie points from those that think property investors should be hit with a 4 x 2 if they don’t swing hard. But I think things may pan out a little differently. Guess time will tell and we don’t have much longer to wait.

Like a car engine that isn’t running smoothly, do we analyse and tune, or do we rip it out and replace it with another in what could be a very costly exercise?

My call would be for the tune-up.

QV Valuations spokeswoman Glenda Whitehead said sales in April had been slow, with fewer properties for sale on a "flat" and "patchy" market.

While this was expected because of Easter and school holidays, doubts around the May 20 Budget, as well as possible increases to interest rates, were holding house-buyers back but even after the Budget announcement the property market is likely to remain relatively subdued.

If confidence returns in the investment sector then we might see an increase in activity. But will that lead to another property boom? Not likely, as the "hangover" from the recession is not over yet.

So, will the market collapse like in America and England? I very much doubt it. More likely the market will remain relatively subdued for the better part of 2010.

In closing, let’s hope commonsense prevails as there is far more at stake than the pockets of investors and tenants.

Brian Dalley is a former NZMBA Mortgage Broker, Property Investor, and Real Estate Agent with over 15 years experience in the industry. You can read more of his views and opinions on his website  

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