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Who Is Going To Benefit From The Proposed Changes To Real Estate?

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Brian Dalley
Brian Dalley

Bank economists, real estate agents, valuers, investors, the media ... they all have differing views as to what side the coin will land on.

I tend to think the coin will land on neither until the government comes clean as to what changes they intend to implement.

Now this is where it gets a little hard to fathom. What does the government want to achieve?

Discourage property investors?

Fix the flaws in the tax system?

Reduce house prices?

Encourage investment in local business/infrastructure?

From what I have been reading they want to achieve it all and it seems they want to achieve by making changes to only one industry, Real Estate. Surely that would be like saying, it’s time to rejoice, we now have a magic pill, take this pill and you will be cured of all sickness.

Making adjustments to one sector will result in a flow on effect to others. But will they be beneficial or catastrophic? Yes that negative extreme could come into play if they screw it up, which is quite on the cards from what I have been reading.

There seems to be a general conception out there that we have bounced back from the recession and many are already donning the rose tinted glasses.

BEWARE the after-shocks can sometimes be more devastating than the original quake. The infrastructure has been weakened and if the government push too hard for changes to the real estate industry things could start to worsen. Yes, the perceived effect could be opposite to what some are predicting and I am not alone in that thinking.

Will the perceived changes result in house prices plummeting by 30% in 2010 as they were predicted to do in 2009, thus making housing that much more affordable? I very much doubt it.

Will people walk away in droves from investing in property if the tax benefits are reduced? I very much doubt that and I sincerely hope I am right, for if I am wrong rents will skyrocket and I ask you, what will Housing New Zealand do as they have opted to lease from private investors rather than build?

I think for starters all industry commentators should stop using statistics to feather their own nests as this is where the problem lies and not with the property investors.

Statistics are much like a traffic accident. At an accident scene it is likely all the witness will have a different take on what they perceived took place. Much like commentators do with statistics. Which ironically is what drives the highs and lows: not the statistics but the commentators’ perception.

This year we have made it easier for all by changing our website to include regional blogs so people can better understand what is having an impact on their region, or region of interest.

Sure what is happening nationally will have an impact on the county as a whole and I will continue to comment on that, but one shouldn’t lose sight of what is happening, and what could happen, in their own backyards.

As to if should you wait to invest/buy or sell. Wait for what? If is affordable to do what you want to do, just get on with it. It is much more fun being in the game than being a bench warmer.

But I suggest that if you are thinking of investing in residential property for nothing other than the tax benefits, wait.

* Brian Dalley is a leading Property Consultant | former NZMBA Mortgage Broker, and Real Estate Agent. You can read more of his views and opinions on his website

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