Expert says proposed CGT may have dampened consumer confidence
Confidence in New Zealand’s housing market continues to dampen as house price expectations fell across the country in the three months to April 2019.
According to the latest ASB housing confidence survey, price expectations have continued to slide across New Zealand, with Auckland leading the gloomy outlook. For the first time since 2009, Auckland price expectations turned negative, with a net 12% expecting a decline.
“The weak result in Auckland was unsurprising, given the Auckland housing market clearly softened over these months and with the media drawing much attention to weak Auckland housing statistics,” said Nick Tuffley, chief economist at ASB.
“Furthermore, since late last year many media commentators have drawn parallels between the Auckland and Australia’s housing markets, highlighting the sharp house price declines in Australia and implying declines can be expected in Auckland. Nonetheless, we are surprised by the extent of the weak results from the ASB survey.”
Tuffley pointed to jitters from the proposed capital gains tax as likely affecting consumer confidence. In February, the Tax Working Group released its recommendation that a capital gains tax should be introduced on residential investment properties – a plan that was ultimately scrapped in late April. The latest ASB housing confidence survey largely captures the period in between these announcements
“Despite the capital gains tax being ruled out, we still expect that many investors may remain on the sidelines this year as investors navigate a variety of recent policy changes that will impact investment property ownership,” said Tuffley.
“We will be keenly watching our next quarter’s housing confidence survey to see how much (if any) of the fall in house price expectations is reversed.”
