Waiting for the appointment
Friday, May 7th 2010, 5:24PM
Sometimes sitting and waiting for an important appointment is one of the hardest things to do. It feels like that at the moment, as we are just under a fortnight out from what maybe one of the biggest forces to hit the property investment world – the May 20 Budget.
The government has made it clear changes are imminent, but what is in store still remains a mystery. In talking to property investors there is a view that the changes will not be as big, as first indicated. Maybe it will be changes to depreciation rules and a little bit more tinkering.
Then maybe investors are being lulled into some false sense of security, thinking this government isn’t bold enough to make mega-changes which would hurt a core constituency?
While the changes are unknown their pending announcement is being blamed for a subdued housing market.
This week Barfoot & Thompson put out its latest sales stats for the Auckland market. These showed that sale prices dropped by more than $3,000 last month.
Likewise, ASB put out its quarterly housing confidence report. This too showed things are pretty subdued at the moment. Indeed ASB is predicting that house prices could fall 3% to 4% this year due to a lack of buyer appetite.
I think that is a pretty brave call. Many of the factors which influence the market are reasonably neutral at the moment. Perhaps the biggest factor in real estate land is the “wide imbalance” between supply and demand.
I’m wondering if once the Budget comes around people will act quite quickly and try and sell properties (if the news is bad) or whether the opposite happens. That is if the changes are palatable, uncertainty is removed and buyers will act quickly.
Perhaps this situation would be helped by the prospect that interest rates will start increasing in June or July at the latest. Whatever, getting this appointment behind us is something all investors are looking forward to.
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