In the last week both the Reserve Bank and the Government have announced changes that are aimed at cooling the heated property market in Auckland and are primarily aimed at property investors.
Firstly the Reserve Bank has announced that from October investors in the Auckland City Council area will now be required to have a 30% deposit.
“The objective of this policy is to promote financial stability by reducing the rate of increase in Auckland house prices, and to improve the resilience of the banking system to a potential downturn in the Auckland housing market.” Said the Reserve Bank Governor, Graeme Wheeler.
Secondly the Government has announced it will introduce a Capital Gains Tax on residential property sold within two years of buying it. Many believe that while this is a step in the right direction it is not yet far enough to have a significant impact on Auckland property prices.
There are a number of exemptions to this tax such as if the property is the sellers main home, if it is part of a deceased or inherited estate or if it is transferred as part of a relationship settlement.
This change will also take place on 1st October.
"It seems to be an interesting but largely political move by the government." says Mark Collins, CEO of New Zealand Home Loans. "It goes some way to reducing the attractiveness of property speculation but not far enough to make demonstrable change quickly. However with some of the other changes i.e. 30% deposit required for investment properties in Auckland this could hamper some future speculators entering the market or move their focus outside of Auckland. So whilst the move may make a small difference to the rate of house price increases the fundamentals of the market are still present......there is more demand than supply."
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The information contained in this article is of a general nature and should not be taken as advice. It reflects the opinions of the writer only and does not necessarily reflect the opinions of New Zealand Home Loans.
