Property market not expected to sparkle
The change of government could move property investors towards higher value rental housng, says the Real Estate Institute, but sales prices and volumes are unlikely to take off.
Thursday, December 9th 1999, 12:00AM
by Paul McBeth
The change of government is unlikely to have a major impact on the residential property market, although investors could move to higher value and therefore higher rental housing.
That's the view of Real Estate Institute President Max Oliver, who says that Labour and the Alliance have stated similar positions on two key issues: a planned increase in state housing and the removal of the accommodation supplement in exchange for income-related rents.
"While more state houses will reduce the demand for private rental properties over the long term," he says, "the overall effect will be gradual as the scale of the state's expansion into this area is relatively modest."
The 1996 Census figures showed that 60,000 of the 300,000 rental properties in the country were owned by Housing New Zealand. It's estimated that a further 10,000 state houses are needed to cope with demand.
Oliver says the Institute isn't expecting any dramatic impact on the overall residential market in terms of sales prices and volumes.
"In fact, over the short term we anticipate a level of greater buoyancy in residential property with the removal of the pre-election uncertainty that has recently dampened activity in the market."
However, BNZ Chief Economist Tony Alexander says investors have been absent in the property market this year.
"Many people got burnt (as we predicted) by over-gearing themselves into properties that have not generated the rent levels or the occupancies which they had hoped for," he says in the bank's latest New Zealand Observer.
"Throw in Labour's plans to reinstate state housing rentals at a maximum of 25 per cent of net income and the outlook for dwelling prices is not good for the next year or so. They may not fall but rises will be minimal."