Budget restraint could be just what the property market needs

 By Mark Harris, co-founder and managing director of New Zealand Sotheby’s International Realty

The newly established housing fund, set up to distribute $128 million towards social homes and affordable rentals over four years, is a great initiative. We’ve got a housing supply issue in New Zealand, and any contribution towards alleviating this, and assisting first time buyers and young families into new homes, is a step in the right direction.

When we look at the state of the housing market, it’s moving forwards. The Budget’s Economic and Fiscal Update forecasts a 5.6% growth in house prices by next year. While different segments of the market are accelerating more quickly than others, overall, the trajectory is promising.

While I would have liked to see some progress on the foreign buyer ban in this year’s Budget, the $65 million pledged towards tax changes for foreign investment is a positive development. Anything to encourage investment in the current economic climate is the right thing to be doing.

The ‘Investment Boost’ component of the Budget – where businesses can write off 20% of the cost of new assets from their tax bill – is a productive approach. If we were to open another office in Auckland for example, therefore employing more people, we would presumably be able to claim a deduction on that expense, which would be a positive outcome for both the company and the employees. The Government's initiative is designed to encourage businesses to invest, boost economic growth, and raise wages – that can only be a good thing for the property market.

In terms of sales, regional markets such as Hawke’s Bay, Nelson and Taupō are all moving pretty quickly. The Southern Lakes region has had one of the best Aprils in a long time, with a dynamic and diverse market driven by both local buyers and offshore purchasers, particularly from Australia. The Auckland market is showing signs of improvement with substantial deals coming through from high-end suburbs like Herne Bay, Ponsonby and Takapuna. While the frequency of sales is not quite as consistent as we would like to see, or as consistent as it was in 2021, it’s certainly better than this time last year.

Overall, this year’s Budget should bring confidence to people, because the Government’s making strategic moves to put the country in the right place for everyone. This adds confidence to the market and provides a consistent pathway towards economic recovery.

New Zealand is in a good place at the moment, we’re not jumping up and down with glee, but the outlook is a lot more positive than it was a year ago.