While the election may be over, until the makeup of a new Government becomes clear it is unlikely that confidence in the residential property market will return.
Human nature is like that. We always look for certainty, but we will not get that until the official result is declared, the deal making is over and we have had time to absorb the implications. The earliest this will be is probably late October.
However, there are a number of positives for housing that can be taken from the way things unfolded during the election campaign.
The most important for me was that both National and Labour stated that they did not want to see existing house prices fall significantly. The prevailing view was that the best outcome for the economy and current homeowners was a modest decline in prices, or prices holding steady.
A major price retreat from present levels was seen as having the potential to hurt too many financially.
The second was the prospect of a capital gains tax on investment property being taken off the table until the next election three years away.
Under a centre left Government it may become a discussion point prior to 2020, but Labour are committed to making it a policy that all will have the right to understand before being asked to endorse or reject it through their vote.
Whether a capital gains tax on property eventually becomes part of a more extended tax on accumulated wealth is not what I'm focused on. What I do know, however, is that a property gains tax on investment property alone will not reduce residential house prices. Such a tax has not put a lid on property price rises in Australia and Britain, and will not do so in New Zealand.
The third positive was that property prices did not become a political football within the election. The two largest parties focused their politicking on the real issue – that of supply, and how they intended to improve it.
The issue of selling residential property to non New Zealand residents did raised its head, but quickly ducked out of sight when it was pointed out key trade agreements prevent this occurring.
House building will be high on the 'must do' list
Regardless of what combination of parties forms the next Government, what we can be assured of is that house building will be high on the 'must do' list. Both of the parties that received the most votes are committed to seeing more homes built, and built quickly.
Greater supply will do more to keep property prices reasonable, and get more people unto their own homes, than any other single action that can be taken.
The timing is certainly right for a return of confidence to the property market.
Spring and early summer is invariably a good time for the property market. More people list and more people are looking. After being subdued for such a long time I am confident that market activity in terms of sales numbers will return come November.
What will happen to prices is another matter. For the past six months the market has been fully priced and our agents are saying while for the right property buyers will go above market, there is little appetite to pay over the odds.
Another positive sign for the future is the strong pipeline of new builds coming on the market, or are being sold off the plan. Many of these offer an alternative lifestyle option to the stand alone family home in the form of apartments and town houses.
The time has come for these forms housing Auckland. By making greater use of the land on which they stand these options offer a more cost effective alternative, or more living space for the same money.
The majority of this type of new development is taking place in either the more established suburbs, which already have good infrastructure, or along transport corridors with good public transport.
While there are many that predict a bleak future for Auckland, the growing population is testament to the majorities belief in a rosy future for the City, and those that live in it.
Managing Director, Barfoot & Thompson