Budget hasn't put off property investors

It’s now a week since the Budget where finance minister Bill English tried to put the kibosh on the residential property market.

We’ve just completed a survey at Landlords.co.nz and the results show that while investors are not particularly happy with what Prime Minister John Key and English have done, it’s not enough to deter people from investing in bricks and mortar.

We will have full results from the survey on the site next week.

Looking through the data and the Budget in more detail, it’s clear there’s still plenty of work for property investors to do around their strategies and their property holding.

Perhaps one of the key points though is that much of this work will need to be done before April 1 next year when changes take effect.

The other interesting debate extending from the Budget is what will happen to house prices and rents. With the latter there is no doubt that rents will rise. By how much is one of those how-long-is-a-piece-of-string questions. Investors I have spoken to have a range of views on this from a big increase to small incremental increases over a period of time.

There is far less certainty around what will happen to house prices. One commentator who has had the most attention on this has been Kieran Trass. Funnily enough, his prediction was not too outlandish, rather it was his comment that if house prices didn’t fall by at least 5% in the next six to nine months he would walk the length of the country. (We’ll be keeping a close eye on this.)

My prediction is that house prices for lower-value properties will possibly soften in the short term and this may give some first home buyers the chance to get into the market. But judging from our survey, investors will still be active in the market which will help to put a foundation underneath it.

Maybe my prediction is similar to Kieran’s one? The only difference is I won’t have to leave my office if I’m wrong.