Changes in the tax regime for property investors has changed buying patterns at the top end of the housing market, according to the business owner of one of New Zealand’s top real estate agencies.
Barry Thom, co-owner of UP Real Estate, said homeowners in Auckland’s wealthier suburbs were increasingly looking to trade up to larger, more expensive properties as the a result of the Government’s housing market shake-up, announced last month.
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“What we are seeing already is the unintended consequence [of the changes] in the upper end. The family home is a tax haven, not subject to capital gains tax or any bright-line test. So instead of buying a second home or an investment property, people are saying, ‘I’ll just get a better home’,” Thom said.
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“The market seems to have taken on a different complexion, and there’s a flow-on effect across the overall Auckland market.”
Under the Government’s housing changes, intended to level the playing field for first home buyers and take the heat out of the market, the bright line test for new investment property purchases has been extended to 10 years and tax deductions on interest rate payments are to be eliminated.
Thom said buyers with $3 million homes were increasingly on the look-out for $5 million houses, particularly in Remuera and neighbouring eastern bays suburbs.
“There’s a high demand from people with $5 million [to spend]. It seems to be where a lot of buyers are. And that figure no longer appears to be a lot of money.”
Thom said a lot of homeowners were re-assessing what they should do with their money, especially with interest rates still low.
“It's not played out yet. What do you do with your money? That’s a real issue. Like the old saying, ‘Money’s looking for a home.’"
Thom said some buyers were taking a good look at the Auckland Unitary Plan to see what opportunities there were in areas zoned for more density.
“Some investors continue, some bail,” he said. “They might be taking a landholding position. Or in certain strips, developers might be looking hard to optimise. I’m amazed when you drive around Point Chevalier what you can see, the significant rise in high density. That's quite a shift.”
An example is a large property at 15 Lammermoor Drive, in St Heliers, which UP Real Estate agents Jo Johnstone and Peter and Lisa Cleave are listing, and is expected to sell for over $6 million.
The stylish four bedroom house, which sits on 1998sqm of land, is being marketed as a combination of practical living with a large landholding that could be used either as a large lawn and garden, with room for a tennis court or sold separately as a prime building site with zoning for more density.
15 Lammermoor Drive, in St Heliers, is on a 1998sqm plot of land. Photo / Supplied
Johnstone said that while she had sold 25 properties in the last 30 weeks, she still had ten buyers looking for homes in the $4 million to $6 million price bracket.
"There are so many buyers, I'm having to door knock [vendors]. But then vendors need somewhere similar to go, so I need to find a solution for them before they sell,” she said.
"Some of them don't want apartments, they still want space for their kids and grand-kids coming home, so that's 300 to 400sqm. And Remuera buyers are gravitating to St Heliers and the bays for more land and a family home. People are compromising, buying a modern house when they really wanted a classic one, paying $5 million for a special new home."
