Fall in prices ‘possible’ – ASB

A fall in house prices is “possible” over the next six months thanks to the Government’s recent housing announcement, ASB says.

The bank, one of the ‘big four’ in New Zealand, says it’s expecting a drop in demand for houses at the more affordable end, with “first-home buyers… now likely to be the group setting the price at the margin”, not investors.

The Government in March said it would phase out the ability for property investors to offset their interest expenses against their rental income when calculating their tax liabilities (something owner-occupiers can’t do), unless they were investing in new builds.

In its latest weekly update, ASB said the added expense would likely drop the price an investor would be willing to pay for a typical property by 30 percent, if they wanted to keep making the same kind of money.