What Does The 2019 Budget Mean For Property Investment?

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From a property perspective what was relevant in this years budget was the noticeable absence of anything specific for property. Certainly, Kiwibuild was not mentioned at all.

Perhaps they think the job has been done to some extent:

• The % of houses being sold to first home buyers is increasing – have first home buyers been placated?
• Interest rates have decreased – giving the feeling that houses will become more affordable.
• Prices have flattened off (although not in all areas), taking the panic out of the market.

Noteworthy was the $1b over 2 years for Kiwi Rail and Auckland City rail link. Auckland is clogged and desperately needs more rail to make the city work. With the population continuing to grow – we can’t just keep adding more cars to the road. There needs to be a clear plan for the continued development of Auckland City rail. Also – will there be an upgraded rail link between Hamilton and Auckland for a commuter service?

But….that’s it. Where is the significant spend on infrastructure that Auckland and the rest of the country desperately needs to manage the population growth we have experienced…and the growth that is certainly to come? For example…in Queenstown, the council is ready to open up more land for residential development, but that can’t happen until the roading is addressed, and much of the roading concerned are state highways. The council in these instances are reliant on the NZTA coming to the party and being prepared to spend the money on road widening and bridge building.

What is the consequence of inadequate infrastructure? It means the council can’t sign off developments. If developers can’t get consent they can’t build. If they can’t build, but the population keeps growing – then demand will exceed supply. Something has to give. Will property prices go up? Not if investors can’t get more easily get finance. So that means they have to rent – which means rents go up.

There is a confluence of events approaching. Watch this space.

 

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