House sales recovery held back by prospect of tax changes

The usual January jump in property sales has not happened and potential tax changes could be to blame.

Property values increased last month, according to the state-owned Quotable Value company, but it said there were signs of uncertainty in the housing market, mostly due to looming interest rate rises and recently announced recommendations of the tax working group that could feature in Government economic announcements tomorrow.

The Victoria University-based working group has suggested taxing the unimproved value of property, changes to the treatment of rental properties, and an increase in GST from 12.5 to 15 per cent.

The Budget will be delivered on May 20 but New Zealanders will get clues on the Government's thinking on tax reform tomorrow.

A spokeswoman for Prime Minister John Key said he would set out a comprehensive policy agenda for this year when he speaks at the reopening of Parliament.

QV spokeswoman Glenda Whitehead said home-buyers remained cautious in the face of proposed tax changes, which were just one factor influencing a quiet start to the year.

To read the full NZ Herald story, click here

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