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From: Tony Cannon

Hi Michael

Query - whatever happened to the effect of GST on house prices.

You may remember that some people were buying pre GST because it was assumed that new house prices would rise by about 8%, and there would be a "sympathetic" rise to the same extent in old (pre GST) houses.

Surely that increase has still to flow through.

Comments please
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Effects of GST

Reply: 1
From: PT Bear

I think we're seeing the post GST rise. Some areas are going up by 10% per quarter in the past 12 months. As always, it's the areas in demand which are seeing the best results. As usual, the worse areas experienced low to negative growth.

Keep in mind that the GST affects the cost of building a property and maintaining it. The real value of property is in the land on which GST has little effect in most cases. If there's demand, and land scarcity, the value goes up no matter what the cost of building is.

Also, there was a predicted slump in the building industry. Perhaps people didn't want to pay the extra GST. The government introduced the FHOG to offset this. It'll be interesting to see what happens when the FHOG ends.

At the time, it also seemed to me that it was marketers that were promoting buying pre GST to generate sales. It's best to keep in mind the motives of the people making predictions.

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