Mortgage brokers and real-estate agents in the city said some changes — such as tweaks to price caps for people accessing government grants and loans — did not go far enough.
Other interventions — such as a $3.8billion national fund to accelerate housing supply — would take years to yield results.
The Government announced yesterday a series of changes designed to discourage housing speculation and to tilt the market to accommodate more first-home buyers.
Among the more dramatic developments was a decision to phase out allowing interest costs to be offset against rental income for tax purposes.
The shift in the bright-line test to tax profit from selling investment properties within 10 years of purchase — rather than five — was another.
In Dunedin, more first-home buyers will be able to access a government grants and loan scheme from April 1.
Price caps that apply to the scheme would increase from $400,000 to $425,000 for existing properties in the city and from $500,000 to $550,000 for new properties.
The Ministry of Housing and Urban Development expected this would increase the number of properties with market values under the price caps in Dunedin from 12% to 17% for existing properties and 16% to 21% for new properties.
MortgageMe director Daryl Taylor said the price caps were "hopeless".
Building a new home for under $550,000 in Dunedin would be a struggle, he said.
"The only homes that I’ve financed in the last 12 months that have fitted into that category have been well out of town."
Mortgage Link adviser Liam Thomas said the push to get more first-time buyers into the market was great, but there needed to be enough homes.
"In Dunedin, you’re not finding a decent property under $425,000 that a first-home owner would want to buy."
Nidd Realty owner Joe Nidd said raising the caps did not go far enough.
"The other measures will eventually have an effect, but they will take a very long time to solve the fundamental problem, which is we have a property shortage," he said.
Greater spending on infrastructure would allow more housing, but planning for and completing developments took years, Mr Nidd said.
Otago Property Investors’ Association president Kathryn Seque said changes such as stopping interest from being tax-deductible would hurt renters.
Landlords would pass on increased costs.
Mrs Seque said the Government could have done more to provide incentives for building.
"The core issue is supply," she said.
"We just need more houses."
Mrs Seque and Bayleys Metro managing partner Mark Stevens said taxing the profit on investment properties sold within 10 years of purchase was a capital gains tax grab.
Mr Stevens said striking down interest as a tax-deductible expense would increase the tax take by almost $1billion a year.
He expected more property investors to exit the market.
Tenants would find it harder to secure properties, he said.
However, infrastructure spending that made it easier to free up land for development would be welcomed.
Harcourts Dunedin director Richard Stringer said the Government’s measures could slow growth in house prices.
"The biggest impact will likely come from the removal of tax relief from interest on loans for investment property," he said.
"That will have some investors rethinking their ability to service debt over the period of the loan if they are heavily geared."
Shifting the bright-line test would result in some investors hanging on to their properties longer, he said.
However, Dunedin had a severe shortage of houses and low interest rates continued to result in pressure on prices.
PKF Dunedin head of tax Jono Bredin said the situation was complex and accountants would be busy.
Dunedin Mayor Aaron Hawkins said allowing Kainga Ora to borrow $2billion extra for land acquisition nationally could be positive.
"The opportunity to accelerate Kainga Ora's social housing programme is a critical part of addressing the sharpest end of housing need in our communities."
- $3.8billion for accelerating housing supply.
- First Home Grant caps lifted to $5000 for an existing property, or up to $10,000 for a new property.
- Income caps lifted from $130,000 to $150,000 for multiple buyers and from $85,000 to $95,000 for individual buyers.
- Bright-line test doubled from 5 to 10 years.
- Interest deductibility loopholes scrapped.
- Govt to offer Kainga Ora $2billion loan to scare up land acquisition.
- The Apprenticeship Boost scheme extended.
