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.

"There is increasing debate around the likely impact of the options put forward by the tax working group ... and while tax changes implemented will impact, that change will be alongside other market factors such as interest rates, employment security, and bank lending policies prevalent at the time any of those tax changes come into effect."

Property Investors Federation president Martin Evans said investors were resisting purchases until the specifics of the tax reforms were known.

"We're hoping the Government won't touch depreciation or impose a 1 per cent land tax. But in the meantime, it's all up in the air, and people are holding off buying. Taxes are just another thing to consider on top of rates, insurance, and mortgage rates."

The First National Group said last week that buyer uncertainty was causing the cancellation of deals on 30 to 40 houses a month.

Ms Whitehead said market activity last month was patchy and was driven by homeowners, not investors.

"While it is normal for sales activity to be at its lowest over the Christmas period, there is usually an increase in listings activity in January leading into the busiest time of the year in February and March. This January, the expected increase appears to be absent."

Real estate experts said people entering the market were applying more scrutiny in their house-hunting and placing more weight on building inspectors and support services.

Ms Whitehead said the frantic market activity of 2009, when multiple buyers competed for properties, had eased. Lower activity could in part be due to people being forced to take additional Christmas leave.

Nationally, property values are 4.4 per cent above the same time last year and 4.3 per cent below the peak of late 2007.


Changes in January 2010:

* Auckland region

Property value growth: 7.3 per cent
Average sale price: $549,028

* North Shore

Property value growth: 8.1 per cent
Average sale price: $599,178

* Hamilton

Property value growth: 3.5 per cent
Average sale price: $350,722

* Thames-Coromandel

Property value decrease 4 per cent
Average sale price: $464,540

* Wellington

Property value growth: 5.7 per cent
Average sale price: $460,638