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Three months have passed since John Key chickened out of taxing capital gains and as luck would have it, we are making progress.

Monday's New Zealand Herald brought news that house prices remain static, sales are down, gloom rises. Gloom for those who borrowed too much for a rental house maybe, but good news for the future.

It could have been so different after the May Budget. Remember the next day's real estate advertisements? "The [tax] changes weren't as formidable as they could have been," chirped one property investment adviser, Tanya Kwasza, who calculated the loss of depreciation claims would cost a $350,000 house only $30 or $40 a week, the equivalent of no more than a 1 per cent rise in interest rates.

Tax specialist Mark Withers said: "Proper investors can breathe a collective sigh of relief ... There will be no capital gains tax, ring fencing of losses, deemed rate of return, land tax ... I believe property investors will now return to the market."

I wouldn't wish unemployment on anyone but property investment touts. There must be something more useful they could do.

By now they are probably doing it. Three years have passed since the bubble burst and there hasn't been much business in the property market since.

Households have been content to sit on the values their real estate reached in the boom. Younger people have been waiting in vain for prices to drop to a level at which they can afford their first mortgage.

Static prices are economically preferable to a rapid fall. Time can bring incomes within reach of them.

We learned on Monday that even mortgagee sales have not undermined prices very much. After three years we must have seen most of the forced sales that were needed to flush out debts the borrowers had hoped to repay from capital gains.

Now, according to the property information agency Terralink, an increasing number of mortgagee sales are happening because the households are hard up.

This winter feels like one of those windshifts in economic life. The property wind has waned and we are wallowing a bit, waiting for a new one.

We haven't had this sort of lull for a while. High export prices powered the economy for a few years after the millennium. By the time they subsided, high immigration had sent house prices rocketing and we hardly noticed the change.

It was a good five-year ride, 2002-2007. Feeling rich on real estate values we borrowed not only for more property but for consumption on credit cards. Foreigners happily lent to us at interest rates the Reserve Bank had to set to counter our inflationary splurge.

The interest rates created so much foreign demand for the dollar that exports suffered from a fiercely high exchange rate. Governor Alan Bollard constantly tried to talk house prices down by warning of the inevitable.

It was fun while it lasted but now, like binge drinkers, we having the morning after. We feel a bit silly. Bill English, who blames the previous government for leading us astray, tells us exports have been in recession since 2005. We didn't notice.

He and Key say they will try to revive the trading sector with some improvements to infrastructure and productivity, but first they have to get us through the fallout from the global financial crisis of 2008.

Maybe that was why they couldn't find the courage to take our bottle away in the Budget. They borrowed a bit more to get us income tax cuts from October that will slightly exceed the amount they take from us in higher GST.

There is a feeling around that the recession may not be over. History can support that possibility; the Great Depression arrived about two years after the Wall St crash.

If the economy needs another artificial boost, the tax cuts on October 1 might be not a moment too soon. Key seems to be lucky like this.

He has been lucky the house market has not recovered. Imagine if property promoters had been right in the days after the Budget. Imagine values were rising and we were all climbing back in. We would know we were heading for another bust with no better sense of direction or future than we have now.

Or imagine the Budget had been as tough on property as the tax working group had suggested it should be. Key would be taking hell by now, blamed for driving us into the doldrums and offering no new sense of direction.

The property market has done the first part of his job for him. While it awaited the Budget it had a ready excuse for inactivity, three months later it has none. The country has lost faith in it. Household investment habits are ripe for change.

The country is ready for his "step change", and waiting.