Investments and Projects managing director Arron Davis says the inflationary effect of greater GST will push everything up, including housing, while the personal tax cuts will help stoke investor confidence and encourage investments to loosen the purse strings and start buying property.

"An increase of GST has a direct impact on the cost of developing new sections and producing housing right across the board," he said. "With an annual shortfall in required housing already in New Zealand and a lack on new product available, more demand will be placed on the existing stock driving up prices."

Davis talked down the impact of changes to depreciation rules that prevent investors from claiming on buildings with a lifespan of 50 years or more, saying it was only the cost of construction that has been removed, and investors can still claw back tax losses on their chattels.

"Owner occupiers and investors alike wanted to see just how much of an impact the budget really would have on the market," he said. "Now that it has been released and the changes were very minor it will be business as usual and the thousands that have been holding off will now be reentering the market place."

Actuary firm Melville Jessup Weaver said the measures announced in the budget were "relatively mild compared to some ideas" that were bandied about earlier this year, and the New Zealand Property Investors' Federation's Andrew King said the changes would give residential investors a second bite at the cherry in the IRD review of depreciation on fit-outs.

Commercial property investors are expected to bear the brunt of the depreciation changes, with a KPMG report forecasting they make up about three-quarter of depreciation claims.