NZ Property Investor No 148 Mar 2016

I HEARD SOME COMMENTARY recently where an economist stressed the historical lack of parity occurring currently between Auckland house price trends and those of the regions. The economist stated unique factors mean the parallel alignment of values in Auckland and the rest of New Zealand may be disrupted forever. If there is any truth in these statements, investors will be in unchartered territory. If we can’t count on SuperCity and regional values realigning - like two points stretching a rubber-band (one pulls the other back until they are on a parallel trajectory), then there is no reliable location on the property cycle we can reference to reassure us in our investment decisions. Yet it can also be argued that no two property cycles entirely imitate each other and it’s possible…

THROUGHOUT THE LATTER part of 2015 we heard a lot about the influence of ‘Auckland money’ in the regions. We did some work to quantify that influence, particularly in Tauranga and Hamilton. The signs were strong with Tauranga seeing a marked increase in people moving from Auckland, and Hamilton popular with Auckland investors looking for better rental yield. But since then we’ve further developed the analysis and applied it across the country to find out how far flung that influence actually is. Using LINZ title information we classify types of buyers, based on their overall portfolio ownership. For multiple property owners we look at the location of the properties they already own – if most of them are Auckland based then we call them Auckland investors. From there we can…

IN MY EXPERIENCE, THIS MARKET HAS MADE FOR RELIABLE TENANTS AND, DUE TO THE LESSER MAINTENANCE COSTS INVOLVED WITH APARTMENTS, SUCH RENTAL PROPERTIES TEND TO BE A COST-EFFECTIVE INVESTMENT. – ANDREW BRUCE TO KICK OFF THE ACADEMIC YEAR, Trade Me Property took a look at rental costs in New Zealand’s major university cities. Head of Trade Me Property Nigel Jeffries says, apart from Christchurch, there have been significant rent increases in the median weekly rent in each of the cities over the last two years. Not surprisingly, Auckland had the biggest increase. It is up by $50, to $500. But the median weekly rent is also up in Hamilton (by $35 to $360), Dunedin (by $30 to $330), Palmerston North (by $25 to $310) and Wellington (by $10 to $480).…

SINCE OCTOBER 1, 2015, everyone who is buying and selling property has had to provide a New Zealand IRD number. One of the goals of this measure was to generate better numbers on how many non-residents are buying property in New Zealand. This followed controversy over claims about the level of Chinese investor activity in the Auckland market. Now, recently released IRD data shows that, since 1 October 2015, a total of 94,265 new IRD numbers have been issued. This is higher than the number issued in the same period in previous years. Of the new IRD numbers issued, 67,211 went to individuals and 27,054 went to non-individuals (which includes companies and Trusts). Of the individual numbers issued, 34,177 went to New Zealand residents and 33,034 went to non-residents. Of…

We ask our readers what has been their worst investment decision? YOUR COMMENTS Patrick Gleeson: Selling a property. $20k in agent’s fees down the drain!! Have learnt to use equity instead. Whittaker Hamilton: Christchurch apartment block. Loss of rent cover policy only lasted 12 months yet uninhabitable waiting for EQC for three years. Kishor Hira: Getting married and having kids... all my money's gone!!! Debbie Van Den Broek: Not buying more when yields were 10% in Tauranga cause my ‘then accountant’ said I should stop and consolidate! We ask investors what’s the first thing they do when they take possession of a new investment? YOUR COMMENTS Hadar Orkibi: Start work on whatever is necessary to bring the property up to standard. Michelle White: Agree with Hadar, start work! We ask…

1 FOLLOWING THE HALO Prices are still sky-high in Auckland despite the market slowing down with investors looking to other parts of New Zealand for better deals. Auckland Property Investors’ Association president Andrew Bruce says, in every cycle, there comes a point where it is hard to get returns in the Auckland market. As a result, people start gravitating to areas outside of Auckland. In his view, it was already happening before the Reserve Bank announced its LVR restrictions on investors in Auckland. 2 INVESTING IN HOLIDAY DREAMS While a holiday home may have a powerful allure, the investment credentials are far from established, Miriam Bell writes. Bachcare managing director Leslie Preston says, traditionally, the returns on holiday homes are always capital gains rather than cash flow. Property Institute chief…