Innholdsfortegnelse for May 2017 i NZ Property Investor

FINGER ON THE PULSE Over the past few months, commentators have been certain that March’s market data would finally reveal whether we are seeing either a sustained slowdown or a speed bump before further value increases. Many pointed out that it was March last year when the market started to pick up following the last round of LVRs in 2015. But the March data is in and the answers we were hoping for haven’t transpired; listings are up, but so are prices and sales. The data suggests complexity in the market – particularly in Auckland. Consequently some commentators are suggesting that the lack of definitive answers means the market has changed direction. But many investors probably aren’t too fussed by the confusion – there are so many different data providers…

❝We expect to see activity and price growth slow over the remainder of 2017, especially in Auckland where prices are most stretched ❞Kim Mundy Summer is over and, for the property market, so too is the seasonal slow patch. Yet still it feels like the market is sitting in a holding pattern, waiting for a sign of what might come. Waiting for an answer to the perennnial question of whether the market will stay cool or start to heat up again. For the last few months, commentators have been saying that the market data for March would reveal a broader picture or more clues to the future. Many pointed out that, after the last round of LVRs in 2015, it was March when the market started to rev up again.…

Finding that balance between risk and reward is one of the biggest challenges faced by every investor. Some investors love discovering undervalued suburbs and buying when they’re on the verge of growth, maximising their returns. Others, though, choose to buy in areas with long track records for positive performance, spending more but in a less risky location. So which strategy could work best for you? Get ‘em while they’re hot: the appeal of up-and-coming areas Finding an up-and-coming area means identifying a suburb or area that is on the cusp of growth: an impending hotspot. These aren’t always easy to find, but one strategy is to buy in the cheaper suburb next door to one that’s recently risen in value. As prices tend rise in an area, buyers look at…

BE OPEN TO CO-INVESTING AND JOINT VENTURES: “Going into a commercial investment with a partner can minimise exposure and risk. The bespoke property that I’m currently developing is a good example. In this case, because the tenant is my partner that means I can be confident that someone is going to be in there for the long term. It allows me to do other investments and not have all my eggs in one basket.” ACT PRUDENTLY WHEN IT COMES TO BORROWING AND GEARING: “The new LVRs have levelled the playing field when it comes to borrowing. The LVR situation now with residential has always been the case with commercial. It’s apples for apples when it comes to financing now. But commercial doesn’t have the big highly leveraged issues – people…

❝ If I were given the choice between that house in Kaikohe or a one-bedroom apartment in Lambton, I wouldn’t hesitate for a second ❞Aaron Tunstall With 1,000 apartments currently under construction on the North Shore, apartment critics are not happy. Apartments are “not the Kiwi way,” is the theme of a recent article in Stuff about the developments. This attitude seems to stem from the idea that New Zealanders must live on a quarter-acre section in a standalone house, whether they want to or not, because that’s the way we always used to do it. By that logic, same-sex marriage and having more than two TV channels aren’t the Kiwi way, either. Times have changed and the way Kiwis live is changing, too. The invention of the internet means…

❝ Ultimately you need to make sure the rental property that you want to buy, is a rental property that tenants want to live in ❞Donna Russell Welcome to my first property management column in a long while. I’m starting from scratch and will cover a range of topics from: property management; pitfalls; dos and don’ts; renovations; inspection strategies; rent arrears management; Tenancy Tribunal; updates on the industry including meth contamination; Osaki protection; and what to look for so that property works well as a business. Property is a business, and as with any business it comes with risks - so you need to make sure it works well and gives you a good return on your money. This month I’ll cover purchasing an investment property. WHAT TO BUY Taking…

MAUNGARAKI/ KOROKORO Lower Hutt Western Hills are one of the best kept secrets. A quick jump on the motorway to Wellington and direct access to local public transport systems. Many properties have views of the Wellington harbour and Cook Strait and there’s a village feel. Hutt Valley High school zone. PETONE Already a stellar rental performer, Petone is experiencing a second wave of apartment developments. Multiple big box retailers are opening new outlets in the area this year. A hot area getting hotter. HUTT CENTRAL Lower Hutt central is on the doorstep to the CBD and has always enjoyed steady anchor tenancies and the flow on effect of a corporate presence. A highly popular rental investment area, it shows consistent rental returns and high occupancy rates. BOULCOTT Boulcott is one…

RENTAL SNAPSHOT Median house rents of the dominant dwelling type for the area EXPLANATION OF STATISTICAL TERMS No. of Properties: Total number of residential properties No of Bonds: Total number of bonds lodged in last three months Median Rent: Weekly rent based on the bonds lodged in the latest three months Rent Quartile Range: Inter-quartile range of weekly rent based on the bonds lodged in the latest three months Median value: The median value of properties in the group based on estimating the current market value of each property using our E-Valuer at the end of the latest month Gross Yield: Annualised median rent as a percentage of median property value for specified time period NORTHLAND AUCKLAND WAIKATO / BAY OF PLENTY HAWKES BAY / GISBORNE TARANAKI MANAWATU / WANGANUI…

Developed in partnership with the Reserve Bank, it is already being used by the Reserve Bank’s forecasting and macro financial teams plus the major banks. The HPI aims to provide a greater level of detail about housing activity and values over time to a higher standard than anything else available in New Zealand. It does this by analysing how prices in a market are influenced by a range of attributes. These include land area, floor area, and number of bedrooms. The HPI also uses unconditional sales data (when the price is agreed) rather than settlement data which often comes weeks later. REINZ CEO Bindi Norwell says the HPI is “the gold standard” in New Zealand house price analysis tools. “It takes many aspects of market composition into account, and thus…

It is widely accepted that the dictates of Australian parent banks have already led to a tightening up in the lending of their New Zealand subsidiaries. But it is likely that further tightening is yet to come in certain lending areas. One such area is interest-only loans. Australian banking regulators recently limited the flow of interest-only lending by Australian banks and experts believe there could be a knock-on effect on interest-only lending in New Zealand. Massey University banking expert David Tripe says the New Zealand banks tend to take their cue from their Australian parents. “As they have been told to tidy up their act, there is likely to be some implications from that here.” While Tripe doesn’t believe interest-only lending in New Zealand is the problem it is in…

REINZ HOUSE SALES: UP Once seasonally adjusted, sales volumes were up marginally around the country, including Auckland, in March. INTEREST RATES: UP Interest rates remain low, but banks are now announcing increases on a regular basis. OCR: DOWN The Reserve Bank left the OCR on hold at the record low of 1.75% in March. IMMIGRATION: NEUTRAL Annual net migration remained at a record high in February, although numbers didn’t increase on January. However, monthly net migration was down in February. BUILDING CONSENTS: NEUTRAL Once seasonally adjusted, building consents were up slightly, both nationwide and in Auckland, in February. However, the overall consent trend remains on the decline. MORTGAGE APPROVALS: NEUTRAL Reserve Bank data shows that mortgage lending overall inched up a little in February. But investors’ share of the new…

❝Buyers are now having to deal with bank policy changes that may hinder their ability to settle on their purchase, given the need to renew the approval prior to completion ❞Peter Norris Before I get started on this month’s article, I thought it would be prudent of me to apologise for an error made in last month’s article. At 11:30 pm, with my crying baby daughter in the background, I was rushing to have the article typed and emailed in time to go to print. Like a high school student cramming the night before their exam, I incorrectly wrote that KiwiSaver is government guaranteed, which of course it isn’t. So, to all you readers (many of whom took liberty to correct me) I apologise! Moving along… Right now, being a…

PALMERSTON NORTH STUDENT RENTAL Shane Storey knew his six-bedroom Morris Street student rental in Palmerston North was borer ridden and didn’t have a long future. With scrim on some of the walls he accepted that he could only get indemnity insurance. It was a risk and the worst-case scenario came true when vandals set fire to sofas on the veranda. His investment burned to the ground in a matter of minutes. With only six months’ loss of rent cover Storey had to get his skates on, not only to get a new rental up and running before the next university year started, but to work out how he could create seven bedrooms (his signature student rental) on the property with a $122,840 insurance pay out. An accountant by day, Storey…

❝You’ll get access not only to better banking terms, but often preferential interest rates that other investors can’t access ❞Campbell Venning Your first home isn’t your dream home. It’s often a do-up, or in a not-so-good location, or you have to share it with two other flatmates. Maybe you get married, maybe you’re starting a family. So eventually you tidy up your first home, sell it, and move onto the next rung of the housing ladder. That’s how it’s done, right? It doesn’t need to be that way. If you think long-term, while your first property won’t be your dream home, it could be the start of your dream investment portfolio. You can be a first home investor instead of a first home buyer, and start with an investor mindset,…

I'm sure that the people saying that home ownership is unachievable for young people are doing this with the best of intentions, but they are giving these people the wrong message. Ironically, by trying to stand up for first home buyers they are likely putting them off even trying to buy a home. An NZPIF study shows that while it is hard for first home buyers to get into their first home, it has always been this way. Now another study, this time on home affordability from Massey University, shows that it isn't impossible for first home buyers to enter the market. Massey's latest study was recently released and showed that housing affordability in New Zealand had actually improved. Not only over the last quarter, but over the past seven…

At Home Property Management 022 303 3449 www.athomepropertymanagement.co.nzBuzz Property Management 04 589 0001 www.buzzproperty.co.nzB&N Property Management 0800 111 252 www.bnproperties.co.nzBayleys Real Estate 0800 BAYLEYS www.bayleys.co.nz/commercialClick Property Management 0800 1 CLICK www.click4rent.co.nzCoreLogic 0800 355 355 www.corelogic.co.nzCrombie Lockwood Insurance 0800 276 6243 www.crombielockwood.co.nzD&D Financial Consultants 09 369 5144 www.dandd.co.nzDiamond Ideas Ltd 0800 164 461 www.healthandsafetycompliance.co.nzDiscount Property 021 280 6655 www.discountproperty.net.nzEnviroCheck 0800 378 483 www.envirocheck.co.nzFresh Tax 0800 18 18 19 www.freshtax.co.nzHothouse.co.nz 03 545 7995 ww.hothouse.co.nzG.J. Gardner Homes 0800 424 546 www.gjgardner.co.nziFindProperty 021 486 000 www.ifindproperty.co.nzImpression Real Estate Ltd 09 300 5001 www.impression.co.nzLPM Property Management 04 805 0599 www.lpmproperty.co.nzKeith Hay Homes 0800 KEITH HAY www.keithhayhomes.co.nzKey Exchange Property Group www.keyexchangepropertygroup.comKris Pedersen Mortgages 09 476 1199 www.krispedersenmortgages.co.nzMethsafe 0508METHSAFE www.methsafe.co.nzManage my rental 04 589 7989 www.managemyrental.co.nzMeth Solutions 0800 638 4522 www.methsolutions.co.nzMaintain to Profit 09 929 4546 www.maintaintprofit.co.nzMinistry…

Auckland mayor Phil Goff established a Mayoral Taskforce on Housing Supply earlier this year in a bid to find solutions for the Super City’s housing crisis. But the workings of the Taskforce have largely been behind closed doors - until a panel of experts, including two Taskforce members, was recently convened to lead a discussion on the relevant issues. Despite divergence on some points, the panel agreed that central government involvement and infrastructure funding solutions will be critical to ensuring the Taskforce is more than just a talkfest. However, the discussion also revealed that for any proposed solutions to prevail there needs to be a widespread change in attitudes – towards Auckland, medium density housing, infrastructure thinking, and the design of neighbourhoods. Ockham Residential chief executive Helen O’Sullivan, who is…

1 Market slowdown different this time Interest rate movements mean that this time round the post-LVR cooling of the property market is different, ANZ economists say. We examine ANZ’s latest Property Focus report which takes a close look at the potential longevity of the current slowdown in the property market. 2 When to worry about meth Landlords are being told they need to be careful what they believe when it comes to meth contamination of rental properties. For example, there are widespread concerns the new health and safety legislation means landlords will need to do meth tests between tenants – or they could be accused of renting an unsafe property. 3 Bright line test dents flipping Big profits are still being made by flipping properties but commentators say the bright…

Not every underperforming property needs to be ditched, so we’ve compiled nine ways you could improve rental return and/ or grow equity on that dud. 1 PAINT AND FLOORS A fresh coat of neutral paint and new carpet will give your rental a much higher appeal for a low cost. 2 ADD MORE ROOMS A granny flat, cabin, sleepout or adding a bedroom can all add value. 3 MULTIPLE INCOME STREAMS Convert downstairs to a separate flat or add an ancillary dwelling. 4 PROPERTY OVERHAUL Clean, garden, weed, scrub and dust; replace cracked or missing putty on windows; plaster dents or cracks in interior walls; replace any rotten weather boards or decking; and waterblast pavement, paths and decks. 5 FURNISHED Is there a need for furnished rentals in your area.…

From 1 April 2017, the Government has introduced new GST legislation that will impact non-resident property investors and those providing various types of professional services to them. Up until now services to non-resident property owners have been considered exports and have been zero rated for GST. To be zero rated though, the service performed could not be performed directly in connection with the land. This means that where work was done physically on the property, for example, construction type work, the services were required to be standard rated. But legal work, architectural services, engineering and even real estate sales commissions were considered to be one step removed from the connection with the property. This outcome was seen by the Government as contrary to the basic concept that GST is a…

❝Make sure you research what upgrades actually increase the value of a property – for example, a typical strategy is to add an extra bedroom ❞Sue Irons As we’ve been saying for the last six months, Auckland is no longer the driver of the nationwide market. What we are looking at now is a much more localised market, with places such as Wellington and Queenstown being driven by internal economic factors. In this kind of market, it’s common to see investors lose confidence in their ability to source locations with strong, fast capital growth. Investors start looking for other ways to create wealth, and one effective way to do this is to grow their equity. There are three things to consider when you are looking at growing your equity. You…

THE DATA Rental data is sourced from the Ministry of Building Innovation and Employment (formerly the Department of Building and Housing) based on rental bonds lodged. This rental data is supplied to us grouped into geographic areas based on statistical area units used by Statistics NZ for the census and as a result do not always match well with common usage suburb names. The rental data for each area is matched to house price information from our database to determine property prices and therefore yield. The yield is calculated as the annualised rental income divided by the median house value calculated using our E-Valuer. MARKET COMPOSITION The rental market in Lower Hutt is dominated by houses and three of the ten areas profiled here are exclusively houses. Only Hutt Central/Waterloo…

NORTHLAND NEXT MEETING: Wednesday May 31st, at The Distinction Hotel, Riverside Drive, Whangarei TOPIC: Speaker is Mike Goodison from Work Safe NZ on health and safety. He will cover the role of commercial property/ landlord owner as a PCBU and the duties which are part of this role. MEMBERSHIP: $180 single or $210 couple; includes subscription to the NZ Property Investor and NZPIF discount card, plus local trade discounts. Please email npiacontact@gmail.com for more information. PO Box 1640, Whangarei. AUCKLAND NEXT MEETING: Tuesday May 9 , Dorothy Winstone Centre, Auckland Girls Grammar School, 14 Howe Street, Freemans Bay. Admission closes at 7.30pm. Free for APIA members and $75 for non-members with prior registration. TOPIC: Global solutions for local problems - What can Auckland learn from more mature property markets? ANZ…

❝ We seem to be public enemy number one. It’s a real shame because in fact we should be public friend number one. We are the ones that at no charge to the Government provide 30% or thereabouts of housing to New Zealanders ❞ NZ PROPERTY INVESTOR: Brian, you and your wife Alison have been investing since you were 21 years old. Have you ever had a deal gone terribly wrong? BK: We’ve had deals where we’ve bought a property and put tenants in then prices have come back and [we’ve] thought ‘that was a bit of a dud’. But it takes you a little while to work out that you’re in a long game. That’s how I look at it – I’m a buy and hold investor. Five…