NZ Property Investor July 2017

There are some pretty strong downward pressures on the property market at present – both in main centres and regional areas. Reserve Bank lending restrictions; tighter bank lending; rising mortgage rates; the usual winter season lull; and increasing uncertainty about policy changes post-election all mean buyers around the country are holding their cards close to their chests. On the plus side, it means buyers have more choice and vendors are getting realistic about their prices; the downside is the wild value increases experienced over the past couple of years are much more muted and for many investors it’s time to press pause and evaluate their position. In our lead piece this month, we’ve delved into the latest growth statistics across the country to spot any latecomers in the property cycle.…

Moody’s Investors Services recently downgraded the long term credit ratings of New Zealand’s four big banks – ANZ, ASB, BNZ and Westpac – to A1 from AA3. While Moody’s says the four banks' baseline credit assessments reflect their strong stand-alone financial profiles, the move was prompted by the downgrading of their respective Australian parent banks. Massey University banking expert David Tripe says the Moody’s downgrade could have a small, negative impact on the costs of wholesale funding. “The downgrades could add about 10 basis points on to interest rates, although the banks are likely to be willing to negotiate on fixed rates.” Infometrics economist Mieke Welvaert says the downgrade implies that those banks are more risky than they were. “This plays into the risk equation, along with the ability for…

The programme divides up the cost of putting ceiling and underfloor insulation into rental properties occupied by low-income families between landlords and the Government. While the goal of the current programme was to get 20,000 more New Zealand homes insulated over two years, after a year just 3,700 properties have been insulated using the subsidy. This year the Energy Efficiency and Conservation Authority (EECA), which runs the programme, has been urging landlords to take up the subsidy before it is too late. But NZ Property Investors' Federation executive officer Andrew King says that a study of their members revealed that very few went through the government funded scheme. This was because it is too expensive even with the subsidy, he says. “Many saved money by doing it themselves, but I've…

Fletcher Residential has finally reached an agreement with community groups opposed to its planned $1.2 billion development in the old Three Kings quarry. The battle over Fletcher Residential’s plans to convert the disused 22-hectare quarry into 1,500 apartments and townhouses, along with retail space and sports fields, has taken nearly 10 years. Consultation on the project started in 2008 but, in the time since, the proposal has been through both the Environment Court and the High Court. But Fletcher Residential, which was supported by the Government and Auckland Council in court, and the community groups reached an agreement last month on the development. According to sources, the agreement was reached after Fletcher Residential made changes to its plans. One major change is that there will be four metres of additional…

Formerly hot property markets around New Zealand are slowing noticeably but Queenstown is not one of them – and that’s creating a halo effect for surrounding areas. Much like Auckland, Queenstown is suffering from a supply shortage and population projections show that double the number of houses will be needed in Queenstown by 2048. However, unlike the Auckland market which is now very subdued, the region’s market is holding firm. REINZ regional director for the Queenstown-Lakes District Gail Hudson says that vendors are continuing to achieve good results although property numbers coming to the market have stabilised. “This remains a very reasonable time for buyers to gain entry to the market in this desirable location especially at the lower end of the market." Meanwhile, QV’s May data shows that the…

Written originally as a manual for building a real estate portfolio for Selwyn Mexted’s seven grand-children, Investment Money Machine considers all aspects of investing from having the right mindset to financing and structuring property purchases. The book takes a holistic approach to wealth building, in that it isn’t simply a ‘get-rich-quick’ manual, but a thoughtful retrospective on Mexted’s own 40-odd year journey in property investing in New Zealand, as well as a big picture guide on the practical ins and outs of building a portfolio. The guide is written in accessible language and focusses on employing different ‘frameworks’ to encourage first-time investors to create both a roadmap for investing success and a detailed practical plan to secure deals. Mexted’s ample experience across multiple property cycles as an investor, business owner,…