Innholdsfortegnelse for July 2017 i NZ Property Investor

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.…

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…

1 Capital gain time over? New Zealand’s housing marker could see a 10% drop from its current peak, if it follows the pattern of previous cycles, according to a major property valuer. 2 Market returning to normal Any doubt that New Zealand’s housing market is taking the pace down a notch is confirmed by May’s QV data which shows annual value growth dropping significantly. 3 Tenant damage law change Landlords could soon have better protection in cases of tenant damage if a new Bill passes into law – but an investor advocate argues it doesn’t go far enough. 4 tax changes ripple across the Tasman Investors beware! Tax proposals in the Australian federal Budget are likely to impact on New Zealand-based investors with properties across the ditch. 5 It’s crunch…

“ I’m not in favour of limiting international student numbers, because I think they bring enormous value to New Zealand that’s more than just financial” Housing and immigration are often talked about as though they are two separate issues. But I promise you, they are not. Impression works at the intersection of these two massive hot-button topics – in the Auckland apartment market. If you’ll forgive me for over-generalising, when immigrants move to New Zealand, they like to live in Auckland. This is well known. They don’t yet know the city well, so they decide to be near the centre of the city, because they know that’s a point from which they can move around and access important facilities and transport links, including trains and buses. Many new immigrants are…

“With just a small deposit you get maximum growth from the whole purchase price while the property is being built” Since the latest loan-to-value ratios (LVR) rule changes in July 2016, most investment properties require a 40% deposit when purchasing. However, with most new builds only requiring 20% deposit (in fact sometimes less), it presents new investors dabbling in the property market, or those with not much cash or equity, an opportunity to make a start. GET DEVELOPING You should always go into a development where the developer has had a great deal of experience. And when I say experience, I mean experience in a variety of types of developments. Remember, a developer is no different to a small time reno and sell/hold investor – the more they do the…

 How did you get started in property investing? ❝ Don't be the landlord that gets a call from the manager saying "Did you know you've got a pig in the back yard?". Yes, that happened to me!❞ Richard Bacon: When we moved to New Zealand from the UK around 12 years ago, we tried letting out our home in the UK. Even though that was a terrible experience of poor letting agents and even worse tenants, we seemed to get the bug and when we sold up in the UK we went looking here in Wellington. What are you doing in your portfolio at the moment? Watching and waiting really, it's time to watch the cycle have its top at the moment. There are some housing density changes happening…

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…

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…

KRIS PEDERSEN Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. Phone 09 486 4719, www. krispedersenmortgages.co.nz NICK ASHFORD Nick and his team specialise in advising on property-related transactions, valuation and restructure services, and tax planning. Withers Tsang & Co Phone 09 376 8860, www.wt.co.nz BERNARD PARKER Bernard is principal of Quinovic – Kapiti-Mana. Quinovic’s outstanding people and systems provide the most professional, effective and reliable residential property management service in the NZ market for over 26 years.www.quinovic.co.nz ALLAN GALLOWAY National Manager Case Management at Ministry of Business, Innovation and Employment Q My tenant and I came to an agreed date to end their tenancy early as they had failed to pay bond and had also stopped…

We’ve analysed the top 10 fastest growing locations and picked out some of the top growth trends of 2017. Many of the top growth areas fall into more than one of the following categories: 1 TOURIST TOWNS TRENDING Of our top 10 growth spots Rotorua, Thames Coromandel, MacKenzie and Kaipara are all pretty attractive tourism drawcards and according to MBIE the number of tourists visiting New Zealand will grow by a whopping 39% over the next six years. This means that holiday hot spots are likely to get hotter. To add fuel to the fire, holiday accommodation websites have been a game changer for those investors wanting to purchase holiday accommodation to rent out to secure a (sometimes) much higher yield. 2 PROXIMITY TO MAJOR CITIES Hauraki, Matamata-Piako, Upper Hutt…

“When a loan is drawn down for the purchase of a rental property be sure that there is a clear link between those funds and the property” Loan interest is by far the largest cost our property investor clients incur. Therefore, ensuring that the tax deductibility of this cost is correctly maximised is essential and should always involve a consultation with your trusted accountant. With that said, here are some important steps you can take yourself to ensure you are structuring your debt efficiently; 1 Evaluate your existing debt and group it into Good, Bad and Ugly debt. Ugly debt, is generally debt that has high interest rates and incurs interest that is not tax deductible. Bad debt, is generally debt that has average interest rates and also incurs interest…

“Technological advances affecting property aren’t necessarily direct - for example, consider the way people work and live” How much do you think property investment will change over the next five, 10 or 20 years? How much of this change do you think will be attributed to technology? Sometimes it’s hard to imagine how much impact technology really could have on the industry. Perhaps that’s because property is a ‘bricks and mortar’ investment. Unlike many other investments, you can actually physically see your property and you can see what’s going on in the market around it. But this doesn’t mean that the industry is immune to advances in technology. Many investors I’ve talked to don’t understand how it might affect them, or what they can do to adapt. FUTURE TRENDS Airbnb…

Phone 022 493 5106 Email cathy@quinovic-whangarei.co.nz Address 62 Bank Street, Whangarei KAMO Kamo is a popular suburb north of Whangarei. With both rural and residential properties, good schools and a vibrant shopping centre. Currently many new properties are being built in new subdivisions offering investors the opportunity to buy low maintenance brick and tile homes. AVENUES The Avenues are in the heart of the city with a mixed bag of properties both old and new. A short walk to the town centre makes this area always sought after and properties for sale or rent never last long! MORNIGSIDE Located just two kilometres from the City Centre Morningside is a popular suburb, offering good streets, many with elevated views of the city. This area always attracts the astute investor with affordable property…

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…

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,…

REINZ HOUSE SALES: DOWN Once seasonally adjusted, sales volumes were again down around the country, and particularly in Auckland, in May. 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 June. IMMIGRATION: UP Annual net migration hit a new record high in May. Monthly net migration was also up slightly, but it is well under the record set in January. BUILDING CONSENTS: DOWN Once seasonally adjusted, building consents were down again in April. But Statistics NZ says the overall consent trend is on the increase. MORTGAGE APPROVALS: DOWN Reserve Bank data shows that mortgage lending overall was down in April – after rising in March.…

❝Conversations about money don’t usually happen until the day the kids leave school, get a job and take out a high interest personal loan to buy that overpriced, pimped out Toyota Altezza❞ It was Nelson Mandela who said, “Education is our greatest weapon to change the world”. In my opinion, education to make better financial decisions would be right up there with the most important education you can get… Yet it pretty much doesn’t exist. English, maths, physics, chemistry - there are plenty of things that our children go to school to learn. It's where kids learn the fundamentals of both the academic and the social world, making up an integral part of the experience of being a young person in New Zealand. Many people have fond memories of the…

Back in 2002, the first property the Elmers bought with their new investment strategy was a five-unit terraced property in Dunedin. It had been a Lookout Point Fire Station house: solidly constructed brick-and-tile three-bedroom units that had once housed firefighters and their families. They paid $290,000 for the property, which was rented by students. At the time the total rent was $685 a week, which covered the 70% mortgage, the rates and the insurance with $16,000 to spare –about a 12% gross yield. There’s been plenty of money spent on the units, with recent repainting and recarpeting, adding dishwashers and installing heat pumps in four of the five dwellings. They have been fully-insulated, the garage doors have been replaced and the roof has been recoated. The Elmers’ diligent maintenance has…

• Always maintain core property parts to a desirable standard. • Revamp retail and office interiors, as well as property entrance ways and foyers. • Ensure exterior front areas are clean and tidy. Do some planting if possible. • Create extra recreational or timeout spaces in office properties. • Empower tenants with greater control of their environment. • Repurpose office space. • Convert properties to mixed use configurations. • Do the work necessary to earn good sustainabilty and NBS ratings. • Use building space creatively to boost revenue streams. • Maintain good relationships with your tenants for secure tenancies. • Tidy up your leases.…

“[Old houses] might be a profitable investment for the short term but in the long term they’re bad for tenants and they’re not doing your investment justice. Get rid of them” Anew world record was set last month, although it’s not one you’d really want to surpass. A Hong Kong executive paid HK$5.18 million (about NZ$916,000) for a car park, making him the owner of the world’s most expensive parking spot. Seriously, prices in Hong Kong are frightening. A two-bedroom apartment will set you back the equivalent of more than $2.5 million New Zealand dollars. Hong Kong is one of the world’s densest cities and it’s a master class on how not to manage land on a small island nation. The government owns all the land and occasionally sells a…

“A 14-day notice should be issued regardless of a promise to pay at a later date. If the tenant reneges on the promise at least you've still got something in place” When a property purchase is made investors have a plan in mind as to an investment strategy and what type of tenant they need to achieve results. They then do thorough background checks and in an ideal world that tenant will pay their rent on time every week. However, things don't always work out the way we plan. With any property investment collecting rent is a top priority, however not all investors have a plan to manage rent arrears. I can't stress enough the importance of checking for rent payments every week on the due date. The tenancy system…

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. The rental market in Whangarei is dominated by houses, with all but Whangarei Central/Otangarei made up of over 85%. Rental apartments are in scarce supply in…

“If taken to its logical conclusion, the Bill could see a high number of rental properties removed from the market” Building and Construction Minister, Nick Smith, recently introduced the Residential Tenancies Amendment Bill (no 2). While the part seeking to address the situation of tenants not being responsible for accidental damage they cause has received a lot of attention, there is another significant part to the Bill. This relates to landlords renting out unlawful premises. Unlawful premises include commercial premises, garages, or premises that do not have building or resource consent. Many "granny flats" would fall under this criteria. A High Court decision found that the Tenancy Tribunal has no jurisdiction on unlawful premises because the premises cannot lawfully be used as residential premises. This has meant that neither tenant…

NORTHLAND NEXT MEETING: Wednesday July 26, 7.00pm Distinction Hotel, Riverside Drive, Whangarei TOPIC: Andrew King, Executive Officer of the NZPIF will be the speaker. Come and be updated on the issues affecting landlords and property investors. 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 July 12, Dorothy Winstone Centre, Auckland Girls Grammar School, 14 Howe Street, Freemans Bay. Admission from 18:30 to 19:30. Free for APIA members and $75 for non-members with prior registration. TOPIC: Details of this meeting will be posted on www.apia.org.nz. APIA hosts 100+ informative property events throughout the year to further members’ knowledge of the market and confidence in…

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…

At Home Property Management 022 303 3449 www.athomepropertymanagement.co.nz Bay of Plenty Regional Council 0800 884 881 www.boprc.govt.nz B&N Property Management 0800 111 252 www.bnproperties.co.nz Bayleys Real Estate 0800 BAYLEYS www.bayleys.co.nz/commercial Click Property Management 0800 1 CLICK www.click4rent.co.nz D&D Financial Consultants 09 369 5144 www.dandd.co.nz Discount Property 021 280 6655 www.discountproperty.net.nz G.J. Gardner Homes 0800 424 546 www.gjgardner.co.nz iFindProperty 021 486 000 www.ifindproperty.co.nz Impression Real Estate Ltd 09 300 5001 www.impression.co.nz Keith Hay Homes 0800 KEITH HAY www.keithhayhomes.co.nz Key Exchange Property Group www.keyexchangepropertygroup.com Kris Pedersen Mortgages 09 476 1199 www.krispedersenmortgages.co.nz Methsafe 0508METHSAFE www.methsafe.co.nz Millennium Centre 09 632 1287 www.oystergroup.co.nz Meth Solutions 09 929 4546 www.methsolutions.co.nz Maintain to Profit 09 929 4546 www.maintaintprofit.co.nz Martin Davidson & Associates Ltd 09 294 6262 www.martindavidson.co.nz Ministry of Business, Innovation and Employment 09 928 2858 www.mbie.govt.nz…