Innholdsfortegnelse for Nov 2017 i NZ Property Investor

A change of government means significant change is on the horizon for property investors and landlords. The Labour party campaigned on increasing rental property insulation and heating, extending the Bright Line Test, and removing the ability to claim losses on rental properties. But although the Healthy Homes Bill is likely to pass, a new capital gains tax, while on the cards for the future, is unlikely to come in during this term. The wave of pre-election uncertainty that dominated the market for months and caused values to plateau, now seems to have given way to a wave of post-election uncertainty, with demand for the former hot spots of Auckland, Waikato, Wellington and Bay of Plenty dropping right off. According to Realestate.co.nz new listings in these regions are significantly down year-on-year.…

“In the regions there has been a quick supply response and this brings the risk of regional over-supplies”Tony Alexander CoreLogic head of research Nick Goodall told the audience that the Reserve Bank’s third round loan-to-value ratio (LVR) restrictions have led to a big drop off in property buyers who need mortgages. This, combined with a significant decline in sales volumes overall, has led to a cooling of property values around the country. Goodall said this has been most noticeable in Auckland although value growth is inconsistent across the region. “There was a slight drop in value growth in Hamilton and Tauranga, but now they have started to pick up a bit again. Wellington and Dunedin initially resisted the slowdown, but have now started to flatten. “Christchurch is different again. Its…

“I see the biggest concern for property investors at the moment being interest only periods coming to an end”Peter Norris Whether it was the election, the miserable winter (which seems to be lingering), school holidays, bank policy or a mix of these, something brought the property market to a halt over the last few months. My guess is it was a combination of these which led to convenient excuses for people to sit on their hands for a while and not make any decisions. Banks reported significant drops in housing and lending activity and for us, enquiry was down to frustratingly low levels. But with the election over, warmer weather and spring home loan campaigns in full swing, there appears to be some life coming back into the market. A…

❝ Learning to make investment decisions isn’t easy. It takes time and energy. People are busy, and stressed, and money is just one more thing that stresses them out ❞ As I write this, it’s mid-October and there’s a headline on the NZ Herald website that says: Election uncertainty's chilling effect on houses for sale. I find this staggering and it makes me wonder about people’s financial literacy in New Zealand. I’m clearly not alone –the government thinks we’re not smart enough to make our own financial decisions. That’s why we don’t have the option of a self-managed superannuation fund like they do in Australia. If you live across the ditch, you can use your self-managed super fund to buy residential or commercial property, or even to buy a commercial…

❝ In a market where demand is strong and stock is low, the landlord is in a position to issue a 90-day notice and give someone else the opportunity to live in a nice home ❞ Homelessness is a major problem in New Zealand. We all read about it in the news or see it first-hand. Tenancy applications are made constantly by tenants living in motels, in cars or bunking down somewhere. The shortage of available rental properties is not helping the issue pushing the rents up and creating a ‘landlord market’. It would stand to reason then that tenants who are renting would meet their obligations, right? It’s not hard to pay the rent on time and keep the property reasonably clean and tidy, right? But there’s a block…

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 As is befitting a central city, the rental market in Wellington Central is dominated by apartments, with most areas having the largest share of…

No policy positions have been announced yet but – based on announcements made during the election campaign - a number of housing market related areas are likely to see reform. These include house building which will see greater government involvement through Labour’s KiwiBuild programme; foreign investment which is likely to include a ban on buying existing dwellings; immigration which is set to be reduced and become more targeted; and monetary policy. Labour also campaigned on more interventionist housing policies including an extension of the Bright Line test to five years, removing negative gearing and significant rental market reforms. Westpac chief economist Dominick Stephens says these policies might have a small impact on house prices, but the big uncertainty is what the new government does with the tax treatment of housing.…

Stories of nightmare consent application processes abound and have long been cited as a hurdle to development, but it seems the drive to improve consent processes is finally making headway. MBIE-supported GoShift, an online consents process which 20 councils from Western Bay of Plenty to Nelson have signed up to, was recently launched. It aims to improve performance, consistency and service delivery across the building consent system nationwide. Property Council chief executive Connal Townsend says GoShift provides a simple, streamlined, more cost-effective process for builders and developers. “Standardised processes and systems between councils will also make participating cities more attractive to investors, as a consistent system removes the risk and time to navigate an unfamiliar process.” Townsend says it will give developers and investors assurance that they are engaging with…

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 MARK WITHERS Mark 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 JENNIFER SYKES Manager, Information & Education, Housing & Tenancy Services at Ministry of Business, Innovation and Employment (MBIE). Q We own a tidy two-bedroom house in Andy Bay, a sought after area of Dunedin. We've rented it out for eight years, most recently…

1 There’s little activity in the market between December 15 at the latest and January 12 at the earliest. And if you list in mid-January you may end up with an open home or auction on Waitangi Day, which is also a tricky time. Think about going to market from Waitangi Day onwards. 2 Presentation is key, even if you’re not spending much on preparing the house for sale. If the house looks like a tip, people will move on. From the perspective of a buyer who’s an investor, a messy property looks like one where the tenants could be an issue. 3 Consider removing your tenants before your property goes to market if they’re untidy, unhelpful or unpredictable. Then tidy up and let people go through it untenanted. Present…

While damage of any kind by tenants is always a problem for landlords, the ongoing ‘P’ issue is clearly being taken more seriously, with 48% of investors citing it as their main concern in terms of damage to rental properties – up from 38% in 2016. Widespread news coverage of the methamphetamine problem has no doubt contributed to their fears. Although the new Meth Standards are now in place and provide much needed clarity for those affected by contamination, in some cases a stigma still remains around contaminated properties. Investor *Melissa Smart recently considered buying a property in a small North Island town – planning to let it for Airbnb, only to discover that it tested positive for methamphetamine. “It was only 0.9, when 1.50[micrograms per 100cm2] is the limit…

❝ The average asking price for apartments in Auckland is up 6.6% year-on-year ❞ Rents on ‘urban properties’ are at an all-time high on the TradeMe Rent Index, up 6.3% on last year to a national median of $420 a week. These properties have clearly outperformed other types of housing, with national median weekly rent up just 2.3% over the same period. And apartments have modestly surpassed townhouses and units – the median rent on apartments is up 20% over the past three years to $460 per week, with Auckland’s median apartment rent reaching a new high of $490, up 6% year-on-year. Urban properties is TradeMe’s way of describing units, townhouses and apartments, and they now command a premium over small standalone houses. In Auckland, people are paying an extra…

❝ There are such benefits as annual rent increases, free-stay allocation for the owner, longterm lease options and a hands-off and hassle-free investment ❞ Renting out a serviced apartment as an investment property has changed dramatically over the past couple of decades. Previously, when an investor owned a serviced apartment in a hotel pool, they might have only received rent when the room was occupied. This is still the case in some areas today, so an investor needs to be certain of what they are buying - but these days we are seeing a new breed of serviced apartment hotels around the country, which are much more secure investments. Of course, there are still some apartments around from the ‘bad old days', so it is wise to do your due…

KELBURN Students are a mainstay of this suburb . Properties close to the university enjoy high demand and high rents to match as students pay for proximity . Due to the location , demand can be high even for tired properties however upgrade and the more discerning will appear at showings and these tenants are worth chasing . TE ARO An area currently in high demand that’s only going to get higher . One bedroom and studio apartments are doing well in Te Aro and we think the population density in the area and social media means no longer do tenants have to flat share to feel they’re connected with their social scene. They can have affordable rent , their own space and easily meet up with friends . Young…

NORTHLAND NEXT MEETING: Wednesday 29 November, 7.00pm – 9.00pm at the Distinction Hotel, Riverside Drive, Whangarei. TOPIC. This meeting is a members’ night. It will be our end of year meet up and will be a presentation of the best & worst stories along our paths to success. Hear about the different ways the locals are investing. Everyone invests differently so come along and pick up the gems of experience. Members only. Light supper. Drinks at the bar. 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 November 14, Dorothy Winstone Centre, Auckland Girls Grammar School, 14 Howe Street, Freemans Bay. Admission from 18:30…

Alpha Property Management 09 974 2629 www.alphapropertymanagement.co.nz/ ANZ 0800 100 217 anz.co.nz/mmm At Home Property Management 022 303 3449 www.athomepropertymanagement.co.nz/ B&N Property Management 0800 111 252 www.bnproperties.co.nz Bayleys Real Estate 0800 BAYLEYS www.bayleys.co.nz/commercial Bachcare 09 366 7000 www.bachcare.co.nz/ 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 Jani King 0800 526 454 www.janiking.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 LPM Property Management 04-805 0599 www.lpmproperty.co.nz/ Meth Solutions 8006384522 www.methsolutions.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 NZ Property Investors Federation 03 357…

Regional markets hold the lure of affordable bargains, but CoreLogic head of research Nick Goodall says that value growth in smaller centres can’t be sustained. That’s because while migration to the main centres should remain quite strong, it is dropping off in smaller centres because they don’t have the economic growth to sustain population growth. “The mixed population growth picture across the country means we need to ask whether property value growth can be sustained in regions where people were thinking it was a good place to buy. “We think that the value growth in many of these places can’t be sustained and, indeed, we are now starting to see many regions dropping away when it comes to value growth.” Just released Statistics New Zealand data on population growth shows…

1 Changes in housing policy to come New Zealand may now have a government, but uncertainty over what that might mean for the housing market is set to linger for some time. 2 No signs of panic The housing market might be cooling rapidly, but ANZ economists say investors appear to be taking the adjustment in their stride. 3 What tenants really want The drive for healthy rental homes has put tenant needs into the spotlight, but now a new survey has exposed what Auckland renters look for in a property. 4 Short stays big pays It is now possible to make holiday rentals work for you by generating some great yields, but with much less effort than ever before. 5 Appeal of former hotspots dims Demand for property in…

REINZ HOUSE SALES: DOWN Once seasonally adjusted, sales volumes year-on-year fell once again around the country, and particularly in Auckland, in September. INTEREST RATES: NEUTRAL Interest rates remain low, but banks are announcing both small rises and falls in various rates periodically. OCR: DOWN The Reserve Bank left the OCR on hold at the record low of 1.75% in September. IMMIGRATION: DOWN Annual net migration dropped once again in September, as compared to August. Meanwhile, monthly net migration continued to ease. BUILDING CONSENTS: DOWN Once seasonally adjusted, building consents rose, both nationally and in Auckland, in August. But commentators say further increases are needed. MORTGAGE APPROVALS: DOWN Reserve Bank data shows that mortgage lending overall edged up slightly in August. But the share of lending going to investors has dropped…

Right now, New Zealand’s commercial property market is riding high. As the Reserve Bank has tightened up on loan-to-value ratios in the residential property market, interest in commercial property has heightened. It is generally acknowledged that there is a limited amount of stock for sale – and for lease. This has contributed to a ready stream of tenants and ongoing low vacancy rates. All of which adds to the attraction of the market. But when it comes to commercial property, cash flow is king and that makes the pursuit of yields the commercial investor’s mantra. Particularly as there is the promise of far greater yields than in residential property. Yet value growth in commercial properties means that commercial yields are lower than they used to be. Experienced commercial investor Hadar…

❝ A guideline on deductibility would likely assist more taxpayers to claim a deduction for the repair ❞ This article is not a commentary on the answer to this question, it’s a plea from a frustrated accountant for better leadership from our tax department and its political masters on the dilemma of taking a tax position when faced with dealing with the cost of remediating a leaky building. The legislation is clear, the general deductibility provisions allow a deduction for expenditure on repairs or maintenance when the cost is of a revenue nature, but, the capital limitation denies a deduction when the cost is of a capital nature. So, we must look to common law decisions for guidance. Now, would it surprise you to learn that despite the leaky building…

❝ Buying an investment property is fraught with risk, but so is investing in stock, building your own business, or any number of wealth creation strategies ❞ Buying investment property to grow your wealth is a well proven strategy. So why is it so scary for many ‘would be’ investors? There are a number of reasons, but in my opinion, the two biggest reasons people are afraid to invest in property are: 1. The large amount of money involved 2. Fear surrounding the unknown HOW MUCH IS THAT DEBT? Taking on a lot of debt can be scary, but it’s important to put that debt into perspective. Unlike your credit card, the debt you take on to get onto the investment property ladder is considered ‘good’ debt. Why? Several reasons:…

Supply is not keeping up with demand in the creative capital of New Zealand and as a consequence, opportunities for property investors can be hard to find. Stock levels across Wellington continue to remain low with less than nine weeks’ inventory available to the market. There were 210 sales across the board for Wellington in August. This was up 5% from the month before (199 sales in July) but down a whopping 27% from August 2016, when 290 sales were recorded. Grant Foggo, director of property management company Comprende, says his company's occupancy rates are running at greater than 95%. “Wellington’s rental market is strong,” he says. “Studio apartments and one-bedroom units - including those attached to people’s homes - are in hot demand. If a property is priced correctly,…

❝ Of all the changes, removing negative gearing is likely to have the largest impact on the industry ❞ The election has been decided and our industry is in for a large amount of change. The supply of properties from Government is to be accelerated, although it’s yet to be shown how council regulatory and labour restraints will be overcome, so it is difficult to say when this will actually occur. Demand for housing is being reduced by lowering the number of migrants coming into New Zealand and reducing the number of rental property providers. The NZ Property Investors' Federation still believes that this is a wrong approach as we need more rental properties for tenants, not just affordable houses for first home buyers. Although the new Government hasn't confirmed…

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…