Innholdsfortegnelse for No 153 Aug 2016 i NZ Property Investor

IN THE CURRENT CLIMATE OF HIGH NET migration, lack of housing supply, low interest rates and aggressive bank lending the question on everyone’s lips is: has the market peaked? Or alternatively, when will it peak? To add fuel to this debate, the Reserve Bank’s proposal to tighten its macroprudential policy on mortgage lending will mean investors across the country will be subject to a 40% equity restriction from September this year. This latest move is the biggest regulatory change investors have seen for quite some time and only time will tell how much of an impact it will have on cooling the ‘hot’ market. Could it be the straw that finally breaks the camel’s back? As the dust settles on this announcement, we will no doubt get more of a…

DO THE WORK AT THE START TO MINIMISE LATER RISKS AS PER THE WORDS FROM THE GREAT Bob Dylan: “The times they are changing”. It’s widely known that the property market is pretty crazy and has been for some time now. Up until this point though, the Reserve Bank has been concerned enough to place restrictions on banks’ lending ability in an attempt to slow the market. These haven’t really worked, apart from an early Christmas market slump that came following last year’s October changes. This really only lasted until February though, and since then it’s taken off again. With the prices continually on the rise and banks tightening lending criteria, Joint Ventures or JVs, are now becoming a common scenario I see coming across my desk with friends and/or…

Brandon Lipman is young, ambitious and keen to make money from property investing – but he’s keeping cool in the current climate. The 24-year old university graduate owns a property in Hamilton, and is about to build on the same site, and is looking for a third property in Hamilton or Lower Hutt. His investment strategy is buy and hold: invest for the long term – yields, and capital gains are a bonus. “I’m conservative, and so are a lot of the people I associate with,” Lipman says. If investors are after the gains we have seen in the last few years, they are not going to get them in the next three years, he believes, although “nothing is impossible”. Lipman bought the $270,000, three-bedroom, 1970s Hamilton rental property last…

EMMA AND COURTNEY What was the biggest DIY lesson you learned during your time on The Block? Emma: Probably time management. It’s not a physical skill, but you need time management, you need confidence and you need to back yourself. Court and I have got better and better at painting – we've got a routine and we know how to get it done. Did you start with a design scheme before you arrived on the Block or figure it out as you went along? Emma: We went in with a plan of what we wanted: quite neutral to appeal to all types of buyers. But we also had to wing it each week. It depended on what we felt the room needed. What were some of the challenges of working…

provides a list of restricted building work and advice for choosing a building practitioner. The Roofing Association (roofingassn.org.nz) provides a database of specialist roofing contractors and information about the trade. For an estimated price range on your roof repair or replacement, try the BuildersCrack estimator. Failing to look after your roof is certainly a false economy. Include it in your regular rental maintenance costs and it will continue to look good and protect your property for decades to come. “If you’ve got a good roof now, look after it!” Black says. “It will last forever and a day.”…

PROPERTY INVESTMENT IS FIRST AND FOREMOST ABOUT GETTING THE FINANCE RIGHT, WITHOUT THAT, NOTHING ELSE IS GOING TO BE SUCCESSFUL – SUE IRONS THE THREE LIMITATIONS FOR investors that I see over and over again are: Time Skill set Risk appetite. And most investors I meet are limited by more than one of these factors. “Cash flow is king” is a frequently-heard saying, especially in relation to property investment. We could add to that “you won’t go broke making a profit” and “if you look after the pennies, the pounds will follow”. But is this really true? Certainly having a cash flow positive property is, on the face of it, appealing. The other side of the coin, however, is if this is at the cost of capital growth, then is…

NOBODY YET KNOWS HOW MANY BUY-TO-LET LANDLORDS ARE USING AIRBNB INSTEAD OF RENTING OUT ON LONG TERM CONTRACTS – SARAH DAWSON THE SECOND HALF OF 2016 continues to be a period of change in the New Zealand property market. How does foreign investment look in the wake of Brexit? Evolving technology, the reaction to Brexit and the continued disruption of Airbnb all present challenges and opportunities. With the New Zealand property market at an all-time high, how sustainable is this extended period of growth? Many are speculating that the property market will take a hit post-Brexit. POST BREXIT JITTERS Any economic jitters may transfer to the New Zealand property market, not least because UK tourists to New Zealand are the fourth biggest national group to visit and are major investors…

MARKET COMPOSITION The rental market in Palmerston North is made up of predominantly houses throughout most of the city. Highbury/Westbrook and Terrace End/Hokowhitu East are made up exclusively of houses, while Hospital/Papaeoia and Palmerston North Central are the only two regions with less than 50% houses. Hospital/Papaeoia being dominated by flats while Palmerston North Central also has over 50% flats and is the only area with apartments. HOUSE SIZE, BY BEDROOM COUNT In terms of size of houses, three-bedroom houses are the most common in the Palmerston North rental market. This is the case across the country. The relatively few houses that are in both Palmerston North Central and Highbury/ Westbrook are all three bedrooms, while the more populous areas of Kelvin Grove/Roslyn,Takaro/Cloverlea/Milson and Terrace End/ Hokowhitu East have a…

The Property Institute has slammed the Reserve Bank's proposed lending restrictions for investors which were announced in July. We asked our readers if this had them rethinking their next investment? YOUR COMMENTS Mark Charlesworth: I can't afford a 40% deposit on an investment property now and most likely won't buy a second house for a while. Strategy will most likely be to buy, reno and live in the house and then sell to get my deposit out for the next one. Will have to do this until I have enough equity for a house I can call my forever home and afford some investment properties. Going to be hard. Kirstyn Tait: Luckily we have just purchased another investment property as I had a feeling this would happen so I moved…

CONCERNS OVER THE COUNTRY’S HEATED HOUSING market reached fever-pitch this month. While Auckland remains the focus of much of the worry, supercharged price growth and increasing pressure can be seen in a number of markets around the country. These trends are evident in the latest round of data, a fair swag of which points the spotlight away from New Zealand’s largest city. A spreading “halo” effect from Auckland may be a significant factor. But, whatever the case, the impact on financial stability is bothering the Reserve Bank and it is tightening the screws on investors in response. Falling interest Auckland’s prices have reached a point which is putting many property buyers off, Realestate.co.nz suggested on the release of their June data. Their data shows the city’s average asking price reached…

In 2002, Mike Harbott was mentored by a veteran property investor on how to build a property portfolio. He bought three houses in his first year out of school; the first house was a $30,000 mortgagee sale in Gisborne. “We quickly found tenants and had it revalued, and used it to buy another house,” Harbott says. After this initial foray into property investing, Harbott spent nearly 10 years trying to initiate a start-up digital business. During the time he went through the digital accelerator programme at Lightning Lab, and learnt invaluable lessons about how business worked. In 2013, he came back to property investing and went in on a student rental in Dunedin, with his brother. Since then he has bought four student rentals and four residential houses worth $4…

PROPERTY INVESTORS WHO ARE HIGHLY GEARED MAY SEE THEIR OPTIONS NARROWED UNDER THE NEW LVR RESTRICTIONS – JEREMY STAPLETON PROPERTY INVESTORS COULD be forgiven for feeling a bit unloved with both the Government and the Reserve Bank of New Zealand continuing to look at the role of investors in the housing market. Prior to the Reserve Bank’s July 7 speech on housing market risks to financial stability, Prime Minister John Key went on public record urging the central bank to consider the role of property investors. What Mr Key had in mind was the Reserve Bank’s loan-to-valuation (LVR) restrictions, which presently require a higher LVR for mortgage lending on investment property in Auckland (30% minimum equity) than for the rest of New Zealand (20% minimum). In the July speech, Housing…

INVESTORS CAN PUT DOWN A 10% DEPOSIT AND SEE THAT LUMP SUM TURN INTO SOME SERIOUS PROFITS BY THE TIME THE KEY IS HANDED OVER TWO YEARS LATER - AARON TUNSTALL WHAT COULD BE SMARTER or more appealing than a brand spanking new apartment? Thanks to a shifting market and completely overhauled lending rules, right now, buying an apartment off the plans looks like an excellent investment. Apartments, unlike one-of-a-kind houses, can be easily compared by a per-metre-square price. Look at the cost of buying existing ‘old stock’ apartments in central Auckland right now: it’s above $10,000 per square metre. For instance, we just sold a small apartment built in 2005 for $13,000/m2. You can buy a brand new apartment off the plans for between $12,000 and $14,000/m2, with lower…

IT IS SHOCKING HOW PERFECTLY NORMAL STATISTICS, SUCH AS THE PERCENTAGE OF INVESTORS BUYING PROPERTY, ARE BEING USED TO MAKE A CASE AGAINST US AND FUEL THE NEGATIVE SENTIMENT - ANDREW KING I WAS EXPECTING THIS YEAR to be relatively quiet on the advocacy front, but oh boy, how wrong I was. The last few months have been extraordinary, with a huge level of uninformed opinion blaming rental property investors for increasing house prices, tenants are no longer responsible for damage they accidently or even carelessly cause, the meth issue is exploding and Labour announced they are targeting speculators but instead their policies were aimed at rental property providers. To be honest, I'm feeling pretty worn out and I imagine I'm not the only one. Before a media interview I…

NEW AND SMALL-SCALE PROPERTY investors are expected to be hit particularly hard by new rules that heavily restrict lending to landlords. Banks have been told that from September, no more than 5% of their lending should be to investors with a deposit of less than 40% of a property’s purchase price. But banks are clamping down early and shutting down lending already. James Lockie, of General Finance, says it will have unintended consequences for the Reserve Bank, which is trying to retain stability in the housing market. He says most people who have been homeowners for a number of years will have enough equity that the new rules won’t bother them. Those most affected will be young investors starting out, he says. “It just means a different group gets to…

Reserve Bank calls for changes to investor LVRs The news late in July that property investors would have lending restricted was top of mind. The Reserve Bank released a consultation paper proposing changes to loan to value restrictions (LVRs). It was claimed that the idea to restrict lending to property investors with less than 40% equity would make life easier for experienced landlords. Top 10 hotspots set to boom There is no exact science to picking future property hotspots, but there are ways and means to help establish areas with good growth potential. In the July issue of NZ Property Investor magazine, we uncovered the 10 spots around New Zealand with the greatest growth potential in 2016. The top 10 list was made up of a diverse range of suburbs…

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 RON HOY FONG As a successful property investor and mentor, Ron has built an impressive portfolio and a wealth of investment strategies and experience. Contact Ron today on 021 888 298 or ronhoyfong@gmail.com 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 KRISTER SAMUEL Krister specialises in selling high yielding apartments for…

Damp patches in the ceiling or exterior walls. Chips in your gutters. When the coating is coming off your roofing material and gathering in the gutters, this is a definite red flag. Light visible from inside the roof space – if light can get in, so can rain, damp air and mould. Your roof is over 25 years old and you’ve never maintained it. The roof is sagging – this is typically a structural problem. Your roof may need bracing (and so will you when you get the invoice).…

REMEMBER THOSE ‘P’ COOKS ARE WEALTHY GUYS, THEY ARE JUST AS LIKELY TO RENT YOUR MULTIMILLION DOLLAR BEACHFRONT HOME TO COOK THEIR METH AS THEY ARE AN INDUSTRIAL UNIT IN THE BACK OF BEYOND – MARK WITHERS THE DISRUPTIVE TECHNOLOGY of Air BnB is beginning to have a profound impact on the way we book accommodation and let space. Landlords are starting in ever-increasing numbers to look at the opportunities to rent furnished accommodation on a casual basis at rates that generate a higher overall income despite vacancy rates than what could be achieved with a permanent rental. In that respect they are competing with traditional providers of commercial accommodation, hotels, motels and boarding houses. There are some tax consequences to this type of activity though. GST REGISTERED OR NOT?…

SECOND-HAND PROPERTY BEING PURCHASED FOR INVESTMENT PURPOSES WILL HAVE FAR LESS COMPETITION THAN IT DID PRIOR TO THESE RULES - CAMPBELL VENNING THE BIGGEST CHANGE we have seen since 2010 - when depreciation on buildings was revoked - has just hit the residential investment market. The Reserve Bank of New Zealand (RBNZ) have put their largest set of brakes on investors in an attempt to curb an over-heated property market. If you want to buy an existing property or one that is more than 30% of the way through construction, you will need to put in 40% of the purchase price versus 20% under the old rules. That’s twice the capital, regardless of price or location. If you are buying an apartment, townhouse or house off-the-plans, your deposit remains at…

NORTHLAND NEXT MEETING: Wednesday August 31, 7.pm at Distinction Whangarei, 7 Riverside Dr. Whangarei. 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, August 9, Dorothy Winstone Centre, Auckland Girls Grammar School, 14 Howe St, Freemans Bay. Admission closes at 7.30pm. Free for APIA members and $75 for non-members with prior registration. TOPIC: Looking to the future: NZ economic outlook and housing market update - ANZ Senior Economist Sharon Zöllner reviews and projects key trends of the New Zealand economy and how it will continue to drive our housing market for the remainder of the year. Closer scrutiny will be given to falling dairy…

BETWEEN THE COVERS, THREADED INTO EACH CHAPTER, ARE MANY GEMS BASED ON PERSONAL AND ANECDOTAL EXPERIENCE Unlocking the Property Market (The 7 ways to Property Investment Success) by John Lindeman. This Australian book is also a lesson for New Zealand property investors, or those eyeing a spin in real estate. Selling, buying, market mores and when and how to invest are as pertinent in this country as they are in a book ostensibly published for the Australian market. The principles are the same; the beauty of Lindeman’s tome is the way in which he advises his readers of a more pragmatic approach. Don’t rush into property, seems his overall message. His seven keys are in fact the seven chapters in this book, ranging from understanding how the market works, to…