Innholdsfortegnelse for February 2020 i NZ Property Investor

Well, what a difference a year can make. It’s a sentiment I seem to be expressing regularly these days – due to the marked improvement in the outlook for the property market. In last month’s issue, our housing forecast canvased the changes and the predictions of the experts, including their view that 2020 could be a brighter one for investors. But now it turns out that the experts are not alone in their optimism. This month, in our lead article, we feature the results of the annual Squirrel NZ Residential Property Investment Survey, and they reveal quite a turnaround in investors’ perceptions of the market. Last year’s survey had 27.98% of respondents expecting property prices to increase. In stark contrast, 63.54% of this year’s respondents expect property prices to go…

REINZ HOUSE SALES: UP Sales volumes nationwide were up year-on-year in December but down from November. The story was the same for Auckland, which saw the highest number of sales in a December for four years. INTEREST RATES: DOWN The Reserve Bank’s decision to hold the OCR in November means rates remain low but there’s speculation they may inch up. Commentators say a long-term low rate environment is still at play. OCR: DOWN The Reserve Bank kept the OCR unchanged at its record low of 1.0% in November. Economists still believe another cut is likely to come but say it could depend on just how hot the housing market gets. IMMIGRATION: DOWN Migration data remains volatile and difficult to interpret. But although annual net migration remains high, commentators say it does appear to…

It definitely seems a competitive market out there and the start to the new decade has seen us continue the low rates of late-2019. Special rates across banks are extremely low with the one-year rate the cheapest across main bank lenders – it’s as low as 3.39% in some cases. We have seen slight increases on the two-year rate from some banks – previously 3.45%, now more commonly seen at 3.50% or 3.55%. Over the coming months (and years) due to the RBNZ capital review it is likely to create quite an interesting landscape with regards to mortgage interest rates. Due to the facts bank have to hold more capital (particularly the big four, which are Aussie owned and account for the lion’s share of our overall lending), we may…

As we head into 2020, I have been speaking with a lot of people who are looking to invest, and if there’s one thing I’ve learned it is that what we focus on becomes the basis of our decisions. As property investors, particularly new investors, it is important to focus on what really matters. Learning and understanding what is truly important is why many investors work with mentors and property finders. I see this all the time as I observe different people’s reaction to the same property. I know that if I visit a property with five people and give them the same information that I will get five different reactions. For example: You’ve found a property. It is a three-bedroom house on a large section and it needs a…

Let’s imagine you’re looking for tenants for your new investment property. You discover that your neighbour’s cousins are looking for a place to live. You’ve met them and they seem decent people. Is a handshake enough to seal the deal? Actually, it’s not. If you want a positive landlord-tenant relationship, you need to set the standard from the start. That means formalising expectations and obligations on both sides with a tenancy agreement. WHAT DOES A TENANCY AGREEMENT DO? A tenancy agreement is a legal contract between a tenant and a landlord. It’s required for all tenancies in New Zealand and you may be fined if you don’t have one in place when you rent out a property. The best landlord/tenant relationships are built on transparency and good communication. Discussing the…

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.…

NORTHLAND NEXT MEETING: Wednesday February 26, 7.00pm at the Distinction Hotel, Riverside Drive, Whangarei. TOPIC: TBA MEMBERSHIP: $180 single or $210 couple; includes subscription to 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 February 11, Dorothy Winstone Centre, Auckland Girls Grammar School, 14 Howe Street, Freemans Bay. Admission between 6.30 and 7.30pm. This is a members-only event and prior registration is necessary. TOPIC: For more information go to www.apia.org.nz/events. MEMBERSHIP: APIA memberships start from $75 and can be purchased on www.apia.org.nz/join. Full memberships include a free subscription to NZ Property Investor, networking opportunities at over 100 events throughout the year, an excellent discount card, free subscription to APIA TV, and much more. For…

Two Christchurch tenants have been ordered to pay their landlords $21,498 after causing extensive damage to their rental property. While the sum includes an order for abandonment and rental arrears, the bulk of it was for the damage. The fixed-term tenancy was due to end in November 2019, but the tenants, Phillipa Miscall and Aaron Cooper, abandoned it several months beforehand. The landlords, Yoomi Jung and Moonsung Jun, took possession of the premises in September. On doing so, they found there was damage to walls throughout the premises and to carpet in several rooms. The garage door and the bathroom basin surround were damaged. The toilet and seat were broken. The fridge was also damaged and a new one had to be purchased. Further, the premises were not left reasonably…

There has been a lot of dialogue in the press lately around the new capital requirements for banks and what that will mean for interest rates. What isn’t often spoken about is what it might mean for access to capital. In simple terms, banks have two ways of addressing their required returns; increasing price (interest rates) and reducing risk. Increasing price is very simple to understand; what cost you 5% yesterday might cost you five and a half percent tomorrow. Reducing risk is one that is a little more nuanced, but something the banks are engaged in at the moment. I expect it to also ramp up a little further over the next two or three years. Banks are required to carry capital (hold money) against each loan that they…

If you’re looking to add to your portfolio, you could go through media like Trade Me or The Property Press. But another way is to buy property off-the-plans from a developer. Here are four reasons to consider it: 1) You pay today’s price, but get tomorrow’s value Using the most common type of investment contract, investors agree to pay the developer a price for the property, but don’t make payment until the build is complete, maybe 12-18 months away. Over that time, the market may have moved, increasing the value of your property. However, you still pay the agreed price. Say you secured a $500,000 property with a 10% deposit. If this was borrowed from the bank, you’d need to cover the interest costs throughout the build, which would be…

Sloping sites can create challenges when undertaking building development works. Typically, earthworks are undertaken on sloping sites to create level building platforms, suitable accessways or carpark areas. These earthworks can result in permanent batter slopes, which need to be designed/constructed to a safe batter angle, to prevent erosion or instability of the batter slopes. On smaller sites that are physically constrained and where it is not possible to fit in safe batter slope profiles, the batter slopes are generally permanently retained by retaining walls. Typically retaining walls, particularly on or close to the boundaries of neighbouring sites, need to be carefully designed and constructed, so as to not cause damage to the neighbour’s land (or buildings on that land). The critical stage of any retaining wall construction is the excavation…

Real estate in the Manawatu District – particularly in Palmerston North and Feilding – is booming, due to extremely tight supply and demand. The supply issue stems from a rapidly growing population, which has likely resulted from increased investment in the region and internal migration. The district is so strong, that in the year to September 2019 it outstripped the national growth rate of 2.4%, with growth of 3.1%. Construction was one of the key reasons for economic growth, with investment in construction increasing by 50.2% to the year ended September 2019. Correspondingly, the number of residential building consents in the Manawatu increased by 34.3% from the previous year, while the number of new dwellings increased by 35.6% over the same period. In total, 221 new homes were consented in…

Quinovic Palmerston North Simon Tavendale, Principal Address 243 Broadway Avenue, Palmerston North Phone 022 504 8500 Email simon@quinovic-palmerstonnorth.co.nz 1 CITY CENTRE Always popular with renters considering the proximity to town, hospital and other city amenities. A mixture of older character homes, flats/units and modern homes exists. 2 AWAPUNI/WESTEND Historically, the suburbs of Awapuni and Westend have attracted people employed at Massey University, the Defence Force & Crowne Research Institutes as well as Fonterra as these areas provide easy access. Popular with families. The recently completed cycle bridge across the Manawatu River and walkways in the area are very popular. Victoria Esplanade and The Lido are also close by. 3 HIGHBURY/TAKARO Both have seen a resurgence in popularity due to affordability when compared to other parts of the City. Good yielding…

NATIONAL RENTAL PRICE MOVEMENT This map represents change in the average rental price between the months of December 2018 and December 2019, based on figures from the Ministry of Business, Innovation & Employment. 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…

Your monthly round up of property investment related events around the country. FEBRUARY PROPERTY INVESTOR NIGHT 6.30pm February 4, Ellerslie, Auckland and Christchurch; February 12, Tauranga; February 17, North Auckland; February 24, Dunedin and Wellington; February 26, Hamilton. Free to attend. Book at www.positiverealestate.co.nz/NZPI PROPERTY INVESTMENT AND EDUCATION SEMINAR Wednesday February 12 and Thursday February 20, 6.45pm, Auckland.Hosted by Gilligan Rowe & Associates. Free to attend. For more information and to register: https://www.gra.co.nz/property-investment-seminars HOW TO PROFIT FROM PROPERTY February 15 Five Knots, Auckland, 9am-3pm. Register at www.ronovationz.co.nz Waikato PIA, Hamilton February 12 Guest speaker Nick Gentle from iFind Property. $40. 7.30pm. Book at www.waikatopia.org.nz/events SOPHISTICATED PROPERTY INVESTOR - COMMERCIAL PROPERTY. February 16, Auckland. Cost $49, 9am-4pm. Book at www.eventbrite.com/e/sophisticated-propertyinvestor-tickets-89941753205. Please be there half an hour prior for registration. For more information…

MATTHEW GILLIGAN Matthew Gilligan is a property investor, developer and tax adviser. He is managing director of chartered accounting firm Gilligan Rowe & Associates, where he heads the specialist property and asset planning divisions. 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 over30 years. www.quinovic.co.nz 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 JENNIFER SYKES Manager, Information & Education, Housing & Tenancy Services at Ministry of Business, Innovation and Employment (MBIE). MARK WITHERS Mark and his team specialise in advising on property-related transactions, valuation and restructure services, and tax planning.…

1 Don’t be scared of looking at different types of buildings, rather than your stock standard house. There are other options and you can reap the rewards. Look outside the square to find room to move. 2 If you are going to buy problematic properties that require remediation, the costs and time delays are always more than what is estimated so factor that into your considerations. 3 Never sell unless you have to. Always try to hold onto your properties if you can. 4 Bank restrictions around apartments can be challenging, so find a good mortgage adviser and/ or bank manager and maintain a strong relationship with them. If you have problems getting finance, go to a non-bank lender. 5 Spend time networking with some good real estate agents. Then…

• In 2019 77% of investors had a loan-to-value ratio (LVR) of below 60%, with 67% positively geared. Negative gearing is down to 9%. This has dropped compared to the results of the 2018 survey when 83% of investors had an LVR below 60% and almost 63% were positively geared. However negative gearing was at 15%. • 61% of investors still have all their lending with one lender, which is a slight improvement on last year’s survey when 64% had all of their lending with one lender. • Just 46% use a mortgage broker – very similar to a year ago when 45% of investors used a mortgage broker. • Government policy is still the biggest issue to growing a portfolio (58%), followed closely by bank lending criteria (37%). Squirrel’s…

With the Kiwi dollar riding high and some talk that we may achieve parity, Kiwis are again being tempted by the prospect of investing in Australia. But those looking to buy across the ditch need to be aware of a bundle of tax issues, which they should factor into their decision. This articles explores some of those issues. Australia has recently altered its stamp duty rules, with the effect of increasing stamp duty payable by foreign buyers, which includes New Zealanders. You should seek local legal advice on the impact of the Australian stamp duty rules and what the investment will actually end up costing. DOUBLE DUTY Because you will be deriving income in Australia, there is a requirement for you to file a tax return in Australia, returning the…

‘Your portfolio is either getting better or worse, so performing a regular assessment on it is crucial’ The summer period is perfect for reassessing your portfolio and ensuring it is run like it should be. So how do you do this? First of all, you should have your longterm and short-term goals set. Things can change any day, and your goals may change because of that, so this is why reassessing your property portfolio regularly is imperative. You may have inherited some money; you may have had a pay rise or a large bonus from work. You may have lost your job or changed it to one with more or less income. Your partner may have started work or ceased work. There are many reasons why your financial situation can…

MARKET COMPOSITION Palmerston North’s rental property market is dominated by houses, with a handful of flats and only five apartments (all in Palmerston North Central). Of the 463 properties recently on the market, 413 have been houses (89%), with a further 45 flats (10%), and only 1% being apartments. Apart from in central parts of Auckland and Wellington (key apartment markets), it’s very typical for houses to dominate the rental sector in most parts of the country. The most rental houses are to be found in Takaro/Cloverlea/Milson (62), Awapuni South/Westend (61), and Hokowhitu West and Lagoon (55). By contrast, Massey/Linton/Ashhurst only has 14 rental houses. In five of Palmerston North’s sub-markets, houses comprise 100% of the stock of rental properties, with the lowest concentration (80%) in Palmerston North Central (the…

Rental price statistics for 2019 came out recently and were very interesting to go through. The median rent for all areas and all property sizes and types hit an all time high of $468 per week, which is four per cent higher than in December 2018. Napier, Dunedin, Palmerston North and Invercargill had the highest increases of between 10.1% and 11.7%. You can view a more detailed history of rental prices for 103 different areas around New Zealand at the NZPIF resources page www.nzpif.org.nz. These stats go from January 2006 to December 2019 and you can graph the data for your specific properties. At four per cent, the increase in rental prices for last year was actually less than the previous year, when rents increased by 5.1%. Even though it…