Innholdsfortegnelse for August 2020 i NZ Property Investor

There’s no escaping the fact that we are living in uncertain times. It’s why the country continues to hang on to the Government’s daily Covid-19 status updates, why debates over border controls and quarantine continue to rage nationwide, and why the ever-growing flow of economic analyses continue to attract unprecedented attention. It’s all about trying to make sense of a world that has spiralled out of our control as Covid-19’s devastating health and economic impacts have spread. It’s about the search for answers. And it’s about the struggle to wrest insight into what might lie ahead. These same inclinations apply when it comes to the property market too. But, to date, the market is proving difficult to pin down. It’s bounced back strongly post-lockdown, defying sales and price expectations along…

Your monthly round up of property investment related events around the country. ONLINE PROPERTY INVESTMENT & EDUCATION SEMINAR Available on demand. Hosted by Gilligan Rowe & Associates and includes Covid-19 property market update. Free to view. For more information and to register, please visit https://www.gra.co.nz/events/property-investment-seminars or phone +64 9 522 7955. PROPERTY SCHOOL SEVEN MODULE ONLINE COURSE Available on demand. Hosted by Gilligan Rowe & Associates. Includes over 12 hours of videos, articles and quizzes. Cost is just $495. For more information and to register: https://www.gra.co.nz/events/graproperty-school or phone +64 9 522 7955. PROPERTY INVESTOR INFORMATION EVENINGS/WEBINARS LIVE EVENTS: Christchurch, August 4, Tauranga, August 12, Hamilton, August 25. ONLINE EVENTS: Auckland and Northland, August 12, South Island, August 25, Wellington and Lower North Island, August 26. Book at https://positiverealestate.co.nz/property-investment-seminar/ PROPERTY INVESTMENT…

Ensuring her rental property’s tenancy agreement limited the number of people allowed to live in a rental property has served a Dunedin landlord well. Karen Anderson rented her property out to Colleen Atwood for an eight-month period in 2019. The relationship quickly became acrimonious, resulting in three Tribunal hearings late in 2019. One major issue was Atwood allowing her partner to live in the property too, despite requests that he leave. It led to Anderson obtaining a declaration from the Tribunal that the partner was not a tenant. When the tenancy ended, the parties returned to the Tribunal to battle it out over a host of issues, including the claim that Atwood had exceeded the maximum number of people allowed to live at the property. While the Tribunal returned a…

Although banks are tightening access to credit and becoming harder to deal with, there are competitive non-bank options with rates as low as 3.40% that are worth considering. The non-bank market is growing and it’s increasingly competitive. The rates might be slightly higher than banks, but the additional cost is inconsequential if properties are cash flow positive and values continue to grow at more than 3% per year. In a previous article I wrote on the next housing boom I was forecasting a 50 percent increase over the next ten years to an average house price of one million dollars across New Zealand. That’s a modest increase by historic standards, but understandable given the context of very low interest rates. An 80% geared property with its value growing at 3%…

I have been surprised at the somewhat negative media commentary on property in the last 90 days, with prominence given to the usual doomsayer economists predicting a market meltdown. With predictions of 10–20% price drops (and a few keyboard warriors during lockdown saying the market could fall up to 50%), it seemed we were in for something between a right meltdown and total systemic failure in housing markets. For many of them, it’s all still just around the corner when the wage subsidies run out and mortgage holidays end. In reply to this, I can’t see it happening (all things being equal). In fact, I think house prices are just as likely to go up this year. I do wonder if it would be better for economists to spend a…

The accompanying photo shows two different news headlines in New Zealand on exactly the same day. If you go searching it won’t be too difficult to find other similar examples of contradictory “news”. It’s a perfect example of “never let the truth get in the way of a good story”. So, the question is, how do we determine exactly what is real and what may be hearsay when we are wanting to invest in this controversial market? It’s easy really. It’s about sticking to the basics. Here’s what I’m doing: 1. Choose a market. If it’s one you know well, or you already live there, it may be easier than a market in another location you have no experience with. But in either case you can’t do your homework until…

I have been genuinely surprised recently by the number of baby boomers who are seemingly considering winding their trusts up as they move into retirement. Often stating they “don’t need them anymore” or are tired of the administration and the cost of it. Admittedly, the new Trusts Act 2019 is a reason to take stock - and soon - but it is not necessarily a reason in and of itself, to wind up your trust. How quickly we forget; I recall being a junior clerk back in the late eighties and seeing the blind panic of a family sink in, upon the realisation of death duties issues, after a terminal diagnosis of a wealthy client. THE RETURN OF DEATH DUTIES? And here we are with Covid-19, facing a mountain of…

THE DATA Rental data is sourced from the Ministry of Business, Innovation and Employment based on rental bonds lodged. This 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 property 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 property value calculated using our E-Valuer. MARKET COMPOSITION Invercargill’s rental property market is predominantly houses, although it also has a reasonable number of flats. Apartments are a small segment. Of the 232 properties recently on the market in Invercargill, 73%…

The Ready2Rent programme was started in the Hawke’s Bay in 2016. It is a Hawke’s Bay District Health Board-led initiative to reduce the number of children with rheumatic fever and other breathing issues admitted to Hawke’s Bay’s hospitals. The programme is supported by the Hawke’s Bay Property Investors’ Association (HBPIA) and is fully supported by the NZ Property Investors’ Federation (NZPIF). Other support comes from the Hawke’s Bay Housing Coalition made up of Te Taiwhenua o Heretaunga (TTOH), Hawke’s Bay District Health Board, Population Health Advisor team, Child Healthy Housing Team, BudgetFirst, MBIE, Work and Income (WINZ) and Ministry of Social Development (MSD), Wharariki Trust and Kainga Ora (Housing NZ). The education programme has three objectives. These are: 1. improve access to the private rental market; 2. increase knowledge around…

NORTHLAND NEXT MEETING: Wednesday August 26, 7.00pm at the Distinction Hotel, Riverside Drive, Whangarei. TOPIC: Peter Lewis, will be making his annual visit to NPIA. MEMBERSHIP: Some of our members could be under extreme stress, it is important that concerns and challenges can be shared. Any member is encouraged to contact the Northland Property Investors’ Association by email to arrange telephone support on a one-to-one basis. $180 single or $210 couple; includes subscription to NZ Property Investor and NZPIF discount card, plus local trade discounts. npiacontact@gmail.com, PO Box 1640, Whangarei. AUCKLAND NEXT MEETING: Tuesday August 11, 6.30pm Auckland Girls’ Grammer School, Freeman’s Bay, Auckland. APIA members only. TOPIC: Unveiling the puppeteer - housing market influencers, effectors and red herrings with Tony Alexander For more information go to www.apia.org.nz/puppeteer. APIA memberships…

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 over 30 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…

Good foundations form both the figurative and literal basis of any successful and cost-effective new structure. The importance of getting your foundations right cannot be overstated, and it is often this aspect of a build that imposes the highest level of risk with respect to cost, programme, and liability to the designers, construction team, and client. Robust and efficient foundation design costs will generally be a fraction of the cost of the physical works, and by investing in a smart design, significant cost and programme savings will likely be realised on a project. THE CHICKEN AND EGG The traditional approach to foundation investigation and design is that two separate companies, one specialising in geotechnical engineering, and another in structural engineering, will do their own assessment to form the basis of…

RENTAL RETURNS June 2020 NATIONAL RENTAL PRICE MOVEMENT This map represents change in the average rental price between the months of June 2019 and June 2020, 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…

This means the two most controversial proposals will become law, unless the Residential Tenancies Amendment Bill does not pass its second reading in Parliament. One proposal is the removal of a landlord’s right to use “no cause” 90-day terminations to end a periodic tenancy agreement. The other is the requirement that fixed-term tenancy agreements become periodic tenancy agreements upon expiry unless both parties agree otherwise. Property professionals say the reforms mean that landlords can’t control who lives in their property and will cause investors to leave the market, pushing up rental prices further. While the NZ Property Investors’ Federation, REINZ, and other landlord advocates campaigned to raise awareness of the likely negative impact of the changes, the Select Committee has not taken their concerns on board. REINZ chief executive Bindi…

REINZ HOUSE SALES: UP In June, there was another strong monthly uplift in sales both nationwide (up 60.1%) and in Auckland (up 75.3%). But they were also up year-on-year nationwide (by 7.1%) and in Auckland (by 9.4%). INTEREST RATES: DOWN March’s record OCR cut continues to be passed on by the banks. There’s now an ongoing mortgage rates war, with rates at unprecedented lows and the situation unlikely to change in the near future. OCR: DOWN The Reserve Bank held the OCR at its Covid-19 prompted record low of 0.25% in June – and it appears to still be open to the prospect of a negative OCR in future if necessary. IMMIGRATION: DOWN Stats NZ’s data shows the number of people to arrive in New Zealand in May was the…

There has been more rate movement over the course of the last month with all of it pointing downwards. Kiwibank have led the discount in floating rates with that down at 3.40%; ASB have removed the difference between “standard” and “special” rates - becoming the first main bank to do so in a move that should benefit first home buyers. And while ANZ, Westpac and Bank of China had been leading the one-year space with a rate of 2.55%, HSBC have just cut that further under their premium product, with the lowest rate on offer in the market at 2.45%. There seems to be a disconnect between many economists’ views and what is actually transpiring in most parts of the property market at present. Most are predicting house price decreases…

Christchurch has seen less growth than the other main centres over the past decade, due to the impact of the earthquakes. So, does the city have potential going forward? Vaughan believes so: “My prediction is that it’s very affordable for a decent-sized city – I think the houses seem quite cheap, so maybe in the next seven or eight years there’s probably going to be a decent boom and a decent amount of capital gain.” Vaughan says currently houses in the first-home buyer bracket are snapped up quickly, which can make slim pickings for investors. However, he says the tenant quality is high in Christchurch, which makes it an attractive proposition for investors. “Over the last nine or ten years we’ve been very lucky – we haven’t had anything worth…

Some property commentators (and investors) look at the data the Real Estate Institute release and proclaim that it doesn’t matter where you buy: properties go up roughly the same amount no matter what the region. One economist released a fantastic piece of analysis that showed over the last 28 years, Gisborne house prices went up at the same rate as Auckland house prices. And that is absolutely true when looking at the data from a regional level. However, you’re not investing in a whole region. You’re not investing in one town. You’re investing in one specific property, within one suburb, within a town that’s within a region. It’s of no comfort that the median house price doubled in 10 years, if it takes 18 years for the property you invested…

The rental market in New Zealand has shifted. In the last few years alone, we’ve seen new compliance requirements come into play, suggested law changes, the Healthy Homes standards rolling out, and record-breaking house prices. For many, owning rental property has suddenly become a stressful and costly exercise. So, it’s understandable that with the classic can-do Kiwi attitude, property owners are drawn to more affordable DIY work or using a handyman to fulfil their property maintenance needs. However, the implications of using the wrong person for the job extend far beyond the initial price tag. When you don’t use a certified professional, you’re actually putting yourself and your investment at risk. Here are just a few of the issues you might encounter: • fewer rights under consumer laws if anything…