Innholdsfortegnelse for June 2021 i NZ Property Investor

Turning back the clocks to mid-2020, we saw Covid-19 and lockdown, rental freezes and experts predicting property price plummets. A year on the market is soaring, with median prices up nationwide by nearly 25% year-on-year (according to REINZ data for April). A year ago, the inner city of Auckland was a wasteland. Foreign students had fled back home, and you could see the tumbleweeds blowing down Queen St. It was a terrible time for investors in this market: within one week, over 1,200 apartments were vacated. Investors dropped their rents, new tenants were securing apartments for under $200 a week, and the future was unsure. But fast forward to 2021, and the market is up and running again. Now tenanted by local university students, and renters who work in the…

The biggest news in interest rates over the last month has been ASB’s introduction of a market leading 1.79% floating rate for construction loans. While some of the fine print still needs to be clarified it appears to be exceptionally useful for investors in particular who are likely to target new properties with the expectation that there will still be some ability to deduct interest costs. ASB has tapped into the funding for lending programme which the Reserve Bank introduced late last year where eligible banks can borrow directly from the Reserve Bank at the official cash rate (currently 0.25%). When it was announced the intention was the RBNZ would make available up to $28 billion, however so far the drawdown rate has been quite low. It remains to be…

I often hear of people who when investing in properties end up buying a negatively geared property in a low capital growth area. This is a sure way of losing your shirt when the next recession comes. Avoid buying any properties that you can’t increase in value within 12 months or cashflow at settlement, otherwise buy on price. Successful property investor and mentor Ron Hoy Fong has built an impressive portfolio and has a wealth of investment strategies and wisdom to share with you. For information on his mentoring programmes call Ron today. Ron Hoy Fong | 021 888 298 | www.ronovationz.com…

We have had a busy summer, particularly in our Auckland office, undertaking, what I call “forensic engineering” assessments for houses, at the request of owners who have noticed damage to their properties. It is not uncommon to occasionally notice minor damage to our houses, particularly after long dry periods. I have covered the dangers of “expansive soils” in my previous articles. Shallow foundations, supported on expansive soils, which are not appropriately designed, can be adversely affected by the seasonal swelling and shrinkage of the supporting soils, which can result in foundation damage. FOUNDATION MOVEMENT However, there are times when observed damage to houses can be indicative of a different damage mechanism which is causing ongoing differential foundation movement. The damage associated with differential foundation movement can be extensive and can…

REINZ HOUSE PRICES: UP Median prices increased by 19.1% to $810,000 in the year to April. This was down on last month’s record. The REINZ House Price Index rose 26.8% year-on-year to 3,775, the highest annual percentage increase since records began. INTEREST RATES: DOWN Heartland Bank has cut its core one-year fixed rate to 1.85%, a -14 basis point drop from what was already the lowest rate in the bank mortgage market. It has also cut its already low 2.50% floating rate to 1.95%, a major -55 bps reduction and sliced -40 bps from its revolving credit rate, taking it down to 2.35%. OCR: HOLDING The Reserve Bank held the OCR at 0.25% – the rate it has been at for more than a year. IMMIGRATION: UP Annual migrant departures…

There has been a spate of horror stories recently about apartment repairs that have left owners significantly out of pocket. In the wake of this, REINZ has made a call for greater disclosure statement requirements for potential apartment buyers. Prospective purchasers looking to buy an apartment or other unit titled property are not always given specific details in the pre-contract disclosure statement around: • weathertightness issues, where there has been remediation without a claim through a court or tribunal • whether the complex has earthquake prone issues • the long-term maintenance plan • proceedings pending against the body corporate • the body corporate’s operational rules • copies of general body corporate minutes (which could indicate weathertightness issues or construction defects which may not have culminated in a legal claim yet).…

Jamie Nankivell is the marketing manager for Hitachi. He explains how heat pumps work. “Unlike electric convection heaters, heat pumps don’t create heat directly. Heat pumps use a refrigeration cycle to transfer heat energy from one location to another. A heat pump will take heat energy from the outside air and transfer it to the inside of the home. “An electric convection heater requires one unit of input energy to output one unit of heat, for example an electric heater requires 3kW of power input in order to output 3kW of heat energy. “A heat pump on the other hand, under typical conditions, will output around three times the amount of heat energy compared to the input power, so for example a heat pump might require only 1kW to output…

Builderscrack sees hundreds of recladding jobs posted per year. The primary driver for most of this work is to replace failed cladding. This is not always evident by visible deterioration of the cladding – and especially with homes built between the mid-1990s and 2004 (leaky homes), water ingress has usually occurred for some time before it is detected. Often the first sign of an issue is seen inside the home, such as swollen skirtings or architraves, or uneven interior claddings or flooring – sometimes accompanied by a musty smell. Not all cladding jobs we see are for leaky buildings. Many are to simply replace aged weatherboard cladding on older homes, usually on south-facing walls. Signs a timber cladding is reaching its end of life are: • a history of poor…

As an investor, we are taught to be counter-cyclical and buy when nobody is buying. What nobody mentions is that it can be scary in the moment. One investor compared it with feeling like he was playing a game of chicken vs an onrushing train … and I wouldn’t hold it against any property investor to feel particularly bruised by this current Government’s policies and rhetoric. Here are some ideas that might help with investing when it starts to feel like the cards are stacked against you. ‘If you have a choice between giving up on your goals and adjusting your strategy, I would opt for the latter’ 1. Remember the people who made something happen during previous downturns? They’re wealthy now. 2. There will be opportunities as would-be investors…

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 The rental market across Queenstown Lakes has recently been dominated by houses, as tends to be the case in most parts of the country. Of the 416 properties recently on the rental…

The New Zealand Property Investors’ Federation (NZPIF), along with Tenants Protection (Christchurch) and The First Home Buyers Club, presented a letter to Government requesting them to reconsider the inability to claim mortgage interest as a tax deduction for residential rental properties. Such interest is a legitimate expense of running a rental property business. Each of the three organisations involved believed that while first home buyers need help getting into the market this should not be at the expense of another party. Our letter was an attempt to persuade Government that the denial of the mortgage interest tax deductibility would not help either tenants or first home buyers. First Home Buyers Club director Lesley Harris said that her members would have preferred to see more positive changes to assist them to…

NATIONAL RENTAL PRICE MOVEMENT This map represents change in the average rental price between the months of April 2020 and April 2021, 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…

This came out of a meeting the Property Investors Federation had with Government ministers and officials to discuss the effects of the bright-line test’s extension to 10 years and scrapping the mortgage interest tax deductibility. Federation president Andrew King and federation executive officer Sharon Cullwick went to the meeting armed with research showing 69% of investors will not be affected by the bright-line change, but removing the ability to claim mortgage interest payments as a legitimate tax deduction will affect 90% of landlords by an average cost of $4,542 per rental property. The research also shows more than 70% of landlords want to increase rents by a median of $21-$30 a week to keep their rentals. King says the First Home Buyers Club, Tenants Protection Association (Christchurch) and Renters United…

PROPERTY APPRENTICE SEMINAR EVENTS Thursday, June 3, 6:30pm-8:30pm; Wednesday, June 9, 6:30pm-8:30pm; Thursday, June 17, 6:30pm-8:30pm; Wednesday, June 30, 2021, 6:30pm-8:30pm; Sat 26 Jun, 2021 1pm-3pm. All online. Greenlane, Saturday, June 26, 2021. See https://www.propertyapprentice.co.nz/free-property-investment-seminars/ PROPERTY INVESTMENT & EDUCATION WEBINAR Available on demand or via Zoom webinar. Hosted by Gilligan Rowe & Associates. Free to attend. 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 7-MODULE ONLINE COURSE: Available on demand. Hosted by Gilligan Rowe & Associates. Includes over 12 hours of videos, articles and quizzes. Cost is just $595. For more information and to register: https://www.gra.co.nz/events/gra-property-schoolor phone +64 9 522 7955. Please contact stephanie@propertyinvestor.co.nz for bookings. Deadline for July issue is June 10.…

The cult of personality is alive and well in the New Zealand property market with the next wave of self-styled property gurus. It’s a hangover from the 1990s that started with Richmastery, only now they’re digital savvy and have social media. I had to laugh when the Government announced its new tax law and how quickly it became vogue to buy off-plan and grab the next “great” opportunity for property investors as spruikers spun out their next version of the truth. In the past I’ve seen an accountant selling dud properties from his own development down to his seminar participants, and then overloading them with complex tax structures that were totally unwarranted. There is a real conflict of interest when “advisers” play on both sides of the fence. The biggest…

It is time to put things into perspective. Complaining about it isn’t going to help. Let’s face it, if the Government is prepared to completely ignore recommendations and suggestions from economists, Treasury, the Reserve Bank, and lobbyists from all sides1 , they are hardly likely to respond well to a bunch of investors having a moan on Facebook about what they are going to do to retaliate (put rents up, evict tenants, etc). The fact of the matter is that we need tenants, and tenants need us. It is a symbiotic relationship, not a parasitic one. By far the majority of tenant/landlord relationships are good ones, it is just an unfortunate reality that the good relationships don’t make headlines. ‘US AND THEM’ MENTALITY The Government and parts of the media…

Firstly, a recap on the Government’s announcement. For acquisitions of residential property after March 27, 2021 interest will only be deductible until October 1, 2021. Interest on debt funding residential property acquired prior to March 27, 2021 will be phased out over four years. • Until September 30, 2021 100% • 1/10/21 – 31/3/23 75% • 1/4/23 – 31/3/24 50% • 1/4/24 – 31/3/25 25% • From April 1, 2025 0% The Government also signalled that interest on lending that funds new builds may remain deductible. DEFINITION NOT DRAFTED The Government has not provided a definition of a new build yet. It has signalled that the definition may include a property acquired within a year of its code of compliance being issued. The Government has signalled a public consultation process…