Innholdsfortegnelse for July 2021 i NZ Property Investor

In order to help those investors who are committed to the “long-haul”, we have been chatting to industry experts on ways in which to ride out this challenging time and move ahead successfully as an investor. We discuss the pros (and cons) of new builds, making use of smart cash strategies, buying off the plan, paying down debt, and other means by which to tighten up your investment portfolio. As an adjunct to our lead story, we are taking a close look at the Treasury’s predictions (presented in this year’s Budget) of a massive drop in price growth. Given that REINZ data from May this year revealed house price growth of 32.3% year-on-year, the prediction of a drop to 0.9% house price growth by mid-2022 seems bold (to say the…

PROPERTY INVESTMENT AND EDUCATION WEBINAR, available on demand or via live Zoom webinar. Hosted by Gilligan Rowe and Associates. Free. 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 and 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-school or phone +64 9 522 7955. POSITIVE REAL ESTATE PROPERTY INVESTMENT WEBINARS. South Island, July 7; Bay of Plenty, July 7; South Auckland and Hamilton, July 7; Wellington and Lower North Island, July 14; Auckland and Northland, July 14; South Island, July 21; Wellington and Lower North Island, July 28; Auckland and Northland, July 28. Hamilton Property Investor Night, July 21.…

REINZ HOUSE PRICES: UP Median prices for residential property across New Zealand increased by a whopping 32.3% from $620,000 in May 2020 to $820,000 in May 2021, the highest annual percentage increase since records began, REINZ data shows. INTEREST RATES The lowest rate for any fixed term is still Heartland Bank’s 1.85%. And the highest rate for any fixed term is ANZ’s new five-year rate of 4.39%. That is the widest/steepest since 2012. OCR: HOLDING The Reserve Bank held the OCR at 0.25% – the rate it has been at for more than a year. IMMIGRATION: DOWN In the year ended March, the country had its biggest drop in immigration since 1986, Stats NZ data reveals. Only a net 6,600 people immigrated to New Zealand, compared with 91,900 in the…

The opening up of residential land for subdivision and the addition of minor dwellings offers investors new opportunities to maximise the potential of their land. Councils around the country are becoming aware of the importance of opening up land in order to allow for much-needed intensification: Auckland’s Unitary Plan is a great example. Kevin Smith from Keith Hay Homes says that his company has noticed a large uptick in interest in new builds from investors post Covid-19, as people are barred from spending their money overseas. “We are seeing ‘mum and dad’ investors increasingly interested in ways of maximising the potential of their properties.” He says they have extended their basic range, and this is proving popular with investors. There are a range of options for those looking to add…

Builderscrack.co.nz sees about 20 home relevelling jobs per month across New Zealand, with about one third of these still earthquake related today. In the years following the Christchurch earthquakes, and more recent Kaikōura earthquake, home relevelling techniques in New Zealand evolved quickly into what is now typically a smooth process across a range of foundation types and settings. Techniques have been borrowed from earthquake remediation work and used throughout the country to remediate a variety of causes. There are a range of factors that lead to an out-of-level home aside from earthquakes: General deterioration of the home due to age and/or moisture, poor ground conditions, poor construction and uneven ground loads over time. Most homes can be successfully releveled no matter the foundation type, or home size – with the…

‘The 1947 Act has many similarities with the HHS 2019 and it does not end with just the heating’ In 1947, the New Zealand Government released legislation that focused explicitly on the quality of rental properties and living standards. Until recently, most of the operators in the industry were not aware that this act even existed. Ironically, 72 years later, we are looking down the barrel of a new version of the same legislation. Only, with a more contemporary twist. We have gone from the Housing Improvement Regulations 1947 to the Healthy Homes Standards 2019 (HHS). UNCANNILY SIMILAR There is an uncanny, and to a degree, concerning similarity between the two acts, and part 1 of the 1947 edition covers “minimum standards of fitness for houses”. The original legislation is…

‘What can we learn from those athletes and their coaches to help us navigate these changing times?’ For almost 20 years prior to becoming a buyer’s agent I had the privilege of working in various roles in the sports industry, helping pre-elite and elite athletes prepare for their pinnacle events. It wasn’t until recently that it struck me how similar the present investment property and elite sporting environments are. Never, well not in my property investment lifetime, has there been such a time of change and uncertainty in property investing, mainly but not solely due to the recent Government policies. I can compare this scenario in our investor world with the uncertainty Olympic athletes, their coaches, and support teams must be feeling right now as they prepare for the Tokyo…

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 Whangārei’s rental market is dominated by houses, as tends to be the case in most parts of the country. Of the 408 properties recently on the rental market, 341 (84%) have been…

In March the Government announced several changes to housing policies in response to a spike in house prices. These changes are aimed at helping first home buyers and disincentivising rental property providers. The changes included an extension from five to 10 years of the bright-line test for existing properties and the removal of mortgage interest as a deductible expense for owners of investment property. These changes will be implemented from October 2021 and are for properties purchased on or after March 27, 2021. FEEDBACK REQUESTED A consultation paper has been released and the Government is asking for feedback. Details of the discussion document named “Design of the interest limitation rule and additional bright-line rules” and accompanying summary sheets are available at taxpolicy.ird.govt.nz. At the time the Government announced these changes…

NORTHLAND NEXT MEETING: Wednesday July 28, 7pm at the Distinction Hotel, Riverside Drive, Whangārei. TOPIC: Commercial Investment 101. Thought about commercial investment as a replacement or to supplement your current residential portfolio? The rules are different. Gordon Lambeth converted his portfolio from residential to commercial eight years ago. He is going to share with you the advantages and disadvantages in making this change. Gordon is an Architectural Designer, Licensed Building Practioner Design Level 2. He is the Vice President of the Northland Property Investors’ Association. He is also on the Executive Committee of the NZPIF. 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: APIA…

Landlords Ineke Kranenburg, Kranham Ltd and Andrew Graham converted one house into two flats, one upstairs and the other downstairs by installing a plywood ceiling at the top of the internal stairs. Each area had its own bathrooms, bedrooms, living areas, kitchen and outdoor space. The tenant and landlords entered a one-year fixed term tenancy for the downstairs flat in January this year, which was due to end on January 5 next year. The tenancy agreement allowed the tenant to have two other flatmates with the trio paying weekly rent of $850. A major issue for the tenant was the lack of soundproofing between the two flats. Where the landlord had sealed off the stairs meant that usual living noises of the upstairs tenants could be heard by the tenant…

At Squirrel we are one of the largest mortgage brokers in New Zealand having settled over $1.5 billion of mortgages in the last year. We are also a lender, which means we can make a portion of those loans available as investments for retail investors. This gives retail investors better investment opportunities for their cash funds. It is an alternative investment for your cash when it’s not tied up in property, and it is more liquid than property. For investors you get the advantage of relatively high interest rates on cash funds. We currently pay retail investors either 4% or 5% pa depending on the risk appetite – paid monthly. The investment is secured over loans that are backed by first-mortgage residential security at a maximum loan to value ratio…

Opportunity knocks in winter: winter is an ideal buying time for property investors as there are generally less home buyers in the market. More opportunities become available and negotiating is a lot easier on the cold and wet rainy days. 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…

Because of its sheer neutrality, grey – which is after all a straight mix of black and white – is the sort of colour that suits almost any project, contemporary or traditional. Grey can be turned into any flavour or style simply by adding accent colours with kitchen accessories. Some current favourites to try are ochre, rust, peach, creamy white, stormy blue and soft green. Silvery or dove greys, like Resene Half Concrete and Resene Athens Grey are elegant and soothing. These look superb with pale timbers, and fleecy whites, like Resene Merino, for a pared back Scandi look or made to sparkle with icy whites, like Resene Alabaster, and pewter or silver accessories. Mid tone greys like Resene Silver Chalice or Resene Half Stack strike a more serious note…

‘When the borders reopen, we are likely to see population growth start climbing again, meaning that demand for housing will increase further’ There is a huge amount of uncertainty from buyers at the moment, so I thought it would be a good idea to remind readers about the reasons why you should buy now instead of waiting for prices to fall. 1. The number of listings for sale across New Zealand are well below average (51% down) when compared to the 10 year average, which means that supply is reduced. Yes, we are experiencing a building boom, but after decades of not building enough to keep up with population growth, we are still playing catch up. High demand + limited supply = price increases. 2. It has been announced that…

The rules are designed to ensure that where a sale and purchase agreement strikes an overall price that includes two or more different categories of asset, the vendor and purchasers’ tax position with respect to the allocation of price between the asset classes must be aligned. The IRD believes that historically there have been issues with vendors and purchasers taking different tax positions on the values allocated to assets acquired together that have led to slippage in the tax system. An example of this might include the vendor of a commercial building disposing of fitout assets at book value and avoiding a depreciation recovery where the purchaser engages a valuer to value the fitout and allocates more value to the fitout items depreciated than the vendor has. The new rules…

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

Independent economist Tony Alexander says it’s a 50:50 call on how high interest rates will need to go to resecure low inflation because the economy is running hot. ANZ economists believe the official cash rate (OCR) will begin to rise in February. It had previously predicted the OCR to start rising from August next year. Predictions interest rate hikes will be sooner than expected have come after the economy burned off recession fears. There are now a new set of challenges as parts of the economy boom. GDP data for the first quarter of the year shows growth of 1.6% – double the figure most economists predicted. For Alexander that is why as soon as the 2.99% five-year fixed mortgage rate appeared, and through the entire time it was offered,…

We’re halfway through 2021 and certainly in a very different place to the one we were in just 12 months ago. In June we saw the 143-page document released which gives further insight into the proposed tax changes for investment properties (both in regard to bright-line and interest limitations) and how this may be implemented. It will be interesting to see how this plays out, and what sort of distortions this creates in the property market. Mortgage rates have remained low, but we are certainly seeing some upward interest rate movement, particularly in the longer-term fixed rates. The three to five-year loan terms have trended upward and in many cases are at least 0.3% higher than they were not too long ago. We have seen for example, the five-year rate…

Real estate giant JLL estimates that up to 30% of corporate real estate could be flexible workspace by 2030, adding $1.8 billion to the country’s economy. The industry is estimated to be growing by 25% each year and a recent JLL workplace survey shows 65% of businesses globally see co-working space as a way to reduce capital and operating expenses. Co-working spaces operate differently to traditional office lease models. Individuals and companies typically join co-working spaces as members, paying a fixed monthly fee depending on the number of desks they require. There are no hidden costs or long leases. This type of space is being used by startups as well as large corporates and is a chance for investors and landlords with small commercial buildings to turn a profit from…

‘Australia, which is more likely to actually have “shovels-ready”, has the potential to entice a percentage of our tradies, engineers and surveyors’ The construction industry in New Zealand has always suffered from a lack of resources, particularly during the peak of the “build cycles”, when there is particular demand for suitably experienced and skilled construction workers (including tradesmen and professional consultants). INCREASED DEMAND We are currently entering a period when there is increased demand on the resources required to undertake large infrastructure projects and residential building developments. In particular, the residential building sector is set to take-off in response to the need to increase residential supply, and partly in response to the Government’s objective, which, as far as I can tell, is to remove the private sector from the business…