Innholdsfortegnelse for September 2021 i NZ Property Investor

The naysayers predicting a property collapse seem to have been silenced by the remarkable property boom that took place postlockdown last year. We have decided to run an extended news feature on what the experts feel may happen when we open up this time around. While the price boom of last year isn’t predicted, the consensus is that we won’t be seeing any major drops either. Speaking of the recent property boom, our lead story for September focuses on the best ways to guarantee good yields for residential property. While the highest yielding suburbs may not be the best bet for buyers wanting a guaranteed tenant pool (most of these are in far flung locales with small populations) there are other ways to ensure good yields. We speak to investors…

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. 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 phone 09 376 8860, www.wt.co.nz RYAN WEIR Ryan is owner of Propertyscouts Auckland Metro and has a half share of Propertyscouts NZ. He’s a member of PROMINZ and passionate about the property management industry and in particular raising industry standards. Q Our GST registered short-term rental property, with three…

The changing nature of the housing market has seen a rapid increase in the amount of terraced housing under development. Even experienced developers like terraced housing. Unlike a bigger apartment project, they are faster. A developer can buy the land, get the consent, sell and build the units – all within 12 months. They can easily have multiple projects on the go at once. Townhouses are easier to sell, and easier to fund. A MORE STABLE OPTION A big project like an apartment building could take a developer three years to secure the land, get consents and build. In the meantime, market conditions could easily change. That could be higher build costs – as we are experiencing now, or lower demand and possibly lower prices as most developers experienced in…

Residential property remains the most popular asset choice for investors, especially those who are looking to fund their retirement. Capital gains are what hits the headlines in mainstream media, but for many property investors, buy-and-hold is the go-to, with a focus on yields. In a nutshell, yields are a measure of rental income a property generates against its purchase price. Experts claim properties with high rental yields are best for investors looking to boost their cashflow – ideally, a net yield of above 5% as this shows stability in the rental income. CoreLogic’s latest data shows the highest gross yields across the country are on the West Coast in the Grey District – Runanga 11.8%, Cobden 10% and Blaketown 9.7%. Taranaki, Rotorua, Far North, Kaipara, Buller and South Taranaki Districts…

DRIVEWAYS • Common issues: potholes, corrugation, and mud. • Maintenance: regraded and relevelled, with fresh gravel laid over top. • Trade: earthworks contractor LARGE TREES • Common issues: treefall in high winds and risk to surrounding property. • Maintenance: tree trimming, cutting down or removing completely. • Trade: arborist LAWNS AND GARDENS • Common issues: difficulty managing due to design, and irrigation. • Maintenance: look to downscale by removing and replanting various plant or tree types. • Trade: landscape designer for initial concepts, then landscaper. Gardener for lawns and general maintenance. DRAINAGE AND STABILITY   • Common issues: hilly or sloping areas needing stability work, and inadequate drainage on flat sites causing flooding issues. • Maintenance: retaining at-risk areas. Making note of areas prone to flooding. • Trade: earthworks contractor…

You may be wondering how to make things work when we’ve seen so much change recently, and there is a risk of even more changes to come. Here’s a tip: change is nothing new to property investment. I’ve lost count of the number of changes we’ve seen over the last 20+ years. You could say that change is the one sure thing that you can rely on. So how can you reduce risk in a period of uncertainty and seemingly constant changes? 10 WAYS TO REDUCE PROPERTY INVESTMENT RISK 1. Have a plan: Know the strategy/ strategies that are going to help you reach your long-term goals, and understand what return you need in order to get there. 2. Increase your knowledge: Learn as much as you can about property…

A few weeks ago, I had the privilege of listening to Christine Rankin speak to a small group of industry operators. It has been so long since I heard someone talk so openly, and it was refreshing to listen to a credible person speak candidly and without fear of repercussion. Christine was not worried about saying the right thing; she instead spoke honestly. Wow, more of that, please. One of Christine’s clear messages was to stand up for what you believe in and not stand still and roll over when your core values or beliefs are compromised. History will tell us that this woman not only talks the talk, but she also walks the walk. Renting in New Zealand has changed rapidly over the last few years. The recent amendments…

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 markets around the southern parts of Canterbury are dominated by houses, as tends to be the case in most parts of the country, certainly in “provincial” areas. Of the 252…

I have been in the property finance sector for 25 years and for the last 15 years have been operating as an advisor in the UK market. Having recently returned to NZ I have noted that there are many similarities between the UK and NZ markets, but I wanted to highlight some of the differences that I have noticed with reference to the build to rent concept. The build to rent banner encompasses a couple of different models – my first experiences with the idea was a few years ago when the UK suffered a soft property market following the Brexit vote. I had several clients that had finished residential development projects only to find that buyers were wary of purchasing when it looked like prices may be falling. However,…

Well, we’re now back in lockdown (level four at the time of writing) and I don’t think any of us expected to be back here in a hurry. We definitely took our freedoms for granted. The big news recently in the interest rate market has been the fact that the official cash rate (OCR) has remained at 0.25% per its review on August 18, 2021. Typically OCR reviews are scheduled every six weeks but this time round it was just over a month since the last one on July 14. There was somewhat of a unanimous expectation by market commentators that we were expecting an increase – some even suggesting it could be as high as a 0.50% hike to the cash rate, due to results of inflation statistics released…

DIY PAINTING Tips for choosing the right paint. • The higher the gloss, the better the paint will resist stains and the easier it is to clean. • Lower gloss paints are better at hiding imperfections and are generally preferred indoors as the reduced sheen is easier on the eye. • You need to ask whether a water-borne or solvent-borne paint is going to be better for your requirements. Opt for water-borne options where you can as they are lower odour and easier to clean up afterwards. In most cases, you’ll find that there is a water-borne product ideal for the project. • For old timber and paintwork: Resene Sonyx 101 water-borne semi-gloss has a lower gloss (compared to Resene Hi-Glo) and will not highlight imperfections in old timber and…

The Government has recently passed new tax legislation known as the purchase price allocation rules. These rules are set to impact commercial property transactions in excess of $1 million and residential transactions in excess of $7.5 million. The new rules are designed to ensure that the allocations given to component parts of a transaction are the same for both buyer and seller to ensure there is symmetry in the tax treatments of both parties. To date, there has been no requirement for alignment in positions between buyer and seller and the Government believes this has created a tax slippage that it seeks to close with the new rules. AN EXAMPLE ... John, has owned a commercial building for some time. He has split his purchase between land, building and fitout…

In early 2020 the Government introduced to Parliament the Residential Tenancies Amendment (RTA) Bill to amend the Residential Tenancies Act 1986. By August the bill had passed its first, and second readings. The Social Services and Community Committee continued with hearing oral submissions during the first countrywide Covid-19 lockdown. Minimal changes were made after the submission process and the bill received Royal Assent on August 11, 2020. It became law on February 11, 2021 and was to be introduced in three phases over this year. Phase one, which was quickly implemented after Royal Assent, was the removal of transitional and emergency housing from the RTA, and an extension of Covid-19 regulations limiting rent increases to once every 12 months. Phase two, which was the majority of the changes, was then…

Imagine if you could pull forward property profits and rents from the future? Time-travelling. It’s a unique way to think about property investment. But that’s how property investment coach Ilse Wolfe describes her business style. Cashflow hacking is Wolfe’s high impact and tailormade approach to her renovations-based property portfolio. From her own experience, she’s created a tight-knit sequence of six principles alongside pin-pointed purchasing criteria that have aspiring investors gravitating to her new service: Opes Accelerate property coaching. Put simply, cashflow hacking is the new-world version of the BRRRR renovation strategy, enabling investors to manufacture, very quickly, substantial equity gain from their properties and significantly increase rent. It actively, and quite literally, builds wealth in only a few weeks of work. “I don’t want to wait for organic market growth,…

HOUSE PRICES: UP Median prices for residential property across New Zealand increased by 25.2% from $659,500 in July last year to a record $826,000 in July this year. INTEREST RATES: DOWN ANZ has reversed some of its mortgage interest rate rises announced just days before the Reserve Bank left the OCR at 0.25% after the Delta variant of Covid was discovered and the country went into lockdown. It is putting its standard one-year fixed rate back to 3.15% after hiking it to 3.29% last week. It also reversed 10 basis point hikes to its standard 18-month and two-year fixed rates, as well as a 14bp hike to its special one-year rate and 10bp hikes to its special 18-month and two-year rates. OCR: HOLDING The Reserve Bank held the OCR at…

Whanganui’s grand manor house had seen better days. Built in 1840 for settlers Andrew and Margaret Duncan, the once grand home was created from pit-sawn heart tōtara, with 24 rooms and expansive stables. But the centuries were not kind to the manor, which was named Tōtarapuka after a Māori settlement in the area. By 2019 it was run down and dated. A motel had been tacked onto the 5,500m2 section, and the three freestanding homes (some with punch holes in the wall) were victims of ongoing deferred maintenance. Belinda Beatty (who works with Wealth Mentor) and Stephen Feast came across the property when a real estate agent they worked with brought it to their attention. As buy and hold investors, the couple saw that the property had loads of potential.…

Many tourism asset investors are not suffering as much as they thought they might. In fact, Covid-19 has had a silver lining for owners and investors in hotels and motels. While the tourism sector as a whole has been smashed around and is still difficult and challenging, the Government has been a sort of saviour for some of the big hotels and hundreds of motels and small hotels, when they were staring into the abyss of no overseas tourists and no income. The Government has handed out MIQ contracts to more than 30 major hotels, providing them with secure cashflow, and is using small hotels and motels for emergency and transitional housing across New Zealand. At the end of May, there were 4,271 transitional housing places in motels and small…

Eighteen months ago when we were in the early days of the Covid Era the great learned ones in our media were warning us the property world was going to end and a price crash was coming. … It turns out that wasn’t quite the case. Fast forward and here we are with a major lack of housing stock NZ wide (listings in most centres currently sit at about one third of what they were only a year ago). Adding to the fun are the changes earlier this year affecting interest deductibility and the bright-line which certainly threw a spanner in the works. After the March tax changes it appeared that new build investments were the answer, and certainly for many this can be a good option. However, the immediate…