NZ Property Investor November 2021

Lockdown has done little to dampen the national enthusiasm for property, however. The dearth of houses and high demand is continuing to drive up prices, with the national average in September sitting at $977,456, a whopping 26.3% increase year-on-year, only slightly down on the 26.6% year-on-year increase in August. But are there clouds on the horizon, set to dampen the flame of property values? A confluence of forces – proposed interest tax deductibility removal and interest rate increases – may seem like growth slowers, but is that really the case? Our lead story this month looks at the ways these two “interest issues” are likely to play out in the property market. The details around interest tax deductibility were announced in late September. They outlined the definition of a “new…

Housing related costs were the latest contributor to the mix. House construction costs surged 12% over the year, with strong demand meeting significant supply disruption. The largest contributor to September quarter inflation was housing and household utilities, rising 2.6% in the quarter alone. Housing costs climbed as home construction costs followed the second quarter’s lead with a 4.5% rise. Builders are finding it difficult sourcing materials and labour to build the new houses New Zealand needs. The 7% September quarter spike in council rates also helped boost housing costs. And rents continued to rise with a 0.7% lift in the quarter – they and are up a massive 12% over the September 2020 quarter. With ongoing supply chain disruptions and capacity constraints, firms are facing rising costs which are squeezing…

The falling number of property listings continues to inhibit the market. REINZ’s latest data shows the total number of properties for sale nationwide dropped year-on-year by 25.7% in September to 13,407, down from 17,576 in September last year – 4,169 fewer properties. However, this is an increase of 9.5% from August 2021. Unsurprisingly, Auckland had the greatest drop in listings year-on-year in September, but there were increases in other regions under lower alert levels. Hawke’s Bay and Wellington had a significant annual percentage change of 15.2% and 14.5% respectively. What has emerged is a tale of two alert levels. Sales in New Zealand excluding Auckland rose 13.8% on August as more real estate activity was allowed and those thinking of selling their homes had the confidence to bring them to…

Build-to-rent proposals are being promoted as the solution to the lack of rental housing at the very same time as private investors are being forcefully expelled from the market. However, I can see many problems with these proposals. The bottom line is that residential landlording in New Zealand, despite popular belief, is and remains a low-return high-workload activity. Over many years I have seen a number of corporates grow enthusiastic about the idea of building a large portfolio of rentals, but then they have faded quietly away once the harsh light of economic reality sets in. As residential landlords, these build-to-rent entities will always be subject to the restrictions of the Residential Tenancies Act. It is all very well for New Ground Capital to state that “tenants are given a…

But entering the end game does not mean things suddenly stop. Momentum is still exceptionally strong in the housing market with high and rising fear of missing out (FOMO) and sellers gaining increasing market power over buyers. A monthly survey of real estate agents Alexander carries out in conjunction with REINZ showed in July, before the country was in lockdown, a gross 66% of agents nationwide and 59% in Auckland were observing FOMO on the part of buyers. In late-August the survey showed that immediately following lockdown nationwide FOMO rose to 71% and for Auckland it lifted to 67%. The most recent survey at the end of September showed nationwide FOMO at 72% and Auckland even higher at 79%. “Lockdown has engendered extra determination from buyers to make a purchase,…

During a conversation with the employee, Joan Selvam got frustrated and said, “You are useless, you have done nothing to help me! I’m gonna f***ing kill you.” The council employee giving evidence to the tribunal said she was intimidated by Selvam and considered the threat had substance as Selvam and her gang affiliates presented a risk. In an earlier hearing, Selvam acknowledged that she had been abusive but denied threatening to kill the employee. Selvam told the tribunal she was staying off alcohol and drugs, and was taking steps to turn her life around. The council, who is her landlord, told the tribunal it had concerns regarding Selvam’s behaviour which it said had been ongoing since the beginning of the tenancy. Employees had been working with her, her probation officer…