Innholdsfortegnelse for February 2022 i NZ Property Investor

The results of the Resimac New Zealand Property Investor Survey are in. This year, for the first time, we partnered with the New Zealand Property Investors’ Federation in order to reach as many investors as we could. It’s been a very worthwhile exercise — the results are fascinating and detailed in depth in our lead story this month. What really stood out for us is that investors are committed to sticking it out. Rather than seeing a mass exodus after endless regulatory changes, the opposite seems to be true — 47% of respondents shared they had never sold a property, and 24% said that they hadn’t sold in the past two years. Most people who responded were small-time investors, with 68% owning five properties or less. And interestingly, 50% of…

The next few months could see a shock for some Kiwi household budgets as about 60% of existing mortgage fixed rates expire in the next 12 months. Many borrowers this time last year were fixing on the 12-month rate because this had proved to be the way to go over a cycle where interest rates were trending downwards. Borrowers coming off these historically low interest rates will find an environment where inflation has already pushed rates significantly higher than where they had been and the likelihood they will trend higher means they are tipped to want to fix for a longer term. If they take the option to fix now for say a three-year term it is already roughly double what they would have been fixing a 12-month rate at…

Keelan Clark is just beginning his property investment journey. Formerly from Norfolk Island, where he owned a property with his siblings, he works for mortgage and insurance consultancy firm Finax as an educator. And he’s just completed his first renovation, on a property in the Auckland suburb of Favona, and is now planning his next move. Clark was looking for a property where he could put into practice the knowledge he gained through working with mentor Lucia Xiao. The property he discovered in Favona was rundown, but had good bones, and room to expand. It was owner-occupied, but in need of a fair amount of work. At 615 square metres, it also had space for an extra dwelling; a gold-standard means to adding value in a city focussed on intensification.…

THE SITUATION I met Alistair and Kerry in mid-2021. The couple are in their early 40s and have done well for themselves. They own their own business, two investment properties, their own home and a bach in South Waikato. Together the properties are worth $8 million, with $3.6 million worth of debt. However, they were worried about two significant challenges: 1. Higher interest rates. 2. The government’s interest deductibility tax changes. They wanted two things: firstly, to protect against the above factors and then to use their property portfolio to build a passive income. This would protect them if anything happened to their business. THE CHALLENGES First, we modelled the cash flow for their two existing investments, seeing what would happen if interest rates move up to 5% over the…

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 Central Christchurch is skewed towards houses, with a reasonable number of apartments and flats. Of the 1,071 properties recently available for rent, 62% have been houses (669), with…

“Key shifts recently have been for mortgaged multiple property owners (i.e. investors) – who had a high share at the start of the year but then saw deposit requirements raised and taxes changed, which saw their share fall back – and first home buyers, who have still be seeing opportunities, helped by KiwiSaver, the low deposit lending speed limits, and a willingness to compromise on either location or type of property in order to get a cheaper price.”…

HOUSE PRICES: UP Median prices for residential property across New Zealand increased annually by 21.5%, from $745,000 in December 2020 to $905,000 in December last year. Although year-on-year growth continues, this was a 1.6% drop compared with a strong November. The median residential property price for New Zealand, excluding Auckland, rose annually by 20.6% from $630,000 to $760,000 — a 1.3% decline from November. Additionally, Auckland’s median residential property price increased 25.9% annually from $1,025,000 in December 2020 to $1,290,000 in December last year — down a marginal 0.8% on November. OCR: STEADY The OCR is still at 0.75% after lifting 0.5% in November. INTEREST RATES: UP This year, a whopping $62 billion in investor mortgages will roll over and attract sharply higher interest rates. Another $151 billion in mortgages…

BENCHTOP The benchtop is often the focal point of a kitchen, so invest in the best your budget can afford for maximum appeal. Laminate or engineered stone are two good options for affordability, quality and style. If redesigning, ensure there’s enough bench space to spread out when prepping, cooking and placing appliances. SPLASHBACK Kitchen splashbacks are one of the easiest ways to add appeal. There’s plenty of material and colour options, they’re affordable to install and require minimal maintenance. For your tenant or future owner, they add a premium feel while also functioning to prevent grease and grime build-up in high-use areas. CABINETRY While outdated cabinets detract from visual appeal, they also represent an outdated method of storage for key things like plates, cups, cookware, containers and utensils. Consider the…

There has been so much focus on the tax changes to property of late that it’s easy to forget that there are different types of property investment and they are most certainly no longer treated equally or fairly under the existing tax laws. There is now stark contrast between “residential land” which is essentially property with a dwelling on it, or capable of taking a dwelling, and commercial property. This article serves to remind us of some of the significant tax changes that differ between residential and commercial in the hope that it may trigger some readers to consider adding commercial to their portfolios as an alternative to simply halting their property investment strategy altogether under these tax settings. When you start considering commercial most of us immediately think a…

A serious lack of insight from a tenant into her behaviour has resulted in eviction. The Tenancy Tribunal found the numerous tenancy breaches portrayed a tenant who posed a high risk of damage to the rental premises and ongoing disruption to neighbours. The landlord, Excalibre Property Management, told the tribunal there was ongoing excessive noise including visitors running up and down the driveway erratically, loud music, barking dogs, verbal and physical altercations and cars revving in the driveway, and asked for the tenancy to be terminated. Name suppression was granted to the tenant. Adjudicator A Aiolupotea said the breach of excessive noise was not capable of being remedied because it was ongoing and persistent enough to cause the neighbours fear and the tenant was not deterred by police call-outs, 14-day…

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. SHANE CAMPBELL A Partner in Wynn Williams’ Dispute Resolution…

As we start to feel the bite of the legislative and bank policy changes introduced in recent months, New Zealand has found itself staring down the barrel of a major credit crunch. In such a nuanced situation, it’s impossible to say exactly how everything will pan out. When it comes to the housing market, the impact will vary from region to region, and even property to property. For investors, the dynamics at play are going to have wide-ranging impacts – and there are a few big trends you should watch for over the coming months and years. Between new responsible lending laws, tighter LVR restrictions, and higher servicing and interest rates, it’s a hell of a lot harder to access credit these days than it was a few months ago.…

When we conducted New Zealand Property Investor magazine’s annual survey last year, the mood was buoyant, with nearly 70% of respondents saying there would be a surge in house prices … and they were right. CoreLogic data recently revealed house prices nationwide grew a whopping 27.6% over the course of 2021, when compared with the previous year. But the results of the same question this year reveal a different sentiment. Only 35% of investors believed house prices would rise; 63% believed prices would stay the same or fall. What accounts for this dramatic change? It’s a cliché, but “perfect storm” is probably the best way to describe the conglomeration of forces currently operating in residential housing’s investor market. The year has thrown hurdle after hurdle at property investors. From new…

Last year was a rollercoaster for those in the market and for those wanting to be, from crazy price increases to drastic changes to finance policies impacting everyone from first home buyers to property investors. No one could have predicted all that happened in 2021. This highlights that no one has a crystal ball to see what the property market will look like in 2022. However, our message remains the same: if you’re ready to buy, now is the best time to buy (if you know what to buy). Here are some things we think we’ll see in the market this year. MARKET SLOW DOWN If you’ve read the headlines over the last couple of weeks you’ll see that the property market has pretty suddenly grinded to a halt, with…

Disruptions to global supply chains and shipping have consumer goods and logistics companies scrambling to increase their inventories and expand their warehouse space, creating opportunities for industrial and logistics property investors and owners. Supply chain shifts and continued e-commerce growth will be major factors in global demand for industrial space, says CBRE’s latest Viewpoint on Supply Chain Disruptions Creating Opportunities for Industrial and Logistics Real Estate. The report points out continued Covid-related disruptions have caused instability in the supply of key materials and components for global industrial production. Asia’s major manufacturing hubs were largely shut early last year by the Covid Delta outbreak, which constrained global supply chains and raised costs. It coincided with an unexpected boom in demand for goods and supply chain congestion intensified. The lockdowns led to…

How the Tenancy Tribunal works has long intrigued me. The tribunal is where disputes over alleged breaches of the RTA (Residential Tenancies Act) and failure to negotiate resolutions end up. It always pulverises opinion. Many feel there is a bias towards tenants, although I do not share that sentiment. However, the tribunal can be inconsistent, and work needs to be done to improve this. One of the best initiatives in recent times is the publication of Dispute Resolution Statistics by Tenancy Services. Tenancy Services has been publishing quarterly data on the number of applications to the Tenancy Tribunal since 2020, including who has lodged the dispute and the basis of the claim. This information helps assess the key issues between landlords and tenants. Interestingly, there has been a significant drop…

WHAT IS CCCFA? As 2022 begins, we hear more and more about CCCFA. So, what exactly is CCCFA? CCCFA is the Credit Contracts and Consumer Finance Act. In short, this act ensures consumers can make informed choices when they are borrowing money. It is designed to make certain that borrowers know what they agree to and gives them the ability to keep track of their debts by requiring lenders to act responsibly at all times. This act protects consumers’ transactions like using a credit card, taking out a loan, either personal or a mortgage, borrowing money on an overdraft, or buying products and services on credit such as hire purchase. It also makes lenders accountable, ensuring they undertake checks that the consumer can repay the funds without severe hardship. CCCFA…

NORTHLAND NEXT MEETING: Wednesday February 23, 7pm at the Distinction Hotel, Riverside Drive, Whangarei. TOPIC: This month’s speaker is Ronald Fajutnao. Ronald immigrated from the Philippines in 2019. Having arrived with minimal funds, he started creatively investing and now owns several properties in Whangarei. Ronald will share with us a different strategy for higher income yield. 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 hosts 100-plus meetings for its members each year. Go to www.apia.org.nz/events for details on upcoming meetings. MEMBERSHIP: APIA memberships start from $75 and can be purchased on www.apia.org.nz/join. Full memberships include a free subscription to the NZ Property Investor,…