NZ Property Investor March 2022

Property prices are a Kiwi obsession and everyone is an armchair expert … or think they are. So, in this issue we have decided to ask the real experts, data analysts, economists and mortgage advisers which direction they think prices will head this year. This is always a case of “crystal ball gazing” and our experts may or may not be proven right. But there are definitely market headwinds (tightening credit, interest deduction removal, et al) that will dampen enthusiasm for property and almost certainly help flatten the growth curve. Tightening credit is also the subject of our second lead, written by Luke Jackson of Resimac. He explains how some investors are moving to commercial loans in the wake of extremely stringent credit criteria, and how this can work well…

The rise in construction costs could hit double digits this year after increasing at the fastest rate in almost four years. Last year alone, construction costs rose 6.1%.  The high costs come from a rise in timber prices and record building consents, according to new data from the Cordell Construction Cost Index.  With an already overheated housing market, expensive construction costs are expected to add further affordability challenges.  A tightening up of the supply chain and capacity restraints have also caused costs to increase, as well as strong demand for new housing encouraged by government rules allowing investors to still claim interest as a deductible expense and keeping the bright-line test at five years. It’s a perfect storm of demand and supply. Industry pundits say they wouldn’t be surprised if…

PROPERTY INVESTMENT AND EDUCATION ZOOM WEBINAR . Learn what active investors are doing to make money out of property in the current market – and how you can, too. Learn more about Property School here: www.gra.co.nz/events/gra-property-school, www.gra.co.nz/events/property-investment-free-seminar PROPERTY WORKSHOP: HOW TO BUY OR INVEST IN AUCKLAND. March 12. Register at www.finax.co.nz, www.luciaxiao.co.nz, @LuciaXiaoFINAX HOW TO CCCFA-PROOF YOUR FUNDING STRATEGY . March 1, 6.30-7.30pm. Presented by Kris Pedersen of Kris Pedersen Mortgages, see https://www.propertybrokers.co.nz/propertymanagement To list your event please contact stephanie@propertyinvestor.co.nz. Deadline for April 2022 issue is March 3.…

‘The tenants claimed the premises were unsafe and had no smoke alarms for the first few months of the tenancy’ A Gisborne landlord who thought she was being kind to her tenants, who in turn left her a card and chocolates when they quit the premises, still ended up before the Tenancy Tribunal with claims for rent arrears and breaches of quiet enjoyment. Tenants Joanne and Adam Manger had nowhere to live and landlord Helen Macdonald offered them the use of a bus and caravan on her property. Then, when Macdonald’s circumstances changed, she offered them her house and she and her son moved into the caravan and bus. She described the arrangement as “a shared helping out, a lovely shared whanau arrangement”. Macdonald says she “was no landlord” by…

CoreLogic’s Buyer Classification data for January shows the Credit Contracts and Consumer Finance changes from the end of last year are having little impact on investors. Mortgaged investors’ share of buying is steady at about 24%, which CoreLogic chief property economist Kelvin Davidson says is where it’s been since the middle of last year, down from close to 30% in early 2021. “Tight LVR rules and the phased removal of interest deductibility, as well as the delicate mix of low gross yields versus rising running costs such as mortgage rates, are seemingly subduing investor demand,” says Davidson. Cash investors are also relatively quiet at 12% share, but Davidson says they could play a more prominent role this year as reduced competition for a larger selection of listings plays into their…

Q I’ve got a new build under construction, where the timeline has blown out and we are getting close to the sunset clause date. I’m worried that the developer will cancel and put up the price. Is there anything I can do? Can I claim a breach of the Fair Trading Act if they’re intentionally slowing down construction? A Questions about sunset clauses are difficult to answer in the abstract. Ultimately the outcome will be dependent on what the actual clause says. For example, a sunset clause can be inserted for the benefit of the purchaser, vendor or both. There can be conditions or limitations on the right to cancel. There can be requirements that a vendor/developer take all reasonable steps to obtain consent (building or resource consent), to undertake…