Innholdsfortegnelse for November 2022 i NZ Property Investor

The intensification of our suburbs in our largest cities represents a major change to the way in which New Zealanders live. We've always counted on space, that wonderful quarter-acre dream. But as more of us flock to the bigger centres, that equation no longer works. We can't stretch out our city limits indefinitely, so sections are starting to feel the squeeze. The government and National Party's bipartisan agreement on medium density residential standards (MDRS) allows developers in Auckland, Hamilton, Tauranga, Wellington and Christchurch to build three townhouses, up to three-storeys each, on 50 per cent of land without consent. While this offers opportunities aplenty for developers and investors wanting to maximise potential of their property, it isn't without detractors. The Christchurch City Council has voted against the rules. We look…

krispedersen MORTGAGES HOUSE PRICES: DOWN The REINZ house price index (HPI) posted its 10th consecutive monthly fall in September and house prices are 8.1 per cent lower on a year ago, the biggest annual decline since the GFC in 2009. OCR: UP The Reserve Bank's official cash rate has risen 50bps and now sits at 3.5 per cent. INTEREST RATES: UP ANZ, Westpac, ASB and BNZ have passed on the full 50bps OCR rise to customers on floating rates. This takes floating rates to more than 7 per cent for the first time in eight years. BUILDING CONSENTS: DOWN Consents fell 1.6 per cent in August after rising 4.9 per cent in July. There were 4,547 new dwelling consents issued in August to bring the annual figure to 50,653, up…

YOUR PROPERTY MANAGER House prices have increased dramatically since the government and Reserve Bank intervened as we entered our first lockdown in March and April 2020. As house prices fall, one must ask what is happening with rents. Have rents ever fallen in New Zealand? We need to look at the data supplied by MBIE (Ministry of Business, Innovation and Employment) from the number of bonds lodged by landlords to get an answer. Since February 1993, records have been kept tracking the number of bonds lodged, held and closed each month, and which properties are rented and for how much. Rents are stabilising. From January through to July this year, the geometric mean rent for New Zealand dropped from $526 to $516 per week. That is a drop of just…

YOUR STRATEGY Working at Massey University, Melvin purchased his first owner-occupied home in 2020 in Pukekohe for $680,000. At the time he didn't think too much about property investment. The hour-long commute between his home and workplace proved to be an inconvenience, so he sought a new purchase on the North Shore. However, when he approached his bank and other mortgage brokers to secure funding, he was told he would not be able to buy a new home because he had no equity. Similarly, family told him he would need to sell his current house if he wanted to buy a new home. Melvin was sceptical when he first encountered Finax, even using a fake name when registering for a property workshop. But when he attended the workshop he found…

NZPIF AROUND THE REGIONS NORTHLAND NEXT MEETING: Wednesday, November 30, 7pm, Whangarei Club, 18 Rust Avenue. (Entrance directly off club car park). TOPIC: This is the last meeting of the year. Details to be advised. MEMBERSHIP: $180 single or $210 couple; includes many benefits. Please email npiacontact@gmail.com for more information. PO Box 1640, Whangarei. AUCKLAND NEXT MEETING: Go to www.apia.org.nz/events for details on upcoming meetings. APIA hosts 100 events and presentations for its members each year. MEMBERSHIP: From $75 and can be purchased on www.apia.org.nz/join. For more information about benefits visit www.apia.org.nz/membership. WAIKATO NEXT MEETING: Wednesday, November 9, 7.30pm Hamilton Workingmen's Club Pavilion, 45 Commerce St, Hamilton. TOPIC: Managing your nest egg – what are your options? Speakers Brendan Reidy and Henry Stokes of Perpetual Guardian. MEMBERSHIP: $260 single; $350…

UP FRONT NEWS Some empty home owners are not willing to become landlords. One in five participants pulled out of a $500,000 survey and investigation by Wise Group, and paid for by the government, when asked whether they would be willing to put their empty houses into the rental market. Wise Group says it was the biggest drop-off and 22.6 per cent of participants did not answer the question or any following that. Landlords who responded to the survey say they feel vilified and targeted by recent government regulatory and tax changes. They cited negative perceptions and attitudes towards landlords as a barrier to renting houses and say tenants and the general public are often unaware of the realities and, in recent times, the increasing costs of being a landlord.…

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 managing director and franchisor of Propertyscouts NZ. He's deputy chairman of the RPMA and is passionate about the property management industry, particularly, raising industry standards. SHANE CAMPBELL A Partner in Wynn Williams' Dispute Resolution Team, Shane specialises in complex commercial…

YOUR RATES With the official cash rate rising by another 0.50 per cent in early October, and more increases expected for November, February and April, it looks like we haven't yet hit the top of the interest rate cycle. About this time last year we were still surprised interest rates were increasing, yet only 12 months later we have seen the official cash rate increased eight times in a row since last October. The last five increases have been by 0.50 per cent each time, putting us at a current OCR of 3.5 per cent. This is likely to now go to 5.25 per cent or higher over the next six months. The reason is inflation (CPI) numbers are still far higher than they should be. Expectations for the September…

The advice to buy a house “with good bones” is absolutely critical with early 20th century villas, bungalows and Art Deco homes. While many of these homes renovate beautifully, for those that have been poorly maintained, and especially those that have suffered water ingress, renovating can end up costing close to that of a new build. Depending on upgrades and maintenance during the life of the home, a basic list of renovation priorities should include: Roofguttering, spouting, cladding and drainage inspection and upgrades Identificationofanyhigh-moisturezones, inspecting and repairing Eitherreplacingormaintainingproblematic windows and doors. Identifying and sealing other sources Underfloormembraneandceilinginsulation a minimum Installinginbathroomsandkitchen Inspectionandupgradestomeet modern safety standards Inspectionforleaksaminimum, upgrading to mains pressure ideal Installationofheatpumps Heat transfer systems also beneficial in older homes Other common challenges…

YOUR ACCOUNTANT The government's move to a 10-year bright-line and removal of interest deductibility on existing stock residential property has forced savvy investors to pivot and mine opportunities wherever they can find them. Here are 15 of the most valuable things to understand to tip the balance back into your favour. 1. When buying a “new build” property, interest is deductible for 20 years provided the CCC was issued after March 27, 2020, but to gain a five-year brightline rather than a 10-year bright-line the acquisition date must be within 12 months of the CCC being issued. If selling a property that has deductibility time remaining on its 20-year clock, promote this when marketing. 2. The term “new build” does not just mean brand new buildings erected on vacant sections.…

These looks at all transactions across the market and groups them based on who the buyer was. First home buyers have been holding onto a decent market share in the past few months, at around 24-25% of all property purchases - up steadily from the lows of 21% earlier in the year (albeit the caveat is that the number of deals is still low). Cash multiple property owners (MPOs) are also faring pretty well, with movers steady too. By contrast, the losses in terms of market share have come from mortgaged MPOs/investors, with their share of purchases now slipping to around 20%. Of course, that's hardly surprising, given the challenges such as low gross yields, slowing rental growth, higher mortgage rates, 40% deposits (unless new-build), fading of capital gains, and…

YOUR MORTGAGE It's not just the loss of tax deductibility hitting property investors in the pocket at the moment. The cost of everything is going up. Spiking interest rates have been a tough enough adjustment for owner-occupiers, but if you're on interest-only there's a solid chance your mortgage expenses have quite literally doubled in recent months (or they're about to). On top of that the cost of insurance, rates, and deferred maintenance have all soared. Not to mention the cost of things like keeping up with new Healthy Homes legislation. The resulting impact on cash flow can be dire. Cash flow is king and amid this crunch, with bank test rates currently up around 8 per cent, we're seeing more situations where investors just aren't passing servicing calculations. The situation…

YOUR SURVEYOR Christchurch City Council has been the first of the councils to reject the government's new medium density residential standards, raising eyebrows of those of us in the residential development industry around the country. This relatively strong move by the council just ahead of the election was surprising because central government has indicated the possibility these regulations could come into effect regardless, overriding any rejection by local councils to the new changes. The council has written to Wellington and is hoping the government agrees to allow for a bespoke set of rules for increased density developments that preserve the aesthetic of the city, arguing that the earthquake rebuild has already accelerated development within the city ahead of the rest of the country's time frames. WHAT IS MDRS? If you…

NZPIF FROM THE PRESIDENT'S DESK ANDREW KING By the time you read this my wife Sarah and I will be starting a seven-month motorbike journey from San Francisco to Santiago in Chile. This is part one of a plan to motorbike around the Americas. Naturally this means my 26-year involvement (nearly half my life) with the rental property industry is coming to an end. It has certainly been a journey and I'd like to thank Sarah and the kids for putting up with a lot. The journey began because I wanted better industry information so founded the Residential Property Investor magazine. The Auckland PIA took my magazine for their members, and this started a relationship with the industry that I never imagined would be so all-consuming. I really wanted to…