Innholdsfortegnelse for September 2023 i NZ Property Investor

Property investing can provide people with a way to escape financial hardship. Many of the investors we have profiled in our pages have experienced this – from tough starts, they have managed to tap into the power of property and make a better life. This month's profile, Jeremy Field, is a case in point. Raised by an unwell, single mother in Christchurch, his early life was beset with troubles. He was injured in a truck accident and lost a much-loved family member as a teenager but managed to rise above these woes and carve out a brighter future. Jeremy used the BRRRR method to amass an impressive property portfolio; he's now also a freshly minted real estate agent. We loved hearing his story and we're sure you'll love reading it.…

The RBNZ's monetary policy committee says house prices appear to have stabilised and its projection for house prices to lift by about 3 per cent next year is reasonably balanced, remaining around estimates of sustainable levels. Westpac is predicting house prices will rise by 8 per cent over the next year. While the RBNZ had previously expected house prices to continue falling through the back part of this year, prices have instead flattened off in recent months. It says the predicted rise in prices will help support household spending. The committee says higher interest rates have contributed to lower demand for housing, with house prices falling 15 per cent from their peak in November 2021 to March 2023. “Stronger net immigration, alongside a peak in interest rate expectations, has occurred…

DIY PROJECT CALEB AND ALICE PEARSON Spring has arrived and, while it may not feel like it yet, the warmer weather will soon be upon us. With the days lengthening and the weather beginning to improve, it's a great time of year to be thinking about landscaping, giving you time to take action before the summer and allowing plants to take root before giving you the benefits over the longer days. I love being outdoors and appreciate good landscaping, but I don't want to be pulling weeds or pruning plants every other weekend, so my personal approach to landscaping is what I would also apply to an investment property. A low maintenance strategy with clean lines and defined spaces results in a smart looking exterior with practical elements that require…

YOUR SHORT-TERM RENTAL The first step to crafting a five-star guest experience is understanding the customer journey. First impressions are based on listings and booking processes. Providing the right information without overwhelming a prospective guest is key to driving conversions. Guests want to know a property's functional amenities and its proximity to area highlights, but they also want to be enticed by the potential experience. Creative copywriting and stunning imagery should capture the essence of their stay in an alluring manner. We recommend employing the services of a professional photographer and stylist to maximise visual appeal. This also has positive and demonstrable revenue impacts. STYLING One of the best ways to enhance your guest experience is through interior design. Artistically designed properties are so popular, Airbnb has released two categories…

YOUR LAWYER The New Zealand property market is in constant motion and a newer element of the market is build to rent (BTR) developments. There are a few key players currently operating in this space, including Simplicity, Kiwi Property and Arc Residential. If suggested changes to the OIO framework are passed, this list is likely to grow. BTR developments are larger scale multi-unit communities, purpose built for long-term rentals. They are usually characterised by higher quality, durable materials, extra amenities for tenants, proximity to other services (often accessed without a car), long-term tenancies, and more options for tenants to personalise their exclusive areas. An attractive proposition for all parties involved, recent legislative changes to the Residential Tenancies Act (RTA) and interest limitation rules (ILR) in New Zealand directly relate to…

NZPIF FROM THE PRESIDENT'S DESK SUE HARRISON The first consideration is to acknowledge that private investors play the highest and most valuable role in the New Zealand housing system. They provide over 85 per cent of rental housing compared with less than 15 per cent provided by state-owned housing. The government sector has shown it is not capable of supplying the housing needs of the nation; any discussions around government or local bodies providing more housing are unrealistic, so the system remains a public/private partnership. The New Zealand Property Investors’ Federation (NZPIF) plays a valuable role in providing its 17 property investor association “member groups” with impartial information which is shared. It also carries out valuable advocacy work on behalf of all property investors. An education certificate course, RentSkills, has…

Steve Harries'Property investment journey began in 2005. Since then he has built up a portfolio of property and business assets which give him the flexibility to do what he loves every day. He shared the story of his family's recent world trip with members of Rotorua PIA. In 2019 – with little sailing experience – Harries and his family bought a yacht in Greece and embarked on a 20,000-nautical-mile sailing adventure. They sailed home to New Zealand –over two-and-a-half years – taking in as many surf and kite-surfing locations as possible along the way. Harries explained that the expenses for his world trip, including the boat and necessary upgrades were all covered when he sold the craft at the end of the family's trip. The trip was essentially achieved with…

UP FRONT NEWS CoreLogic's latest Pain and Gain Report shows gains have dropped, down to a median profit of $290,000 – well down on a peak profit of $440,000 in the last quarter of 2021 – the height of the housing market boom. The number of properties sold for a gross profit dipped to 93.1 per cent in the second quarter of this year. While that remains a high figure – reflecting that long hold periods means most sellers still make gains – it's lower than 94.1 per cent in the first quarter of this year, and well down on the 99.3 per cent peak in the fourth quarter of 2021. Properties that were sold for a gross profit in the second quarter of this year had been owned for…

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…

HOUSE PRICES: DOWN Nationwide, July's median house price dropped 4.9 per cent year-on-year to $770,000 across the country. In Auckland it dropped below $1 million to $990,000. The median sale price also took a tumble in the regions year-on-year, with Waikato down 8.9 per cent, Bay of Plenty, down 7 per cent; and Wellington, down 8.9 per cent. Sales lifted 1.6 per cent, to 4,903 last month, compared to last year and were up 10.8 per cent in Auckland, but on a month-on-month basis sales were 15.6 per cent. New listings dropped 17.6 per cent year-on-year, from 7,470 listings in July last year to 6,156 last month, and a 1 per cent decline compared to June from 6,218. OCR: UP The Reserve Bank's official cash rate stays at 5.5 per…

In part one this renovation focused on a 98m2, 1980's two-bedroom apartment. The laundry was being removed from the kitchen and placed into the bathroom; the key focus being saving space. In part two the renovation continues with a kitchen remodel, and a transformation with a new open living space and a clean fresh neutral palette. It's time to say goodbye to 80's wallpaper and carpet. MOVE THAT WALL With older homes a formal dining area and kitchen separated with a wall are very traditional. Often a client will want to introduce open living when undertaking a kitchen renovation and have the wall removed. For this kitchen remodel we had already removed the existing laundry (previously in the kitchen – now relocated to the bathroom). It was now time to…

YOUR DEVELOPER Property development is a sizable commitment of money, time and patience. A venture that results in considerable returns when each phase of the project is completed properly. A developer's fundamental objective is to seek out and secure favourable land opportunities, develop the land and maximise its potential and, lastly, complete the project and turn a profit, either by selling the units or becoming the landlord and renting them. In order to be successful in this field an entrepreneurial mindset, plus knowledge of the following aspects of property development, are key. LEARN THE RULES An imperative requirement to start a property development journey is to have sufficient knowledge of land rules and usage to keep your expectations realistic for what can be achieved onsite. Knowing what to look for…

PROPERTY INSIGHTS Most are familiar with the saying “the straw that broke the camel's back”. For landlords today, this idiom has taken on a weightier significance. It feels like they're not merely dealing with one or two straws, but an overwhelming haystack that threatens to bury their financial stability and investment aspirations. Media and political narratives have a tendency for painting landlords in stark, contrasting colours. The dominant image is often that of a heartless, profit-driven individual, amassing multiple subpar properties and evicting tenants at the faintest whiff of complaint. In these tales, the tenant is almost invariably the downtrodden victim, battling deteriorating living conditions, the perpetual fear of eviction, and arbitrary rent increases. This portrayal, while cinematic, belongs more in a Dickensian novel than in the nuanced realities of…

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. WAIKATO NEXT MEETING: Wednesday September 13, 7.30pm Workingmen's Club, 45 Commerce St, Hamilton. TOPIC: The great debate – residential versus commercial investment. TARANAKI NEXT MEETING: Tuesday September 19, 7 for 7.30pm start, Plymouth International Hotel, 220 Courtenay Street, New Plymouth. TOPIC: Speaker is Matthew Horncastle, managing director of the Williams Corporation. MANAWATU NEXT MEETING: Wednesday September 6, 7 for 7.30pm at the Palmerston North Bridge Club, corner Cook and Cuba streets, Palmerston North. TOPIC: Chris Bishop will talk about National's plans for infrastructure and housing. NELSON NEXT MEETING: Tuesday September 19, 7.30pm at the Honest Lawyer, Monaco, Nelson. TOPIC: 6pm investor dinner, followed by Peter Lewis, NZPIF Vice…

Significant changes to the Credit Contracts and Consumer Finance Act (CCCFA) will be made under a Nationalled government. National's Commerce and Consumer Affairs spokesman Andrew Bayly says it will stop banks asking intrusive questions of borrowers’ spending habits when they apply for a housing loan. Under the law, banks go further than ever before in checking they are lending responsibly and can't just rely on information given. Changes to the CCCFA in 2021 required banks to break down applicants’ spending habits before approving loans, going as far as requesting explanations for deviations as little as $5. At the time the changes were made the Financial Services Federation, Financial Advice NZ, banks, the NZ Banking Association and others told the government the rules were going to be too restrictive. Most consumers…

Q Are the changes to the tax deductibility rules having a real effect on investors yet and how can investors prepare for the next round of tax bills? A The short answer is “yes” – the interest non-deduction rules are affecting investors. At present only 50 per cent of residential rental property interest can be deducted as an expense, and this is hurting investors who are already paying higher interest costs and suffering negative cash flow from the increase in finance cost. When you add inflation on food and living costs to this equation, it's a terrible burden and completely unfair. It will be even worse as the non-deduction rules are fully phased in over the next 18 months or so (no interest will be deductible from April 1, 2025…

YOUR RATES krispedersen MORTGAGES The Reserve Bank has indicated it still believes the job has been done and a cash rate of 5.50 per cent is enough, which they retained at the most recent review on August 16. They did, however, acknowledge that there is a chance of one further increase being required. At present the market is pricing in about a 40 per cent increase of this happening in the first half of 2024 if inflation does prove more stubborn to contain than expected. And expectations are starting to differ among banks. Westpac and ANZ economists are leaning towards thinking an increase may be required, although Kiwibank chief economist Jarrod Kerr is adamant that enough has been done. Recent analysis from the Reserve Bank showed that the average New Zealand…

YOUR ACCOUNTANT Many parents will relate to navigating the minefield around helping children into a home. Firstly, there is the pressure to do so given that it has become increasingly difficult for young people to qualify for lending without assistance. While a dip in house prices has helped some, the increase in interest rates and the stress testing applied by banks under the responsible lending code has meant it is as difficult as ever for the kids to actually get a loan to buy their first home. Couple that with the pressure to do for every child what you have done for one, and you can be up against hurdles that make planning for your own retirement difficult to achieve. One dilemma with helping the kids is the question of…

YOUR REVIEW Mortgage-free parents dreamed of a retirement spent driving their caravan around New Zealand. And maybe Australia. Here's how the pair used their hard-worked-for assets, to fuel their vagabond dream. THE INVESTORS Married couple Bobby and Lee, 53 and 52, had a blended family of four children. They still paid child support for the youngest, but that was due to finish in six months. As the baby of the family became an adult. Retirement was looming. The couple thought they were doing pretty well, for their early 50s. Sure, she was a bit more conservative than he was, but they'd managed to work around it. They'd diligently paid their mortgage and were finally mortgage free. They were earning $90,000 and $56,000 a year, and had reasonable savings. There was…

Each year, from February to December, members of Marlborough Property Investors’ Association meet at the premises of Ray White. Each month there is a different speaker, and many topics are covered which are of interest to investors. A passionate designer of selfsufficient gardens, Christo Saggers, was the speaker at a recent monthly meeting. On his website (http://christosaggers.co.nz), he says he has been designing gardens and landscapes since 2007. During this time he has created natural native gardens, edible gardens, Mediterranean gardens, self-sufficient gardens, farmhouse gardens and modern urban minimalist gardens. As he says - you name it he's designed it. However, he states his real interest is in modern self-sufficiency. In today's world with the cost of living continually increasing, it was interesting for members to learn that Sagger's passion…