Innholdsfortegnelse for October 2023 i NZ Property Investor

Spring is here and alongside the lambs and daffodils, we have the joy of an election. The government has had years of external crises to deal with – from Covid to the horrors of the Christchurch massacre – and here’s hoping whoever takes the reins is in for a less tumultuous time. Political parties are all about promises and in this issue we investigate what each of them are offering when it comes to housing. National and ACT have set themselves up as champions of landlords; both are offering either a softening or the complete removal of contentious policies around the likes of interest deductibility and the bright-line test. If the polls are right, these promises may become realities post-election. There is a widespread consensus that people are holding off…

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 propertyrelated 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 If we look just at New Zealand, it appears we could be in for further interest rate increases. Immigration is continuing to be stronger than expected, although a lot of Kiwis are also leaving these shores. Most economists are now picking house prices to rise gently over the remainder of this year and then have a larger increase over the 2024 calendar year. A change in government, which looks very likely at the time of writing, is set to bring some confidence back into the market, especially for property investors. First home buyers are already showing this confidence as revealed in a recent survey by Tony Alexander, which reported that after being locked out by the Reserve Bank for a while they are now back in force. While…

YOUR SHORT-TERM RENTAL SEASONALITY IS KEY Optimising your average daily rates (ADRs) throughout the year is central to maximising short-term rental profits and one of the differentiating factors between short and long-term renting. Seasonality plays one of the biggest roles in booking demand and increasing returns. Like the travel industry as a whole, short-stays experience peak revenue months based on seasonal demand. Alongside big name sporting matches, concerts, and various other events that go hand-in-hand with warmer weather, November through to Easter is particularly lucrative. The upcoming school and university holidays paired with the many public holidays in between will be key drivers. AirDNA, a leading data source for Airbnb and Vrbo, ranks the previous December, January and February as the top three months in the wider Auckland market from…

SPONSORED THE PROPERTY LIFESTYLE Hey there, fellow investors, let’s talk about a sneaky little monster that likes to wreak havoc on our confidence: Imposter Syndrome. It’s that nagging feeling of self-doubt that can make us question our abilities and achievements, holding us back from reaching our full potential in the world of property investing. But fear not, let’s dive deep into the murky waters of Imposter Syndrome, uncovering its tricks in the realm of property. Plus, I will share three powerful tips to kick Imposter Syndrome to the curb and unleash your true investor potential. IMPOSTER SYNDROME: TAMING THE INNER DOUBTS Imposter Syndrome loves to play mind games, but once we recognise its tactics, we can confront it head-on. Here are a few ways it tends to show up: 1.…

NZPIF FROM THE PRESIDENT’S DESK SUE HARRISON The power of our members brings us many benefits beyond the networking and educational aspects of connecting with like-minded people. The New Zealand Property Investors’ Federation (NZPIF) plays a valuable role in providing its nationwide property investor association “member groups” with impartial information that is shared and carries out valuable advocacy work on behalf of all investors. NZPIF has been meeting politicians from all major parties who recognise the importance of the housing crisis as an election issue. When policies are announced national media are quick to ask our members for a response as the only national not-for-profit network of property investors. Our influence is also extended through our family of sponsors to complement our everyday work, and locally many of the associations…

NZPIF SPOTLIGHT – OTAGO NEW ZEALAND PROPERTY INVESTORS FEDERATION Andy Hamilton, of Titan Homes, presented at our August event. Andy showed how it was possible to increase the number of bedrooms in a property efficiently in terms of cost and time. He cited two case studies, one in Dunedin which saw a six-bedroom property increase to 10, and a five-unit development. With central government amending laws around housing density, smaller homes and/or the addition of a sleepout could add value and rental income to many properties around the country. Titan Homes is a specialist in small homes built in their factories in either Auckland or Dunedin, and then transported to a final destination. Andy says some of the benefits of building off-site and under cover include: • faster construction time…

There are a few classic strategies that investors have been using for decades to maximise their gains in the property game – and one of those is BRRRR. It stands for buy, renovate, rent, refinance and repeat. You buy a run-down house, do a costeffective makeover, then find tenants. If you’ve got the numbers right and with a bit of good luck, the new higher value of the house should allow you to refinance it, so you pull out a chunk of cash to use as a deposit on the next do-up. Rinse, repeat, and watch your portfolio grow. But the current market is heavy going, with renovation costs high and refinancing often a challenge. Is this classic strategy still a good idea, or even feasible, as we head towards…

YOUR DEVELOPER The property development industry in New Zealand is continually changing and has been steering towards creating high quality residential homes that are driven by principles of inclusivity. The goal of inclusive design, interchangeably known as universal design, is to create spaces that accommodate a diverse range of needs across all people. NZ has a very diverse population whose needs are not entirely met by typical housing development standards. Developers would be contributing a great deal to the quality of NZ housing and growth of communities by embarking on innovative projects that address these specific needs around inclusivity. AGEING POPULATION Universal design prioritises accessibility and usability for everyone across a large scope of needs including disabilities, age and background. The country is quickly facing the reality of an increasingly…

PROPERTY INSIGHTS When it comes to enhancing rental properties, many owners contemplate whether to take the DIY route or hire professionals. The decision may seem straightforward, but several factors come into play, including costs, skill level, and time commitment. Revamping a rental offers multiple advantages such as higher rent, attracting better tenants, and safeguarding the property’s capital value. Frequently, landlords seek advice on prioritising renovations based on their budget, especially during tenant turnover. Choosing to renovate yourself, like repainting the home, involves considering variables. Not only do you need to account for the material costs, but also the rental income loss during the vacancy and the value of your time. The quality of work is another concern; you must weigh up whether you can match a professional’s expertise. COSTS AND…

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, October 11, 7.30pm Workingmen’s Club, 45 Commerce St, Hamilton. TOPIC: Matt Stark, of Stark Property, will be talking about what is happening in the Hamilton CBD now and in the future. TARANAKI NEXT MEETING: Tuesday, October 17, 7 for 7.30pm. Plymouth International Hotel, 220 Courtenay Street. TOPIC: New rules of property investment. Opes Partners election special. MANAWATU NEXT MEETING: Wednesday October 4, 7 for 7.30pm at the Palmerston North Bridge Club, corner Cook and Cuba streets, Palmerston North. TOPIC: Rachel Summer, University lecturer, will talk about maps and what spatial data will do for you. NELSON NEXT MEETING: Tuesday, October 3, 7pm at Bunnings…

ANZ continues to argue house prices will lift 3 per cent over the rest of this year before growth moderates in 2024 as lingering unaffordability, deteriorating job security, and the prospect of highfor-longer mortgage rates sets in. While there are risks on both sides of our house price forecast, ANZ economists think the near-term skew is to the upside. “That said, it is possible election-related inertia in the market makes diagnosing how the risk profile is evolving more difficult than otherwise,” says Sharon Zollner, ANZ’s chief economist. On balance, indicators suggest the housing market remains on a tightening trajectory. “Auction clearance rates in Auckland continue to go higher and inventories are going down despite relatively weak sales. Sales tend to lead prices by three months or so, suggesting our expectation…

HOUSE PRICES: MIXED While house prices are still down across the country, the market is turning. In Auckland, the country’s largest property market, the median sale price moved back up over the $1 million mark to $1,010,000, increasing 2 per cent month-on-month in August, but declining 8.2 per cent year-on-year. Wellington had month-onmonth increases with the median sale price up 2.3 per cent from $733,000 to $750,000. Regionally, median sale prices remained down year-on-year except for five regions: Nelson, Canterbury, Southland, Northland and Gisborne. OCR: STEADY The Reserve Bank’s official cash rate has been at 5.5 per cent since July after the RBNZ indicated it was at the end of its tightening cycle, although some economists believe it will need to rise further to stem inflation. INTEREST RATES: UP ASB…

FEATURE ELECTION SPECIAL It’s election month and time to consider who we want in charge of the country … and the housing market. There’s a lot of talk about buyers and sellers holding off from acting until after election night, and the implications of the policies of whoever holds the reins of power. Property investors will be particularly interested to see if anything changes around regulations: especially those thorny ones that have made life difficult for those in the sector. We take a deep dive into the policies of the four main parties to see what they have to say about housing, and property investing in particular. LABOUR THE CURRENT GOVERNMENT HAS BEEN CRITICISED BY PROPERTY INVESTORS AROUND THEIR POLICIES, INCLUDING THE REMOVAL OF INTEREST DEDUCTABILITY AND THE EXTENSION OF…

YOUR ACCOUNTANT Well, finally we are here. The election is upon us, and never before has there been a political choice that will have such a profound impact on residential property investors’ fortunes as this one. By increasing the bright-line to 10 years and removing interest deductibility from residential housing, Labour achieved their objective of making housing more affordable for first home buyers, at least as far as price was concerned. But on the interest rate front, not so much. These twin policies, that amounted to a targeted capital gains tax on residential investors and a denial of legitimate expense deductibility, have had a profound impact on the residential property market. Property investors have been targeted mercilessly as house price inflation, fuelled by the cheap Covid money, was wrestled back…

YOUR REVIEW Grandparents Arron and Karen waited until their 50s to become property investors. Up till then, Arron figured investing was something only rich people do. Here’s how the pair worked together to achieve their retirement goals. What got them into investment? It wasn’t only the wealth aspect that attracted Arron to property investment … there was a social value too, and that can get lost on some people. “There’s a dual benefit there. Not just for us, but for the community too,” he says. The property investor gets the benefit at the end of the journey when the house is eventually sold after 15 to 20 years, and the person in that house gets the benefit of somewhere to live during that time. That said, the pair were in…

THE DATA Rental data is sourced from the Ministry of Business, Innovation and Employment based on rental bonds lodged. This data is supplied 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. The rental market across Dunedin is dominated by houses. Of the 492 properties recently available on the market for rent, 411 have been houses (84 per cent), 27 flats (5 per cent), with 54 apartments (11…

NZPIF SPOTLIGHT – AUCKLAND NEW ZEALAND PROPERTY INVESTORS FEDERATION I don’t want to jinx things, but if the polls are anything to go by we are inching ever so close to interest deductibility and bright-line scale-back. You can practically feel the buzz in the air, and about time. After the six years we’ve had, our raw nerve endings could do with soothing. A return to common sense taxation should do the trick, but don’t expect rental property ownership to suddenly be a day at the beach. Things on the tenancy side are far less dynamic in this election cycle. Sure, the Nats promise to reinstate 90-day no-fault termination, and the Greens have a litany of demands, including a rental WOF and a 3 per cent rent cap. Exciting, but not…