NZ Property Investor No 146 Jan 2016

HAPPY NEW YEAR to you all. I hope you have been enjoying the warmer weather and taking the chance to reflect on the year gone past and put some goals in place for 2016. It certainly looks like it’s going to be a cracker! Our industry experts have a lot to say on the forecast for the year. With a number of regulatory changes restricting investment in Auckland occurring in 2015 we are seeing growth in the regions. But there is far more to the equation than meets the eye. Our experts explain where you should be looking, what threats there are to the market, what is driving growth and the changes that are afoot in 2016. Our story on p24 is a must-read for all property investors looking to…

THE OFFICIAL CASH RATE (OCR) dropping to 2.5% is heralded as being great for homeowners and investors. Lower interest rates make it more affordable to finance purchasing a home or a property investment. On the flip side capital growth is likely to be slower as a low OCR is indicative of an economy that is sluggish, with little inflation. The Reserve Bank reviews the OCR every six weeks. Since being introduced in March 1999, there have been 88 reviews resulting in no change to the OCR, 20 reviews resulting in drops to the OCR and 28 resulting in increases. 75% of the reviews where there has been a change it has been 25 basis points or 0.25%, one way or the other. There have been three instances where the OCR…

INVESTORS OUTSIDE AUCKLAND are not safely out of the Reserve Bank's sights, warn economists. Since November, investors buying rental property in Auckland have had to have deposits of at least 30%. In other parts of the country, the loan-to-value restrictions limiting the amount of low-deposit loans banks lend have been eased slightly. Banks can now lend up to 15% of their new loans to borrowers with a deposit of less than 20%. But now economists warn it may soon get harder to secure loans to buy property in places such as Hamilton, too. They warn the Reserve Bank is likely to use its full arsenal of tools in other housing markets that are starting to look over-heated. Infometrics economist Mieke Welvaert says it is likely house price growth in the…

MANY PROPERTY INVESTORS think the rents their tenants pay are too cheap. Crockers’ latest research shows while 61% of investors feel prices are fair, nearly a third feel rents are below or well below a reasonable price. Nearly half plan to increase their rents in the next six months. 42% of investors plan an increase of 3% or more. Another 16% are considering an increase of more than 5%. An increase in local rates will be the biggest driver of increases, those polled say, followed by insurance increases and maintenance to the property. But compared to a similar survey last year, fewer respondents say an increase in interest rates will drive them to lift their rents. Just 33% say it would be a factor, compared to almost half in July…

EXPERIENCED PROPERTY INVESTORS are getting ready to score a deal in the Auckland market. The city’s house price growth has slowed, prompting speculation it is entering a period of downturn. Westpac chief economist Dominick Stephens says, "There can now be no doubting that the erstwhile star market has suffered a fall from grace." He says seasonally-adjusted Real Estate Institute data shows house sales fell 13% in Auckland in November, following a 17% drop in October. House prices fell 1.9%in November after a 4.4% fall in October, taking them below July levels. New Zealand Property Investors' Federation executive officer Andrew King says that could worry some new investors. “They might be thinking now they have to have a 30% deposit, the prices are tanking and you can’t get a decent [rental]…

1 LANDLORDS WARNED IRD IS WATCHING Investors were warned not to expect to be able to dodge capital gains tax just by holding on to their properties longer than two years after the "bright-line test" was passed into law.This test requires property investors to pay tax on gains made on properties they have bought and sold within two years. But Revenue Minister Todd McClay says it did not mean investors who held a property for longer than two years would automatically be in the clear for tax purposes. 2 TOP 5 SPOTS TO LOOK FOR YIELD IN AUCKLAND Investors looking for decent rental yields in the SuperCity still have some options, Miriam Bell writes. Apartments in central suburbs and houses in suburbs to the South make up a new list…