Innholdsfortegnelse for No 146 Jan 2016 i NZ Property Investor

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…

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…

MARK AND NICOLE FISHER made a New Year resolution in January 2015 to get into property investing. The Napier couple, in their mid-30s, saw an advert in the NZ Property Investor magazine for an e-Coaching Mentoring programme run by The Property Investor Centre and decided to sign up. The course is designed to be covered over several months but Mark and Nicole were so motivated, they completed all 12 modules in two weeks. As Mark explains, they were pumped up with their new knowledge but still nervous about making a mistake with their first property purchase. And that’s where the e-coaching programme really proved its worth. “The guys at the Property Investor Centre offered us a deal on a block of five two-bedroom units in Fielding,” he says. “We bought…

IT SEEMS THE AUCKLAND MARKET’S wild ride upward has finally come to an end. Months of eye-popping price rises created an expectation the ride would never end. But a market will always reach its peak and a growing body of evidence suggests those heady days are over. The last two months’ worth of data leaves little doubt SuperCity price growth is slowing down. While Auckland’s market might be settling, the news is more positive for markets around the rest of New Zealand. The release of November’s Quotable Value (QV) data is confirmation the tide has turned. Before November, QV’s data told a different story to that of other data. It consistently showed strongly increasing values, while other data indicated slowing price growth. This has changed. Slower rate QV national spokeswoman…

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 & Co Phone 09 376 8860, www.wt.co.nz RON HOY FONG As a successful property investor and mentor, Ron has built an impressive portfolio and a wealth of investment strategies and experience. Contact Ron today on 021 888 298 or ronhoyfong@gmail.com BERNARD PARKER Bernard is principal of Quinovic – Kapiti-Mana. Quinovic’s outstanding people and systems provide the most professional, effective and reliable residential property management service in the NZ market for over 26 years.www.quinovic.co.nz KRISTER SAMUEL Krister specialises in selling high yielding apartments for…

IT’S WORTH STEPPING AWAY FROM THE DAY-TODAY PROPERTY MANAGEMENT ISSUES AND SETTING ASIDE SOME QUALITY TIME TO EVALUATE – SANDY RICHARDSON THE HOLIDAY SEASON IS traditionally a time when New Zealanders head off outdoors to relax, unwind, soak up the summer sun, and make plans for the year ahead. If you’re a property investor, it’s also a great time to conduct a regular annual review of your portfolio and investment strategy. Considering that today’s property portfolio can easily be worth hundreds of thousands if not millions of dollars, and carry a large debt load, it’s worth stepping away from the day-to-day property management issues to set aside some quality time to evaluate, during the holiday break. SELF-REVIEW There are several levels of review to conduct, so we offer a basic…

WHEN YOU HAVE A PLAN IN PLACE, IT’S MUCH EASIER TO MAKE DECISIONS – AARON TUNSTALL WHAT DO YOU WANT to achieve from your life in 2016? January is the ideal time to think about your plans, not only for the year but also into the future. I’m not a huge fan of New Year’s resolutions about losing weight, quitting smoking or drinking less. According to one study*, only 8% succeed. (If you’re serious about changing your personal habits, you’ve probably already begun to make changes rather than waiting for an arbitrary date on the calendar.) But evaluating and reviewing your financial planning is an investment of time that can really pay off. You can use the New Year to look back at what you’ve achieved, hopefully pat yourself on…

Tauranga city is in the Bay of Plenty region on the eastern coast of the North Island of New Zealand. The city is well served by a variety of transport links, including sea, rail, air and road. By road Tauranga is 206 km from Auckland, 86 km from Rotorua, 107 km from Hamilton and 548 km from Wellington. The boundaries of the city extend from the Wairoa River in the west to the Pacific coast in the east, and from the harbour inlet at Mount Maunganui in the north to the foothills of the Kaimai/Mamaku ranges in the south. The last Census shows the region has a population of 114,789 people. It has an above average proportion of European and Maori ethnic groups (83.5%/ 17.1% compared with 74.0%/ 14.9% nationally…

THE ACCOMMODATION SUPPLEMENT HAS SUFFERED FROM QUIET NEGLECT AT THE HANDS OF SUCCESSIVE GOVERNMENTS ANDREW KING LATE LAST YEAR THE SALVATION ARMY published an interesting report into housing the Baby Boomer generation. The report claims around 200,000 people aged over 65 in 2030 won’t own their home. This should interest all forward thinking rental property owners. Because of Government incentives, the home ownership rate increased from 61% in 1951 to 74% in 1991. Home ownership programmes were scrapped in 1991 and ownership levels fell to around 64% as they are today. According to the Salvation Army, nearly two thirds of the almost 430,000 new households formed between 1991 and 2015 are tenant households. While baby boomers have generally benefited from the pre 1991 incentives, many didn't. The report suggests only…

NATIONAL RENTAL PRICE MOVEMENT This map represents change in the average rental price between the months of November 2014 and November 2015, based on figures from the Ministry of Business, Innovation & Employment. RENTAL SNAPSHOT Median house rents of the dominant dwelling type for the area AUCKLAND - CITY WELLINGTON - CITY CANTERBURY - CHRISTCHURCH NEW ZEALAND EXPLANATION OF STATISTICAL TERMS No. of Properties: Total number of residential properties No of Bonds: Total number of bonds lodged in last three months Median Rent: Weekly rent based on the bonds lodged in the latest three months Rent Quartile Range: Inter-quartile range of weekly rent based on the bonds lodged in the latest three months Median value: The median value of properties in the group based on estimating the current market value…

Kill our ortgage and Sort our Retirement (the go-to guide for getting ahead), by annah cQueen. 344 pages. Published by llen& nwin. Sit down a while and digest some 344 pages of common sense rules in Hannah McQueen’s Kill Your Mortgage and Sort Your Retirement (Allen & Unwin). Written to help you achieve the stress-free dream retirement through property investment, chartered accountant and founder and director of enableMe writes with a deft hand and worldliness not always evident in publications of financial literacy. This well considered read is for you and me, the average punter, and sweeps a broad brush over pitfalls on the way to a more blissful retirement. The first 40-odd pages comprise domestic budgeting and the final 300 of this meaty red-blooded soft cover extends to five…

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…

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]…

The Reserve Bank cut the Official Cash Rate last month, we asked our readers what it would mean for them. YOUR COMMENTS Ernest Wong: ROE, ROI ROA depend largely on the cost when u bought, the marginal movement of interest rate means very little... David Sapwell: While the world keeps printing money rates are likely to keep falling as they need to get that fresh money into the public system. Vivian XU: Debtor beat saver! We shared a note left by a landlord to a tenant waiving a month's rent to allow them to have "a good and decent Christmas". YOUR COMMENTS Andrew Kay: Plot twist.. It was his neighbour who wrote this note, in hope they get kicked out for not paying rent Lynda Utting: Many years ago, we…

REINZ HOUSE SALES: DOWN Sales volumes were down nationwide in November. INTEREST RATES: DOWN Interest rates are still at record lows. OCR: DOWN The Reserve Bank cut the OCR to 2.50% in December. IMMIGRATION: UP Migration continues to hit record highs, according to Statistics NZ’s latest data. BUILDING CONSENTS: NEUTRAL The number of building consents issued in November rose and Statistics NZ says the nationwide trend is rising. MORTGAGE APPROVALS: UP Reserve Bank data shows lending remains strong, although it is down on a few months ago. RENTS: RENTS UP Rents rose slightly in markets around the country in November. This included Auckland - but SuperCity rents are still not keeping pace with prices.…

MARKET COMPOSITION The rental market in Tauranga, like most cities in New Zealand, comprises mostly houses, with a fair representation of flats in the region, but fewer apartments. Only Mt Maunganui (20%) and Tauranga Central/Greerton (3%) have any recent bonds lodged for apartments. Pyes Pa/Hairini/Welcome Bay is made up of exclusively houses while Papamoa Beach has over 95% houses. Tauranga Central/ Greerton has the largest percentage of flats at 23%, while Bethlehem/Otumoetai has the second most at 17%. HOUSE SIZE, BY BEDROOM COUNT Three-bedroom houses are the most popular across the region, accounting for between 56% in Pyes Pa/Hairini/Welcome Bay, and 68% in Tauranga Central/Greerton, of the rental market. Two-bedroom houses are the next most common size of property in Mt Maunganui, Bethlehem/Otumoetai and Tauranga Central/ Greerton, while four-bedroom houses…

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…

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…

RECENTLY, I HAVE BEEN APPROACHED by a number of existing ‘buy and hold’ investors wanting to change their strategy. They want to start trading and developing property. But despite their earlier success holding property, they have no idea where to begin with trading. More specifically, they have no idea how banks view traders and developers. When starting out as a developer what do you need to be aware of when applying for funding? What are the key things banks or non-bank lenders are looking for? How do banks view developers? And, importantly, what are the risks when things don’t work out? END GAME You must make sure your strategy still works if things go wrong – and things do go wrong. We’re already seeing developers stuck in over-leveraged positions in…

IN THE ‘OLD’ DAYS IT ALL SEEMED LIKE A WONDERFULLY ROMANTIC IDEA, MOVING TO LIFESTYLE DESTINATIONS – BUT THE REALITY WAS IT JUST DIDN’T WORK.– CAMPBELL VENNING QUEENSTOWN. WE ALL love it, tourists love it and it’s an addictive place. Sure, some people like Wanaka and other smaller South Island locations more but the numbers have continually shown that Queenstown is New Zealand’s tourist mecca. We teach long term, low risk investing so a tourist town isn’t typically in our curriculum. New Zealand is changing, however, and, alongside Rolleston in Canterbury, Queenstown Lakes district is one of New Zealand’s fastest growing regional authorities and an investing location you should consider as part of a diversified portfolio. Why? I wrote last month about affordability, technology and the fact immigrants predictably flow…

IF YOUR PROPERTY IS NOT MAINTAINED TO A HIGH STANDARD, IT CAN RESULT IN PROPERTY DEPRECIATION – SARAH DAWSON OWNING AN INVESTMENT property is an exciting opportunity and if managed correctly, can provide you with a high-value asset. I have compiled some insights and strategies which can help ensure your investment maximises its potential. As with any long-term goal, having a strategic approach to investing and managing the investment will put you in good stead for property success. But how can you manage a property to maximise capital growth and rental return on your investment? GOOD TENANTS This may sound like common sense, but having respectful tenants will make your life a lot easier, not to mention it will decrease the risk of damage to your property. Having good tenants…

BROOKFIELD Established solid rental area for families with school-age children; falls into the Otumoetai school zones. Rents quickly and fetches median rents. OTUMOETAI/MATUA Established area and has good schools for all age ranges. Mixed housing ranging from older rental blocks to executive homes on the waterfront. Consistently one of the most highly sought-after areas with Matua competing with the Mount. Rents quickly and fetches higher rents. GATE PA/GREERTON Location presents both industrial and residential sections leading to high variation in neighbourhoods. Lower income housing has higher yields, but be selective of street choices. Greerton has good primary schools in high demand and a charming shopping district with cafes. OHAUITI Larger modern homes, quiet established streets. Attracts families who are good long term tenants. Often properties have views in a semi-rural…

NORTHLAND NEXT MEETING: Next meeting: Wednesday February 24, 2016, 7pm at the Northland Cricket Pavilion, Okara Dr, Whangarei. MEMBERSHIP: $180 single or $210 couple; includes subscription to the NZ Property Investor and NZPIF discount card, plus local trade discounts. Email npiacontact@gmail.com for more information. PO Box 1640, Whangarei. AUCKLAND NEXT MEETING: February, 2016 MEMBERSHIP: Sign up for an APIA membership at www.apia.org.nz/register. APIA memberships include a free subscription to the NZ Property Investor, networking opportunities at over 100 events throughout the year, an excellent discount card, free subscription to APIA TV, and massive savings off mortgage interest rates with the ANZ bank. Visit www.apia.org.nz or email admin@apia.org.nz WAIKATO NEXT MEETING: Wednesday February 19, 2016. 7pm for 7.30pm start. The Pavilion of the Hamilton Workingmen’s Club, Commerce St, Frankton, Hamilton. TOPIC:…