Question from reader: Is it ok for landlords to ask “How much are you willing to pay?”
A question was asked from a reader whether it is ok for landlords to ask “How much are you willing to pay?” Landlords cannot discriminate tenants but there is nothing wrong with renting to a person who is willing to pay more. An examination of the Residential Tenancies Act…
Are you renting for below or above the market rent?
Market rent is a useful guide for landlords when they’re deciding what the rent will be.
But remember no two properties are the same. Even if the house is built by the same builder, one house could have a better view or better frontage which means it can rent higher. It all depends on the individual renter and landlord.
The information here comes from data provided by Tenancy Services. This means it only reflects properties where bonds are lodged.For more information, visit https://www.tenancy.govt.nz/
Can you guess which suburb these market rents are for?
When’s the best time to sell your house?
When’s the best time to sell your house? Ron Hoy Fong says ideally you won’t ever have to sell your house. If you need money, just refinance it. But assuming you have decided to sell your house due to personal circumstances (migrating, relocating to another area, downsizing), when is the best month to sell your house?
It’s difficult to time the market. market timing is best left for speculators. However, obviously it is important to know what is happening in the property market and the economy as a whole, before you sell your house.
2017 Year in Review
We are at that time of the year again. Today we look back at what has happened in 2017
This time last year we mentioned that Politics has been very rocky. 2017 was not much different….
Politics, Economic Events, and Property. Here’s what happened in 2017 …
Foreign buyer ban likely to come into effect 2018
The Labour led coalition is sticking to its election promise to ban foreign buyers.
The new law will allow Permanent residents and Australians to buy a property without screening as long as they have resided in New Zealand for at least 183 days of the past year. Here’s what you need to know.
RBNZ confirms Adrian Orr appointed as Governor
Former Reserve Bank Deputy Governor Adrian Orr has been appointed as the Reserve Bank Governor from March 2018. Finance Minister Grant Robertson said Orr was the unanimous choice of the Reserve Bank board. He was the former RBNZ deputy governor from 2003 -2007 and during this time …
But as far as interest rates are concerned, they are likely to …
What is this bitcoin thing and why real estate is a better investment
Bitcoin has surged over $13000 USD per coin, having risen an eye-popping 1,200 percent this year. That’s better than most investments available right now.
Real estate is a more stable investment compared to bitcoin. Here’s why:
- Bitcoin is a decentralised cryptocurrency. It can be hacked and you can lose your bitcoins if your computer is hacked. Recently the news reported that “Nearly $64m in bitcoin has been stolen by hackers who broke into Slovenian-based bitcoin mining marketplace NiceHash.” Here’s 5 more reasons why.
RBNZ confirmed it will ease the lending restrictions on home buyers from January 2018
RBNZ confirmed it will ease the lending restrictions on home buyers from January 2018.
From 1 January 2018, the LVR restrictions will require that:
- No more than 15 percent (currently 10 percent) of each bank’s new mortgage lending to owner occupiers can be at LVRs of more than 80 percent. This is good news for first home buyers who don’t have a 20% deposit.
- No more than 5 percent of each bank’s new mortgage lending to residential property investors can be at LVRs of more than 65 percent (currently 60 percent).
Auckland Council 2017 Valuation increased by 46 per cent compared to 2014 values to make the average Auckland home worth $1,076,000
Auckland Council has released revaluation figures for properties across Auckland this week.
No surprise the region’s house values have gone up. But how much? On average, values have increased by 46 per cent to make the average Auckland home worth $1,076,000.
But not everybody is pleased.
If you don’t agree with the value of your property, you can object to it. To make a valid property valuation objection, you must provide a reason why you are objecting. You can object if you think a property valuation is incorrect, but not because of the effect a valuation has on your rates. Not all properties change value in the same way. For example, flats may sell differently than apartments, houses or shops. Many other factors affect a property’s value, such as age, size, construction and location. If you have added another room or extended the house and this is not reflected in the valuation, you can object.
Objections need to be received by the council by 16 January 2018.
You can find more about objections here.
Profit from property seminar
Come join Ron Hoy Fong and the Ronovationz team this Saturday 18 November.
The recession is coming but that doesn’t mean you shouldn’t invest in property
Come to the seminar to learn:
– Where the Auckland housing market is heading with the new Labour/NZ First/Green government
– Where the new HOT SPOTS in Auckland are
– Pre-Christmas opportunities
– Where are the Auckland COLD SPOTS and where NOT to invest in the next few years and more …
Official Cash Rate unchanged at 1.75 percent and 3 takeaways from the Governor’s speech
9 November – The RBNZ has kept Official Cash Rate unchanged at 1.75 percent.
Here are the 3 takeaways from the Governor’s speech:
- The RBNZ is not looking to introduce any further restrictions to cool down the housing market.
- Although the LVR ratio requirement is not likely to removed any time soon, the RBNZ is unlikely to introduce debt to income requirement to get a home loan.
- Low house inflation is likely to continue due to reduced demand, tightening credit standards, and the government’s housing policy.
Labour’s housing plans in brief
What’s Labour housing plans? Will they work? For instance, Labour’s policy to is ban foreign purchasers from buying existing homes. Aussies are not classified as foreign buyers. So they can still buy homes in NZ. And As it is worded, technically foreign purchasers can still buy new properties (either off the plan or a vacant section and develop a house there).
Labour wants to increase the bright line test from 2 years to 5 years. This again is aimed at discouraging speculators from entering the market. Well that’s a good thing. Most people don’t want speculators in the market. Mind you, it all comes down to being envy. When the speculators lost money in the 2007-2008, nobody felt sorry for them. But the same people became envious of the speculators who earned over 6 figures and then some more in the 2013-2016 boom. For those who are not in the game, it’s easy to criticise people. To complain when others make money. When few people had confidence in the market, speculators helped provide that confidence. Should really thank them for turning the property slump in the 2007-2009 period around. The speculators and early investors acutally started the property boom which actually led to a consumption boom and construction boom.
Anyway that aside, labour also plans to build affordable homes. Here’s how it works. Read more
Foreign buyers out, rent to buy in
As you may know, Labour leader, Jacinda Arden is now the Prime Minister of NZ.
New Zealand First and Labour agreed to ban foreigners from buying existing homes, strengthen the Overseas Investment Act and set-up a comprehensive register of foreign-owned land and housing.
Compared this to Canada: Foreigners who buy homes in Toronto and its surrounding area face an additional 15% tax.
And compared to Australia: foreigners can only buy new houses. Foreign non-residents will normally be allowed to purchase new dwellings in Australia without being subject to any conditions. There is no limit on the number of new dwellings a foreign non-resident may purchase, but approval is generally required prior to each acquisition.
Australia’s policy on housing recognises that new houses create construction jobs which have flow on effects to other sectors of the economy. That’ s why they allow foreigners to buy new housing.
If New Zealand bans foreign buyers outright, what does it mean for existing home owners? Will prices fall? Is this good news or bad news? Read more Prices will probably stay on hold for the next six or 12 months
What is the difference between the CV and the market value?
The Capital Value (CV) is the value used by a city council to allocate and assess the rates for a property.
In the Auckland region, the CV (Capital Value) is the same as the Rateable Value.
There is no fixed relationship between the CV and the market value of the property.
That is why some owners have found their property to sell only 50% above the 2014 CV while other owners have seen their property sell for nearly double the 2014 CV.
Here are 5 differences between the market value of a property and its CV: Read more
What’s happening in the lending market? HSBC lowest mortgage rate starts mortgage wars
HSBC has just come out with 3.87% interest rate fixed for 18 months. It’s 3 year fixed rate is 4.89%.
Westpac is offering a 4.94% three year fixed home loan rate.
ASB has come out with a 4.39% fixed for one year home loan rate.
What do you think banks expect to happen to the OCR? Read more
Why you should invest in property?
Let’s take a step back．what are the key asset classes for you to invest in? Sharemarket, Cash at the Bank, Precious Metals, and property.
Leverage. Cashflow. Control. Capital gains. That is why you should invest in property. Read this post for a comparison between sharemarket, cash at the bank, precious metals and real estate.
The value of cash is constant in a non-inflationary environment and the value of cash falls in an inflationary environment. Term deposits barely keep up with inflation, while gold and silver usually keeps up with inflation, it does not produce regular income like real estate. more …
Who won the election …
As you may know, NZ had its GENERAL ELECTION on Saturday 23 September, and the preliminary results are shown below: It is more in line with the Newshub polls which had National 10% ahead of Labour.
Nz Herald got it wrong when they said that Labour will beat National. But as this post reveals, don’t get too carried away if your party didn’t get voted into government, your success doesn’t depend on it. success depends on the individual and is a function of effort (and sometimes luck) and less about who’s in government
What does it really cost to reclad a leaky home?
Recently stumbled upon an article about leaky townhouse block onNorth Shore.
How much would it cost to reclad their house? Experts estimate it could cost more than $300,000 to reclad a two bedroom townhouse. And this does not include other holding costs you incur such interest on your current mortgage, rates, insurance), and there are other costs too.
Productivity the key to bridging the gap between incomes and house prices
Because Productivity has been flat in New Zealand, wages haven’t kept pace with house price inflation. And its not just NZ. It’s a phenomenon across the Western world
Luckily New Zealand’s economy has been enjoying strong growth in GDP in recent years – helped by record migration population growth, record low interest rates, and a construction boom.
Here is why productivity matters.
The investment math:Calculating investment yields and return
Every property investor’s should want to own a property that has a strong rental return , has big capital growth potential, and require low maintenance.With the slowing down of capital growth in property investments, investors will return to focussing on cash flow and will need to calculate yields.
Especially with commercial property, investors like to compare competing investments using yields.
Do you know the difference between gross rent, net rent, gross yields and net yields? Find out
Capital gains on the table?
Come next month, the country will decide who will be in the Prime Minister for the next three years.
Labour has definitely picked up some momentum but have not ruled out a capital gains tax.
National’s leader and PM Bill English responded by saying.
Do you want a water tax? No.
Do you want a new petrol tax? No.
Do you want a new capital gains tax? No.
Labour or National: It doesn’t matter…
The NZ election is just a month away and Jacinda Arden is closing the gap on National. Labour’s appeal is that they’ll bring change. What change? “the more things change, the more they stay the same”. You still pay taxes. Transport has gotten worst whether it was Labour in government or whether it was National in government. so it doesn’t matter. We’ve had prosperous times and downturn times whether it was National or Labour. But does it really matter who is in government? Find more in this post.
Should first home buyers be exempt from LVR lending?
Barfoot and Thompson, the leading residential agent in Auckland is lobbying for first home buyers be exempt from LVR lending. Is this the solution to the housing problem? Read more
Just went to an open home and saw this New house but builder in a rush forgot to open up the drainpipe
The builder was in a rush he forgot to check that all drainpipes were flowing…
11 Bryant Place in Glendowie sells for double CV
Despite the slowdown in volumes in the Auckland Property Market, a Glendowie home has managed to sell for double its CV at an Ray White Auction. Ken Choong marketed 11 Bryant Place and Guess how much 11 Bryant Place sold for? $1.626 million…
Property Fun Facts
This week the NZ Herald released an estimate of the total value of properties in Auckland, Wellington, and Christchurch.
It estimated there were a total 482,000 residential properties in Auckland. If we add up the value of all the residential properties in Auckland, what do you think it will be worth? NZ Herald puts it at $530b. NZ’s GDP is about $180 billion. So the total value of Auckland’s residential properties is approx 3 times NZ’s GDP.
For a different perspective, Auckland has roughly 482,000 residential properties. And Christchurch, Queenstown, and Wellington combined have almost 240,000 residential properties. So Auckland has roughly double the total number of properties in Christchurch, Queenstown and Wellington combined. However, the sum of all Auckland’s residential properties is worth nearly FOUR times what Wellington, Christchurch, and Queenstown’s are worth combined.
As Banks tighten lending, apartment buyers (and sellers) feel the pinch
The latest round of Reserve Bank lending limits, combined with the stricter lending policy by the main banks have reduced back the number of people able to get mortgages.
In particularly, the banks are being very strict on lending to the apartment sector. One project, Sugartree, has been in the news recently
Property prices may be slowing in Auckland but big sections still fetch high prices
Sell through rates at auctions continue to fall. This may not be a bad sign as buyers are becoming more cautious and want to put a conditional offer.
While many are of the opinion that Auckland’s house prices could be falling, land with a big section continue to be popular (even if it is at the end of a long driveway).
This property in Papatoetoe sold for …
Tax & Property: Ownership Structures
It is common for people to own properties in their own name or in partnership with their spouse. Depending on your financial situation, you may be better off owning property using a different vehicle such as a trust, company, or look through company. Read this post to find out the differing tax implications for each ownership structure.
Team New Zealand’s win good news for Auckland’s economy and property
New Zealand once again wins the America’s Cup.
That’s good news for Auckland and good news for New Zealand.
No doubt Auckland city’s waterfront will be vibrant when Auckland stages the next America’s Cup in four years time.
Who will be the biggest winners? Find out in this post.
Do I have to pay tax if I sell my property?
Although there is no specific capital gains tax in New Zealand, you can still be taxed on the gains you make when you sell your real estate properties.
The Income Tax Act has a separate section on taxing land transactions, specifically sections CB 6A, and CB6 to CB 14 deals with land transactions. Find out in this post if I have to pay tax if I sell my property.
101 Tax Tips for Property Investors
Fed rate hike – done deal
It seems market analysts are in agreement that the June rate hike of 25-basis points (bps) is almost certain.
The market has pretty much priced in a rate hike. Gold price has come back down from $1300 and steadied at $1268.
This means the Fed’s short-term interest rates would rise to 1.0% – 1.25%.
Bad news for for NZ and Australia ………………….
Does anyone know the Auction Results from Barfoot and Thompson?
If you have been to a Barfoot and Thompson auction recently, you will notice a number of properties at Barfoot & Thompson’s Auckland auctions either drew no bids or were passed in.
But say you didn’t have tome to attend auctions but was interested in the result?
The 3 most common ways to find out what the auction results are:
Subscribe to an agent’s newsletter.
Check out Barfoot and Thompson’s latest auction results pages.
The 3 categories of apartments and the rise of luxury apartments.
An apartment in Remeura sold for over $8 million. But then again this is not your typical apartment, it has a floor area of 356 square metres.
Earlier in the year another apartment on the 29th floor of the Sentinel building in Takapuna sold for about $7 million. The apartment had a floor area of almost 700 square metres. This includes over 200 square metres of deck on the roof. Wow! This apartment’s deck is bigger than most people’s homes.There is a big difference in prices between luxury apartments (with over 300 square metres of floor) compared to the typical apartments which have only up to 60 square metres of floor area. Take an ordinary 2 bedroom apartment in Nelson Street (328/72 Nelson Street). It sold for $418,000. Even a new 2 bedroom apartment in Freemans Bay (G6/5 Howe Street) with 72 square metres of floor area only sold for $620,000 in April 2016.
So why do luxury apartments fetch such a high price?
Another reason why people hate apartments – the Mountain View saga
Just recently, owners of a Mount Wellington apartment block on 68 Mountain Road found they are collectively facing a potential $32.8 million bill to fix leaky, fire, roof, & structural issues in their apartment block.
This story reminds people of another reason why Aucklanders and New Zealanders in general don’t like apartments. It’s what I call the hidden costs. What are these hidden costs?
Let’s do the maths: Say it cost $15 million to fix an apartment complex. The apartment complex has 250 apartments. So $15 m divided by 250 apartments means each owner has to contribute……..
Is it still possible to find a $600,000 home in Auckland City?
Many years ago, it was common to find a place in Auckland City (This region includes the areas within the boundaries of Blockhouse Bay, Avondale, Royal Oal, Otahuhu, Mount Wellington, Pt England but excludes East,South, West Auckland and North Shore) for less than $600,000.
Is it still possible today? A quick search on Trade Me revealed …
A buyers guide to buying houses in NEW ZEALAND
If you are new to purchasing residential property, there is a wealth of information out there.
Most importantly, before you sign an agreement for sale and purchase, you should understand the document you are signing.
You can find the links to the English and Chinese version of the guide here.
Adding value to properties
Value can be added through renovation, development and/or subdivision.If the land area is large, some investors may consider adding another dwelling or subdividing the land. For most investors, Renovation is the key to adding value. If you can spend money on putting up a partition wall to create another bedroom, you can easily increase the property’s value by …
Money is never the only problem. It’s usually something else. Lack of knowlege, discipline, is a bigger problem than lack of money.
Are property prices currently too high? It depends who you ask. If you ask the rich, houses still seem affordable. In places like Remuera and Epsom, houses regularly go for above $1.6 million. Yet they are still selling like hot cakes. In reality, money is not the problem. Perhaps the problem us many people have a lack of understanding of how to earn money and manage money. This creates a divide between those who have it and those who don’t. If school did’t teach you how to become wealthy, then you still have a chance. Grant Cardone put out THE millionaire booklet. And it’s just 44 pages. You can read it in one sitting. People just don’t have time to read whole books anymore so Grant Cardone made a booklet especially for those time poor people. This post contains a nice little summary but the best part is you can get your copy for free. Here’s how.
$719000 for a 4 bedroom house in Mt Wellington? A good deal or is this a lemon?
If you do quick research, you will find that a 3 bedroom house on the same road sold for $402000 in March 2016. That’s 90,000 below CV. When a neighbouring property sells for less than the CV in a booming market, That’s always a red flag. The seller is not stupid. In a booming market, there must be something wrong with the property for the owner to sell below CV as we find out in this post.
The real wealth comes from capital gains
When it comes to property, while rents provide the cash flow to cover the mortgages, the real wealth comes from capital gains. That’s why the buy and hold strategy is very popular among property investors in NZ. On average, Auckland’s house prices doubles every 10 years, Due to the effect of compounding, a property bought for $50,000 in 1960 will appreciate as follows:
Things to avoid: properties near power pythons
Properties located near Power pythons seem to have a lower value. Despite being located in a area with 3 bedroom house values averaging over $800,000, this property is selling for less than $700,000. Read more.
What are property syndications?
Promoters and property managers have enjoyed a surge in fees from organising property syndications over the last few years.
What exactly is a property syndication? Is it right for you? Our opinion is that property syndications should be only for sophisticated investors. Those wanting to get a higher return thank investing in a term deposit, should be reminded that …
OCR likely to stay at 1.75% until September 2017
Last week, the RBNZ reported Inflation is closer to the target band and if it doesn’t exceed 3%, there is no need for the RBNZ to take action.
The OCR likely to stay at 1.75% until September. Here’s why.
Auckland’s flood prone areas
Auckland’s flood prone areas can be found on Auckland Council’s website.
This is of importance to both investors and residents especially following the flooding of certain places in Auckland several weeks ago.
New Lynn, which was badly affected by the flooding it experienced in this month’s major storm, had over 70 homes …
101 Tax Essentials for Property Investors
Get this excellent tax guide. This tax guide contains 101 tax tips and essentials that NZ property investors should be aware of. An essential for serious property investors. If you care about your investments, you will take the time to read this.
Fed hikes rate again
And she does it again. The Federal Reserve announced that the key short-term interest rate will be increased by 0.25%. This is the second time in three months. This takes the overnight funds rate to a target range of 0.75 percent to 1 percent. How will this impact you?
Ronovationz Property Wealth Creation Event
In a previous post, I wrote about the importance of having a mentor. Gary Lin is a property coach from Ronovationz. Ronovationz was founded by Ron Hoy Fong, a super property investor who now wants to pass on his knowledge to his students.
This weekend, Saturday and Sunday, Ronovationz will hold a free seminar at ICL Education Group, 12-14 Lorne Street.
80 apartments planned in Otahuhu
To address potential housing shortages, A developer is planning to build affordable apartments in Mason Square in Mason Avenue, Otahuhu.
The bulk and scale of the buildings have been deliberately kept to three stories to keep them in context with the adjacent historic church.
Named the “Mason Square Project”, the developers plan to build just over 80 apartments in 2 stages. If you are interested contact the marketing department at masonsquare@harcourts.co.nz.
As always, apartments are a little bit more complicated than freestanding homes and townhouses, especially understanding body corporates and body corporate levies.
Always vet the tenant
Just like you wouldn’t lend your brand new car to any stranger, investors should be more active in the tenant management process, even if you outsource your property management to a property manager.
Just recently, a full time investor found out one of his properties were let out to irresponsible tenants. The owner discovered his property in Whangaparaoa was contaminated with Meth after the tenants left without notice. Unfortunately, the tenant vetting process didn’t identify this tenant as a potential problem. Now the owner has to spend over $100k in repairs to make the property livable again.
What can be done to solve this problem? This post looks at a possible solution.
More useful resources: QV.co.nz
Previously, we posted a list of where to find information on property for free. Here is the link to that post if you haven’t seen it yet.
Today, we tell you about another resource QV.co.nz. This post shows how you can access information on sales history, changes in council valuation as the suburb history.
OCR held at 1.75%
As expected and discussed in this post the RBNZ governor announced this week that he will hold the OCR at 1.75%.
His decision took into consideration the recovery of commodity prices, the slowing down in house prices, and possible geopolitical uncertainty…
Wheeler to step down in September
Reserve Bank Governor Graeme Wheeler today announced that he will not be seeking another term as Reserve Bank Governor. His current term ends on 26 September this year, and Grant Spencer is expected to be the acting RBNZ governor for the first six months after Wheeler’s term ends. There will be unlikely be any major changes to monetary policy between now and September, because both Graeme Wheeler and Grant Spencer share similar views on the housing market.
The good news: US Federal Reserve Keeps Interest Rates Unchanged (For now)
The good news is the Federal Reserve announced they will keep the interest rate unchanged – for now.
The bad news is the current interest rates is still well below the historical average. Its inevitable that interest rates will rise in the future. But just how much will interest rates increase by in the future? Just what is the average floating mortgage interest rate since 1990? This is what the data shows: the average floating interest rate on mortgages between 1990 and 2016 was 8.4%. Wow!
Further Rate hikes expected this year
What a start to 2017.
President Trump stood by his promise to withdraw from the TPP (Trans Pacific Partnership trade agreement. Its not clear what effect this would have on the economy.
Closer to home, Kiwibank has announced 2 rate increases in their mortgage interest rate since January 6. Its likely other banks will follow suit over the next few months. What’s the best way going forward? Find out in this post.
Slow start to the year says REINZ. Business as usual for the rest of us
REINZ (that’s Real Estate Institue of New Zealand) reported that the median sale price of real estate across New Zealand dropped $4000 to $516,000 in December. For Auckland, the median was $840,000 and had fallen about 1.4%.
REINZ projects 2017 will get off to a slow start. This is not something to be worried about. Its normal for the property market to slow down in December, January and February. Usually we have to wait until March 2017 before we know for sure whether the market is slowing. Read more in this post
Just how much does it cost to build a house?
With the rising cost of housing, some people may just decide to commission a builder to get a custom house built on a section they have purchased.
Because each housing project is different, it is difficult to provide a rough guide of how much it will cost.
The Department of Building used to publish a guide that allowed you estimate how much it will cost to build or rebuild your own home. But eventually took it down because people complained it was not accurate enough.
Before spending a bunch of money getting a quantity surveyor to calculate the building costs, you should try out this clever tool from Cordell.
We ran the tool based on a contemporary 2 storey home in Auckland, with a floor area of 180 m2 , 2 ensuites, 1 lounge, 1 double garage. And the Cordells website estimate it will cost $520,000 to build this house. Have a closer look in this post.
OECD report puts spotlight house prices
The OECD (Organisation for Economic Co-operation and Development) came out with a report that put house prices in the spotlight.
Particularly, it came out with this chart:
It found that house prices in Belgium, NZ, Canada, Norway, Australia and the Great Britain were overpriced. But overpriced compared to what? What does it mean for you? Find out in this post.
2016 Year in Review
We are at that time of the year again.
With a few days left in 2016, this is a good time to reflect on 2016. Here’s what we came up with.
Bill’s new cabinet lineup
Bill English announced his new cabinet lineup earlier this week.
Notable changes include moving Judith Collins from Minister of Police to Minister of Revenue and promoting:
- Simon Bridges to Minister for Economic Development.
- Amy Adams to number 6 on the party list. She took on Minister for Social Housing and Minister for Housing New Zealand.
Michael Woodhouse continues to look after immigration and Dr Nick Smith held onto his Minister of Building and Construction portfolio.
As expected, Steven Joyce was promoted to Minister of Finance, which was previously held by Bill English.
What does Bill’s cabinet mean for New Zealand ? Find out more.
Fed raises interest rates as expected
Today Janet Yellen, the Federal Reserve Chairman raised the short term Fed rate by 0.25% from 0.5% to 0.75%.
This is the first rate increase since last year December 2015.
She also announced that the Fed is likely to raise interest rates again in the coming year.
Citing the improving economy, Yellen also said there was increasing employment and household spending. This led to the decision to increase the Fed rate.
What does that mean for you? read more
New year, new Prime Minister: Bill English the new PM
Following John Key’s resignation from the office of Prime Minister of New Zealand, the National Party selected Bill English to succeed him. No surprises there.Bill English was previously the Finance Minister under John Key.
Mr Steven Joyce will become the new Finance Minister. At least 4 ministers are retiring and won’t stand for election in 2017. Expect a few new faces in the National Party next year. Read more
John Key resigns as Prime Minister of NZ. What does the future hold for NZ?
John Key announced his resignation from being Prime Minister of NZ today. Citing family reasons, he becomes one of the few NZ prime ministers who resigned voluntarily before serving out the term.
Such an announcement caught the financial community by surprise, because shortly after his announcement, the NZD weakened compared to the USD.
The NZ sharemarket dropped 54 points.
What effects could his resignation have on the economy and on property?
All eyes on the Fed this month
There is a famous saying in economics that goes “In economics, things take longer to happen than you think they will, and then they happen faster than you thought they could.” Rudi Dornbusch is famous for saying this.
This week we saw that oil prices rebounded to over $50. In the space of 12 months, oil prices have risen 60%. Few times in history has this happened. What has this got to do with property? Find out in this post
Where to find property information for free
Wondering what a neighbour’s house recently sold for at an auction? You can now find it on relab.co.nz. It’s for free and currently does not require you to register or login.
Read this post to find out other sources which provide information on property.
St James Apartments reminds us why investors shy away from new apartment developments
In March 2015, the St James Apartments developers proudly announced more than 170 apartments in Auckland’s had been presold. Actually, the site has a lot of heritage.
It is located on the corner of Wellesley & Kitchener Streets, Auckland Central. Auckland city is now home to many apartment buildings but there are only a handful of these beautiful old Heritage buildings of which St James is one. Many apartment investors were looking forward to its completion.
Now more than a year and a half later, the developers make another announcement. Early investors may have to put up more money or cancel their agreement. This post reminds us why investors prefer houses over apartments.
Donald Trump Victory: What it means for NZ?
The polls got it wrong again. After calling the Brexit the wrong way, it looks like the polls got the US election wrong too. A Donald Trump victory means the Republicans are back into power after 8 years of rule under the Democrats.
What effect does this have on New Zealand and the property market? Not much really unless you happen to be investing in shares.
On the future of buying and selling houses on the internet: A fad or a trend?
It is common to buy a property through an intermediary such as a real estate agent. Or perhaps you purchased a house at an auction. The auctioneer facilitated the sale and either you had to be physically present or you could have placed a phone bid. However, recently, PropFi started to facilitate online property auctions (similar to Trade Me). Is this the start of a major trend or is it just a fad?
5 tax mistakes all property investors make
Do you invest in property in New Zealand? Good. Make sure you don’t make these 5 common tax mistakes involving depreciation on chattels, depreciation recovery, capital expenditures below $500, taxing capital gains, and incorrectly applying the 2-year bright line test.
Download the FREE guide now. It was kindly provided by the tax professionals at Mr Tax. Visit their website: mrtax.co.nz
OCR expected to drop. What will happen next?
The OCR is expected to drop in November 10 (after the US election).
This will be the eighth and last time this year the RBNZ reviews the OCR.
What impact will it have on the property market?
It all depends on what banks do as this post explains.
Would you take your client to court to claim commission on a property you could not sell? One real estate agent did just that…
Recently, an Auckland real estate agent made the news trying to sue a former client. To make matters worse, the agent did not close the sale or introduce a buyer, yet wanted to claim a 32k commission on a property he didn’t sell in 2012.
In the end, both parties lost: they lost money and wasted time. Find out the details here.
Would the new immigration policy affect house prices?
Immigration Minister Michael Woodhouse made an announcement this week:
Fewer residence approvals would be decrease for the next two years: the new target for residence approvals over the next two years will be 85,000-95,000. This is less than the current target of 90,000 -100,000 approvals. What impact will this have on the housing market?
Selling your property, taxes and depreciation recovery
From 1 April 2011, you can no longer claim depreciation on the building as an expense. This 0% depreciation rule applies to buildings with an estimated useful life of 50 years of more. If you owned investment properties before this date and have claimed depreciation, then when you sell your property, you may tax to pay under the depreciation recovery provisions. Read this post to find out more about depreciation recovery and how it applies to you.
Labour’s wants to ban foreign buyers but will it solve the housing affordability problem?
Labour is considering banning foreign house buyers from purchasing properties if they get into office. So if Labour gets their way and ban foreign buyers from purchasing properties, what will happen to house prices? Second, what effect will this have on the economy?
Is Living Big in a Tiny House the home solution for millennials?
You may be familiar with units and apartments, but have you heard about the tiny house?
The risks and rewards when you buy off the plan
Thinking of buying a new property just off the plans? Read this post for an insight into the benefits and drawbacks of buying off plans.
House Price statistics – average or median?
The latest figures by QV show that the average value of a house in Auckland is $1,013,632. Real Estate Institute of New Zealand prefers to quote the median house price. Their recent data collected in July indicated the median house price was over $825,000. Which is more reliable? What do these numbers mean?
Property, Accounting and Taxes
This post answers some common questions regarding tax and rental properties. You will find answers to questions such as
- what expenses are tax deductible?
- what is depreciation recovery and how it affects my tax?
- Is the bond included as income?
- If I am registered for GST, can I claim the GST on my expenses?
Read the post to find out the answers to these property and tax questions.
RBNZ delays Loan-to-value restrictions
On 18 August 2016, the Reserve Bank announced it is deferring the start of the proposed changes to investor loan-to-value restrictions (LVRs) nationwide from 1 September to 1 October 2016. The Governor also clarified in what situations the borrower will be exempt from the 60% Loan to Value ratio.
The Auckland Unitary Plan – Auckland Council’s revised rulebook
What’s the most noticeable impact of the Unitary Plan? Due to the larger population, the Unitary Plan allows for greater intensification of land use. This means the Unitary Plan encourages more apartments and terraced style housing. We are likely to see more development in existing shopping centre areas such as Manukau, Botany, Albany, Sylvia Park, and Henderson. This post explores the Unitary Plan in more detail.
Keep Safe: Property and the Health & Safety Act
The Health & Safety Act was reformed recently and came into force on April 2016.
Generally when we think of Health and Safety, we think about it applying to the workplace. But it actually has wide reaching effects which impacts landlords and property managers. Just how could it affect you? Find out in this quick post.
Why houses prices keep on rising?
NZ house prices have gone up compared to last year. While the Labour party and other opposition parties are blaming foreigners for pushing up the house prices, this is not entirely true.
Here comes the news: Just over 3% of the homes sold in New Zealand between April 2016 and June 2016 were sold to non-residents.
So the majority of people buying NZ residential property are either NZ residents or citizens. So what is driving up the house prices in NZ? Find out in this post.
What will happen to mortgage interest rates?
The rise and fall of Mortgage interest rates: Interest rates on mortgages are at an historical low in NZ, having peaked at over 20% in 1987. Will this low interest environment continue and for how long?
How much interest will I pay on my mortgage?
A lot of attention has been focused on how to get finance, so homebuyers and investors can get into the property market. Less attention has been put into showing how mortgage finance can affect your personal finances.
Do you know how long it takes to pay half your mortgage? And how much interest have you paid on your home loan already? In this short post, you find out the answers to these questions and how one homeowner can save almost $100,000 interest by paying an extra $110 per fortnight.
60% LVR? What was the Reserve Bank thinking?
Earlier this week, RBNZ announced that as of 1 September 2016 there will be a requirement for loans to residential property investors to have a minimum of 40 percent deposit. Basically, this means the maximum LVR can be 60%. What does that mean for you? Find out in this post.
What’s next?
If you look back 50 years of the property cycle, you will find that when property prices double from their last peak, we have reached the top of the current property cycle. As pointed out by Ron Hoy Fong, prices have doubled since their 2007 peak. Sure. There may be been overshoot in prices but the market always come back to equilibrium (The one thing I learnt from behavioural finance is that over-reaction always occurs). Just a side note, beware of forecasts from experts specially those from Bernard Hickey. He’s been saying the property prices will fall since 2012. I think he was five years out
What is negative gearing?
Is your property negatively geared? Does negative gearing make sense for you? This post explains what is negative gearing and how it helps some property investors.
Keeping up to date with the Residential Tenancies Act
If you are a landlord, it’s your responsibility to make sure you are complying with the rules and regulations regarding tenancies.Recent changes include requirement to have smoke alarms (from 1 July 2016) and requirement to have insulation on rental residential properties (starts from 1 July 2019). You can find more details in this post.
The art of refinancing
Want to buy another investment property, but don’t quite have enough cash to meet the down payment? Refinancing your existing mortgage is another possibility. Read this post to find out how refinancing your mortgage can help finance another property or a new car.
Thinking like a property millionaire
One thing separates successful investors from the unsuccessful investors. And that is the investor’s mindset. How you think and how you make decisions will determine your investment success.
Just last week I had lunch with Gary Lin.
Gary Lin is a successful and passionate investor in the Auckland property market. He started with $200,000 in 2010 and now has a multi million real estate portfolio.
Over lunch with Gary, I found out what it takes to be a property millionaire. Here are the five key take-aways
Bond matters. Charging your tenant a bond: How to get it right
Standard practice is to require a tenant to pay a bond equivalent to four weeks rent and one week’s rent in advance.
In this post, you will find out how much bond you can charge, how to lodge it with Tenancy Services, and what happens to the bond at the end of the tenancy. Included are the links to the Bond lodgement form, the Bond Refund form and the Bond Transfer form.
Property inspection checklist for new landlords
If you several rental properties, you know that regular property inspections are necessary. If you are a new landlord, how do you know what to inspect? We’ve put together a checklist and a short post to guide you through inspecting your rental property after you have rented it out.
City apartments: How to reduce vacancy in the summer months
City apartments located in the CBD and near universities are in popular demand among university and tertiary students.
Apartment owners can experience vacancy when the students finish the school term and either go back to their country or visit another place in NZ.
RLWT: Does the Residential Land Withholding Tax affect you?
If you have a job, you know about PAYE tax deductions. PAYE tax is deducted from your wages by your employer and paid directly to IRD. If you have a term deposit, you will know about resident withholding tax. The bank deducts tax on the interest income you earn and pays it to IRD. And now we have Residential Land Withholding Tax (RLWT). The law takes effect on 1 July 2016 so read here to find out whether the Residential Land Withholding Tax applies to you.
What’s a Code Compliance Certificate and do you need to worry about it?
Apartments are getting popular in Auckland again. A few current projects include Queens Square, Princes Residences, Victoria Residences and the Sugar Tree Apartments Project.
It is interesting to note a lot of these projects are based on the floor plans. Buyers sign a binding contract and pay down a deposit well before the apartments are built. Buyers place high confidence on the developer to complete the building on time and to a high standard, hopefully free of weather-tightness issues. How is this relevant to the Code Compliance Certificate?
How to end or “terminate” a tenancy agreement
How do you terminate a rental agreement? This is a very relevant question and the answer is of interest to both landlords and tenants. The answer can be found in this post.
Increasing your tenant’s rents – Do it the right way
With rising insurance and council rates, New Zealand landlords may have to increase their rents to get a decent return on their investment.
If you’re the landlord, can you increase the rent whenever you want? Well not exactly. Here’s what you need to do in order to comply with the Residential Tenancies Act.
What can a property coach do for you
Not many people know Ron but many have heard of Tofu Shop. For those of you who don’t know who I’m talking about, Ron Fong founded the Tofu Shop chain and is now a highly successful property investor. He’s accomplished so much in the property market to the extent that he has become a property coach. Yes, he’s paid to coach and teach people how to invest in property. In this post, I share with you Gary Lin’s experience after going through Ron Fong’s coaching programme.
10 important things you need to know when buying a house
Here’s a list of ten important things to know when buying a house:
1. Know what your requirements are.
2. Have your financing options ready. There is nothing worse finding out you can’t raise a mortgage to complete the purchase of your chosen house.
3.When you have found a house you are interested in, request a copy of the LIM report ……. Read more
5 quick facts about Highland Park, Pakuranga and Macleans’ housing market
Sharine Burns from Professionals Lovegrove Realty is one of top salespeople and won the runner up for top salesperson in 2013/2014 and 2014/2015.
Sharine Burns from Professionals Lovegrove Realty shares her take on the East Auckland property market.
5 tips all vendors need to know
Selling your home can be very emotional. There can be a tendency to expect a price which is way above the market value. A good agent will help guide you into forming a realistic value of your property.
This post summarises a list of 5 tips all vendors need to know.
Auctions: A short introduction to buying at auctions
Today I will do a short post on buying at auctions. Buying at auctions is different from tender and “price by negotiation” type of purchases. The key point to note is that once your bid has been accepted by the auctioneer, the contract is unconditional. So if you intend to buy at an auction, make sure you do your research beforehand…… Read more to find out about vendor bidding and reserve prices.
Buying into St Johns for under $100,000 – Impossible right?
In fact, the location is 1/14 Abraham Place, Saint Johns. Why is it only selling for well below the Auckland median house price?
How you can own a part of Sylvia Park (for less than $1000)
If you like shopping, chances are you have been to Sylvia Park in Mt Wellington, Auckland. Have you ever wondered how you could own (indirectly) a part of Sylvia Park Shopping Mall? Need a few million dollars right? Nope. Less than that. Here’s how.
Is this the start of the apartment boom?
“By 2017 over 50% of new homes built in Auckland will be attached.” RCG 2016
“Auckland apartment builds to outstrip houses by 2017” NZ Herald, 2016
Will Auckland house prices rise or fall in 2016?
“Auckland residential house prices in February have retreated from the record prices” Barfoot and Thompson, February 2016
Perhaps this means Auckland house prices are going to fall. Is this possible? Find out all about it in this post.
First Steps: Finding a tenant for your investment property
You just bought your first investment property. YAY!
Assuming you took it in vacant possession; you now have to look for a tenant.
If you need tax advice, Don’t forget to visit Mr Tax.co.nz.
They are also helping you apply for tax refunds.