NZ Property Investor

Life is all about perspective. It’s all too easy to slip into the mire of pessimism: look at the rising rates of Covid; the overheating planet; skyrocketing inflation; the upwards march of interest rates; and feel helpless. But there are always other ways of looking at things. In this issue of New Zealand Property Investor magazine we profile an investor with a small portfolio but a huge amount of optimism. Jenny Zhang is new to the New Zealand market, but has taken all the opportunities offered. She bought a small apartment in Morningside, Auckland in 2020, which has increased in value by hundreds of thousands due to the addition of a new bedroom. A rundown bungalow in Onehunga has had a small spruce-up and is now tenanted, the rental return is significantly…

Residential construction is close to topping out, if it hasn’t already, in this housing cycle. ANZ’s latest Property Focus says there simply isn’t enough economic resource available for residential construction to grow much more, and any light at the end of the migration and building materials tunnel seems months away. By then, demand will likely feel different. ANZ chief economist Sharon Zollner says while the bank’s forecast is for the overall level of residential construction to remain high by historical standards, there is a period of contraction on the cards. “We have pencilled in about a 6 per cent contraction in residential investment activity over next year, which relative to previous cycles can be thought of as a soft landing. “However, while benign, this is a significantly weaker forecast than the RBNZ’s May Monetary…

One of the defining features of independent economist Tony Alexander and property management company Crockers’ investor survey, which has been running since June last year, is that investors are in for the long haul and they don’t radically change their plans. About 65 per cent of survey respondents say they are in it for the long haul. Despite the popular image of property investment being driven strongly by a desire to ride the price cycle or buy and flick, it is not backed up by investors’ expressed aims. In the latest survey, investors’ buying intentions are not trending anywhere and neither are plans for selling. Although the percentage of respondents planning to sell has lifted to 24 per cent from 20 per cent in April and March, there is no true drift…

New Zealand is at the top of Bloomberg’s list of riskiest housing markets - those that are vulnerable to a price crash. The country experienced extreme price growth over the pandemic, which helped drive home valuations to absurd levels based on price-to-rent and price-to-income ratios. Now, Bloomberg has spelt out the impacts of a severe house price correction. “Falling house prices will erode household wealth, dent consumer confidence and potentially curb future development. Animal spirits are typically tame when people are faced with higher repayment costs on an asset that is losing value. “There are going to be house buyers who have entered the market in the past year or so who started off with a mortgage rate of 2.5 per cent and all of a sudden they are rolling off on to a…

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 disputes. He acts on property disputes, product liability, defective…

Existing builds are now known as the poor cousin to new builds in the current tax environment. The reason for this is that investors can deduct interest before tax on new builds, whereas this is being phased out for existing builds. Additionally, Healthy Homes Standards mean higher capital expenditures has been faced by every investor. It’s a double whammy on the bottom line for existing build landlords. Long gone are the days of buying any investment property, giving it a lick of paint and hoping it’ll be a good investment. Renovating to offset the operational costs is tricky and wrought with complication if not executed well. So why is it that investors such as Use Wolfe are still so passionate about acquiring them? EXISTING BUILDS SUCCESS Existing builds offer many opportunities for value-add strategies to…