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NZ Property Investor January 2019

The New Zealand Property investor magazine provides readers with information you can use to successfully invest in residential property. You can learn from the experts, read the stories of your fellow investors and keep up to date with the latest house prices and rental statistics.

New Zealand
NZ Property Investor Magazine Ltd
12 Issues

in this issue

2 min
new year challenges

Heading into a new year, with the sun on your back and a holiday glow lingering, it’s easy to overlook looming challenges. But that type of confident approach can be a help, not a hindrance. And it’s an approach that investors could be well placed to adopt over the course of 2019. It was predicted that last year would be a year of change but, ultimately, it wasn’t until late in 2018 that the changes started to become real. Now, the bright-line test has been extended, both foreign buyers and letting fees have been banned, and the Bill to ring-fence rental losses is going through Parliament. But wait – there’s more to come. The Healthy Homes minimum standards will be in force by July and the finalised tenancy law reforms are set…

1 min
record low rates phase over

Towards the end of 2018, there was an intense few weeks when New Zealand’s big four banks, along with many others, were offering below 4% rates packages. Likely driven by the need for the banks to attract prime customers, there was much talk at the time over whether those record lows were the “new norm”. But it turns out that they weren’t. All of the big four banks have now moved their rates up again. And commentators believe that another sub 4% price war is unlikely. Kris Pedersen, of Kris Pedersen Mortgages, says that the cut-price frenzy was a bit of a special situation, potentially coming on the back of the bank conduct discussions. “Where the term deposit rates are in the six to 12 month space it suggests that continuing to offer mortgage rates…

2 min
buying in holiday hot spots

Buying investment properties in popular holiday areas is often seen as risky, but CoreLogic analysed property performance in 10 such areas and came up with some surprising observations. CoreLogic research analyst Kelvin Davidson says that, surprisingly, it seems that holiday homes don’t necessarily come with a hefty price tag. Many of the locations analysed – which include Waiheke, Coromandel and Wanaka – have property values below the national average. Many of the locations had active property markets throughout 2018 with reasonable turnover rates, he says. “This suggests that when a property has come on to the market in these areas over the past year, it has tended to sell pretty quickly.” The research also shows that gross rental yields tend to be lower in most of these areas, with only Paihia, Tahunanui, and Coromandel…

2 min
tax change bad news

Revenue Minister Stuart Nash has now introduced the Taxation (Annual Rates for 2019-20 GST Offshore Supplier Registration and Remedial Matters) Bill into Parliament. One of the major tax policy changes contained in the Bill is the proposed ring-fencing of tax losses from rental properties*, which the Government consulted on earlier this year. Nash says it will mean residential property investors no longer get a tax break by using losses on rental properties to offset the tax payable on other sources of income such as salary and wages. “Ring-fencing losses from rental properties will make property speculation less attractive. It will help to level the playing field between property investors and home buyers.” However, the NZ Property Investors Federation believes that ring-fencing losses will provide a barrier to people being able to provide much needed…

7 min
softer market ahead

Drama may have threatened to strike the housing market over the course of last year, but it never eventuated. Rather it was a year of gradual unfurling in the face of looming change. Much of that change is set to hit this year and commentators expect it to have a dampening effect on the market. Yet, heading into 2019, the market is not in a bad place. Mortgage rates remain at record lows and the Reserve Bank has again eased its LVR restrictions from January 1. Additionally, the high demand – low supply equation which has long been driving the market is still at play. That means commentators don’t see New Zealand’s markets following in the footsteps of Australia’s. But different markets are moving at a variety of speeds. For this reason,…

1 min
what’s driving house prices?

REINZ HOUSE SALES: UP Sales volumes nationwide were up in October. After a slump in September, October saw sales reach their highest level in five months. They were also up year-on-year. INTEREST RATES: DOWN Interest rates remain at low levels after last year’s rates wars but they are not expected to drop further. OCR: DOWN The Reserve Bank left the OCR on hold at the record low of 1.75% in November and Reserve Bank Governor Adrian Orr says they expect it to stay on hold until into 2020. IMMIGRATION: DOWN Annual net migration was down in October for the ninth month in a row. It is now at the lowest level in three years. But monthly net migration was up slightly in October, as compared to September. BUILDING CONSENTS: UP Building consents issuance nationwide continues to rise year-on-year. This…