Brexit puts downward pressure on OCR, foreign buyers hindered, Bay of Plenty boom
Several more cuts to the official cash rate (OCR) were expected this year, but the Reserve Bank was determined not to add more fuel to a housing market that’s going off like a rocket. One rate cut in August now seems definite due to the wake of the Brexit, but I believe the RB will do whatever it can to avoid another cut. Rock and a hard place continues for Mr Wheeler.
Apparently, if you’re skilled at reading Graeme Wheeler’s eyebrow movements, they are saying the Reserve Bank is pushing hard to introduce macroprudential tools before the end of the year. The most likely tool is another round of loan-to-value restrictions, with debt-to-income ratios remaining a strong possibility. As I wrote in my last newsletter, this worries me for my investor clients since we have no idea how the banks will calculate rental income when they come up with a formula to make this work. If you own rental properties and you’re looking to borrow, any DTI restrictions will make a good broker even more valuable, as the average punter won’t have a hope of matching their application to the right lender if all the banks put different policies in place.
Mortgage rates are staying roughly the same, with the major banks putting serious roadblocks in the way of foreign buyers. Will this slow down the Auckland house market? It doesn’t seem likely, and it’s not only Auckland that’s booming. Recent data has shown the Bay of Plenty has seen more asking price growth in the past 12 months than Auckland – and not just by percentage, but in actual dollars, all $101,250 of them.
What we will see for the remainder of 2016? The usual pattern is a flat or diminished period of sales volumes and values over winter followed by a spring bounce and there’s nothing to suggest this year will be any different. My prediction: watch for price rises to keep rippling across New Zealand’s most liveable regions, with Auckland remaining buoyant.
Winter – a great time to buy a property.
The commonly accepted wisdom is that the best times to sell your house are February/March and September/October. Those are the months with the biggest jumps in listing numbers and that means we see price increases in those months, too. As a result, there are several good reasons to go property-hunting in winter:
- Winter vendors are often more motivated to sell – if they had all the time in the world to stage and sell their house, they’d probably have held off until spring. Most vendors at this time of year are ready to sell and less likely to muck you around.
- Fewer buyers are competing in winter. Less enthusiastic house-hunters will go into hibernation and stay home in a storm, so if you’re a serious buyer with cash in your pocket, you may be able to strike a deal more easily.
- Homes don’t always look their best with bare trees, condensation on the windows and leaves all over the driveway. Usually our savvy SuperCity clients can see past those details to the value of the house beneath, but not every buyer is this astute. You may find a property with an opportunity to add value for a better price than you’d be able to negotiate in summer.
So if you’re thinking about buying another property this year, brave the cold and get out in the winter months – it could pay off with a fantastic buy.
Borrowing to build, extend or renovate?
Whether it’s your home or your investment property, a great location is hard to replace. There are so few listings available in Auckland, particularly in the high-end suburbs, that many of my clients are choosing to extend, renovate or rebuild in order to get the house they want in the right area. Investors, meanwhile, are looking to generate better yields by adding a room or a minor dwelling, or even subdividing to build wealth.
For any substantial project you’ll need to think about construction finance, which is where SuperCity can help. Talk to me early in the planning process and I can help you understand the best ways to work alongside the banks with a construction loan. The amount a bank will lend you isn’t just related to the usual factors, but also to how well-organised your plans are, whether your builder is working on a fixed price and how complicated your build is likely to be. By spending more time and money in the planning stages to reduce risks, you can not only borrow more from the bank, but also help prevent budget overruns. Give me a call and let me know what kind of build you have in mind and I can talk you through some of the best ways to fund your dream home or cashflow creator.
Our clients best interests come first.
A report came out last week from the Financial Services Council that was published in NZ Herald & Stuff. It’s a substantial document on when advisers provide options to replace a policy, but focuses on it being purely out of profit. I find this article disturbing and lacking in the full story. There are unprofessional advisers out there who will change your cover to make a quick buck, which is in their best interest. However, we pride ourselves in ensuring your lifestyle, future plans and best interests are in line with your current insurance policy. Insurance companies change their policy wordings frequently. So its important to review your goals, plans and current financial situation so it lines up with your policy cover.
We provide advantageous options
We provide you with options to choose from to replace policies only if it’s in your best interests. This might be for a range of reasons, especially if your circumstances change, you want premium savings, or another provider changes the details of their product to something that will really work well for your situation.
We find the policy that best fits your needs
For instance, one client who had an old policy that hadn’t been reviewed in 7 years, came to us through a family member’s recommendation for a review. They wanted insurance cover that wouldn’t increase in premiums each year. We provided options and the client chose to replace their existing policy to a level premium policy. Our client is extremely happy as their policy will not increase each year, and they will save tens of thousands of dollars over the life of their policy…and in addition to this, the new policy had built-in benefits including FREE kids cover for their 3 children.
We put you first
Another client who came to us with an existing policy was concerned she was at higher risk of breast cancer after another family member was diagnosed. Her existing policy covered her for 9 conditions, had some cancer exclusions such as early stage cancer. We provided alternative options. The client chose to replace her old policy for comprehensive trauma cover that covers her for 43 conditions, including all types of cancers including early stage cancer. She can now sleep easy, knowing she’s covered.
We give you the information you need to make a choice
Through our solid process, we provide you with quality advice, educate you through every aspect of the policies, and let you make up your own mind.
We plan for claim time
Our aim is to make sure that when an insurable event occurs, you have the best outcome at claim time. That’s why we have a 100% claim approval success rate so far, and one of the many reasons why we get all our new clients from personal recommendations.
In the industry (just the same as any industry), but at SuperCity Insurance we stand proudly by our impeccable track record and impressive success rates – as well as our many, many, happy clients.
If you would like to review any of our work together; if you have a claim you need help and support with; or if you have any questions on what you have read in this newsletter, please don’t hesitate to call me directly.
In health and happiness,
Jaime
Jaime James, Principal Insurance Advisor for SuperCity Insurance
M: 021 527 069
Contact Joel
Joel Oliver
Managing Director
Level 4, 272 Parnell Road, Parnell, Auckland 1052
PO Box 37303, Parnell, Auckland 1151
0800 INVEST I 021 884 181
www.supercitymortgages.co.nz
joel@supercitymortgages.co.nz
Text “Joel” to 215 for my contact details
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