Up, Down and Sideways – It’s all happening in the property market.

Up, Down and Sideways – It’s all happening in the property market.

It’s an interesting but active time in the market: asking prices have been at record highs, listings have been at record lows, rents are likely to hit new highs and yet values are relatively flat. The OCR is still at its record low of 1.75% and not likely to go up this year – although we’ll keep you posted.
Home loan rates have snuck up gradually over the past year from an average of about 4.3 (two year fixed) in 2016 to around 4.75 now. That’s not a big jump but we may see this number continue to slowly creep up. In saying this, I have been able to secure rates such as 1 year fixed 4.09% and 2 year fixed for 4.29%, well below what you will see in banks advertising and interest.co.nz.

Will the RBNZ drop the required deposit for investors to 30%? The Property Institute thinks so, down from the current LVR of 35% and last year’s 40% restriction. That will definitely help, but borrowing is still going to be more difficult than it was two years ago. Our big banks are under more restrictions from their Australian parent banks, and that’s making them tighter with their purse strings in New Zealand too.

Despite all the mixed messages from the market, I am still getting excellent rates for my clients on a range of loan terms across several different lenders. Each bank and lender has its own nuances, so I can be a bit of a matchmaker and pair you up with the one that will provide you with the most favourable terms. A quick reminder too, give me a call or drop me a note if your friends or family mention refixing, refinancing their loan. I would love to help them.

Of course there’s a rental crisis!

There’s a lot of press right now about the rental crisis: it’s at a peak in Wellington, it’s serious in Auckland and it’s an increasing problem in Hamilton and Marlborough, too. Rental stock on TradeMe dropped by 35% in Auckland late last year, while rents are on the rise. The headlines make it sound like a surprise, but it hasn’t exactly come out of the blue. This is a problem that’s been years in the making, with the main causes being:
  1. The cumulative housing shortage that began in about 2010. It’s not going anywhere. A shortage of houses is always going to contribute to a shortage of rentals. As the population grows, the problem gets worse.
  2. Fewer investors buying in 2017. Legislation and tight LVR restrictions meant investors weren’t putting new rentals into the pool. Landlords were nervous.
  3. Airbnb is scooping up a lot of rentals. Auckland Airbnb listings increased by 93% last year. Short-term rentals can have good yields and landlords don’t have to worry about the RTA, the Tenancy Tribunal or pets. You can see the appeal.
  4. First-home buyers have come back into the market and they’re snapping up cheaper properties sold by investors. What was a rental is now a first home. That’s good news for first-home buyers but ultimately it’s contributing to the rental shortage.
  5. The cost of construction has jumped while finance for development is harder to get. That’s meant fewer developments, consents that are never constructed, and overall not as many new houses arriving in the market.
Put simply, if you discourage property investment, people stop buying rentals. Which leads to a rental shortage. Rents have been disproportionately low compared to prices for at least 10 years – they were always going to rise. Expect to see higher rents this year and the possibility of improving yields, combined with reduced competition from buyers – this could be a great time to buy a rental. Give us a call and we can help you figure out what you could buy.

Auckland buyers getting creative.

Leasehold, apartments and extensions – Aucklanders are feeling creative when it comes to property right now. Our team has been seeing first home buyers snapping up luxury leasehold apartments, giving them a high-end lifestyle on a surprisingly reasonable budget. 
Landowners know that leaseholds scare buyers off, so investigating ground lease terms is paramount. It can be a good deal if you know what you’re doing, and leasehold is one area where you need to get plenty of expert advice. You will need a 50% deposit, though, which is a hefty chunk of change; the bank of Mum and Dad often gets a call in this situation.

Investors are looking at those leasehold apartments too, as well as the freehold ones. Yields are improving rapidly as rents rise and prices stay flat, while Airbnb is providing some impressive yields. One market expert told me she’s spoken to investors getting gross yields of up to 18% on apartments via Airbnb. Hard to go past that.

And don’t forget the America’s Cup. The excitement of the win might have died down, but CBRE is already forecasting a housing shortage in 2021 (not a huge surprise since we already have a housing shortage). It’s only three years away, so now, just like anytime, is the right time to buy a property if you go by the well-known mantra ‘it’s not the timing of the market, its time in the market’. Or you could make a quick dollar renting out your home and staying with a friend. Better yet, go on holiday and have an Airbnb guest paying for your five-star Fijian getaway.

The best calculator online.

Property is a numbers game, so get those numbers right with our advanced, but easy to use mortgage calculator. Our team spent a long time developing what we believe is the best local online loan calculator available.
You can work out an interest-only loan, what your repayments would be, see what difference an extra payment would make. On an average sized mortgage of $500k, just $50 extra a fortnight will save you $45k in interest over the term of the loan and reduce the term by two and half years. No wonder banks default to 30 years without passing on this information. Have a play around with the calculator and email me if you would like to review your current loan payments to save some serious money in interest costs.

Our mission is to make a meaningful difference in people lives.

We do this by helping our team and clients grow into their potential. We believe that if we can help our clients build real, better and great financial plans that it will allow them to live a better life, one with balance and freedom.

What is common amongst our clients is that:

  • they want to grow
  • they want better for themselves, their family and businesses
  • they want financial security and a balanced life
We help provide our clients with certainty for uncertain times. 
Our commitment to the pursuit of providing outstanding advice and services is the heartbeat to our successful claims which ultimately, makes a positive impact in people lives. That is what gets us out of bed in the morning. Through sharing our knowledge, experience and skills, our clients feel safe and protected as we support them along their journey.The key to financial freedom is protecting your most valuable asset: 
Your financial wellbeing goes hand in hand with overall wellbeing because, in the event of uncertain times (such as death, illness or injury), you want a plan that ensures you can protect your family, home & lifestyle and ultimately focus on recovery.

Let’s make sure everything is still on track.
Have there been any major changes in your life since we last connected (i.e. recently gone self-employed, had a baby, moved etc.)? Would you like help to stop premiums increasing each year? Has your mortgage had a recent health check?  We’re here to help. Please do call us so we can assist you.

Blessings to you all,

Jaime James
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



Comments are closed.