A P R I L
M A R K E T
2 0 1 9
P U L S E
C21
PUBLISHER Century 21 New Zealand Ltd
CONTRIBUTORS Ryan Mitchell Bindi Norwell SCOOP Business Laura Barry Julius Capilitan
EDITORIAL ENQUIRIES Century 21 New Zealand +64 9414 6041
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WELCOME TO THE
APRIL 2019 ISSUE OF
C21 MARKET PULSE
+64 9414 6041
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C O N T E N T S A P R I L
NZ MARKET UPDATE
02-03
2 0 1 9
AVOID BUYER’S REMORSE
Lending restrictions need major review.
4 things most people forget to check when they
Century 21 New Zealand National Manager,
buy property.
Ryan Mitchell
Home Beautiful Magazine Editor, Laura Barry
TAX TALK
04
FINANCE UPDATE
CGT would see investors abandon property
Mortgage Rate War: Will Rates Drop Further?
managers.
C21 Home Loans New Zealand, Julius Capilitan
SCOOP Business
C21 LIFESTYLE
LATEST PROPERTY STATISTICS
05
Re-organise your home this autumn.
Legislation uncertainty and access to finance impacting market. REINZ CEO, Bindi Norwell
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N Z M A R K E T U P DAT E
LENDING RESTRICTIONS NEED MAJOR REVIEW
B Y R YA N M I T C H E L L ,
N AT I O N A L M A N AG E R , C E N T U R Y 2 1 N E W Z E A L A N D
From New Year’s Day the Reserve Bank relaxed the lending rules somewhat for our retail banks. The market reaction since, however, has been described as “fairly muted”. There has been little sign of more Kiwis rushing to take out home loans and that’s despite some two-year mortgage rates now below four percent.
Late last year I welcomed news
overall impact on lending figures
in 2013 to cool the property market
has not been dramatic.
as a ‘temporary’ measure, with
Since 1 January New Zealand banks have been allowed to lend 20%
new home builds exempt from the lending restrictions.
(increased from 15%) of their new
Over the past two years ongoing
loans to owner-occupiers with a
reviewing and relaxing of the
deposit of less than 20%. Rules have
restrictions is something many
also softened for property investors.
in the industry, including the
Now, five percent of new mortgage
Real Estate Institute (REINZ) and
loans to investors can be for those
Century 21 New Zealand, have been
with deposits of less than 30%,
calling for.
lowered from 35%.
Maximum lending for most
With such tweaking having little
owner-occupiers remains at 80%
real effect, it’s time for the Reserve
of a property’s total value. With
Bank to look at further softening its
potentially more exceptions
loan-to-value ratios particularly for
now made within a bank’s new
first-home buyers.
residential mortgages portfolio this should’ve been great news for many
that the Reserve Bank would be
Adding to this argument is the
further relaxing its tough lending
fact that leading economic think-
rules from the start of this year. The
tank, the New Zealand Institute
Even if high-LVR borrowers can
move promised to deliver a timely
of Economic Research (NZIER)
successfully secure a mortgage
boost for New Zealand’s real estate
believes that despite the easing of
with say a 15% deposit rather than
market, particularly helping those at
restrictions, the move has helped
the standard 20% requirement, that
the entry level.
investors more than first-home
can be tens of thousands of dollars
buyers who continue to miss out on
difference and a real gamechanger
affordable homes.
- enabling more to get into the
Early analysis shows while there has been some increase in high LVR (loan-to-value ratio) lending, the
Tough LVRs were introduced back
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prospective home buyers.
housing market.
However as NZIER believes, the
that city. The Reserve Bank’s policy
home buyers mostly can’t. Young
easing of restrictions has actually
now needs to reflect the Auckland
Aucklanders, in particular, should
been more effective for investors
market in 2019.
be able to take advantage of the
and led to an increase in rental stock. In turn this is now crowding out first-home buyers who are having to compete for low-cost housing stock with ever-greater numbers of investors.
With rents still rising, securing a low interest rate now and buying would be a better option for many. But with most still needing a 20 percent deposit, it’s impossible for
low interest rates while they last, but they can’t even get out of the starting blocks because of one big blunt tool that Auckland no longer even needs.
many. In fact, for Auckland first-
I appreciate that New Zealand
The Reserve Bank has said it is
home buyers looking at the average
household debt remains high and
committed to reviewing the LVRs
priced house, the required deposit
so I think it’s safe to assume the
ongoingly. It has indicated that it
would be around $200,000.
banks will keep a tight rein on their
would look at further loosening of the rules if the New Zealand housing market remained subdued. Recent figures would suggest that the RBNZ may well have cause to relax the rules again further this year.
I agree with the observation that continual surging rents
let’s now look at allowing more exceptions to
and record low
the rules when
interest rates will likely motivate more renters to
While many of the country’s
enter the
regional centres continue to report
housing
strong price growth, the Auckland
market.
market has well and truly flattened
However,
out. Century 21 is still getting plenty
what will
of listings, and we’re still achieving
actually
good prices for vendors, but the
get them
‘time to sell’ period has definitely
into the
stretched out with buyers taking
market is
their time.
reducing the
With the heat now officially out
credit conditions overall. However
“Since 1 January New Zealand banks have been allowed to lend 20% (increased from 15%) of their new loans to owneroccupiers with a deposit of less than 20%.”
they can be fully justified. It makes no sense when you have people earning more than enough to service a
mortgage, but
required deposit.
simply can’t get one because their high rent and living
of our largest and fastest growing
Of course first-home buyers
region, the Reserve Bank really does
should still pay a deposit and
need to look at further easing as too
their savings history and ability to
many Auckland first-home buyers
service the mortgage must still be
are simply missing out
heavily scrutinised. However, it’s
Well done on the Reserve Bank on
high time first-home buyers got a
continuing to review and slowly
fairer go. The blanket high deposit
soften the six-year-old lending
requirements need to go.
restrictions. However with their
Let’s not forget that the LVRs were introduced a few years ago to largely help cool what was a crazy Auckland housing market, and they
Property investors can mostly
have played a role in successfully
structure their business and lending
taking the unsustainable heat out of
to make it work. However, first-
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costs haven’t allowed them to save the required deposit. The policy is too rigid.
latest tweaking having little impact, it’s increasingly clear that a good shot in the arm is well overdue.
TAX TALK
CGT WOULD SEE INVESTORS ABANDON PROPERTY MANAGERS
SCOOP BUSINESS W W W . S C O O P. C O . N Z
A Capital Gains Tax (CGT) on residential property investors will do nothing to help the country’s housing supply. Instead it would probably only push up rents, as well as push out many professional property managers, says one New Zealand real estate boss.
would then struggle to keep up
changes are set to add further
with forecast demand, and possibly
pressure on landlords. “A CGT
even lead to overcrowding. “When
scheme may well be revenue
you have fewer rentals coming on
neutral for the Government, but
stream that of course will push up
sadly it won’t be for tenants. The
rents. At the same time, when you
property industry universally agrees
have the likes of retirees opting to
that rents would only become more
upgrade their own CGT-exempt
expensive, and that’s bad news for
home instead, then those capital
the rapidly growing number of Kiwis
investments just add to the future
in rental properties.”
sale prices of family homes,” he says. Mr Mitchell is also concerned that a CGT on property investors
“The Government has rightly said it will keep farmers and small business owners top of mind, but it also needs to carefully consider property investors who are crucial to the country as well,” says Ryan Mitchell, National Manager of Century 21 New Zealand.
could lead to fewer contracting the services of a property manager which in turn could see the disappearance of a level of professionalism and responsiveness for many tenants. “Most property investors are running their rentals on pretty tight margins, with the prospect of a future capital gain
Ahead of the Government formally
a key driver for many. If a CGT is
reporting back on the Tax Working
applied, sadly some will either
Group’s report next month, there
drop their property management
has been much speculation by the
service all together or not engage
property industry that a CGT would
one in the first place, simply to help
lead to current investors selling up
maximise their earnings now.”
and potential ones opting against buying a rental. Future supply
He says, rightly or wrongly, other possible government policy
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He says whether a CGT is going to apply to residential property investors arguably remains the biggest question mark as the Government now considers the report. “I just hope our landlords aren’t seen as an easy target. Most do a great job and work well with their tenants. Given the ongoing housing supply issues, New Zealand needs more rental stock than ever before. I call on property investors to also be top of mind for the Government in the coming days and weeks,” says Ryan Mitchell.
L AT E ST P R O P E R T Y STAT I ST I C S
LEGISLATION UNCERTAINTY AND ACCESS TO FINANCE IMPACTING MARKET
BY BINDI NORWELL, REINZ CEO
The number of residential properties sold in March fell by 12.9% from the same time last year to 6,938 (down from 7,964) according to the latest data from the Real Estate Institute of New Zealand (REINZ), source of the most complete and accurate real estate data in New Zealand. The last time sales volumes fell this much on an annual basis was 17 months ago. For New Zealand excluding Auckland, the number of properties sold fell by 10.5% when compared to the same time last year (from 5,513 to 4,932).
•
West Coast: +2.1% (from 47 to
CGT we’ll start to see volumes pick
48 – 1 additional house sold)
up. However, winter is normally a
Bindi Norwell, Chief Executive at REINZ says: “At a time when sales volumes are normally very
quieter time of year, so time will tell what happens with sales volumes going forward,” continues Norwell.
In Auckland, the number of
strong and total sales figures for
“Looking at the regions in more
properties sold in March fell by
the country are typically well over
detail, 15 out of 16 regions across
-18.2% year-on-year (from 2,451 to
the 7,000 mark, with 6,938 sales
the country saw an annual fall in
2,006) – the lowest for the month
this was the lowest number of
sales volumes. With listings down in
of March since 2008.
properties sold for the month of
both February and March, it’s little
March since March 2011.
wonder that sales volumes are down
Regions with the greatest decrease
so significantly,” continues Norwell.
in annual sales volumes during
“Despite some extremely
March were:
competitive mortgage rates on
“Sales volumes in Auckland were
offer from the banks and the high
down 18.2% from the same time last
chance of an OCR cut in the near
year, with all areas bar Waitakere
future, it appears the legislative
City, seeing a fall in volumes year-
changes on the horizon and the
on-year. Despite, the large fall
difficulty accessing finance are
in volumes, this was the highest
now really starting to impact the
number of properties sold in the
housing market in terms of sales
City of Sails for four months,”
volumes. Hopefully, as we gain
says Norwell.
•
Gisborne: -33.3% (from 75 to 50 – 25 fewer houses)
•
Marlborough: -32.2% (from 121 to 82 – 39 fewer houses)
•
Northland: -24.4% (from 246 to 186 – 60 fewer houses).
Only one region saw an annual increase in sales volumes during March:
more certainty over the coming months – particularly in relation to
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AV O I D B U Y E R ’ S R E M O R S E
4 THINGS MOST PEOPLE FORGET TO CHECK WHEN THEY BUY PROPERTY
B Y L A U R A B A R R Y,
E D I TO R , H O M E B E AU T I F U L M AGA Z I N E
Buying land, a house or an apartment is likely to be one of the biggest investments you will ever make. Property isn’t cheap, and its takes a lot of hard work, dedication and sacrifice to save up that deposit. So, if you have reached the property inspection stage of your firsthome purchase, there’s a few things you need to check – which most people forget about.
1. CHECK THE WORK STATIONS
you can work from home? Do you
situation, the noise situation, and
need a garden or are you happy
if it has facilities such as a doctor,
with a courtyard or balcony? These
dentist, supermarket and chemist
A house needs the essentials: a
are all important questions to keep
within easy reach. It also pays to
bathroom, kitchen and laundry.
at the forefront of your mind when
double check if there are any new
However, if you’re visiting multiple
viewing a property, because a one-
areas of development happening in
properties it can be easy to
bedroom unit with a small balcony
the suburb, because you don’t want
skip over a careful analysis of
might suit your life now, but it isn’t
to pay more for a beach view, only
those rooms. If you’re looking at
going to cater to a couple with a
to find that beach view will soon be
apartments, then the laundry can
child and a dog. Try to future-proof
obscured by an apartment building
be particularly illusive. Make sure
your investment so it can grow and
or shopping centre.
to check the exact location of the
adapt as your life changes.
laundry, that there’s enough room in the kitchen to be functional and the layout of the bathroom.
2. KEEP THE FUTURE IN MIND Although you may just be buying your first property, are you planing to have children? Or planning to get a pet? Do you need a space where
4. DO YOUR RESEARCH
3. SPEND SOME TIME IN THE AREA
If you plan to buy an apartment
You don’t want to move into your
report and familiarise yourself
brand-new home, only to discover
with any levy fees, past, current or
it’s under a flight path, the suburb
future issues, future plans for the
has heavy traffic or is slated for
building and any maintenance or
development. Spend some time
repairs that need to be done. It’s
getting to know the suburb and
important to know what money you
familiarise yourself with the traffic
might be expected to cough up.
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be sure to get a strata inspection
CENTURY 21
F I N A N C E U P DAT E
MORTGAGE RATE WAR: WILL RATES DROP FURTHER? BY J U L I U S C A P I L I TA N ,
C 2 1 H O M E LOA N S , N E W Z E A L A N D
With so much talk surrounding the buoyant housing market and increased median house prices across New Zealand, many are wondering what the future will hold in terms of fluctuating mortgage rates and proposed legislative changes.
The big surprise recently was the announcement by
Most economists had been
Secondly, there is poised to be a
predicting that the next move by
reduction in the LVR’s requirements
the RBNZ would be to lift the OCR
which will allow both new investors
slightly upwards, so this new signal
and seasoned buyers to be building
shows the concern that the Reserve
their property portfolios sooner.
Bank has around our slowing
This of course, is great news for
economy, softer real estate market,
borrowers.
and also reflects possible impacts of wider world issues.
to maintain the current historically low Official Cash Rate (OCR) of 1.75%. Even more surprising
I think we can expect to see the
Recently I had the benefit of
advertised 3.99% special hanging
attending a talk by Westpac Chief
around for a while, and we may even
Economist Dominic Stephens.
see some discounts as we head
During his presentation he
further into the year.
mentioned two great points to watch out for in
the Reserve Bank of New Zealand
2019. The first, he mentioned, is due
“Bank funding has become cheaper and, as a result, this will be passed on to the consumer meaning we could see a large drop in mortgage rates... ”
to a drop in bank swap rates. Bank funding has become cheaper and, as a result, this will be passed on to
however was the RBNZ signalling a possible decrease in the OCR as early as next month.
In regard to current mortgage rates,
the consumer meaning we could see a large drop in mortgage rates and for longer.
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Whilst the mortgage war between the banks continues, we can only expect the advantage to pay into the hands of the consumer. Century 21 Home Loans are well equipped to guide you through the entire process and potentially save you thousands of dollars in interest. We have access to over 40+ lenders to help you find the best loan type suited for your situation, saving you money, time and energy. J U L I U S C A P I L I TA N M: 027 2777 352 E: julius.capilitan@century21.co.nz
C21 LIFESTYLE
RE-ORGANISE YOUR HOME THIS AUTUMN With the change of seasons fast approaching, it can be a great time of year to clean out and reorganise your home. Here are five tips on re-organising and decluttering your home this autumn.
1. ROTATE YOUR LINEN CUPBOARD
drawers’ don’t get out of hand. Most homeware and department stores stock no end of dividers, tubs, hooks
4. DRAW UP A CLEANING SCHEDULE
and containers for organising all
Drawing up and sticking to a
your drawers and cupboards around
cleaning schedule can help you
the home. You could also look for
keep on top of housework. Kitchens
cost-effective ways of creating
should be cleaned on a daily basis,
storage in your home, for example
however, scheduling time to keep
using glass jars from condiments
on top of other chores such as
to hold jewellery, pens, or even
cleaning out the fridge or washing
toiletries in the bathroom.
windows can often fall by the wayside. By consistently setting
3. DECLUTTER YOUR SPACE
aside the time for these tasks you could have a picture-perfect home
As the days and nights get cooler
It’s always a good idea to get rid of
it may be time to pull out the
any unnecessary items from your
feather doonas and woolly throw
home. The change of seasons can
rugs. Instead of trying to cram your
be a perfect time for sorting out
summer and winter linens all into
your wardrobe and getting rid of
your cupboards, try using space
any items of clothing you have not
saving vacuum sealed bags to store
worn in at least the last 6 months.
anything that may not be in use for
You could donate them to charity or
the coming season. Not only will
give them to family or friends who
You may have spent a lot of time
they save you space, but if you use
may want them. Sort through draws
organising and sorting out your
clear bags, you can make it easier to
and cupboards and throw away
cupboards, draws and other storage
find the items when you need them
any odds and ends that you have
space, so don’t let it all go to
again.
no use for, or can’t recall why you
waste! There’s no use in setting up
own in the first place. An easy trick
cleaning schedules or organising
for efficient decluttering is to use
your storage and then letting things
three boxes or containers, and label
slip a week or two later. Be vigilant,
them ‘throw’, ‘relocate’ and ‘donate’.
and try to ensure that your hard
Systematically sorting things will
work is maintained consistently.
2. HAVE A PLACE FOR EVERYTHING By taking some time to establish a place for everything in your home, you can help to ensure that those ever so prevalent ‘junk
make the job easier and a lot less time-consuming.
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all year round. A cleaning schedule can also be a great way to delegate tasks to your kids without any fuss over ‘who does what’ or ‘who does more’.
5. MAINTAIN YOUR SPACE
FIND A PROPERT Y M ANAGER W HO W I L L PR OTECT YOUR BEST INTERESTS At CENTURY 21, we look after your property as if it were our own, giving our clients the peace of mind in knowing their investment property is protected by professionals. Our knowledgeable team of experts are here to assist you with all of your property needs. We take a holistic approach to property management and provide an all-encompassing property service solution to our clients. If you would like to know more about our property management services, or curious to know what return your property might achieve in the current market, please speak to us today.
All enquiries are highly confidential.
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