KIWISAVER

KIWISAVER SHOULD BE ALLOWED FOR INVESTMENT PROPERTIES

The Government needs to broaden KiwiSaver’s withdrawal criteria to allow more New Zealanders to access the scheme to buy an investment property, says one real estate boss.

KiwiSaver has more than three million members with average balances of around $20,000, with many accounts experiencing volatility in value since the Covid-19 health and economic crises. Inland Revenue figures revealed today also show in April and May more Kiwis tapped into their retirement savings by making hardship withdrawals.

Last year the Retirement Commissioner suggested that KiwiSaver members should be allowed to withdraw money from their accounts to buy rental properties, not just first homes. Owner of Century 21 New Zealand, Derryn Mayne, now believes the concept needs to be urgently revisited by the Government.

“Given these unprecedented times and the growing opportunities out there, the rules now need to be broadened.

“You can withdraw funds for your first home, or for land to build your home, if you’ve been in KiwiSaver for at least three years. There are also circumstances in which people may access their funds if they’ve previously owned a home. However, there remains absolutely no opportunity to use the voluntary savings scheme to buy a property you’re not going to live in,” she says.

Ms Mayne says the strict owneroccupier criteria was fine during the Global Financial Crisis over a decade ago, as there were far less people in the scheme and the average balances were less than $3,000, given KiwiSaver was launched in 2007.

“The Government needs to think of new ways to encourage property purchases. We are not short of buyers for now, but as a country we need to think laterally if we’re to keep our housing market ticking along.” The Century 21 New Zealand real estate boss says it’s wrong people can only access KiwiSaver as an owner-occupier property purchaser, when the reality is a lot of people simply can’t afford to buy where they want to live.

“If you live in Auckland and can’t afford to purchase there, you should be able to stay renting

but use your KiwiSaver to buy an investment property in say Waikato. That’s increasingly appealing given the lower deposit requirements, rock-bottom interest rates, and a buyers’ market.”

As KiwiSaver funds cannot be used for an investment property, those using the scheme must live in the home for at least six months. Ms Mayne says any fear of investment properties, using KiwiSaver, being quickly flipped could be easily rectified. A rule could ensure people accessing their funds have to hold onto to their investment property for certain amount of time.

She says enabling Kiwis to use the scheme to help buy an investment property is a safe bet for them and positive for the country. It would boast home ownership which has declined over the past 30 years from about 78% in the 1980s to about 55% now.

“Residential property will always deliver a strong capital gain over the long-term. What’s more, such a simple policy tweak would give a shot in the arm to New Zealand’s property market and help the overall economy,” says Derryn Mayne.

NATIONAL HOUSE PRICES CONTINUE TO RISE POST-COVID

B Y BINDI NORWELL, REINZ CEO

House prices have continued to surpass predictions for how they would perform post-COVID with median house prices across New Zealand increasing by 9.2% in June to $639,000, up from $585,000 in June 2019 and up from $620,000 (3.1%) in May 2020, according to the latest data from the Real Estate Institute of New Zealand (REINZ).

June marks 105 months in a row of year-on-year median prices increases for the country.

Median house prices for New Zealand excluding Auckland increased by double digits with an 11.3% uplift to $540,000, up from $485,000 in June last year and up from $530,000 in May this year.

Additionally, Auckland’s median house prices increased by 9.2% to $928,000 up from $850,000 at the same time last year and up from $904,500 in May this year. This was the second highest median price on record for the City of Sails.

Waikato achieved a record median price in June of $615,000 up from the previous record of $600,000 set last month, thereby marking two consecutive months of record median prices. Bindi Norwell, Chief Executive at REINZ says: “Earlier this year, there were a number of predictions that house prices would fall postCOVID. However, we are yet to see evidence of that happening, with every region in the country seeing an uplift from the same time last year, and 10 out of 16 regions seeing an uplift from May.

“With wage subsidies and mortgage ‘holidays’ still firmly in place, and demand for good property exceeding supply, we wouldn’t be so bold as to say there won’t be an easing of pricing in the coming months when these support mechanisms come to an end. But right now, Kiwis’ love affair with property continues unabated – especially with the low interest rates we currently have in the market,” she continues. The number of properties sold in June across New Zealand increased by 7.1% from the same time last year (from 6,184 to 6,625) - the highest number of properties sold in a June month for 4 years.

For New Zealand excluding Auckland, the number of properties sold increased by 6.2% when compared to the same time last year (from 4,306 to 4,571) – the highest for the month of June in 4 years.

In Auckland, the number of properties sold in June increased by 9.4% year-on-year (from 1,878 to 2,054) – the highest for the month of June in 4 years.

Shaking off the COVID-19 impact, June was the first time in three months where regions have started to see increases in annual sales

volumes, with 10 out of 16 regions seeing annual increases.

“Not only did sales volumes return to ‘normal’ in June, they were the highest for a June month in four years suggesting that the impact of lockdown is now well and truly behind the country, and that people have been able to get on with their sales and purchasing decisions as per usual,“ says Norwell.

“With thousands of New Zealanders returning home as a result of New Zealand’s limited cases of COVID-19, many of these individuals are looking to purchase property for their family to live in which is also likely to have bolstered June’s sales volumes,” points out Norwell. “However, we’ve said it before, and it’s important to say it again, that this may well be a postlockdown peak in activity levels. There are concerns that with the wage subsidies, mortgage holidays ending and an election in September, that there may be a potential trough in activity levels in the coming months,” she warns.

“Although, with a 19.7% increase in new listings in June – the highest for the month of June in 4 years – hopefully this will lead to more choice for buyers in the coming months,” continues Norwell.

The REINZ House Price Index for New Zealand, which measures the changing value of property in the market, increased 8.6% year-onyear to 2,991. The HPI for New Zealand excluding Auckland increased 9.5% from June 2019 to 2,982 and Auckland’s HPI increased 7.7% year-on-year to 3,002. In June, Manawatu/Wanganui had the highest annual growth rate with a 19.4% increase to a new record index level of 3,683. In second place was Gisborne/Hawke’s Bay with an annual growth rate of 17.8% to a new record index level of 3,226 and in third place was Southland with a 12.2% annual increase to 3,415.

Looking at the month-on-month shifts to help gain a clearer picture of how the underlying value of the market is recovering from COVID-19, there were three new record high index levels recorded in June, with 9 of the 12 regions recording a month-on-month increase. The only exceptions to this were Northland (-0.7%), Bay of

A N N U A L M E D I A N PRICE CHANGES AUCKLAND 9.2% 17.1% $ NORTHLAND 10.5% BAY OF PLENTY 8.7% $ Record Median Price WAIKATO 29.4% 12.0% GISBORNE

NATIONAL MEDIAN PRICE: TARANAKI 15.6% 18.8% $639,000 13.2% MANAWATU / WANGANUI HAWKE’S BAY 9.2% NELSON 2.4% 3.9% WELLINGTON 10.5% 45 MEDIAN DAYS TO SELL: WEST COAST 15.8% TASMAN MARLBOROUGH 5.4% CANTERBURY Source: REINZ Monthly Property Report 14 July 2020. SOUTHLAND 19.8% OTAGO 21.7%

Plenty (-0.7%) and Otago (-1.0%). The 1-month data showed that the underlying value in the market has mostly held strong and begun to recover compared to May. The HPI for the country increased 0.9%, for New Zealand excluding Auckland it increased 0.8% and Auckland’s HPI rose 0.9% compared to May.

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