Welcome to the latest addition of our market updates and thoughts .
It doesn’t seem right to write anything today without some mention of the tragic events that unfolded in Christchurch. Personally, I feel in denial and am shell-shocked by the whole event and deliberately avoid hearing too much about it. I have avoided most of the TV news items and when I do hear one, I tend to change channels, when yet another reporter with the same somber expression and sad eyes is earnestly talking about some new angle or interviewing another expert or victim. Its not the New Zealand I know.
The Chinese say Crisis and Change are twins. They are from the same womb. Out of this crisis we are seeing the birth of a new level of tolerance and acceptance in New Zealand, at least for now. I personally find myself truthfully questioning those little everyday thoughts of intolerance and discrimination I have, along with a resolve to say something the next time I see it in others. It feels like the standard “It’s just a point of view, what harm can it do ?, no longer works.
If this event is the dawning of a new age of acceptance in all New Zealanders, then maybe, just maybe, it had a purpose.
We are seeing more and more evidence the market is hitting a slowdown period. Open homes numbers are way down and so is internet inquiry. The listings are coming on the market faster than they are selling so buyers have a choice of suitable properties for the first time in years. First home buyers are still there in numbers but the investor market has slowed down.
Houses still sell in this type of market but instead of there being 100-140 sales per month there will only be 70-80.
What does this means ?
- 2-4% property growth for the next 2-3 years
- Watch the Auckland market closely as the recovery will happen there first
- The next property surge is most likely in 2022.
- The 2021 Americas Cup racing may bring that forward a year BUT it didn’t have much effect last time it was here, so why would it this time?
- If you want to sell a rental investment get in now. I have recently sold three out of four of my readers rental properties and it took a lot more time than both of us expected and in one case we sold at the bottom of the price expectation.
- Investment property prices will tank and maybe even drop a little over the next 2-3 years
- You need to get the asking price correct right from the start. You can’t put a higher price on and expect offers. If the property is too high in comparison to what other properties are listed at, you won’t get any offers at all.
- Buyers are testing the market with low offers.
- We wont see the pricing drops that are happening in Australia. Our market conditions and economy are very different. For a good explanation of the reasons get yourself onto Tony Alexander’ ( BNZ economist) newsletter.)
Put a medal on the private landlords chest
What a sad day it would be, if the Government and the Reserve Bank ever succeeded in driving the private landlords out of the rental market. Some simple facts
- 450,000 households rent ( Census figures 2013)
- Housing NZ own 62,000 rental homes ( this figure is gathered by stealth as they seem to fudge their actual ownership by claiming properties they lease off private landlords)
- That means 388,000 rental properties are owned by private landlords
- That’s 6 out of every 7 rentals
- If the private landlords all got out, you would presume it would be the governments job to provide the missing rental housing.
- At an average cost of $500,000 each the Government ( ie you the taxpayer) would need to stump up with 194 billion dollars to replace them.
- Or $53,000 extra tax for every one of the 3.64 million people who pay tax in NZ
- To put that in perspective the Christchurch earthquake rebuild has cost around 40 billion so far.
- The logical conclusion is …we need the private landlords so stop beating up on them.
Well not quite! its just that I have been guided by the very lovely and smart Julz Cooper to provide a weekly Facebook video called “ Tuesday Chats with Barry ‘. These are my current and unscripted thoughts on mostly Real Estate matters condensed into a 2-3 minute video.
I’m sure there is an easy way to find these but if not follow the links;
Likely to stay about the same levels for some time yet or they may even drop another .5% . Turkey is going into recession, China’s growth is slowing dramatically, Argentina if in financial free-fall, the USA is starting to lose a lot of the ground it had made up and Australia is feeling the pressure. The world economy is way too shaky to see any major hikes and we still have the delights of Brexit ahead.
Latest updates in the new Rental Regulations
Just in case you don’t get the very valuable Rental Report from our Rental Business Development Manager he is a section of her document on the new rental standards. ( Courtesy of Renee Wilkinson 14/3/19)
“As you are aware the regulations that have been brought in over the past three years have been to do with insulation and smoke alarms. Every rental owner should have smoke alarms installed three meters from every bedroom and /or sleeping room, and on every level of house. With the insulation every investment property owner should ensure that the insulation on their property should meet the guidelines by 1 July 2019.’
On Sunday the 24th February 2019, the government released the new regulations that investment properties owners will need to comply with.
Heating Rental homes must have a fixed heating device that can heat the living room to 18c
Insulation Ceiling and underfloor insulation must either meet the 2008 Building code , or have a minimum thickness of 120mm ( nearly 5 inches)
Ventilation Windows in the Living-room, dining room, kitchen and bedrooms , must be operable and extractor fans must be in rooms with a bath or shower, or indoor cook-top.
Moisture and Drainage If a rental property has an enclosed sub-floor, it must have a ground moisture barrier if it is possible to install one
Draughts Landlords must stop any unnecessary gaps or holes in walls, ceilings, windows, floors, and doors that cause noticeable draughts. All unused chimneys and fireplaces must be blocked. “
Now here is something to love. If you are a landlord you have until July 2021 to comply with these new standards, yet Government housing doesn’t have to comply until July 2023, but then we have a new date of July 2024 before all rental homes must comply. Figure that out if you can.
An interesting but thought-provoking study
In Professor Lipton’s book “The Biology of Belief” , he quotes a study done by Barbara Starfield in 2000 in which she logs the deaths that are caused by side effects of medical treatment or prescription drugs, rather than the illness itself. These are called “ iatrogenic deaths”.
“According to conservative estimates published in the “Journal of the American Medical Association” Iatrogenic illness is the third -leading cause of death* in this country ( USA). More than 120,000 people die from adverse effects of prescribed medications each year . A more recent study, based on the results of a ten-year survey of government statistics, came up with even more dismal figures. ( Null et al, 2003) That study concludes that iatrogenic illness is actually the leading cause of death in the United States and that adverse reactions to prescription drugs are responsible for more than 300,000 deaths a year. “
*( In 2017 165,500 people in the USA died of Heart disease and 152,500 people died of cancer)
As I have the pleasure of growing older, I am appreciating some different things. Firstly, its grandchildren. To see the way, they deal with their world is magic. The energy and enthusiasm they bring to the table and the way they master so many new skills such as walking and talking. You can see their intelligent little minds working things out behind their intently staring and very clear eyes.
Secondly to the younger people in my life. The first-time parents who have blessed me with their friendships. These people are like the Yin to my Yang. They have a different way of seeing the world and bring a balance to my life and a fresh way of looking at things. Sometimes the way I used to look at things and sometimes the way I still do, but often from a perspective that I hadn’t thought of. So, to the younger generations, thank you all for being in my life, you make it so much richer.