2021 has got off to a rollicking start. House prices in Whangarei have been going up by an average of $1, 230 per week for the last year. So the question is “ Will this continue or are there some pressures building to change this. I think so!!
Interest rates
Let look at the historical reason for the current rises.·


Low interest rates. its cheap to borrow money and you get a better return from houses than from the bank.· Supply and demand. There is still a chronic shortage of housing. The supply issue in partly being addressed. Higher property prices mean marginal subdivisions are profitable again. Building permits are steadily increasing across the country, so we are finally beginning to close the gap between supply and demand, but we have a long way to go and it will be 10 years before we actually catch up.· Returning Kiwis are buying up properties. Many of these are in the county where they were born, so the provinces are doing well.· Qualified KiwiSaver buyers are in the market in ever increasing quantities.· Building costs are going up fast. In 2016 the average cost to build in NZ was $1906 per m2, with many variances depending on size, quality, and location. In 2020 that had risen to $2238 and will be higher today. ( Canstar.co.nz) We are now nearly twice the cost to build the same house than our Australian cousins who are paying around $1,190 per M2. (Michael Yardney Property Update ) . Get your kids to get a trade if they are looking to be wealthy in NZ

1. Small Business Funded By House Prices
2. House Prices In The Next Six Months 
3. House Prices Doubling Every 10 years ..
4. A Critique ! A Warning About The Auckland Market
5. Rental Market Headwinds ? 
6. Hunterwasser Tribute 
7. Wild Inflation Theory 
8. Electric Cars Parity with I.C.E.
9. Fusion Energy and the Future       

Welcome to the next edition of my mostly real-estate thoughts, facts and predictions for the future. The last letter was in July and as is becoming increasingly common it takes a few months for the dust to settle enough for me to get an idea where things are going in the property market. In the last issue I said that while logic told me that we had to be heading into a recession, we were seeing no sign of that in the markets, and that I though we would see the market stay flat of even rise for the rest of the year. Well half that prediction was wrong. It did not stay flat, but I was way ahead of every noted economist. 

Small Business Funded By House Prices. 

I managed to spend about 2 minutes walking alongside John Key, when he was Prime Minister, as he was heading from our conference for a rendezvous with a government BMW. I was desperate to get my message across that small businesses depended on house price inflation. He probably thought I was raving loony, as I garbled on about the link, that seemed so obvious to me, a business owner. He finished my monologue by saying “Small business needs rising house prices! I get it”. My teaching the then Prime Minister, who had a lengthy and distinguished career in the financial world to suck eggs, was done! 

So, let me walk with you for two minutes …. Rising house prices are essential for business growth, survival, and capital expenditure. Approximately 97 % of all businesses in NZ are small businesses and they employ around 30 % of the working population. (MBIE). Any small business owner will tell you that when they need money to:- start up, buy more stuff, get an overdraft, buy more stock , buy more machinery, expand , or just survive, that when they go to their bank for funding, they are going to get asked one overriding question. . “What’s your house worth?”. While the banks are interested in other aspects of your business, what they fall back on is the security you have in your house or houses. That is what they primarily lend you money on. They know that this is the only readily realisable security they can get. They also know it motivates the hell out of you to make sure your business succeeds. The more your house is worth, the more you can borrow. The more you can borrow the more you can grow your business. The link between house prices and funding for small businesses is cast in chains. The last thing the government, the banks, and small business owners want to see, is property prices declining. That would be the beginning of a really, really, big financial disaster. 

Which Segway’s into the Reserve Bank’s Chief Economist, Yuong Ha, saying the bank was not responsible for soaring house prices and cannot control them. “House prices are not something we can control, even though people put that on us”. And neither should they. Houses are a commodity and should be market driven by supply and demand. We do,  and will see government intervention in house prices, but imagine if the government made legislation that controlled other asset classes, like the share market prices or Gold prices. Imagine the uproar!

Where Are Prices Going In The Next Six Months 

The short answer is up and accelerating. 

There is way too much pressure from the multitude of buyers to see any other result. We are seeing multiple offers on properties similar to the peak three years ago. Open homes are full, and we have people making offers on property without seeing them. What we are seeing in the streets

  1.  First home buyers. As more and more young people build up a deposit in KiwiSaver, more and more of them have a deposit for a house and are they ever in the market. Any property that comes in their price range will get 20-40 people through the first open home and it is probably going to have a deal on it, within a week. KiwiSaver started 17 years ago and after three years people qualify to remove some money for a deposit. That means we have 14 years of qualified first home buyers entered or entering the market. These people are pushing the investors out of this section of the market as they pay more than the value the investor sees. A negative side effect is that the first home buyers are moving out of rentals and widening the gap between desirable tenants and less desirable, meaning the overall quality of tenants is declining.
  2.  Money fleeing the banks. We are seeing more and more purchases where the buyer is pulling their cash out of a bank and putting it into a property. These people are often buying the one- and two-bedroom smaller properties that do not suit the first home buyer. Most of these people are older and have the cash, so we are not seeing many sales subject to finance
  3.  People relocating from the main centers. There seems to be a huge amount of movement from the bigger cities to places like Whangarei. These people are often cashed up, as they are selling more expensive homes. I mention the cash element, current Bank strategy of limiting Loan to Value Ratio’s is only going to hurt the first home buyers and not the second two groups.
  4. With the current pressure on the available stock and with interest rates predicted to remain low or go even lower, there is no reason to believe we are going to see a slowdown in the market for the next 6 months, at least, and I suspect it for 12 months . Again, logic says that we must have an impact from the Covid recession, but every prediction of when that was going to happen has so far been proven wrong. We are through the end of July crash, when the subsidies would stop and kill the market, and through September crash when the impact of the subsidies stopping would be felt. The only predictions still standing are the ones saying next year when the impact of the subsidies stopping is going to be really felt. I’d hate to be the emperor standing naked in my new clothes but remember this Covid induced recession is not like any other recession and all the usual rules do not seem to apply. The recently released unemployment figure of 5.3% demonstrates that the predicted mass unemployment simply is not happening. We have had way worse unemployment rates even in good years. When you take out the 4% totally unemployable the real rate of active job seekers is exceptionally low, with some industries crying out for workers. The Government tax take is nowhere near as bad as predicted so again, bad news predictions proving wrong.  The reality is we are being told things are way worse than they are proving to be.

We may not see the calamitous and dire future predictions that we have been foretold occurring. We do not seem to have died from lack of tourists. 10 billion of the money that was spent on overseas holidays is now being spent on NZ holidays. I thoroughly enjoyed my latest camper holiday, where the first thing you noticed was the different attitude of the camper staff to their own people, and the second you noticed was that everyone pulls over to let cars get past. You don’t see the big lines of cars following slow campers. The pickup and drop off terminals were very busy. There were plenty of campers on the roads and the holiday parks were full.In Reefton, Diana and I dropped into “Dawson’s Bar and Dining” looking to talk to a local about the town. I asked the extremely helpful bar lady to point out a local to me. Her finger waivered in the air as she used it as pointer to scan left and right over the 30-40 diners and drinkers, before finally with a sense of triumph, identifying one couple and a single manic looking gentleman. 3 locals out of 30-40 people. The point being NZers are out and about seeing their own country and spending much of the 20 billion they would have spent overseas this year in good old NZ.But for me the biggest bonus of all was the lack of social media posts of annoying family and friends basking in some exotic overseas location, while I was hard at work suffering the rain and cold. 

The fundamentals of low interest rates, a shortage of houses and a growing population are still in play and have been for the last 15 years. Basically, until the supply catches up, the demand will drive prices up. (See Something to watch in Auckland)

“Do House Prices Really Double Every 10 years” by Mark Lister. Craigs’ Investment Partners 

An interesting headline that always captures my eye, as these articles are invariable written by someone with a barrow to push. Mark starts off his article saying he is no property hater and recommends young people getting on the property ladder. Craigs are predominantly a share broking and investment firm and property investment takes money away from firms like this.

 In this article he quotes Reserve bank data from 1962. He writes “that at first glance, the numbers are good. New Zealand House prices have increased 8.2% per annum over that 58-year period, so they’ve in fact doubled every nine years”. He ends his article saying that “It’s also based on some periods in our history when inflation was exceptionally high, this makes the rule of thumb much less useful, and potentially a little less accurate” 

And this is the argument all these writers follow, like a well-worn Wildebeest game trail into the Great Green Greasy Crocodile infested Limpopo river. They try to claim that this increase is not truly representative of true growth, because we have inflation and gross domestic product and these events  must be taken off housing growth. Mark  also talks about how mortgage rates have fallen and made housing more affordable, thus distorting the increases.

He mentions that the biggest rises have occurred in times of high inflation and therefore are biased  increases And the answer is “Of course!! That’s the exact point and that’s why people invest in property and that why the rule of thumb of doubling every 10 years is accurate”. Do not complicate it Mark. Your article clearly shows that despite fluctuations in interest rates, despite how well the gross domestic product is doing or not doing , despite economic slowdowns and rises, despite high interest rates and low interest rates, despite plagues of locusts and corona viruses, property does on average double in value every 10 years , (or nine years in the last 58 as your research shows.) This does not just go back to 1962, but back to when property records began. 130 years in NZ and Australia and 900 years in England (the Domesday Book)

Something To Watch In The Auckland Property Market. 

Auckland looks like it is making inroads into its severe housing shortage. Previously this figure has been estimated at around 40,000 by noted economists like Tony Alexander, however a new report from the Auckland Council Chief Economist David Norman has the current shortfall at around 15,000 homes. This in part will reflect the intensive building programme in Auckland, but also by the slowdown and shift in immigration trends. While net immigration  figures are up on last year (79,400 this year as opposed to 52,300 last.) The people coming into NZ now are predominantly returning New Zealanders, and with our borders closed we are not seeing the number of non-NZ migrants to the country. The New Zealanders differ from the more typical overseas migrants as they head back to their areas of origin, rather than piling into Auckland as the non- Kiwis have done in the past. Along with the baby boomer retirement drift out of Auckland for financial and lifestyle reasons, we could see the pressure on Auckland house prices slow down or even stop. The result will be a stagnation of prices in this area. It is 3- 5 years away, but we may be seeing the beginning of the trend now. It looks like we will have a Covid vaccine before then ,and it will be interesting to see how open our borders are to overseas persons after this scare. You can be sure there will be more pandemics coming and some of them will be deadlier. You can also be sure New Zealand will be an even more attractive destination to people overseas, with our ability and willingness to close the borders in times of crisis. Just how open our borders are will decide the future growth in the Auckland market.

Rental Market Signs. 

We are seeing an unusual set of statistics in the rental market. We have previously talked about price glass ceilings for rents. $400 per week was one of these I talked about in 2018, but that ceiling is well and truly shattered. Rents are going up fast at present with an average increase of $7 in the last month and average rents are closing in on the next ceiling which will be $500 per week. There are some potential signals that all is not as good as it seems. The days a property is vacant has increased to 26.5 days. Correspondingly we are seeing both enquiries and applications down on previous months. There are a lot of potential reasons for this, including the approach of Christmas, but one suggestion is that people are not prepared to pay the rents being asked. We will watch this closely as we know there is a chronic shortage of rental properties and we went through something remarkably similar when average rents approached $400. For the first time in my memory , it is usually cheaper to own a home than to rent it. 

Hunterwasser Nears Completion. 

Never has a building in Whangarei been so mired in conflict and so polarizing in opinion. You would this it was  another Trump Tower. The process to fund it followed a very convoluted and twisted path, and looking back on it there were obvious signs of “clever manipulation “ of the public, including creating a referendum that split the “No” vote in half and despite assurance to the contrary,  it will undoubtedly be an ongoing cost to the cities ratepayers for many years to come. 

However, that said, as this magnificent structure slowly and sensuously strips from its bridal white robes, revealing tantalizing glimpses of gleaming multi coloured tiles and soft  seductive  and sweeping curves, even the staunchest critic must be impressed. We are seeing a masterpiece being created. 

For 100’s of years after the controversial process has been forgotten, this unique building will become a symbol of Whangarei and its future. It will make national headlines as it becomes the Ohakune Carrot or the Paeroa L&P bottle of Whangarei. It will spread across the world in people’s selfie photographs and will put Whangarei firmly on the map. 

Congratulations to the many who fought so hard for this building for over 12 years.  Who had the vision to see what many (including me) could not see. You will be remembered in future generations as some of the current day founders of our city . 


Inflation Theory A’la Barry 

Here is a strange theory I have been working on. In July I mentioned that when you print money you make that money worth less, because there is more of it, and the things it buys worth more. Classic inflation theory.  Historically when money gets created through “Quantitative easing “inflation gets going. But this is not happening yet. Japan has been deliberately printing money for about 5 years to try to get inflation moving, and so far, it has fallen as flat as a  rice cracker! 

So, what if we were in fact getting the inflation that quantitative easing creates, but it was only showing up in certain areas. Imagine that brick pavement you walk on in most city centers. The ones with brick sized pavers and lots of cracks between. As those bricks push down into the sand underlay you get sand rising through the cracks and settling in the grooves. If we look at the sand as the things that are going up in price like houses, shares, and gold. The bricks represent the things that are not going up in price, like cars, TV’s, and toasters. These things cannot go up because there are so many of them and if the manufacturer put the prices up, you would buy a different one, or hold off buying one for a while. Technology and mass production are constantly driving the prices of these items down so holding off can save you money. So, let us say there is inflation occurring,  but its only in selected areas like property and shares. They are the cracks in the pavement.  When we look at property it is deliberately excluded from the inflation index, as is the share market. So what we are seeing as a rising market could in fact be inflation happening, but not across the board as has previously been recorded, but specifically in property.  

As I write this it seems a bit far-fetched, but I am leaving it in the newsletter for those with greater knowledge to comment. I would also point out that this  ties in with the K shaped recovery we are told about, where the recovery is very uneven and favours certain sectors over others, such as medicine over travel.

Electric Car Prices Due to Hit Parity Next Year. 

Just putting this prediction out there again. New electric vehicle costs are predicted to reach parity with internal combustion engine vehicles next year. If you are in the market for a new car then you should watch this closely, as once this happens, internal combustion cars are going to be hard to sell on the second-hand market. Initially the cheaper vehicles will come out of China and India, but once started the rest of the car companies will follow suit.

New Renewable and Radioactive- Free Power Source Possibility 

We are all aware of the nuclear fission energy source. That is the classic atomic reactor that splits up very heavy atoms like Plutonium or Uranium and captures the energy released to create electricity. The problem being that pesky by-product radiation. 

A British company based in Oxfordshire has switched on a new type of power source ( Tokamak Fusion Reactor) where they fuse two lighter elements together and harness the energy, so instead of splitting a heavy atom they fuse two light atoms together in a process called nuclear fusion, as opposed to nuclear fission . The process attempts to create the same type of energy the Sun creates with its hydrogen and helium mass. So, providing they do not turn us into a mini sun ourselves,  (it is switched on so that minor setback has passed), the new type of energy source could create unlimited power with zero radioactive by- products. 

This will revolutionise power as we know it, with cheap , efficient and green energy for Cities, Houses and vehicles. 

While researching this article I looked up the “ NZ Nuclear Free Zone Act 1987 “ to see if we would be allowed to use Nuclear Fusion, and guess what, this much quoted act only stops nuclear powered warships, weapons and craft. The act allows the building and using of Nuclear Power. You could knock me over with a radioactive feather!!(Thanks Rupert Morrish for putting me right on Fission and Fusion )

Optimize Realty ltd Licensed Agent reaa 2008
Barry Joblin areinz licensed agent reaa 2008

Why Me?

Some years ago, I was standing in front of this famous Van Gogh Painting “Stary Night”. (It is in the Rijksmuseum in Amsterdam).  I remember standing amongst a crowd of other people and being totally under its strange and fascinating spell. I remember thinking “that’s so simple I could paint that!”. Years later I tried, and tried, and tried, and although some of my work was passable, I could never capture the movement, colour, and mood his painting drew from me.  (Incidentally, the view is from his asylum window, so he was quite mad at the time.) 

And strangely this relates to Real Estate sales.  If you asked me today   “Why would I use you , what can you do for me that I cannot do for myself?” or What makes you different from any other agent? I would have difficulty answering.  I could give you all the standard marketing, knowledge and negotiating answers, but that is not really any different from what anyone else would say.  What I have is 35 years of Real Estate sales experience and that has built a set of skills and a special kind of instinct.

  1. It is not what I do, so much as when I do it.  
  2. It is not closing the sale but knowing when and how to close it to your advantage.
  3. It is not simply negotiating the price, but knowing how to read the other party, so that I know what their top dollar is before they know.  
  4. It is not simply marketing your property through the various mediums but knowing how to target the right buyers and how to enhance and showcase your home’s special features and benefits. 
  5. It is not simply getting an offer on your property, but how to add value and desire to your home so that you get the best market price.
  6. It is not about just knowing the market today but being able to guide you through what is going to happen tomorrow.  

Based on my extensive experience I have a proven track record of getting the best price, far in excess of the fees you pay.. 

So call me if you are thinking of selling your property.

• The Current Situation in our Office
• Section Development Down
• Finding lions in Africa!
• Super low Interest Rates and Job losses.
• Banks Being Kind.
• Number of listings
• Changing Patterns Due to Low Interest Rates
• My Old Enemy the Media and Job Losses.
• Hiding in the Invisible Future
• Debt levels
• Making New Money
• Effect on Assets
• The New Migrants
• Election Year
• A Close Relative 
• Prediction
• The Two World bubbles.
• Can You Help

I pride myself on making accurate market forecasts of where the Real Estate market in Whangarei is going next. Over the past 35 years I have had past patterns to call on to predict the future. This market is unlike any we have ever seen before and therefore there are no patterns to look at, or follow. It is a big mistake to look at past recessions and say this one will follow the same patterns as this one has its own set of rules. Personally, I have felt the market is too uncertain to make a prediction, however I am being asked for some guidance now, rather than when the dust has settled.
It is the middle of winter and we would expect the market to have slowed down by now. What we are seeing is a property market behaving more like in a boom market than a recessionary market.
We are only a few months off an election, but instead of the market pausing for the election we have lots of sales happening. This is unusual. 
There appears no doubt the economy will hit a recession. The question is, will this recession behave as past recessions have.
Below I will look at the key factors and make an assessment for Whangarei based on the evidence I am looking at.

The Current Situation in our Office

Many owners are taking a wait and see approach. Listing numbers are building but a slow rate and are not keeping up with demand. We we are seeing active sales and are pretty much back to pre-covid levels. We would be selling more, but as there is a shortage of good properties and we have a supply problem.  Buyer inquiries are up in most areas and price ranges. 
 We are back to having multiple offers on most reasonably priced properties with one property recently having nine offers on it. 3-4 offers on one property are common. The sales are 90% in the $350,000-$650,000 price range with only the occasional higher sale. Higher priced rentals ($550 plus) are taking longer to fill, suggesting there is some resistance building in rental price  increases.  

Section Development Down 

Many of the building companies have had their development money pulled by the banks. This has happened in the past and will result in a shortage of sections in 1-3 years. The catch-up in total housing numbers that has been happening across the country will stall and once again we will see pressure on existing house prices as the supply of properties falls behind the demand. It is like one of those frustrating dreams where we are always chasing something but never quite catch up. We are still well behind the amount of houses our population size requires. (40,000-50,000)   The result is likely to be continued upward pressure on prices.

Finding lions in Africa!

If you are on Safari and looking for lions in Africa, you first look for the vultures. They are circling high in the sky either waiting for a wounded animal to die or for the lions to finish feeding so they can pick the carcass. In real estate we find the bargain vultures come out every downturn. They are easy to recognise, because they are looking for wounded or stressed out sellers, and they make low offers. They use words like:- “ we are cash buyers “ “and the market is stuffed” or “we don’t want to insult the owner but this is what we would offer” ( Invariably very insulting) or “the owner would be  foolish to turn this down” . These people will look at lots of properties and make lots of low-ball offers hoping to meet a stressed seller. Today these people are out in force trying to talk the market down. They use the media reports of massive price drops to justify their low offers. They are trying to pick up a bargain at someone else’s expense.
I have seen this scenario many times before. This time around I think we are going to see lots of starving vultures, certainly for the next 6 months at least.  I remember taking a well know economist to lunch after he made a low-ball offer on a property. Over lunch he explained all the perfectly valid reasons, (supported by graphs and charts and free form diagrams,) as to why the property market was overpriced and heading down. He was so certain of it; he had sold his own home and was waiting for the catastrophe to occur. The year was 2003 and sure enough he was right! Just five years later In 2008 the property market dropped all of 7% after a record 100% rise from the time of our lunch in 2003 to the 2008 global financial crash. After he had sold, and while he was eagerly making low-ball offers based on his graphs and charts, the average house price had doubled in value. 

Super low Interest Rates and Job losses

There is one key difference between this forthcoming recession and all the others. Low interest rates! . You can borrow for around 2.6% and there does not seem to be any threat of rates going higher for many years to come. That means a $500,000 loan taken over 30 years is going to cost you $461.68c per week to repay.Consider that it will cost you around $480-$520 per week to rent the same home.You have to ask, “why would people have to sell.” “Because they lost their jobs” the Vultures eagerly squawk!  Well yes there have been substantial job loses,  and probably more to come, and these are affecting many families in serious and concerning ways. However, some 43% of homeowners have no mortgage at all so you can take these people off your kill horizon. The average mortgage is over 10 years old so was taken out when property prices were half what they are today. Therefore the $500,000 borrowed today was only $250,000 when borrowed 10 years ago, and the repayments on that are around $280 per week. Most families today have two incomes so can survive for short periods of time if required, and there is substantial government hardship support. The people most affected by this crisis are the people in the Tourist sectors. That is the tourist towns like Queenstown, Rotorua and Paihia. And the people most effected are the minimum wage earners in those cities, most of whom do not own a house. The last time I was in Queenstown I was noted  that every person who served me, be that in a shop, a restaurant, or a service,  had an accent. I would ask them where they came from and the answers were Brazil, Peru, Ireland, England, Italy, and many other parts of the world. Not one was a Kiwi. They were on working holidays earning their daily keep. Tony Alexander has summed up this scenario in a few quick sentences; “Heading into the 2008 recession 4% of our workforce were people on a working visa. That now stands at 8% and such visa holders have accounted for 25% of the net job’s growth in NZ over the last 10 years. These people are not property owners.” Think about that for a moment. We may be heading toward double figure unemployment from the low figure of 4.6%. 8% of our current workforce are overseas people on working Visas. 10-12% job losses suddenly do not look so bad. This adds to the question “Where are the super stressed sellers going to come from?”

Banks Being Kind.

This crisis is a medical crisis. It is not caused by poor lending policies and zero or negative property equity. The banks are financially healthy, so do not have to recover loan money to save themselves. Even better, Banks are inviting short term accommodations like interest only loans to get people over the hard times. Interest only over a $500,000 loan is $250 per week. You can even get a complete mortgage holiday where you do not have to pay any mortgage at all for a time, (I do not recommend this unless there is no other option) . So where is the pressure to sell going to come from? 

Number of listings
Another biggie from Tony Alexander’s observations, is that in 2008 we had 58,000 homes listed for sale. Today we have just 19,000. There is a severe shortage of properties for sale and a growing buyer demand. If there is any slowdown in our local  market it is going to be because we do not have enough listings and that is going to put upward pressure on property.

Changing Patterns Due to Low Interest Rates
In a previous newsletter I mentioned that the number of people who were buying a home and keeping their old home had risen dramatically. The low interest rates often mean you can buy new and keep your old house, rent it, and have the tenant pay the mortgage. A simple way to get into the rental market. We are also finding landlords withdrawing properties from sale, because the interest rates are so affordable. The result is more pressure on listing numbers.

My Old Enemy the Media and Job Losses.

The media should carry a health warning just like a cigarette pack. “Ingesting this material could be damaging to your Health “. The standards of reporting have dropped so low. Investigative journalism is rare and so much media information is based on the reporter following social media reports like Twitter and many of the reports are used to prove a story line, rather than have the story based on the evidence.  A glaring example of the Media sensationalism was the 1000 jobs Fletcher’s are shedding. It’s reported as being a result of COVID 19, but it’s not! Fletcher’s where is serious trouble in 2018 with a loss of $660 million in its Building and interiors division. Fletcher’s employ 21,000 people across all its divisions and like any sound business had to cut back to survive. They cut 4.7% of their workforce. That is equivalent to a company of 40 people cutting one job from its payroll. Fletcher’s had to reduce overheads including jobs based on its 2018 and 2019 performance, not Covid as reported. Many companies have taken the “Covid opportunity” to trim their fat and I would suggest that around half or the total job losses (excepting tourism) are simply businesses trimming their overheads and using Covid as the excuse. Locally we are about to witness some changes at the Marsden Point Refinery. They are going to rationalize the operation and may well end up closing the production side of the company, and there will be job losses. It will get blamed on Covid 19,  and admittedly the refinery will be affected by the airline cutback as Jet fuel is a big earner for them, but this restructure is a long time in the making. The refinery has only been borderline profitable for some years now and a rationalization was coming anyway. It is cheaper to buy refined fuel from overseas than it is to refine it ourselves. The changes in the refinery were going to happen anyway. Just as an aside …don’t forget that our petrol price is driven up by the Governments outrageous $1.03 tax* per litre tax on fuel. (aa.co.nz Petrol tax $0.73 c plus GST on total at $2.00 per litre). About half your petrol bill is Government taxes!!!  Rationalizing  the refinery is the right move as Fuel as we know it is changing. Volkswagen have just joined the rapidly growing electric car movement by declaring its Zwickau factory has produced its last internal combustion vehicle as they transition to electric vehicles. The year 2021. (next year) is when electric vehicle prices are predicted to match ICE vehicles and they will only get cheaper from then on. It makes little point to keep a dinosaur industry such as Oil Refining  going in a small country like ours going, when the future of fossil fuels is limited.
Hiding in the Invisible Future
Public enemy #1. the media have ignored the facts that property prices have risen since Covid lock-down and continue to report anyone willing to predict a property crash. With the current wave of data proving them wrong they have moved into the grey area of tomorrow. The imminent recession will come September, October, and November. This is just too convenient. If you make predictions into the future, then facts cannot prove you wrong. It is a certainty that our economy is in a struggle now and things will get worse and we will have some form of recession. It will probably get worse next year, when the election is over , but the problem is that this coming recession is like no other  recession. All the current rules do not apply. I see some economists are pushing the main impact of the recession out to 2021 now. Again, I don’t think anyone knows what will happen. Logic says we are heading into hard times, but the current evidence is saying differently. I drove from Whangarei Heads through town out to Ngunguru on Sunday and just about all the for-sale signs I saw had a SOLD on them.

Debt levels

In past recessions the debt level has been predominantly carried by individual persons through borrowing. Our personal debt level is at record highs but most of this is in housing mortgages, which many will argue is an investment rather than a true debt. Today the government have shouldered the lion’s share of the new debt with its 60 Billion budget this year. The 60 Billion budget is a Government debt, and not individual debt. You and I wont lose sleep over our new debt levels, but the minister of Finance Grant Robertson may! Unless he could magically make some more money!!! Magically Making More Money Unlike individuals, Governments can create money through their Reserve Bank to stimulate the economy and pay back debt (Quantitative Easing) which is exactly what Grant Robertson has said they will do.It has taken me a while to get my head around this concept but here is an example from England of how quantitative easing works.  “The Bank of England purchased financial assets, almost exclusively government bonds- from pension funds and insurance companies. It paid for these bonds by creating new central bank reserves (this is the created money) and is the type of money that banks use to pay each other. The pension funds would sell the bonds to the Bank of England and in exchange, they would receive deposits (money) in an account at one of the major banks. The bank ends up with a new deposit (a liability from it to the pension fund) and a new asset, Central bank reserves at the Bank of England.
Quantitative Easing therefore simultaneously increased A) :- the amount of central bank money , which is used in the system that banks use to pay each other, and B):- the amount of commercial liquidity ( deposits in the bank accounts of people and companies). Only the deposits can actually be spent in the real economy, as central bank reserves are just for the internal use between banks and the bank of England” (positivemoney.org)
Effect on Assets
What impact does this creation of money have? Firstly, is spreads the financial shock over several years rather than having it all in one year. Secondly it creates a big supply of money into the system which boosts the economy, but devalues money as there is more of it in circulation. If money is worth less, then the things it buys are worth more. Traditionally this is the cause of inflation, however for now inflation is a thing of the past, and even countries like Japan who are actively printing money to get inflation, cannot get it rising. But what does rise in price are assets. Assets like property, gold, and to a lesser extent shares. The equation is simple. (More money + the same amount of property(assets) = rising prices.)
The New Migrants
We have the huge number of Kiwis returning to NZ. The Covid crisis is not going away anytime soon so our people are coming back, and they are buying property. Statistics NZ estimate that 21,000 New Zealanders returned home during December – March and that is accelerating. The quarantine facilities are talking about 2,000- 3,000 new arrivals per week, most of which will be Kiwis. Many of these people have come home for good and will be able to buy a home. Statistics NZ also estimate there are a further 800,000 New Zealanders still living overseas, so the pool of potential returning Kiwis is very large. To put that number in perspective , that the total population of Wellington, Hamilton, Tauranga and Whangarei all in one. 

Election Year

An election year is usually a bad year for Real Estate. In a previous newsletter I said that I did not think this would be the case this year as the worst-case scenario is moving from a left-ish government to a right-ish government so no major worries for homeowners. Being an election year, I think we will see some major pushes on the job and economy front and as many negative recessionary effects are going to be delayed until after the election.  The government is going to be pushing companies to retain jobs so the overall impact,  while severe, will not be as bad as many are predicting and thus we are seeing the new predictions that the full impact of a recession won’t hit until 2021.

A Close Relative- 

…. drives trucks for a big national trucking company. During Covid the company reduced the guaranteed driving hours from 40 per week to 30 per week in anticipation of less work. My close relatives experience was  NO drop in hours. He still regularly drives 40-50 hours a week.  The fears of a slow-down were worse than the reality. Many firms have paid the government wage subsidy back as they have had no drop in work. While the predictions have been dire, we are seeing a lot of evidence that the situation on the ground is not as bad as expected.


So back to the circling Vultures and the dire media led predictions about property prices. This crisis is very  different from any other. We have healthy banks, who have a big safety level built into their house lending and very low interest rates. Listing numbers are dropping from an already low level and demand is increasing. To get housing prices reducing you have to have stressed owners, who are forced to take a lower price or lose their  home. You have to ask the question. “Where is the financial pressure to sell going to come from? When is the Bank pressure to force mortgage sales going to arise?  Where are the super stressed sellers going to come from?  On the reverse we have upward pressure as more buyers enter the market and an already existing shortage listings. Prediction # Its too early to look at 2021 which could be a very different year,   but the current evidence for the rest of 2020  shows the Whangarei property market  remaining steady and probably rising .  

Roll on the Vaccine.

Unless we get a vaccine, we are heading for two different worlds. A world that has come to live with Covid and a world that has contained it. The smaller of the two worlds will be ours. The island nations that have a big moat around them and have either contained or eliminated Covid.  The bigger of the worlds will be those that have lost the containment battle and now live with the virus. In Qatar 3.3 of every 100 people has or has had the virus. In the USA they are closing in on 1 in every 100 people had or having the virus. In Brazil it is 1 in every 160. At this stage you would have to say the battle is lost in these countries.  At best they can slow it down , but their chances of elimination are long gone.  They are going to have to live through the crisis and in terms of numbers the virus has only just started. In the USA over 99% of the population have not had it.  The only way they can win this war is with a vaccine or effective treatment.  Until there is a vaccine, we will have two bubbles. Those with and those without. Unfortunately, we will be in the smaller without  bubble, but fortunately,  we are only small ourselves and don’t need a big bubble to survive. It doesn’t mean we can’t trade outside our bubble, it means we can’t visit each other and therefore overseas tourism is going to be in trouble for a time to come. A vaccine or effective treatment will join these two bubbles together, however while I hope a vaccine will be found within the next few months, the reality is that this is a corona type virus. The common cold is a corona type virus and we don’t have a vaccine for that.

Property market and the Corona Virus.

  • The Bug
  • The economy
  • The effect on property
  • Future bugs a certainty
  • Future economic changes

You are reading my fifth  attempt to write this newsletter. Every 24 hours I have gone back and edited it again because the changes are happening so fast. The day you get this I’ll be having regrets as something will have changed, or been clarified since writing. But as they say “Fools rush in where Angels fear to tread”. So true to form: – Below are a selection of facts, alternative facts and opinions on the virus and its effect on the property market. Keeping in mind we have never had this strain of bug before and in my 35 years of selling Real Estate I have never dealt with this before, so its all new ground.

This strain of bug before and in my 35 years of selling Real Estate I have never dealt with this before, so its all new ground.

The bug undefined

  • We have had many previous out of control bugs:- Polio, measles, chicken pox, Mumps, Influenza, Colds ,Ebola and many more. As humans we survived them all and will do so again. But Covid 19 is only a precursor and forewarning of more bugs to come. 
  • The Chinese contagion looks like it has been controlled and is currently in decline. It is a military state, so enforcement of restrictions may be easier than in the west. Many of the previously closed highways, cities and factories are re-opening. This is just 3 months after the first reported illness at the end of December. Around 70% of the people who were hospitalised in China are now recovered. Spain and Italy are showing signs of the infection rate declining , so this will have an end. 
  • Our lock-down will isolate and localize infections. I have no doubt it is the right thing to do, even though I share the frustration of many at the self-righteous and often ignorant human beings who will flout the rules.
  • In times of War, necessity means that technology leaps forward at a much faster pace than in times of peace. Covid 19 is a viral war against humanity and as such vaccines will be developed much quicker than in times of peace. Especially as China now has around 80,000-100,000 recovered people with effective antibodies to study. The timeline to develop an effective vaccine will be shorter than the 18 months being touted and most likely  3-4 months.
  • Old fashioned Quinine (anti Malaria treatment) has been touted as a preventative measure. The sales of Gin will increase as people test this for themselves. Meanwhile a man has died in the USA after listening to Trump and self-medicating with Chloro-quinine. In fairness Trump was right, he won’t be getting Covid 19.
  • We are an Island nation with easily protected borders and as of today only have a minor semi-controlled community outbreak, unlike China, Italy, Spain, the rest of Europe and the USA. We have been very lucky so far and we can stop this thing. But we need the majority of the population to obey the lockdown rules. We need to have confidence in our health system that they can track the virus spread and conduct the right tests on the right people at the right time. It is unfortunate that out only death to date was misdiagnosed as Flu. There is a big gap between talking pretty words in parliament and the actual implementation of the legislation. 
  • If there is going to be a rebel group, it will be the young. They usually have symptoms milder than a cold and let’s face it, they have the most to gain by a shift in power from the old to the young. Let’s hope they remember they have parents and grandparents and remain glued to their screens in what must be a continuation of a type of self-isolation they are practiced at already. 
  • Let’s look at what this virus is actually going to do. It’s basically going to leave our youngest kids alone. It will hurt some of our millennials, but most will be fine. By the time you are hitting fifty your personal risk factor will be increasing. Sixty and you have to be extra careful, seventy your chances of dying are about 7-8% IF YOU GET HOSPITALISED!! Remember about 87% of people who get it will recover at home without hospitalisation. 80 plus and your chances after hospitalization are about 15% of dying. If you have a chronic illness and have a weakened body or immune system you have a greater chance of dying. (in China a 100-year-old man has fully recovered from the virus)
  • So, while the personal picture is very scary, the actual impact on the planetary population of 7 billion will be small.

The Economyundefined

  • The virus will have a devastating  effect on the economy in the short term, because of the necessary actions required to control it, but it may be short lived 3-4 months.
  • The real issue is the recovery time. How much has the economy been damaged and how long will it take to get back to where we were. Factories don’t just push a button and start again. Transport requires a lot of logistics and supplies to operate; how long will it take to get these moving again. Tourism may never fully recover. Confidence is a big driver and until that returns the economy will stagnate. The recovery could happen quickly or take a decade. 
  • While the effects will be global, this is not a financial meltdown. The global economy could recover very quickly after the virus is either contained or sufficient people have been exposed to it and recovered with immunity.  The “herd effect” where enough people have immunity to stop the spread. So, imagine if it was all over by August, September and October. In New Zealand this could be the end of April or May. It is conceivable that we could be fully trading with China by August. 
  • The virus shutdown will not be fully over until  an effective vaccine is developed. Until then we will have two separate worlds. One where countries have controlled the spread of the virus through social isolation, and one where the virus spread out of control and the population have immunity through having survived it. It looks like this divide will be rich nations versus poor nations. The continents of South America and Africa look like they will head the out of control route. Thereafter the only way the “isolation” nations can keep the virus out of its protected, yet vulnerable people, is to keep the inhabitants of the “immunity” nations out. Therefore tourism in New Zealand will be a dead duck until the vaccine is developed. The development  of the vaccine will be the start of normalisation. 
  • We will see jobs go, but New Zealand is probably in the best position it has ever been in regarding employment. We have around 4% unemployed, with many industries unable to find NZ workers. We currently have thousands of imported workers in the agricultural and horticulture sector, the building sector, and the transport sector. We have a lot of available jobs in the country simply by sending the imported workers home. (Many employers will resist this as they have found their imports are way better than the locals.) . New Zealand has some fat in the employment market. We can absorb several thousand job losses.
  • This recession is different from any other. It is not being driven by bad economic circumstances, nor an ailing economy. For a great comparison of the major differences have a look at Tony Alexanders newsletter

The Effect on Property

  • In times of crisis there are two major fall backs. Gold and Property!. 
  • In every financial  or global crisis we see the gloss disappear off Shares. Prices drop as they are doing now. Shares in a time of crisis are a poor investment Shares are your slice of other companies and as such are subject to global disasters.
  • They  rely on a growing economy. People won’t  pull their money out of shares as its too late, but they won’t be heavily investing in shares for a while either.
  • Gold has to be rising in value for you to make money and at $2631 per ounce it is just about as high as it can go.  Gold has averaged around $1,500 NZ for the last 3 years, so it would take a bold person to buy now expecting further significant increases. Meanwhile it doesn’t earn any income for you. It has to go up in value to make money and gold  is notoriously fickle. You  have to pick the up cycle and sell before the down cycle. Gold is basically gambling.
  • Property is more stable and has historically had  a steady capital increase. It’s something people simply can’t do without, unless they have a large livable boat, so its’ value remains high as long as there are people in this world. It has value while you hold it, be that rents or your personal ability to utilise it for food or other resources.
  • There is no long term financial  comparison to property. and there is nothing like a world-wide crisis to illustrate this. 
  • Interest rates are at an all-time low, so housing is more affordable than ever. In previous recessions we have had high interest rates so when people have lost their incomes, they have been forced to sell their property, often at a bargain price and rent. Today a $500,000 mortgage will cost you about $517 per week to repay. A three-bedroom home to rent will cost you about $500 pw.  The figures to own as to rent are nearly the same. This time we are not going to see the mass of mortgage sales that we have seen in previous recessions.
  • There is no incentive for people to keep money in the bank. Over the last three years we have seen a growing trend of people pulling money out of banks and putting it into rental investments. This will accelerate as interest rates drop. 
  • Lots of people with NZ passports are going to return home. We see this in every major crisis, be that war, pestilence or financial crisis, … Kiwis come home.  Some to raise their kids in a safer environment along with their foreign-born partners. These people will be financially better off than the average Kiwi and they will buy property. They will be a major driver in the  dearer price range.
  • Australia hasn’t treated the 650,000 New Zealanders living in their country very well. They are second class citizens in a country they may have lived in for 20 or more years. We will see a lot of these people either having to return due to financial hardship or choosing to return because they realise they are expendable non citizens, who are being treated very poorly. 
  • Rural and country living will grow in popularity. People will want the safety of greater isolation and a greater ability to grow their own food. Lifestyle blocks will have a resurgence in popularity. Think of the people who have had to self -isolate in a 40-60m2 high-rise Auckland apartment. The first 24 hours are going to feel like a week, the next like a month,  and after 4 weeks they will literally be climbing the walls. That urban, coffee and wine  culture lifestyle is going to look a little bleak!. People are going to want to be live in an environment that allows enjoyment of the outdoors and space to roam. Animals to talk to and fruit and vegetables to grow.
  • People will want to get out of the big Cities and their hotbeds of disease. There will be increased migration  out of Auckland, Wellington, Hamilton, and Christchurch,  places with high populations and international airports. This  movement won’t impact places like Auckland with its 1.5 million people, in fact they will hardly notice it , but if just 2% of these people decide to move to smaller rural places that will be 30,0000 people, over  half of Whangareis’ current population.
  • Property prices will at worst stay steady during this crisis and most likely will accelerate after it is over. Places like New Zealand, surrounded by water and easily protected, will have huge appeal to all people, Kiwis and foreigners alike.
  • This demand will further accelerate if there is another viral outbreak, and as I have said earlier, this is just a matter of time.
  • Off-setting this is the actual physical ability of people to look at properties. With the lockdown it’s impossible to physically inspect a property. The banks have shut down mortgage processing, the valuers and builders are locked down, LIMS are unavailable, and you can’t shift in or out of a house. Lawyers cant do the Anti money laundering requirements,  so basically the market will stop for the length of time during the shutdown. But once the lockdown is finished there will be a flurry of activity.
  • First home buyer   Kiwi- saver investments have dropped along with the share market, so less first home buyers are able to meet the deposit requirements. This will have little impact on the first home buyer market, because there are so many of them. Kiwi saver was introduced in July 2007. You had to be in it for three years to qualify to use some of the money for a home deposit and the amount you could withdraw maxed out after 5 years. Subsequently for the last 10 years people have qualified and been using their Kiwi saver to help with the deposit. While many have been successful and are in their homes, there is a considerable backlog of qualified first home buyers who have been unable to find a suitable and affordable property. So much so, that the drop off in this market will not be felt. Instead of having fifteen suitably qualified first home buyers per property we may only have seven. The longer you are in the scheme the more deposit you have, so those desperate to buy a house may have wait a bit longer or drop their price bracket a bit,  rather then drop out of the market.
  • Investors will head back into the market in increasing numbers looking for properties below market value. They may have slim pickings. We recently sold a property in Otangarei for $390,000. When I arrived in Whangarei in 1991 you could pick up a property in this suburb for $20,000-$30,000.
  • The Government has been at pains to protect all New Zealanders, both financially and economically. There will be considerable financial pain, but the effects of this are being minimised by the wage’s subsidy and the mortgage holidays and other accommodation.


The Covid 19 virus is only the precursor to other bugs that will develop and try to eat us. Humans are such a big untapped planetary food source. Viruses have been around for a lot longer than we have. It is inevitable that something is going to find a new way to harvest our nutrients. And what better adapted creature than a virus, which can reproduce thousands of times a day, and using our bodies, spread itself through our breathing and social processes. It can mutate faster than we can vaccinate against it. We will have more of these types of bugs coming.

But we will be better prepared for the next one. We know what to do now and how to contain it.

Most of the future bugs will be contained close to where they originated.

Future Economic Changes
  • This virus will have a long-term effect on peoples’ thinking about the way the global economy works. Economies today are dependent on being able to grow internationally. That means they need a growing market to sell into, a worldwide marketplace. We see the evidence of this with all the free trade agreements negotiated in the last 10 years. But are worldwide markets the best strategy for a country?  This virus may be the beginning of a reset where countries look more inside their own borders for growth. 
  • Through necessity people have moved more towards home-based self-sufficiency.  Old fashioned baking is back in vogue as are walks with the family and board games. The home environment has become more important. Isolation and avoiding people outside the family bubble has a new emphasis. People will dine out less and some values such as appearances may change. We will see less waste, such as that generated in the restaurant and dining industry. The green movement will flourish.
  • People will holiday more in their safe havens (NZ) so we will see more internal tourism.
  • NZ will still be seen as the clean green country that it is,  and will still be seen as a tourist destination, but we will need protect our shores better than we have and may not want as many of these risky tourists, many of whom totally ignored the isolation requirements when entering the country. 
  • Tourism as an industry will probably decline and it would be foolish to rely on the tourist dollar like we have. We need to promote New Zealand  to New Zealanders more. We will see the end of the reliance on the tourist dollar and the end of international global travel as we know it, certainly, to the extent it is now.
  • This bug may be the beginning of the end for the current financial system based on economic growth. It is unlikely the existing financial global system, where countries export to each other, will last long term. There is likely to be a movement towards more ecologically sound self-sustaining economic systems. Economies are likely to head internally rather than externally. The export dollar will become less important as it brings so much potential risk with it. This will be short term initially but may gain a stronger foothold going forward, especially among the younger generations.
  • It’s a time the world can reset and head in a slightly different and most likely greener direction.
  • Countries will move towards nationalism rather than globalism. What happens in our back yard will be more important than the worlds backyard.  We will want to be able to lock the gate at any time, with the right people on each side of the fence and have a strong enough internal economy that we can survive without the shocks.
  • We as a country will have a lot of new debt. We will have to pay that back either through our money being worth less, or through taxes. The piper will have to be paid and from what we have heard a lot of this will be by “Quantitative Easing “. Printing money. This should result in some inflation, although it hasn’t yet in countries that have tried it. ( USA, Europe and Japan) , but  never the less it should do!  You print more of it and the value of what is there declines because there is more of it! Seems simple enough. 
  • Which brings us back to property, the only sure fire hedge against inflation. 

Future Economic Changes

Email me if you have anyone that wants to be on my database and who will be interesting in receiving this newsletter on a monthly basis.barry.joblin@harcourts.co.nz or go to  My blog

Your February 2020 Newsletter

Where the market is going in 2020.

The main reason this newsletter is a bit overdue is because I have been carefully watching what is happening in the news and comparing that with what is happening in our office. It will be no surprise that my personal predictions will follow just about everyone elses  and  that’s it’s heading back up again. However  this has taken quite some time to materialise. The media predictions were rampant at the end of last year, but at a local level it wasn’t happening. We were still seeing the lower end of the market active, but the higher priced properties were selling slowly. However, this year we are seeing a large numbers of Auckland buyers moving back into the market. My personal enquiry has shifted from predominantly locals to predominantly Aucklanders. We have multiple offers on many properties with a new company record of 10 on the same property.
Last year we saw a two-tier market, where properties under $500,000 raced ahead whereas properties over $600,000 were selling slower. This created a distortion as the lower priced properties were gaining on the higher half and the price gap between them closed. Logic would say that with the new interest in the dearer houses we should see a period of adjustment where these properties re-establish their price difference.

2020’predictions are: –

Continued strong interest in properties up to $500,000 from the first home buyers and the investors. This market will continue its steady 10-12% pa growth.
The higher priced properties will remain at the same level for about three months, then experience a strong upward surge. This is because there are a lot of available properties in this higher price range and these need to sell before there will be upward pressure on prices. We have about three months’ supply depending on enquiry. The market will then surge over the winter months. This market will also see around 12% growth with most of it focused in the second half of the year
Some key factors and points of interest: –

  • We are finding a surprising amount of Auckland buyers who are buying, but not selling their Auckland homes. About 30%. These people have enough equity in their current homes, that they can buy in Whangarei and not sell in Auckland. This is going to have a huge effect on the available Auckland properties for sale and push the Auckland prices up faster, as the already short supply gets shorter. The interest they pay on their new home loan will more than be covered by the increased equity in their existing loan. Not a bad strategy for a home buyer who owns an Auckland home.
  • Interest rates are very low and may even head down a small amount yet. Housing loans are now very affordable, and a $600,000 loan is going to cost you about $386 per week. Compare this to when Whangarei’s average house price was going up at $1700 per week. A buyer keeping their old home and buying another is going to get double the capital gain.
  • Nearly every general election causes the housing market to stall. I will make a bold prediction and say that will not happen this year. Historically most elections are based on a conservative government in power, and peoples fear that if a liberal, left- leaning government gets into power then we will see anti home ownership legislation, such as a Capital Gains tax. As we already have a left leaning government in power and they have stated they will not be introducing a capital gains tax, then there is no threat to home ownership. The worst that can happen is a more conservative government will take power at the end of the year. Therefore, I don’t see people holding off buying due to the election this time around. I have every chance of having egg on my face for this prediction as it will be a first, and historically elections are bad for real estate.
  • Building costs have skyrocketed after the Christchurch Earthquake recovery swallowed up most of the available builders. Builders have waiting lists, and many are pricing work on the basis that they can put a high cost on the quote and can afford to miss the contract. Anyone building will be looking at $3000 per sqm building costs this year, meaning that a modest $160m2 home will cost you $480,000. Add a $350,000 section to that and your new build costs are $830,000. Right now, existing homes are better value, but it will not take long for the current supply to be sold and then these new build costs will set the new prices.
  • Section supply is still at an all-time low. There is an adjustment period when people take time to accept the new section development prices and the new build costs, but when they do these new $400,000 plus section prices will be the norm.
  • The Americas cup will start 21 March next year. Impact on house prices …. none. It’s a great event but has almost no impact on the Real Estate market. It didn’t last time it was in NZ and it won’t this time either. 

Confession Time

Almost 90% of my predictions are proving accurate, right down to the percentage growth, however there are two glaring exceptions.  The first is rents. Two years ago, I predicted that average rents would hit $480 pw by the end of 2017. They are close to that now and there is continued strong upward pressure. Rents in excess of $600 pw are being achieved but the fact is I got it wrong. The pressure was there but the resistance to higher rents has taken longer to dissipate than I thought. A bit like walking through thick mud. Progress was made, but at a slower pace.  The second is Rental ownership. At the beginning of last year, I predicted that many of the mum and pop landlords would get out of the rental market and there may be a small drop in prices. This has proven to be totally wrong. There was a brief flurry of mum and pop investors getting out as compliance costs and landlord requirements got harder, but this was more than offset by first home buyers picking up the properties and interest rates dropping further, meaning people with money were looking for alternative investments. In my defence I did say that if the Government raised the first home buyer assistance ceiling from $400,000 to $450,000 in their budget, that this would alter the prediction and sure enough they did. However, two mistakes are two mistakes! I apologise and will fine tune my crystal ball.

How Fast is Whangarei Growing?

I have been a long-term advocate for growth in Whangarei and have written numerous articles about how it is growing twice as fast as the WDC are planning. The WDC were planning around  less than 1% growth whereas the District Health Boards’ new medical registrations was showing 2% growth. ( WDC have just released a paper saying we grew at 1.57% over the last few years.)  I have read some recent press articles  about rapid population growth in the district inspired by Government  spending:- such as the $800 million infrastructure spend , Ports of Auckland shifting and the Navy shifting , and  figures that say if  the Ports of Auckland  and the Navy shift north the district population could hit 145,000 in 10 years .  This figure is quoted by the NZ Herald as being expounded by the current WDC chief executive Rob Forlong.  Right now it”s  hard to think Whangarei’s can cope with this type of population growth.  It’s not that it won’t increase at a fast pace , but we simply don’t have the infrastructure to allow this growth. Sewage, electricity, roads, bridges, and then we don’t have the builders, electricians, plumbers etc to build all the houses.  We don’t have the time to wriggle through all the red tape in 10 years to create the sections needed. We can handle a population of 120,000  in 10 years, but 145,000 it would be an unmitigated disaster for the city, and we would have homeless people under every lamppost trying to find a dry sewage free place to stand. With optimistic predictions showing an average of approximately 2,500 new people per year for the next 10 years , we would need over 1,000 new houses per year. Currently we are building less than half that. We currently have about 450 sections being developed or in the planning stages , so even if we had the builders we don’t have the available land,  and sections take a lot of time to develop. 
The growth prediction has been  exaggerated and I hope people are not giving it too much credence . Let’s look at some factors

  • The Hunterwasser Building. Magic building and I’m personally glad it’s being built, even though  the reality is it’s going to run well over the given budget (already 4 Million and heading to 8 Million). It’s never going to turn a profit as sold to the ratepayers, and in fact will be a cost on us all for years to come. It will be a great tourist attraction,  but it on its own is not going to pull hundreds of permanent residents into the city. People don’t shift cities because of a Noddy House . 
  • The 800 plus million infrastructure spend. This is conditional upon the Labour coalition staying in power for 10 years or future governments buying into it. Then years and years of planning and resource management consents, buying properties, and dealing with objectors.  Some of the roading may be done reasonably quickly, as the planning was well advanced under the previous government, and the rail line could be re-opened, but most of the spend will be 5-10 years away at a very optimistic guess.
  • The Navy. This is not new. Stan Semenoff tried to get them here during his mayoralty and probably a few mayors before that. It would require a massive infrastructure investment to create suitable land and buildings and at best would take 10 years of preparation, but more likely 20-30.
  • Ports of Auckland. Again, a massive investment in infrastructure required. Most of the 800 million plus will need to have been spent on the big five projects and all the work done, before this concept could even start. So, at best 15 to 20 years.
  • Whangarei is growing and fast, but at The DHB estimated  rate of 2% per annum and allowing for an accelerating growth rate of 3%  we could see a further 24,000 people in the city and district in 10 years. From a base of 96,000 that’s around 121,000 in 10 years.. So, let’s not get too carried away with growth projections. 
  • What we can see now is that restaurants are getting fuller and car parking is getting harder to find. Doctor practices are full and it’s hard to get a new doctor, (a problem recognised by the DHB, who have appointed a recruitment Doctor, whose job it is to find other Doctors for Northland.) Traffic is building up and congestion is a common topic of conversation. Rentals are in short supply and the supermarkets are busier. The recreational walks and parks around the city have more people using them, so growth is happening but 145,000 is a 20 year projection, not a 10. 

Auckland and the NZ Herald.

It is no wonder newspaper readership is declining worldwide. In the midst of a statistically proven shortage of listings and housing in Auckland, ( Barfoots, REINZ, Trademe, Realestate.co) the NZ Herald run with the following counter headline “ Housing U-turn: All of a sudden Auckland has a surplus of homes. (Amelia Wade 12/2/20)”
The article follows a comment made by the Salvation Army based on the last years Census. Yes! that’s the one where 1 in 7 people either partially completed it or didn’t do it at all. (700,000 people) The same one where as a result of the fiasco and independent review, the CEO, Liz MacPherson resigned before she was sacked.
Based on this census the Salvation army reported that the population of Auckland dropped 77,500 people in the last 5 years. They then go on the say this means there are now 7,168 surplus homes in Auckland. The Herald have swallowed this click bait and gone on to make this a morning headline. Talk about 2+2=3. 
Anyone who believes Auckland’s population has dropped 77,500 people hasn’t been there for the last 5 years. They haven’t seen the massive amount of housing construction that is gobbling up land faster than a vacuum cleaner sucks dust. Nor seen the arrival every year of 50,000 new permanent migrants, who mostly settle in Auckland. And what about the 40,000 estimated shortage of existing housing stock. I am sure the Salvation Army have a good purpose in using this statistic, but surely the NZ Herald don’t believe their own headline.

Tammy’s Rental Areas

I have published three newsletters where I have made comments on where to buy rental properties in Whangarei. Our rentals Business Development Manager, the very lovely and smart Tammy Drinkwater, has written her own summary of areas. For those wanting to see this follow the link to her newsletter. If you are a landlord, you should get on her database as she puts out very good material. click here  to see her newsletters

August 2019 Newsletter


  • Update on My Daughter-in Law.
  • House price Drop in Whangarei.
  • Rental Prices Jump.
  • Are Markets Signalling a Recession?
  • What Does That Mean for You?
  • House Battery Technology Versus Car Battery Technology.
  • How I Became a Volunteer Policing the Anti Money Laundering and Terrorism Act
  • Tips on Saving Tax Dollars. My revenge!!


Update on My Daughter-in Law

She is at home with her family and feeling a lot better as she travels the slow road back to full health. It will take time as Sepsis is the result of Septicaemia (Bacteria) getting into your bloodstream. Your body reacts by shutting down your organs to survive and the bugs together with your own immune system can turn on your organs and damage them.So many of you have sent your best wishes and we all feel humbled by your concern. Thank you.

House price Drop in Whangarei for the first time in years.

Average prices dropped by $500 June to July with the current average price for Whangarei being $547,711.  This is a very small drop, but well worth watching over the next few months. If it continues then we will be seeing the market dropping from its peak.

The most likely cause is the increasingly large number of smaller sales to first home buyers and nothing to worry about.

Rental Prices

The average rent for our companies’ rentals is now sitting around $455pw. This is a significant rise on earlier this year and shows how the limited supply is pushing rents up. Our rental team have been recommending rent rises for some time now only to have many landlords reluctant to raise the rents and have chosen instead to keep them below market. With the increase in compliance costs, recently introduced by the Government, rents have risen sharply as landlords take the opportunity to recover costs. Tenants are paying $40 more per week now than they were at the beginning of the year. Funny how that works eh!

The lowest priced property rented with Harcourts is $260 PW for a one bedroom and the highest is $580 PW. The highest demand from tenants is for a three-bedroom, one-bathroom home around the $475-$500 pw range.The number of written applications is down to around 40 pw, but this reflects word getting around that we are very fussy in our client selection.

Are Markets Signalling a Recession?

While this topic is beyond my specialist knowledge I have never been short in having an opinion. I am a keen observer of the financial markets  and believe the signs are now clear. A recession is coming!   Real Estate is a safe place to have your money in a recession as long as you don’t have to sell in a hurry.  NZ be is in a better  space than most to ride it out and we could even  see buying pressure in this one.  Worldwide the indicators are bad. (Source Andrew Walker BBC World Services Economics Correspondent.) 

  • Inverted Yield Curves. These words are gobbledygook to most people, but they are important indicators to everyone. Basically, an ” Inverted Yield Curve”  is about a Government borrowing money. They borrow it mostly from their own or another countries citizens , usually via your bank or financial advisor. They are called bonds. They promise to pay it back in a set number of years plus interest. An inverted yield curve is when it is cheaper for the Government to borrow money for 10 years than say 2 years. This means the savvy lenders are saying there is higher risk in the short term and it’s safer to lend the money over a longer term. Historically  Inverted Yield Curves happen before a recession. The USA and the UK are both showing these feared curves in their bond markets now.  
  • Global Trade Conflict. The trade war between the USA and China is affecting every corner of the world. Trade conflicts can lead countries protecting  their own interests rather than trading freely with other countries. The last time we had countries abandoning Global trade and concentrating on their own markets was the start of the great depression of 1929.
  • A “No Brexit” deal with the UK pulling out of the European Union will plunge both the UK and the EU further into a financial crisis.
  • The USA, China, Germany and England have all recorded financial slowdowns for the last three months.
  • The stock markets in the USA, Germany and the UK are having wobbles where there are sudden selloffs and then recoveries the next day. This indicates  nervousness and the possibility of panic selling.
  • German Bond markets are in negative territory. That means the money Fritz lends to the government reduces in value while it is lent. Fritz lends his Government $1000 and gets $990 back.
  • Our Reserve Bank has signalled they fear the worst ahead by dropping the official Cash rate to 1%. Twice the drop the markets expected. 

What Does That Mean for You?

  • The World going into recession doesn’t always  mean we have follow. It’s highly likely that we will, but we navigated the last crash in 2007 without disastrous results, thanks to some very clever stewardship by our government at the time.
  • A global financial crisis is not by default a NZ financial crisis. 
  • If we do go into recession then there will most likely downward pressure on house prices HOWEVER  there is a key difference this time around and that’s interest rates. The last few times we hit bad times; interest rates were very high by comparison to today. Those that couldn’t afford their mortgages were forced to sell at any price.  Banks sold people up in forced mortgage sales and these sales set new low prices, from which other properties were priced, thus creating a downward spiral.
  • From our experience Banks are very reluctant to force a sale and only do so when the borrower has either abandoned the property or gone all septic and refused to co-operate. Banks go out of their way to make the loan work for both parties, so most forced sales today are because the borrower has completely abandoned their responsibilities.
  • The current low interest rates mean most people who were able to afford to buy a house in the first place will be able to afford to keep the house, so we shouldn’t get the forced sales of past recessions. 
  • Rents are way higher now and rising, interest rates are way down and dropping, so the option of selling the family home  and reducing outgoings is going to be limited. Why sell your current house with its fixed or dropping mortgage payments,  to rent a house where the payments are going to go up every 6 months.
  • Jobs. We are currently at our lowest ever unemployment rate of 4.3%. This means we have a serious oversupply of jobs and serious undersupply of workers. This means that if thousands of jobs are lost through a recession, there is a lot of fat in the system and the unemployment rate would have to rise to 7-8% before the ordinary employable people started struggling to find employment.
  • Alternative income sources. Because there is such a shortage of accommodation NZ wide, owners can rent out a room for around $180-$220 per week or provide an Airbnb service. This income together with the low interest rates will make a significant contribution to a mortgage.
  • The first home buyers are coming onto the market in increasing numbers as their Kiwi Savers qualify for home ownership. The cost of renting and the cost of a mortgage is closing fast so there is little reason to stay renting unless you have to. Thus, the lower end of the market has a strong driving force that will continue through a recession. As long as the lower end is selling there will be a flow through affect to higher priced properties.
  • As interest rates drop, people with money are choosing to re-invest their money and a lot of that is going into housing. So we could see more buying pressure than less. 
  • Word of Caution. In a recession there are two types of property that tend to be adversely affected. The luxury market such as holiday homes/Baches and Strata Title properties such as high-rise apartments.

In summary I think a Global recession is very likely and within the next 12-18 months, and we in NZ will feel the pain, but we will come out of a recession far better than most countries and may even scrape through through without joining the recessionary swamp. While the market will slow, we should survive it without significant price drops and in specific price ranges ( $380,000-$500,000) we may see a rise. 
Real Estate and Gold are the places to be in a recession. 

Real Estate and Gold are the places to be in a recession.

House Battery Technology Versus Car Battery Technology

 I read an interesting article recently about the difficulties of using car battery technology in house batteries. This led to watching a YouTube clip about the Redflow Z cell battery. The Company owner  says the difference between car batteries and house batteries is the difference between a sprinter and a marathon runner. The sprinter needs heaps of power for short fast runs, while the marathon runner needs consistent power over a longer term. The “Flow Battery” is a technology where power is stored in the form of zinc on a plastic plate, very similar to galvanizing steel to prevent rust. The batteries work by pumping a Zinc Bromine solution over plastic grids. Through electrolysis, the zinc coats the plastic plate as future releasable energy. The liquid keeps circulating as required, either putting zinc onto the plates (storing energy) or taking Zinc off the plates (releasing energy) and has an infinite shelf life. Redflow is already producing units for residential use that store 10 KWH of energy. Two of these should power a house. They already have houses set up which are nearly 100%  power neutral. The battery stores the energy for years if necessary, has no fire risk, as Bromine is a chemical used in fire extinguishers and puts fires out, as opposed to Lithium which burns like a volcano on steroids.
The flow system appears to have no loss of storage capacity and provided it is being charged by solar cells keeps on working indefinitely. They are currently dearer than the equivalent Li-on battery packs, but are currently being put together by hand, so with automation, prices will come down and are expected to be comparable to the equivalent Li-ion battery packs.

How I Became a Volunteer Policing the Anti Money Laundering and Terrorism Act

Have I ever mentioned that I REALLY REALLY hate this act?I’m sure its intentions are noble, and it’s fit for purpose, ( actually I don’t) but what I hate is my part in it.  No one asked me if I wanted to be involved. I don’t!  and no one pays me for my time , but by law,  I have to comply or else they will throw me in jail! Nice one!!! 

As an example of the time commitment: – I recently listed three sections for sale.The first section belongs to  a person I have personally known and dealt with for over 20 years. His land is owned by himself and a trustee company. To comply with the AML Act ,  I had to sight and take a copy of his passport (proof of identity). Plus sight and copy a utility bill sent to his address (proof of address) . I then had to ask him how he got the money to buy the property( proof of income)  The Trustee company is owned by his accountant with three directors. I then had get the “Company Extract”  and the ” Certificate of Incorporation”  of the company  from the Companies office and do CDD (Customer Due Diligence) on all directors by sighting and copying their passports  and a utility bill as proof of identity and address. Remember they are just the trustees and have no financial interest in the property. Then I had to find out the trusts source of  wealth (how they managed to buy or own the property in the first place) and source of funds (how is the trust getting its funds to service and maintain the property). 

The other two sections are owned by a company that specializes in developing  sections. I have known and worked with the developer for around 15 years. I had to sight the passports of both directors of this company along with obtaining a copy of an account addressed to their homes. I then needed to ask them how they got the money to develop this section, ignoring the fact that I know its’ their profession and frankly none of my business.!

It took nearly a week to get all the required proofs. Meanwhile I had photographed the three properties, entered them into our computer system, and written the advertisements for them in 2 days. Due to the legislative requirements I could not begin marketing the properties for another 5 days. I would have spent as many hours on the compliance requirements as I spent on the entire listing process. I can’t charge anyone for this, (although the accountants and lawyers can) , and I am required to do this volunteer service, free for the government without any thanks and the overriding motivation that if I don’t do my job properly, they can fine me $300,000 or throw me in jail for two years!!! I wonder how many money laundering terrorists I will catch ?   Thanks, Jacinda, Winston and John! I just love being your volunteer. It would have been nice to have been consulted,  but I presume my Knighthood is in the Mail. (Sorry John but this stupidity started under your watch.)

I’m Very Immature for my Age and here is my Way of Paying it Forward!

To balance my “volunteering” , I have collected some obscure ways to get “Better Value” out of Government departments. I hope someone pays less tax, or gains some financial benefit from any of the following:-A rental property is a business and your business-related expenses are tax deductible. ACC. If you pay ACC levies you can negotiate your own deal under a secretive policy called “Cover Plus”. You negotiate what your weekly cover will be and pay your fee based on that set  amount. In the event of an accident you get paid the weekly amount agreed without having to revert to the current formula of 80% of your weekly income. This is especially pertinent if you are self-employed where your remuneration may not reflect your real earnings.Don’t Ask IRD a Tax related question. In a survey by the Dom.Post , 25% of the answers IRD gave to customers were wrong and in the case of GST, 50% were wrong. IRD are not responsible for giving you a wrong answer, as it is your responsibility to understand tax law and get it right, even if they tell you the wrong information.But wait!!! there’s more!! You can ask for a “Binding Ruling” from IRD. You pay about $6000 for this but when it hits the fan and you go to  IRD  with your “Binding Ruling” folded in your fist and a smug  “I’ve got this”   look on your face, IRD  can refuse to accept their own ruling.If you have a company and you have lent the company money as Shareholder funds, you can have the company borrow the money and pay it back to you. (you will still need to personally secure it with the bank ), but the loan is then tax deductible to the company and you can pay off personal loans like your mortgage. It’s a plus for your company and a plus for you.Check your personal credit card each month and don’t forget to charge all business expenses back as business costs.Donations are Tax Deductible. Lots of expenses are donations. You don’t have to have an actual  room set aside to claim for business use at home. You can claim for the portion of your house that you use for business purposes. It’s based on a percentage of space rather than an actual room.Renting out a room or flat on your property. If you let part of your property to another, the rent becomes income and you have to pay Tax on it. However, is you take in “Flatmates” then there is no Tax payable on the income. I am merely trying to volunteer my further assistance to the government to ensure my early Knighthood, but please check this information with an accountant or someone who specializes in this stuff before taking it as gospel. Tip …don’t ask the Tax department!

July 2019 Newsletter

Welcome to an unseasonably warm winter. 

  • Reality check – A salute to parents 
  • Electric houses coming closer
  • Market prediction for the next six months
  • Confusing legislation – about to erode your rights
  • Difference between Jonquil and Daffodil  

No frosts in my part of the world and the days are getting longer by a surprising 1 minute and 2 seconds per day. That extra minutes daylight is a lovely warming thought in the midst of winter. We are seeing the signs of an early spring with the Jonquils and Dahlias already starting to flower and the Wild flowering Cherries looking like they will flower about the time you get this newsletter.

Our lovely Daughter in Law recently went through a medical crisis with her spending several days in Intensive care and fighting for her life. The scary thing is they know what the issue was but not what caused it, and they suspect they never will. I drove to Tauranga to pick up their three-year-old and looked after her for 11-12 days. She is an absolute angel and such a well balance kid …. but …. I have not been so exhausted for I don’t know how long. On a good day it felt like my life was on hold, on a bad it felt like it was in chaos.

So, my greatest respect to all the parents out there. The ones who sacrifice their lives daily to create a warm and loving environment for their families. And Uber respect for those amazing and rare older parents who permanently take on one of their children’s children. What courage and what selfless dedication to another.

And to all the mum’s and dads who raise kids and work. I admire your time management skills and ability to focus on your tasks and fit it all in the same 24-hour day I have. You are the best!

My Daughter in Law is slowly recovering at home now, but it will be a while.

Futurist Predictions and Self Powered houses

The futurist Dr Richard Hames(NZ herald 14/7/19 ) . Has predicted that Hydrogen Fuel cells are the way forward for electric vehicles rather than electric. This could put a spanner in my very confident prediction that self-powered houses will be an option within 5 years. However he also predicts Trump will get in for another term so we will soon see if his predictions carry any weight.

I don’t know about Hydrogen Fuel Cells but do see a clear cross over between electric vehicles and self-powered electric houses. The new technology will be developed for cars and then crossed over to batteries for houses, as is already happening ( I.e. the Tesla Power wall) . If the way forward is Hydrogen Fuel Cells, then I don’t know how they will power houses.

A report from Bloomberg NEF, has electric car costs becoming cheaper than combustion engine cars by 2022. Previous reports had the crossover in 2026 which was reduced to 2024 and now to 2022. It stands to reason that as more manufacturers develop the new technology, costs will come down faster and the crossover point could be 2021 or earlier. Basically, this will be the end of the combustion motor car.

Market prediction

I haven’t put out a newsletter for a couple of months now, basically because I have been confused by what was happening in the market. I could see a slow down coming by it just seemed to never arrive.

We at Harcourt’s had some great selling months leading up to winter and it’s still going strong. This is contrary to many of the signs I had been seeing and to my earlier forecasts. So, did I get it wrong? I don’t think so.

The biggest driver of the market over the last four to five months has been the first home buyers. They have been out in numbers and snapping up any homes in the $350,000- $500,000 bracket. Once you move out of that price range the market has been a lot slower. We are seeing areas, Like Bream Bay, where most houses are over $550,000, hit a wall with minimal activity unless it’s under this price range.
We also need to consider that even though we are building more homes we still haven’t caught up with the under-supply. Recent reports say we are still falling behind.

Rents have been moving upwards, so those with Kiwi saver schemes, are being influenced to buy rather than pay $400 pw. plus rents into a landlord’s pocket. It’s a big incentive to beg steal or borrow to get into your own home.

Interest rates keep falling, although very slowly now. We get the combined effect of money being cheaper to borrow and the interest on money in the bank not being worth having, so many people continue to take money out of the bank and put it into an investment house.

If we look at Core logics” latest average price for Whangarei, its sitting at $548,223. This has remained reasonably stable for 8 months now, so it suggests the boom is over for now. However, a closer look shows that this figure is strongly influenced by the number of lower cost houses selling.

The fundamentals such as supply, interest rates, and immigration are still strong.
The days to sell is pushing out to around 50-60 now. Another indication of a slow down.

My prediction remains that we are heading into a stall. The market won’t drop because of the underlying positive forces, but there will be a period of adjustment for a year or two while people get used to the average property in the city being over half a million dollars.

Investor buyers will find increasing pressure from the Government to get out of rentals, but this will be offset by the low interest rates, rising rents and the wave of first home buyers wanting their properties. I still think that if you want to get out of rentals this is the time to do it. But similarly if you are wanting to get into long term rentals, get in while there is a slower period.


Warning !!! You and the Taxation (Annual Rates for 2019-20, GST Offshore Supplier Registration, and Remedial Matters) Bill

Firstly, what a mouthful and secondly what a deceptive title for legislation that takes away landlord’s rights to offset their loses in owning a rental property against their main income. I have read the legislation and unlike most law changes, this one is about as murky as it can get. I think I have found the actual wording in the legislation but am still not 100% sure.

Here is what appears to be the relevant section
Sub-part EL— Allocation of Deductions for excess residential land expenditure

General outline
The provisions in this sub-part, in general, –

  1. Limit a person’s deductions for expenditure incurred in relation to residential land to income derived from the land; and
  2. Suspends deductions for the excess expenditure for the income year in which the expenditure is incurred;and;

These words mean you can no longer claim your rental loses against your main income.

Ashley Church, a writer for NZE, has written
Investment property in the major metropolitan areas generally makes a loss for up to 10 years before it starts to make a profit”
he goes on the say that the ability to offset business set up costs against other income
“ Isn’t a subsidy or a loophole, it’s a standard tax practice that is applied broadly against hundreds of thousands of businesses across New Zealand and is based on the principle that the costs associated with establishing a business and running a business should be deductible from overall income”

However the bill does appear to shift the loses to future years, so rather than reduce your tax liability the year it was earned you can offset it against profits from future years.

 c  Provide that the excess amounts are carried forward to later income years in which the person derives residential income. 

Some will think these changes fair and good. What I am concerned about is the way this change has been achieved and the longer-term consequences. To place it under this innocuous title is deceptive and give the appearance it is being hidden.

Secondly it is going to have a devastating effect on rental supply and our country is not ready for private landlords to withdraw from the market. I have written many times about how, we as a country need the private landlord, but yet again we are steadily driving them out. Remember that 4/5 rental properties are privately owned. There is already a shortage of rental properties in most centers and this will only get worse. One of the key reasons to buy a rental property is now gone. The inevitable result is we will see the most vulnerable and marginalized people unable to find rental accommodation and an increase in homelessness

Example . My daughter and son in law were fortunate enough to move into their own home last week. They have been paying $450 pw for a very basic three-bedroom house in a pretty rough area. I personally thought they were paying $50 a week too much. That same house is now being advertised at $490 pw and from what the kids have told me, has a queue of prospective and desperate tenants lined up to take it.

Useless fact .

Jonquils are basically Daffodils but have multiple flower head clusters and a strong scent . Daffodils are the yellow headed flowers we all know and associate with spring. They all come under the family “Narcissus” . Narcissus was a very good looking ancient Creek bloke who walked by a pool of water while hunting, decided to have a drink, saw his reflection in the water, fell in love with his own reflection and because he couldn’t have perfection decided to kill himself . I’m sure it made sense to him at the time! Out of his remains grew the Narcissus or Daffodil.

I invite you to give me some comments or what your thoughts are on the articles that I have written. I look forward to hear from you




March 2019 Newsletter

Welcome to the latest addition of our market updates and thoughts .

Life lessons March 19 - Lifes lessons

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.

Market Prediction detective

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 Landlord Medal

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.

Dinosaur discovery

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. dinosaur descovery

I’m sure there is an easy way to find these but if not follow the links;

1st video at town basin

2nd video at the bridge

3rd video at Tamatarau

4th video at Mair park

5th video at Laurel hall park

6th video at Densey Pass

Interest Rates

Interest ratesLikely 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 rental update

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

Thought provokingIn 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)

Staying young

Stay youngAs 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.

December 2018 Newsletter


  • 2019 Property Price Predictions
  • Time to sell you rental
  • You are about to get Probed ( AML)


thank you

Diana and I would like to take the opportunity to thank you for your support over the last year and to wish you and all your loved ones a happy and safe holiday season. The many comments and notes of support we get makes the effort worthwhile. We love to share our combined 60 years of Real Estate knowledge with you.

2019 the year of the Bi-polar Bear.  

Its time for our annual prediction about property prices in Whangarei. We started these in 2015 and they have been scarily accurate so far, coming within a few percentage points of the predictions. We thought 2018 would end with prices 10-12% above last year and in November they are 11.3% above.

2019 is going to be the hardest year to predict because the market is surging on, so all the sales evidence is saying its going up, but the reality is that it probably shouldn’t be. We are overdue a full stop and 2019 is likely to be it. The market seems to have fragmented into two markets. Those properties above $600,000 have been moving slowly but steadily ahead. Influenced by the Aucklander’s relocating.

The lower under $600,000 sector has been going gangbusters.

So what’s going to happen in 2019.



We are going to see the slowdown, but the market will have two tiers. Properties above $600,000 will continue to move upwards at a slowing pace while properties below $600,000 will almost stop moving. Over the full year we will see growth at around 5% by December 2019.

The evidence says the market is surging ahead but my gut instinct after over 35 years in the industry is that its time for a re-evaluation.

Prediction #2

The rental market has peaked and it’s time to sell.

 If you are owning a rental for the long term, then hold onto it, but if you are owning a rental for the short term then its time to sell it. The bottom end of the market (rentals especially) has moved more and faster than the rest of the market for two years now. The gap between the dearer properties and rentals has closed and right now, in my humble opinion, rentals are at their peak and probably overpriced.

Rents are moving upwards slowly but are not keeping pace with the investment value. There is a chronic shortage of rental properties so there is no problem with supply.  But the gap between rental house prices and the average family homes has closed to an unusual level.  The bottom end of the market has pushed up while the level above that ($600,000 plus) has moved a lot slower. This means the gap between the different quality of homes and the different areas has compressed. A bit like two tectonic plates moving. Something it going to give!

Either the prices above $600,000 are about to get an upwards adjustment or the prices below are about to stall.  Which is more likely? Listing are coming on at a faster rate, so I personally believe that its going to be the latter.

Prediction #3

The sharp rise in rental value homes will stall for a number of years and in certain scenarios could actually drop a bit.

One of those scenarios is currently happening. The government of the day makes it difficult for private landlords to own homes. The current legislation means landlords have to provide: -, insulation, heating in every room, building warrant of fitness’s, and draft stopping to name a few.

Changes to the Tenancy act are all in the tenant’s favour with: – less ability to adjust rents, harder to get bad tenants out, and possible taxes on capital gain to come.

All this envy thinking makes the hassle of owning a rental home too much of a problem for many and we will see a mass exodus of landlords from the market. This is not new, we see it after every upward property correction, but this one will be particularly strong as the new legislation is 100 percent tenant friendly and 100 percent landlord unfriendly.

For example, in the 2nd reform bill currently before parliament, if your tenant damages your property their liability will only be as high as their bond or your insurance excess.  Imagine how your insurance company is going to react if your tenant can damage your property but has very limited liability for their actions.  Your premiums are going up and so are the excess levels.

In the previous two years we have predicted a rise in homelessness through existing Reserve Bank activity. We now have unfriendly Landlord legislation and the homelessness level is going to skyrocket.

2019 and 2020 is going to be the years we see a surge of mum and pop investors getting out of rentals as an income. Anyone considering selling needs to be in the front of this exodus. Not in the middle or the later stages. You need to sell while there are still plenty of buyers and that is now while the market still has upward momentum. If you leave it too late you will be competing into a market where there are a surplus of rentals and a shortage of buyers.  If that imbalance gets out of whack you will see prices come down. It’s happened before.

If you are long term (5 years or more) then just hang in there. There are plenty of tenants, so you are not going to sitting on an empty house, but you will have to spend some money on it to meet the new legislation and you will see some of your rights eroded. For example, you may not be able to stop tenants doing minor alterations to the property, nor stop them having pets.

If you have your money in rentals for the capital gain, then it’s time to move on.

Keep in mind the Brightline test. If you purchased before 1 October 2015 then you had to own it for 2 years or pay tax on the profit. As we are now over three years from this time it doesn’t apply.  If you purchased it after 28th March 2018 you have to hold it for 5 years to avoid tax so you should look at riding this cycle out unless you are willing to donate a third of you capital gain to the Government.

There is one factor that could alter this prediction. Current first home buyers get a grant from the government of $5,000 each if they buy under $400,000 in Whangarei. If your property is worth $400,000 or less and is in in a reasonable area the First home buyers are waiting in droves.

If the government lifts the ceiling to say $500,000 then this will positively impact on all properties under $500,000.

Disclosure. I have sold my only remaining rental property for a number of reasons but definitely influence by the above.

Anti money laudering

Anti-Money Laundering and Counter Terrorism Act!

What an absolute nightmare this has become!!!! I can not see how this legislation slipped quietly by the civil libertarians without so much as a whisper.

Most would say “I don’t money launder and am not a Terrorist so what’s it got to do with me?’.  How very wrong you are. This will be the most comprehensive invasion of your privacy you will ever experience beside smear tests and digital prostate checks.

As of the first of January, this year the final phase will be in place.

The very next time you go to sell a house this is what is going to happen BY LAW.

The agent will be required BY LAW to risk assess you: –

  • Establish your identity (Passport, birth certificate, drivers’ licence, or Gun licence) AND the agent has to hold a copy of these documents on file in their system
  • Establish how you purchased your house.
  • Establish you correct living address
  • If your house is in a Trust, then the agent must complete this procedure for every member of that trust including the beneficiaries. This will include date of birth, source of wealth, where they live.
  • Your Agent can not enter a listing contract with you until that information has been verified by an authorised compliance officer.
  • If your agent thinks you are a suspicious character, they are obliged to report you to someone we don’t know yet. Probably Donald Trump!
  • If the agent fails to comply with the above, then they are liable to up to 2 years imprisonment and up to a $300,000 fine
  • A very similar criteria applies to buyers

If the agents haven’t bend you over the barrel enough, wait till you see your lawyer. They get the job of completing the personal probe. They have been doing it since July this year.

They will have to: –

  • Independently confirm all the above plus a whole heap more before they can act for you, including
  • Check that you don’t have Russian or North Korean connections.
  • Check that you have a NZ IRD number. No IRD number and the sale cannot proceed even if you have a signed contract. (most contracts have a penalty interest rate if the purchaser can’t settle on time. This also applies to the seller is they can’t settle on time)
  • Check that you have a NZ Bank account. No NZ bank account = no NZ IRD number.
  • Read this lawyer Guideline. “in many cases reporting entities will be unaware what the underlying criminal activity is. However, by screening transactions and activities for known indicators and typologies, a reasonable suspicion that the transaction or activity is relevant to criminal offending may arise. In these cases, a Suspicious Activity Report must be submitted to the Police Finance Intelligence Unit. “

 Already we have heard that many lawyers are adjusting their standard fees by adding one hour of their time to complete the basic check. It certainly makes quick settlements a thing of the past and if it’s complicated, you are billing goes up by hundreds if not thousands of dollars.

And just like the infamous “Y2K virus” and the “Great Meth Myth” we already have a plethora of opportunist service companies offering the” Complete Service Package” for a fee. A whole new industry has sprung up out of the legislative leaf litter like a fungus on the forest floor. If you have any doubt, just try Googling ‘Anti-money laundering “

We all have heard the saying that “the job that todays child will do as an adult, hasn’t been invented yet “.   I can see why.  Who would have thought a complete and separate compliance industry could grow out of you simply selling or buying a house.  I think I may be getting too old, it just seems like stupidity to me.  Like when they stopped us buying the very effective Pseudoephedrine based cold relief pills to stop the rise in “P’ manufacture. That worked …didn’t it?

We have been told that NZ is simply falling into line with other western countries, but really!!!! Why should this burden be placed on Agents? It shouldn’t be our job and you rightly shouldn’t have to be interrogated by your agent to this level to sell a house.

This is a classic case of the whole of society paying the price for the actions of less than 1/100,000 individuals. (I’ve tried verifying this figure, but not surprisingly no one knows how much money laundering and terrorism financing actually happens)

When I started in Real Estate in 1983, our listing form was one page long. A few years later it went to two. As of today, its 8 pages long and this legislation along with the health and safety stuff we must do will probably double that.

Prediction #4 (not really a prediction…more advice)

If you are planning to sell your rental, or your own home next year, get it listed before the 31st of December this year.  It doesn’t matter when you market it or actually sell it, just get the listing signed before the years end.

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