What Is Happening With The Property Market And Some Basic Tips

31 October 2018

What Is Happening With The Property Market And Some Basic Tips


Looking at realestate.co.nz, the number of listings has increased dramatically since 30/09/18.  The table below shows a 17.7% increase over New Zealand.

•  Auckland, Bay of Plenty, Hawkes Bay, Wellington, and Canterbury have all experienced over 18% growth in listings.  A fair expectation would then be that these markets have flattened and are unlikely to increase dramatically with the number of new listings.
• Manawatu and Southland are the two regions going against the trend, with only small increases in listings over the last month.  This most likely means that these regions are still experiencing the end effects of the boom.  However, if long term trends continue, these regions will also flatten.  The exact "when" is always the hard part to predict!

Looking at this information, there should be more opportunities and choice for buyers.

It will be very interesting to see what happens to the property market over the next six months!

Basic Tips

1.  If buying:

1.   Take your time.
2.   Only buy if the numbers work for you.  I would suggest buying something where there is added value, rather than just relying on capital gains.
3.   Gross yield gives a basic indication of cashflow, but make sure you look at the full cashflow.

2.  Take advantage of what you have:

1.   Can you get flatmates (taxable income), or boarders (some exemptions that can make tax free) to increase your income and long term pay off your personal house quicker?
2.   Can you subdivide, or build a minor dwelling on your existing personal house or existing rentals?
3.   When did you last review rent?  Rents have changed a lot in the last 12 months and it is important to keep up to date and review your rents.
4.   What is your loan strategy?  Can you break to get a much better rate?  Can you fix longer term to give yourself some long term protection and certainty?
5.   Can you renovate to improve cash return?

3.  If selling:

1.   Get advice on the tax consequences of any sale.  It’s not just the Brightline test you have to watch out for.  Capital gains can be taxed in other ways,.    Plus, there might be building depreciation to recover if the rental is        from before 1/4/11.
2.   Consider where you will invest your equity that will get a better return?  ie what will you do with the cash?
3.   Consider staging the property as this can often help to get a higher sale price.
4.   Consider first impressions – If a buyer is looking for the house, they often see the number and mailbox first.  What impression does this give?

Kind regards
Ross Barnett