PropertyProfit Weekly Update

Take Away the Land and What do you Have? – A Resurgence of Activity in the Building Industry.

2010-03-10T09:29:26+13:00

Each time I bring up Leasehold Land as an alternative to making housing more affordable those with otherwise little to say come out of the woodwork to assure me such an initiative will not work. Knowing it has worked in the past, (St John’s) comes to mind, I sent a number of emails to various councils throughout the country for their comment.

Are You Better Off Renting or Paying a Mortgage?

2010-03-05T08:27:25+13:00

As housing affordability is set to get worse many are now being left with no alternative but to rent even though homeownership is their preferred option. Much like in Shanghai China, where house prices have skyrocketed and it now takes around 70% of the average income to afford a bank loan, New Zealanders are not alone in their struggle. A government official in China commented he didn’t want house prices to tumble but would instead prefer to limit lending to slow the market down and return to sustainable growth. Sound familiar? New Zealanders and the Chinese prefer homeownership over renting...

Where To From Here? 2010 and Beyond...

2010-03-04T08:00:35+13:00

It’s little wonder people are confused and lacking confidence when you read headlines like, Property listings surge, sales remain static. January building consents value falls to seven-year low. End to Auckland mortgagee sales surge some years off. Interest rates set to increase later in the year Then John Stewart, First National general manager, was reported as saying 20 percent reductions were becoming more common. As reported last year I feel there are far too many people holding on in the belief that if they hold on a little longer they will be able to weather the storm. I was having...

What are the Tax Loopholes?

2010-02-24T08:13:06+13:00

With book titles such as The Insider's Guide to Real Estate Investing Loopholes, and the governments online brochure IR 435 laying out how to take advantage of Investing in Residential Real Estate, it’s little wonder Mum and Dad investors are taking advantage of what is on offer. From memory it was approximately 1992 when the Government introduced the concept of “loss attributing qualifying companies”, commonly referred to as an (LAQC) which have been a favoured vehicle of property investors and their advisors ever since. I remember at the time being a little taken back at the government’s generosity allowing investors...

Property Sales Screech to a Holt… (18 year low)

2010-02-24T07:51:39+13:00

Inaction by property investors, (who account for approximately 5% of total sales) cause the market to stall. I find it extraordinary that such a small percentage of people could have such devastating effects. “SALES PLUMMET TO THEIR LOWEST LEVEL IN ALMOST TWO DECADES” says the Real Estate Institute of New Zealand (REINZ). The number of sales has fallen to its lowest level since electronic records have been kept. On the upside, based on the above reports it is now unlikely the OCR (official cash rate) will be raised next month as I previously anticipated. But let’s step back for a...

Property Screeches to a Holt as Investors are Brought to Their Knees

2010-02-16T11:02:54+13:00

As John Key launches an all out attack on property investors, (who account for approximately 5% of total sales) the real estate market losers traction. I find it extraordinary that such a small percentage of people could have such devastating effects. “SALES PLUMMET TO THEIR LOWEST LEVEL IN ALMOST TWO DECADES” says the Real Estate Institute of New Zealand (REINZ). The number of sales has fallen to its lowest level since electronic records have been kept.

No Deposit Home Loans Back on the Table Again

2010-02-16T10:44:34+13:00

Maori have been offered no deposit home loans to help them get into housing but will they benefit in the long run? Housing spokesperson and Māori Party co-leader, Tariana Turia, is proud that another key milestone in the Māori Party's policy manifesto has been achieved with the Housing Minister's announcement of a new home ownership product called Kāinga Whenua. "Our policy priority was to resource iwi and Māori organisations to develop sustainable housing initiatives" said Mrs Turia. "This came from our recognition that Māori often have the land but not the income to service borrowing" said Mrs Turia. "We were...

Buy a One-Way Ticket and Leave the Country Now!

2010-02-10T19:40:51+13:00

Little wonder I rarely see eye to eye with Bernard Hickey, the person that lead with that rant soon after John Key addressed parliament. And to rub salt into the wound Air New Zealand, a company that was propped up by government funds (taxpayer funds) places an advertisement within the article. Very patriotic. Interesting how those that say we would all be better off across the ditch are making the statements from within New Zealand. A little hypercritical don’t you think. Then out comes the Goff “No bold plan at all” guess neither he nor Hickey actually listened to what...

Are Property Investors in for another Flogging?

2010-02-05T15:24:00+13:00

A meeting was called to look at ways of creating a level playing field resulting in a tax reform bill tabled. [Tax Working Group Report] Why it was decided to exclude any representation from property investors, the very people the finger is pointed at, is beyond me. Are they being set up to take the fall for the real culprits of the Real Estate market turmoil?

How do I know if I can get a mortgage?

2010-02-02T16:32:04+13:00

A friend called me to ask for some Mortgage Advice, a colleague of his, after calling her bank, was feeling a little down. Although she had been saving for some time and knew of others in a similar position that had got mortgages, her bank said that for various reasons she would have to wait.

No Surprise as the OCR Remains at 2.50% - But...!

2010-01-28T15:42:05+13:00

The OCR remains at 2.50% How will that affect the residential housing market? For the first time all economists/commentators seem to be on the same page, all but one. Yes you guessed it, I have differing views. Sure I was with the rest when it came to this announcement as the writing was on the wall just as it was for an increase in the GST to 15%.

Who is going to benefit from the proposed changes to Real Estate?

2010-01-14T17:02:49+13:00

Bank economists, real estate agents, valuers, investors, the media ... they all have differing views as to what side the coin will land on. I tend to think the coin will land on neither until the government comes clean as to what changes they intend to implement. Now this is where it gets a little hard to fathom. What does the government want to achieve? Discourage property investors? Fix the flaws in the tax system? Reduce house prices? Encourage investment in local business/infrastructure? From what I have been reading they want to achieve it all and it seems they want to achieve by making changes to only one industry, Real Estate. Surely that would be like saying, it’s time to rejoice, we now have a magic pill, take this pill and you will be cured of all sickness.

Become a Millionaire Property Investor this Christmas

2009-12-18T11:41:53+13:00

Often I am accused of being bias when it comes to property investment and I can live with that.We are all different and that I am thankful for, it would be boring if we all had the same views however, this week I am going to warn potential property investors to proceed with caution over the holiday season as some [not all] prepare to feast on the ill prepared. Some of the projects I have investigated recently have over stated benefits but as they are [ only an opinion ] they get away with it. Just because someone tells you,...

Invest in a rental property, form an LAQC and reduce your personal tax

2009-12-11T11:37:00+13:00

Not hard to understand why so many are doing it and why so many are opposed to it. The opposing sides will both have their time in the sun as seasons change but they will never agree, as when one is in the sun the other sits in their shade. Let us first deal with an LAQC as that may very well be the direction in which the axe swings, and this time it will. What is an LAQC - it is a [ Loss Attributing Qualifying Company ] basically the same as a Limited Liability Company except for one...

Why are Aucklanders obsessed with real estate?

2009-12-08T07:41:29+13:00

Why are Aucklanders seemingly tripping over each other to invest in real estate? An interesting analogy but one I am not buying into. I am seeing a different picture emerging and one that I hope becomes apparent to Dr Brash, as an unwarranted increase in interest rates would not be helpful just now.

Is Revolving Credit Beneficial or Is The “Instant Credit” Just a Carrot?

2009-11-25T23:13:19+13:00

Revolving credit facilities are more than just a low cost overdraught facility. They can be and are the most basic of financial tools. However as a certain level of budgeting and self-control is involved to capitalise on the principle [saving money] many first get tempted by the carrot - spending money.

We cannot survive on an economy based on property.

2009-11-18T00:53:27+13:00

I would like to challenge Dr Ganesh Nana [ the BERL Chief Economist ] on that statement, “We cannot survive on a property bubble. We cannot survive on an economy based on property.” We are only a small island nation located in the middle of nowhere with dairy, produce and technology our main export earners. Manufacturing is not really an industry that is going to save us. Therefore, what is he, Dr Bollard and all those others chasing their tails like demented cats proposing?

Standing in the middle of the road is dangerous. Five year fixed rate 9%

2009-11-09T22:47:55+13:00

As I am writing I notice two email messages arrive the first from ASB and the second from Westpac both advising they have increased their mortgage interest rates. Looking at the five-year rate 8.75% it is now believable when I say I can see 9% on the cards by March. Many thought I was wrong in that predication six months ago and I wish they had been right.

Why are Commentators Having an On/Off Affair with Real Estate?

2009-11-03T22:22:50+13:00

Just what is going on in the real estate market? Is the recession over or not? One minute the reports come out that there is a surge in house sales, prices are increasing, houses are selling much faster, then the amber light starts flashing on the message board; “Spring did not bring the surge people we were hoping for”.

Banks are Merely Money Lending Brothels.

2009-10-27T15:29:45+13:00

Below is the result one of our Mortgage Brokers achieved by sending the identical application to three of those ‘four corner cartel of shops selling the same product at the same price’. This example highlights a few things...

Questionable Decisions as Interest Rates Rise.

2009-10-21T14:25:53+13:00

NO [Declined], we will not loan you more money. Every day starts anew and mid week was no exception; a loan application had been declined. Sure it happens from time to time but usually only when one pushes the envelope. Not this time...

Is an LAQC the all time great scam of the century?

2009-10-15T20:32:02+13:00

Invest in a rental property, form an LAQC and reduce your personal tax. Little wonder so many are doing it. In addition, it does not end there, the door is wide open if one is switched on as they can ring even more benefits out of the system by moving figures from one column to another and it is legal.

More Buyers than Property creates a Resurgence in Property Values.

2009-10-13T07:35:27+13:00

Is it nationwide or is it simply a case of big spending Aucklanders throwing their money around? A headline [More Buyers than Property] came to my attention on the weekend but really did not go on to explain how this came about...

The [Dirty Little Secrets] about Mortgage Protection Insurance…

2009-10-08T13:42:58+13:00

Are Banking Consultants and Mobile Mortgage Managers being encouraged to sell life insurance to meet sales targets and to qualify for bonuses?

Current Interest Rates 6th Oct. 2009

2009-10-06T07:51:08+13:00

Market Average Carded Interest Rates - No Change: Fixed Rate 6 months: 5.50%, Fixed Rate 1 year: 5.80%, Fixed Rate 2 years: 6.95%, Fixed Rate 3 years: 7.75%, Fixed Rate 4 years: 8.25%, Fixed Rate 5 years: 8.60%, Floating Rate: 5.75%

Nothing Short of a World War or Great Depression will Change Things.

2009-10-05T15:56:14+13:00

Nothing short of a World War, Great Depression, total or near destruction will see real estate cycles track as they have over the past years and heaven forbid either happening any time soon.

Current Interest Rates 25th Sept. 2009

2009-09-29T08:42:38+13:00

Market Average Carded Interest Rates: Fixed Rate 6 months: 5.50%, Fixed Rate 1 year: 5.80%, Fixed Rate 2 years: 6.95%, Fixed Rate 3 years: 7.75%, Fixed Rate 4 years: 8.25%, Fixed Rate 5 years: 8.60%, Floating Rate: 5.75%

Bill English Talks About Making Changes to KiwiSaver...

2009-09-29T08:21:17+13:00

Less talk and more action Bill as the current [restrictive policy] is putting many off investing in the scheme.

Warning: Interest Rates are On The Move.

2009-09-29T07:57:40+13:00

ASB have increased their 12month, 18 month and two year rates however their six month and floating rate are still at an all time low. Have the economists got it wrong? Are we going to be left stranded in the middle of the road like possums blinded by car headlights not knowing which way to run?

Shockwaves Are Set to Hit the New Zealand Real Estate Market.

2009-09-21T18:08:38+12:00

Dinning with a group of property investors a few days ago I made that statement which froze their knives and forks in mid air. It was if the building had started to violently shake and the ground below was about to open up and swallow them whole.

Builders Slash Profit Margins.

2009-09-15T10:28:33+12:00

Builders Slash Profit Margins to help kick start the real estate industry, YEAH RIGHT! It was only last week that I was giving Bernard Hickey stick for rolling his eyes at the resurge of interest shown by some property investors.

Has Bollard Lost the Plot?

2009-09-11T13:50:06+12:00

Watching a late night News Broadcast I wasn’t sure if I was hearing things as it had been a long day. But when Bernard Hickey made a statement something like “here we go again” as he was looking at the ground in horror, I thought out loud, what are these so called experts going on about?

Are New Zealand Lenders Getting the Jitters?

2009-09-07T13:57:49+12:00

Many are under the misconception that lenders are getting a little more liberal when it comes to assessing loan applications. And understandably when one in particular is spending a fair amount of money to get that message across, but from my experience with that particular lender, it is more a branding exercise than a genuine softening of credit policy.

Housing Affordability - Alarm Bells are Ringing

2009-09-03T12:00:37+12:00

For those that haven’t yet heard the racket, housing affordability alarm bells are ringing. Take haste as the fire-fighters do - this isn’t a drill, it is the real thing...

Will the Government add GST to rents and mortgages?

2009-08-28T13:35:33+12:00

Will the Government add GST to rents and mortgages to help reduce the current deficit? A real possibility I believe. After all debt reduction isn’t taxed.

Property Prices to increase by 30% over the next 10 years.

2009-08-27T17:30:51+12:00

Having a chat with a Property Investor today he commented about property prices are predicted to increase by 30% in the next ten years and to find him another one...

Take Action and Cap your Home Loan Interest Rate at 5.5%

2009-08-24T19:47:00+12:00

As no one in the world can say with any certainty what interest rates are going to do should you fix / float or split your loan to hedge the risk. Sorry I was too busy to read the weekend papers but believe comments were made as to fix vs. floating so I guess it will be interesting to see how my views match those of others...

Are New Zealand Banks firing blanks?

2009-08-13T21:56:00+12:00

Are they really serious about stimulating the economy or are they simply firing blanks. Personally, I don’t think you need to don a bulletproof vest just yet. Lenders in my opinion are largely responsible for the recession we are in now (happy to explain that in next week’s Blog should interest warrant it) therefore I feel they; the lenders have a duty to...

Property White Water Rafting…

2009-08-04T11:07:00+12:00

Property Investment over the past ten years can best be compared with white water rafting. First the safe exhilarating ride, property prices increasing, and increasing, and increasing, then look out, hold on, turbulent waters, the torrent sending many plunging over the waterfall to be left will little but the clothes on their backs. This may sound like a horror movie and for many it was...

KiwiSaver, would you like chips with that?

2009-08-03T14:30:44+12:00

So far only a million or so New Zealanders have joined KiwiSaver. Sure there are a few wondering in every day and signing up but if I were to walk around the local shopping mall dropping one hundred dollar notes I am sure their would be a stampede...

A Billion Dollar Business

2009-07-04T14:16:58+12:00

KiwiSaver is a billion dollar business that all Kiwis under the age of 65 can get a slice of, yet only one million have joined the scheme.Like many, I have sat on the sideline waiting for the tinkering to end and paying very little attention to KiwiSaver until I came across this little quotation, “for every week you wait, it is costing you $20”. “That’s madness” I thought, “and really the only tinkering is going to be reducing or removing benefits as it doesn’t need to be made better to attract people.” One day I believe the scheme will be made compulsory.

If nothing changes… nothing changes?

2009-07-04T13:34:04+12:00

Ever since New Zealand was hit by the world recession not one property expert has paved the way forward, instead they constantly refer to the past for explanation as to what will come. Apparently nothing has changed; it is still all about cycles. A common comment is “we are at a particular point in the cycle and need to be at another point, when this happens then we will be able to …. “. I certainly don’t share this view.

Ground Breaking NEWS

2009-06-12T11:38:18+12:00

Although not new to the Commercial sector it is ground breaking news in the Residential Market. Very much like car pooling, several people share the same vehicle to reach a common destination RPS will do the same for Property Investors. First, like any good investment we needed an exit strategy; a term of ten years was decided upon. This wasn’t a figure randomly plucked from the air. Housing New Zealand preferred lease periods are for a term of ten years with the right of renewal for a further five years, so that decision was a no brainer.

Tax Property Investors?

2009-06-04T21:09:00+12:00

It was reported that the Treasury Secretary John Whitehead said it's time to address a long standing issue of taxing capital gains from property investment. I believe he went on to say, capital gains, or property taxes, would encourage investment into productive activity. Unfortunately he didn't mention what type productive activity he was referring to. Many will disagree with Mr Whitehead and be baffled by his statement as the building industry is the largest productive activity we have. Well if not the largest it is way up there.

Robert Kiyosaki author of best seller “Rich Dad Poor Dad” is coming to town.

2009-05-22T10:25:02+12:00

Author of best seller “Rich Dad Poor Dad” Robert Kiyosaki and his wife Kim, author of “Rich Women” fly into town early June with their entourage to dazzle us with there huge range of carefully crafted glass slippers. Robert is big on acquiring real estate and then using it as leverage to acquire more wealth generating opportunities which is the basic fundamental of his teaching. Purchase assets not liabilities.

Property Investors are Getting Burnt and so are Their Properties.

2009-05-16T08:42:17+12:00

“Natural growth” / “external growth” what are they, and how do they relate to the rise and fall of property? It is now very apparent that many investors have no idea what the words mean as the large number of fire sales confirm. Look what happened in the Auckland CBD, and will happen in other areas if the path of “natural” growth is not factored in.

Have the resistance gone into hiding?

2009-05-08T20:59:00+12:00

Is there really a cease fire, or are the KiwiBank freedom fighters simply regrouping in anticipation of a strike from across the ditch by the Aussie Banks? Maybe Peter Jacksons Chinese made Lancaster Bomber has been brought here to help the resistance with the next faze of the interest rate war, “the big one” the one that will end all interest rate wars. Or, has that last war already been fought, I guess only time will tell. For now I think all of the Banks are licking their wounds and are hoping for a little time out from the interest...

OCR cut again, time to take a breath...

2009-05-01T17:51:56+12:00

This time it was Westpac that lead the charge by reducing its six month rate to 5.39 percent down by .40 percent. Not a bad start, and more will follow. It was only a few weeks ago that there was a stampede of people towards long term fixed rates and I guess many of them will now be starting to wonder why they got caught up in the hype after reading Dr Bollards comments that it is likely he will keep interest rates low until late 2010, really there is nothing new there, as I am sure that is what...

The Biggest Wake Up Call Ever!

2009-04-18T07:46:15+12:00

The biggest news item this week has reached all corners of the globe and it has nothing to do with the 'Recession' or Real Estate... Or does it? Those of you who know me or have read my ebooks, will no doubt have heard stories about my past investment property success's and the lessons I have learnt. One of the biggest is "Don't Judge a Book by its Cover!" Check out the video interview below and then read on. If you are one of the few that have not seen the actual episode featuring Susan Boyle, click here. How does...

First Home Buyers are back on the property ladder.

2009-04-14T11:59:00+12:00

Yes it true, two brief examples, for more detailed information please email me brian@propertyprofit.co.nz or call me on direct line 09 278 9237. If your "Parents" were to "gift" you 10% of the purchase price, you could potentially borrow the remaining 90%, essentially 100% lending. Second example, if you have saved 5% over a period of time, you could essentially borrow 95% of the purchase price. This policy takes effect as of today 14/04/2009 PLEASE NOTE it is subject to change without notice and conditions do apply. Again, for more detailed information please email me brian@propertyprofit.co.nz or call me on...