Latest Inner City Apartment Sales

 

9a/9 Victoria St East. The Lister building. This 4-5 bedroom penthouse in the historic Lister building was firmly in luxury territory with 104 sq m of floor space and a massive 84 sq m outdoor terrace looking out towards Albert Park at one end and up Victoria St towards the Sky Tower at the other. There were several bidders and it sold under the hammer for $650,000. Rates were $2310 and body corporate levy $11,600. According to QV.co.nz it was last sold for $345,000 in 2010.

105/57 Mahuhu Cres. Hudson Brown building. A two bedroom/two bathroom unit with a car park and 75sq m of floor space and two outdoor courtyards. This would have been apartment heaven for many inner city hopefuls except that it was on a leasehold title which kept the buyers away in droves. The auctioneer asked for an opening bid from the floor and when none was received, kicked things off himself with a vendor bid of $200,000. When no else was prepared to put their hand up with a higher offer he had no choice but to pass it in for sale by negotiation. Rates were $1508 and the body corporate levy was $9263 a year which included ground rent. According to QV.co.nz the property was originally purchased for $530,000 in 2006 and resold for $220,000 in 2009.

207/57 Mahuhu Cres. Hudson Brown building.  A 60sq m one bedroom unit with a car park. Its leasehold title didn’t deter potential suitors from chasing this hot downtown babe and it sold under the hammer for $145,000 which was less than half its original purchase price. Rates were $1104 and the body corporate levy of $6870 a year included the ground rent. According to QV.co.nz it was originally purchased for $317,235 in 2006 and resold for $135,000 in 2009.

95g/6 St Martins Lane. St Martins Apartments. A 52sq m, fully furnished, one bedroom unit with car park, with a management contract  to hotel operator Waldorf providing rent of $475 a week, fixed until 2019. Passed in with no bids.

9n/135 Victoria St, west. Victopia building. A 36sq m, fully furnished, two bedroom shoebox. Rented at $370 a week. Passed in with no bids.

Source : interest .co

Barfoot’s Gets Numbers Confused

Barfoot & Thompson have  made a “boo-boo” in their latest release.

They try to show that because house prices have increased, the gross return to landlords is falling as rents fail to keep up with values and costs.

Their error is that they have taken the average sale price of  houses across all suburbs and then compared that to average rents in the same suburbs.

This does not compute.

Most houses are sold to owner occupiers, and it is only the cheaper houses that are usually sold to investor/ landlords.

If you want to make  comparisons, then you must take the average sale price of  properties sold to investors and then do the maths.

While it is true that some “expensive” houses are sold to investors, the majority are at the cheaper end.

Read the story here:

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11333462

Somebody in Barfoots should be taken out and beaten on the soles of their feet with a  loaded stick.

The average rental property value is way way less than $677,000.

The vast majority of rental properties are in the $350-$450K region and the average rental around $350-$450 per week = a gross return of  approx 5.2%.

It is true that the dearer the house the higher the rent, but it does not go up in a straight line because of the “grunt”  factor  i.e. the ability of people to pay more whatever the value of the property.

SPRING HAS SPRUNG – PROPERTY TAKES OFF

Tensions rise as buyers do battle
By Lane Nichols
Saturday Sep 27, 2014

14 Rockwood Place

“Who will give me a starting bid of $1.8 million?”
An uncomfortable silence falls over the auction room floor. The auctioneer scans the sea of faces urgently for a raised eyebrow that could signal an opening bid.
Nada.
The property in question is a “conveniently located” four-bedroom Epsom home at 14 Rockwood Place.
Close to schools, shops and motorways, it features polished floors, a deck and double garage.

It’s lot four on the schedule. The three previous properties in New Windsor, Mt Roskill and Avondale have gone under the hammer for around $750,000, more than $300,000 above their 2011 CVs.
It’s just a few days on from the election and the property market is already showing signs of buoyancy after a slump in sales.

Read the test here:

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11332363

 

Latest City Apartment Sales

906/1 Courthouse Lane. The Metropolis building. A 44sq m, one bedroom apartment, fully furnished and fitted out. Sold for $326,000. Vacant but rent appraised at $450 a week, which would give a gross rental yield of 7.2%. Rates $1262. Body corporate levy $5092. According to QV.co.nz the property was originally purchased for $285,000 in 2005 and sold again for the same price in 2011.

2i/220 Victoria St. The Beaumont building. A 114sq m apartment with two bedrooms, two bathrooms and two car parks, overlooking Victoria Park. Sold for $800,000 compared with its council valuation of $475,000. A previous sales history was not available. Rates $1927 and body corporate levy $8327.

16/6 Porters Ave, Eden Terrace. A 75 sq m, two bedroom, two bathroom apartment on two levels with a tandem car park. This apartment was located adjacent to the railway tracks near Mt Eden station but that didn’t deter potential buyers and it sold for $350,000. Rates $1185 and body corporate levy $2849. Vacant but rent appraised at $540 -$560 a week if rented furnished. According to QV.co.nz it was originally purchased for $257,000 in 2006 and resold for $290,000 in July this year.

315/72 Nelson St. The Zest building. A 23sq m, one bedroom shoebox. Sold for $150,000. Rates $765. Body corporate levy $1742. It was rented at $280 a week fixed until next March, which provided a gross rental yield of 9.7%. According to QV.co.nz the apartment was originally purchased for $126,000 in 2003 and resold for $94,000 in 2008.

412/85 Wakefield St. Tetra House. A 39sq m one bedroom apartment with two bathrooms, managed as part of the Waldorf complex. Sold for $202,000. The management contract provided rental income of $1365 a month (including GST), providing a gross rental yield of 8.1%. Rates $1799. Body corporate levy $4166. According to QV.co.nz it was purchased for $251,000 in 2006.

615/72 Nelson St. The Zest building. A one bedroom 29sq m shoebox. Sold for $150,000. Rented at $270 per week providing a gross rental yield of 9.4%. Rates $878. Body corporate levy $1791. According to QV.co.nz it was originally purchased for $195,000 in 2007.

505/149 Nelson St. Ascent building. A 41sq m one bedroom apartment sold for $160,100. Rented on a periodic tenancy for $320 a week providing a gross rental yield of 10.4%. Rates $828. Body corporate levy $2337. According to QV.co.nz it was originally purchased for $101,000 2003 and resold for $102,000 in 2008.

Source: Interest.co

Investor Landlords Will Dominate The Market

Article:

Today’s Herald carries an interesting story about how the number of first home buyers with small deposits have been pushed out of the market to be replace by investor / landlords who are happy to fill the gap and obtain some income and profit as well.   ( see the Herald link below)

This is what happens when there are unintended consequences. As predicted by me earlier, the LVR rules imposed by the Reserve Bank have, from the start, hurt the poorest in the country

More people are now renting, and even more people are buying and supplying rentals to fill the demand.

At this rate I fully expect that home ownership will continue to fall rapidly to levels not seen since the 18th century – maybe as low as 30% of “affordable houses”

The inevitable outcome of such a dramatic fall in home ownership will be a steep rise of the “rentier” class i.e. the person who solely lives off  rents from unearned rental income.

This sounds very nice for those who may be in that class, but it will carry the seeds of its own destruction should it become too extreme. New and existing political parties will no doubt find favour from the dispossessed class and we face a real chance of a severe political tension erupting sooner or later.

Another side effect will be the return of the “Low Deposit Dealer” who will buy up cheap homes and on sell for a hefty profit by providing the money between what what can be borrowed and what falls short. While this in itself  is an honourable job, it will not be long before loan sharks take over with the resultant uproar from the Left.

The conditions today for low deposit buyers  mirror almost exactly the conditions I used to work with in the 1960′s and 70′s. Mortgages then were restricted to 2/3rds of  purchase price and were almost impossible to get anyway. As a result there were, just like today, hoards of families who could never afford a home.

At the time, not only were lone sharks prevalent, but genuine whole-retail dealers  flourished along side, providing cheap homes on low deposits with various forms of “rent to buy” schemes. These worked brilliantly and so long as the deal was fair and transparent no one was harmed.

Indeed to this day I still get thank you cards and calls from the good folk I helped into homes using one of the legally approved and straight up deals to help the deserving poor to (a) get a foot on the property ladder and (b) provide a fair profit for my efforts.

The notion that the country can build hundreds and thousands of affordable homes  is fanciful, to say the least. Increasing immigration, rising interest rates and transport costs (most affordable homes being in the sticks)  can only create  depressing “Nappy Valleys” which will be shunned by all but the most desperate.

To add to the problem, the falling NZ dollar will bring a wave of inflation as all imported goods go up in price, oil being the most obvious, but also many building materials.

And here’s the Kicker:

The falling NZ dollar will make investment much more  attractive to overseas buyers, who will be able to afford to buy even more properties with their own stronger currencies.

History is repeating itself, as I have seen all this before. The pity is, no one has learned anything from it.

 

Landlords up share of house sales

9:30 AM Friday Sep 26, 2014


Westpac has changed its business model after discovering landlords are on the rise with their share of house sales up from 37 per cent a year ago to 42 per cent last month.
Sales to first-home buyers are on the decline, with their share of the market down from 19 per cent to 17 per cent as mortgage loan-to-value restrictions bite.
Ian Blair, Westpac’s retail banking general manager, said the bank worked with information business CoreLogic to discover the trend and had beefed up teams dedicated to servicing landlord customers as a result.

His numbers tally with data out in July from NZIER principal economist Shamubeel Eaqub, also using CoreLogic data, to reveal that investors made up 45 per cent of the market, first-home buyers 19 per cent and movers 28 per cent.
Blair said Westpac had a new team of investment property lending specialists, and had refreshed product offerings for investors and developed an online resource centre.

That online tool has a new property investment calculator showing rent yields and capital gains in year one, as well as a forecast over a chosen period, and net cash flow position. It also includes key information, lending options, tools and resources, such as case studies and property manager checklists, Blair said.
Blair said movers were staying put and mortgage registrations for that category – people who owned or own a house and were trading up or down – have not moved.

Read the rest here:

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11331562

We Are Not Alone

  UK house price rises for 2014 almost twice as high as predicted

 

UK house prices will end the year 9.5% higher than they started it, but the strength of increases this year means that in London the market could flatline in 2016, property firm Savills said on Tuesday, as it revised its forecasts for the next five years.

The firm had predicted a 6.5% increase in prices across the country in 2014, but said that growth had “exceeded all expectations”. As a result it has revised up its forecast for the current year, and its prediction of total growth by the end of 2018 to 25.7% from 25.2%. Its five-year forecast assumes mortgage rates will have risen to an average of 5% by 2018.

In London, where the major house price indices all showed annual growth of around 20% at the start of the summer, Savills said it expected the rate over the year to hit 15%, far in excess of the 8.5% it had originally forecast.

However it said strong growth this year has left less capacity for further mid-term growth in some markets. Despite this year’s strong performance, it has left the five-year forecast for London unchanged, at 24.4%, and revised down that for and the wider south-east from 31.9% to 31.6%.

Read  the rest here:

http://www.theguardian.com/money/2014/aug/26/uk-house-prices-rises-twice-predicted

Capital Gains Tax – Labour’s Policy Gone.

COMMENTARY ON THE ELECTION RESULTS



 

The election has shown that Kiwis will not tolerate stupid politicians and loopy policies.

 The most loopy policy, which undoubtedly turned off hundreds of thousands of voters, was the notion that we need a Capital Gains Tax  
just “because other countries have them”.

When sparse details were asked for and given they were horrendously fumbled, so that the entire left including the Labour Party & Greens became a public laughing stock. 

This was especially so when it became clear that the tax was also a de facto Inheritance and Death Duty tax all rolled into one.

As a result this ill-thought out and stupid policy was buried in the landslide victory from the Centre Right, rightly taking with it most of its delusional promoters. It was deja vue for me, as the same tired old policy was wheeled out in 1976 by the then Labour Party only to result in spectacular failure as property prices rose even further.  

I railed publically against it at the time (and won) so it was with astonishment that, almost 40 years later, I found myself having to repeat the exercise all over again.

 

Below are extracts from a series of articles posted on my Facebook page where I showed up the stupidity of such a tax, especially when it can be shown that in other countries that have CGT, property prices have run rampant. The tax has been shown to be totally ineffective and complex nightmare, only benefiting lawyers and accountants.

Sept 4th:



Capital Gains Tax question :

What happens if you have been using a part of your home for business purpose, e.g. an office / study or renting out a couple of rooms for a little additional income? Will that portion of your home be subject to CGT when it is sold?

 

Sept 5th:

Capital Gains Question

From Labours Tax Policy, Small Businesses:

“Small business assets, up to a maximum of $250,000, sold for retirement, where the owner is above a certain age (e.g. 55) has held the business for 15 years and has been working in the business, will be exempt. This means that those who have saved through investing in a small business will not be negatively disadvantaged”

Does this mean that if John Smith has a small business consisting of $200,000 stock and $50,000 equipment (assets), will he have to pay CGT if he sells the stock and equipment for $250,100? What if he is sells the good will as well ? Is that subject to CGT?  What if John has several businesses- does he pay CGT on all the rest? What if gets sick before he has owned the business for 15 years and has to sell? Is there any point at all in building up a bigger business?

 



Sept 6th:

Capital Gains Question

John and Anne get married. Over time they have 4 children and they all live together in the family home which is jointly owned. After 15 years of marriage they split up and John moves out and buys another home and puts it into a trust with his children as beneficiaries.  Every month they swap children for a week.   John finds another woman, Jill, who moves in with him as his partner. She leaves her family home leaving her two children with her ex-husband
and they also come and stay with Jill and John, month in and month out.  In the meantime, Anne, now formally divorced from John also finds another man Fred, in her life. Fred has three adult children and they stay in Fred’s home while he moves in with Anne and Fred’s oldest adult child pays him rent. John wants Fred to buy his half of the family home, but to do this Fred must sell his house to pay John out.  This proves to be difficult, but eventually he does sell but for less than what he and his ex-wife paid for it as they are concerned that the Capital Gains Tax is coming into effect in the years 2015/2016

Link  from Labour’s CGT policy:

https://www.labour.org.nz/sites/default/files/issues/capital_gains_tax.pdf

 



Sept 9th:



THE NIGHTMARE NEXT DOOR  

Read how complicated the Australian CGT rules are – they may soon be coming to a place near you.

 

” 
Capital gains tax in Australia
 
(CGT) in the context of the Australian taxation system applies to the capital gain made on disposal of any asset, except for specific exemptions. The most significant exemption is the family home. Rollover provisions apply to some disposals, one of the most significant is transfers to beneficiaries on death, so that the CGT is not a quasi-death duty .
 
CGT operates by having net gains treated as taxable income in the tax year an asset is sold or otherwise disposed of. If an asset is held for at least 1 year then any gain is first discounted by 50% for individual taxpayers, or by 33.3% for superannuation funds. Net losses in a tax year may be carried forward, but not offset against income.
 
Personal use assets and collectables are treated as separate categories and losses on those are quarantined so they can only be applied against gains in the same category, not other gains. This works to stop taxpayers subsidising hobbies from their investment earnings.

 

Read the rest here:

http://en.wikipedia.org/wiki/Capital_gains_tax_in_Australia
Sept 13th

Capital Gains Question:  

 

Will The CGT Usher In The Collapse Of Small Businesses?

Read:

Westpac’s Economic Overview May 2014 
 by Dominck Stephens

Extract:

“But introducing a CGT in combination with ring-fencing would affect house prices by discouraging investors. We calculate that a 15% CGT would reduce the value to an investor of a given property by 23%, if rents remained unchanged. Even if we assume a 10% lift in rents, the loss in net present value of the house to a landlord is still 15%. Similarly, removing the tax-free status of most capital gains would reduce the capital value of farm land. How such a change in fundamentals would affect actual market prices is, of course, unknown. But our suspicion is that the mere announcement of a CGT would have a marked impact on farm and property prices.”

 

(You should carefully note that Westpac foresees a reduction of up to 23% in the value of property by the introduction of a CGT and ring fencing losses for both residential homes and farms under present conditions.)
 
 If this was the case I estimate that up to one third of small businesses will collapse within 12 months of the introduction of a CGT for one simple reason.
 
 The majority of small business secure their bank lending (overdrafts etc) by using their homes, farms and investment  properties as security.
 Reducing the value of the security by up to 23%, will have the effect of the banks ( including Westpac)  being under-secured and obliged them, to either demand repayment of the business loans, or demand more margin (extra security) .
 
 As this likely to be impossible in many cases, the business owner or farmer will either have to sell his home and investments and close his business to pay back the loan, or severely curtail his business either by shedding jobs, and dramatically shrinking down to cope.

Read all Westpacs reports here:


http://www.westpac.co.nz/wib/economic-updates

 



Sept 18th

Capital Gains Tax Question

Janet & John and their two children, (12 & 10) buy an old run down 3 bedroom house at the cheaper end of the market and decide to renovate it and rent it out.
 Both Janet and John want to be good landlords and give any tenants a fair go, in a comfortable, warm and pleasant home.
 
 They have paid $375,000 for the house by using tax paid savings plus some borrowings. To achieve their goals they employ tradespeople to supply and fit new carpets, insulate the walls, repaint the whole interior and exterior, lay new concrete, and erect a double carport.
 
 The total cost of the trades was $25,000 paid from their tax paid savings. But Janet & John do not have bottomless pockets so they decide that the whole family will also
 help in renovating the house. 
 
 John does much if the heavy work after hours and weeks ends, putting in pavers, preparing and sanding the interior and exterior walls to save on the painting work. Janet also works long hours doing lighter work such as organising and hanging the blinds and  drapes, selecting the colours, and generally overseeing the project and keeping account. Even the two children pitch in after school and week ends, pushing wheel barrows, sweeping up and cleaning.
 
 In total, Janet ( who is pregnant) spends 100 hours of her time on the project. John spends  250 hours on the project and the two children spend 50 hours each working as best as they can.The house has now been revalued at $450,000 after calculating the added value from the trades, and including all the work the family has put in themselves.

QUESTION:

How do you estimate the net taxable Capital Gain taking into account the $25,000 input from the trades PLUS the 400 hours work the whole family supplied?
 ( bear in mind that men sometimes earn more then women and small  children have no set rate of pay)

                         FREE FINANCIAL & PORTFOLIO REVIEW
 


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To arrange a no obligation meeting with our team of property and finance specialists go to our contact page by pressing the button below and paste the message    “PORTFOLIO and FINANCE REVIEW

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Market Confidence Rises Post Election


Open homes boom post election, say agents
Anne Gibson
Sept 22  2014

After a slump in home sales over recent months, agents are reporting busy open homes on the Sunday after the general election. Photo / Dean Purcell.
Aucklanders reportedly flocked to open homes on Sunday, surer of their spending power post-election.
Industry bosses are expecting sales to recover now the election is over and spring is on the way.

Peter Thompson, Barfoot & Thompson managing director, said such a strong election result had resulted in agents already seeing more open home attendance, as confidence returned.

“People have been holding off putting their properties on the market. Already, yesterday, more people were at open homes,” said Thompson.

Read the rest here:

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11329343

Mortgagee Sale- It Gets Complicated

 Bayleys, Westpac in court over sale

KELSEY WILKIE
20/09/2014

A Palmerston North developer is suing a real estate agent and a bank after missing out on buying a Broadway property for almost $2 million less than its market price.
But lawyers for the two companies told the High Court in Palmerston North yesterday the developer should have read the fine print in the contract.

A hearing was held yesterday to determine whether Batchelar Centre Ltd’s complaint against Bayleys Coast to Coast and Westpac New Zealand over the February 14 sale of 33 Broadway Ave would go to trial.

Batchelar Centre had made an offer to buy the property, valued at $2.35m, for $400,000 but it was sold to Brian Green Properties for $405,000.
The property was sold by Westpac as a mortgagee sale. The bank used a better-offer clause to get out of the deal with Batchelar.

On December 12 last year, Batchelar Centre made an offer of $400,000, the court heard, and the contract was signed with settlement due on April 1.

Read the rest here:

http://www.stuff.co.nz/manawatu-standard/news/10523716/Bayleys-Westpac-in-court-over-sale