Auckland House Buyers discusses the effects of the new Property Legislation

October 2015 heralded the addition of some fresh legislation that has created some negative feelings towards buying and selling houses. The additions include increased LVR of 20% first home buyers and 30% for investments, IRD details and the Bright Line Test. Not only does it make it difficult for people to save for their first homes it is now increasingly difficult for investors to expand their property portfolio. Volumes have dropped in a reaction to the governments’ tight hold on the property market. For those trying to secure their future with investment properties they are finding it more and more difficult to exit the rat race. Paying for a mortgage and trying to save the 30% for an investment is making it unachievable for most. On top of the increased upfront payment the Bright Line Test taxes the on-sell of a house within 2 years of settlement has significantly reduced opportunity towards financial freedom.

Auckland House Buyers  –  December 23, 2015 – Kathleen O’Kane

Auckland House Buyers assess the holiday slump and its effect on the 2016 market.

The number of sales from December 2015 was the lowest they have been in 4 years. They were down 19.3% from November showing a significant drop in the market from what was an extremely active year for real estate. The number of listings also dropped by 55% making it hard for January to be able to keep up with the pace of Auckland’s growing demand for property. For those who are looking to sell privately this is the perfect time to consider it as there is little in way of competition as a result of the holiday slump.

Auckland House Buyers shows how the Auction sandwich isn’t cutting the mustard!

 

Auckland has seen some impressive statistics over the past year with 80% clearance at auctions. This simple analysis can show how easily housing prices can become inflated by aggressive buyers and those who are simply trying to find their first home or get a fair deal are left with nothing. However, in the last week clearances have dropped to 30-40%.

Barfoot & Thomson are a big name with a big reputation. However, at their most recent auction sale in Shortland Street only 9/25 properties sold. The 36% success rate shows how much the market has dropped since September/October. Asking prices have already seen significant drops and vendors are coming to the realisation that their property isn’t worth the inflated price that it may have achieved a couple of months ago.

Auckland House Buyers  –  December 18, 2015 – Kathleen O’Kane

Auckland House Buyers look into the significant drop overnight of the OCR

 

The OCR has dropped significantly overnight to 2.5%. Economists predicted this was going to happen and the Reserve bank has said that this would be it. Some believe that it was due to the inflated housing market, overseas oil prices and the strong position of the NZ Dollar in overseas markets. For those on a Floating Rate; ANZ has just dropped theirs to 5.74% in response to the OCR drop. Could this be the time for re-structuring or possibly applying for your first home mortgage?

 

New Zealand’s Official Cash Rate – 1999 – 2015 (image courtesy of NZ Herald):

 

You will often here Auckland is inflated and overprice and you may be right but this all depends on what you are comparing to.

If we’re comparing to small rural towns then yes Auckland is very expensive but is this really comparing apples to apples?

Auckland is literally the hub of NZ and where most immigrants decide to visit and stay. Now we know why this is.. the job opportunities for one, but also it’s the big city where major events take place and is the place to be whether you want to grab a drink with friends or a bite at the many restaurants to choose from.

Now if we are comparing with other global cities say for example Hong Kong you’ll find that half a million wouldn’t get you very far, instead in would be a shoe box apartment the size of your double garage about 20-30 square meters. Let that sink in for a minute and you’ll realize Auckland is nowhere near as expensive as other global cities.

The four laws being passed are mainly affecting both local and foreign investors they are;

1. 30% deposit required for any home that you are not living in.
2. IRD number required for all foreign investors
3. NZ bank account for all foreign investors
4. Taxed on property sold within 2 years of purchase

The good news is that if you are homeowner selling and wanting to buy a new home none of the new laws would affect you. This also means you may get a very good deal on your next personal home whether it’s an upgrade or downgrade.