Rent shock predicted as shortage gets worse

[Bluekiwi]

Yep, the longer recession and quake has kept rates low for 2011 when I was expecting them to go up.

But early 2012 fixing for 2 to 3 years before rates go up, is a key point for me.

That would give me security through to 2014, and I am thinking cap gains would have kicked in by then, plus my trading should bring in at least 50k a year to handle any shocks.

But when you have a yield of 8.5% you can sit nicely with rates around 6.0 to 6.5% and be pretty much cash flow nuetral.

As soon as rates hit 8 to 9% and more you are bleeding money.

[Ahar]

I will look to buy another 4 when I can, which wont be till 2012.

Just make sure you've got your butt covered.

Just remember, the "cure" for inflationary pressure is to up the interst rate.....and there is a lot of talk about inflation at the moment.

And whilst inflation should see an increase in property values, it's not a done deal yet.

Just maybe we'll get the high interest rates without any real inflation....ie, the reserve bank will be successful.

Just possible then that house prices will fall....I should expect some/many folk will not be able to afford the expense.....then again there should be some good buying opportunities. But only for those PI's who aren't too highly geared.

[Bluekiwi]

Its in there all right.

The world is a changing at the moment.
A lot to keep track off.

Certainly is a good time to buy property now.

I will look to buy another 4 when I can, which wont be till 2012.

[Davo36]

Is the price of oil included in the inflation calculation these day? Or excluded?

[67910241]

If OCR drops 50 basis points tomorrow, they may well leave PI alone for a while, as they will not want to stir inflation any more than oil may already be doing.

Of course, if the Saudi "day of rage" movement takes off (unlikely); then all bets are off with inflation anyway.

My thought there is that the oil inflation, and all other bits of stuff that go up with it (including food), are in fact competing with other inflation. In other words, the more the essentials up, the more the rest can't and won't.

Also with all the inflationary pressure, reducing the rate seems a bit counterintuitive esp. if this causes the NZD to plunge. I don't think the OCR drop is a done deal tho.

[Perry]

This one will be the proverbial mother
of all unintended consequences IMHO.
.

[speights boy]

Who knows 679.

My guess is with ChCh they will be mindful of rents already increasing due to shortages, so will not want to aggravate further.

Obviously WFF is being cut for some.

If OCR drops 50 basis points tomorrow, they may well leave PI alone for a while, as they will not want to stir inflation any more than oil may already be doing.

Of course, if the Saudi "day of rage" movement takes off (unlikely); then all bets are off with inflation anyway.

[67910241]

This was not an unintended consequence.

What'd you reckon SB, could ringfencing be next on the "ooops I did it again" list?

[speights boy]

None was heard
to speak of unintended consequences,
like increases in rent, .........

This was not an unintended consequence.

[Perry]

But the notion was "spun" as a way of
getting at those mean, rotten, nasty
property investors. Those evil folks who
were rorting the system. None was heard
to speak of unintended consequences,
like increases in rent, along with the
the excise increase in petrol, (plus extra
GST), so Dipton Dum and Tweedle Key
could claw back all the revenue lost via
the much vaunted tax rate reductions.

Verily, what the gov't giveth with one hand
it taketh back, with interest, with the other.

[speights boy]

A shame some pithy comment was not added, like:
May've helped the masses grasp that it was gov't
policy that was driving their rent up so fast and
so much.
.

User pays; instead of taxpayers.

[Perry]

Mr Whitburn, a lawyer formerly with Russell McVeagh
who owns 11 rental homes in Auckland, cited one land-
lord who will lose $23,000 annually in tax breaks as
a result of last year's Budget changes.

A shame some pithy comment was not added, like:

Because of the profoundly asinine decisions being
made in W'gton, along with scarcity of available
residential rentals, the LL concerned did expect
to recover that loss of depreciation allowance
from tenants, through rent increases.

May've helped the masses grasp that it was gov't
policy that was driving their rent up so fast and
so much. Hell, some of it may even have made
its way into the cranial compounds of the W'gton
woodenheads.

(OK - only joking!)
.

[Keithw]

Go Granny Go
The Govt hasn't got a clue what their tinkering has caused.

The message still hasn't got through to these idiot reporters (or the Govt) that Depreciation is not a Tax Break, it is a real cost !
Populist reporting as usual

[muppet]

Rent shock predicted as shortage gets worse

By Anne Gibson
5:30 AM Wednesday Mar 9, 2011
Photo / Janna Dixon


Auckland faces a rent shock as the Christchurch earthquake diaspora, rising insurance premiums and the loss of a landlords' tax break all affect demand on already scarce stock.
David Whitburn, president of the Auckland Property Investors' Association, and Andrew King, vice-president of the NZ Property Investors Federation, predict Auckland rents will spiral by $100 to $150 a week in the next year.
That will put many three-bedroom eastern suburbs homes and city-fringe properties in the $700 to $800-a-week bracket - about $38,000 a year.
The average wage is just under $1000 a week.
The two men said the earthquake and demand for rental housing would propel prices upwards. Severe under-building in the past decade would exacerbate the shortage.
Big insurance rises after the quakes and the loss of depreciation tax breaks from the start of next month are other factors cited for the rent shock.
Mr Whitburn, a lawyer formerly with Russell McVeagh who owns 11 rental homes in Auckland, cited one landlord who will lose $23,000 annually in tax breaks as a result of last year's Budget changes.

Read more at Grannys

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10711046