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  1. #1
    Join Date
    Jun 2005
    Location
    Nelson NZ
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    Default Nelson PIA meeting 12 May and newsletter

    NELSON PROPERTY INVESTORS ASSOCIATION


    MAY 2009 NEWSLETTER


    PO Box 198 Nelson


    Our next meeting is being held at the Nelson Suburban Club, Tahunanui Drive on Tuesday 12th May. The meeting proper commences at 7.30 pm with the ever popular meal at 6pm when you will have the opportunity to chat to other investors The CIB from the Police will speak on drugs in your rentals. They will tell us how to recognise them and what to do when you find them. I am aware of one property in Nelson that has been demolished after the discovery of P manufacture. Insurance companies are insisting on more regular inspections to avoid this sort of problem. Do you know what criminal and civil court proceedings will occur when you discover and report the presence of drugs?




    THE MARKET


    It is only four weeks since I wrote the last newsletter and commented on the market. That is a long time in this industry. Despite finding things hard going in March I let twenty properties over the month. This is one per working day. Twenty properties to clean up, twenty to inspect and twenty to arrange for start of rent payments and bonds to be collected and lodged. Then along came April. Not one property was let for the first 20 days of April. I was stuck with five large properties with rents over $400 and another ten smaller ones. Oh dear I thought this is it. The long forecasted crises that everyone from economists to taxi drivers had predicted, has arrived. Then suddenly the phone started ringing again. We are coming back to Nelson the chorus went, we no longer want to live in Alexandra, Christchurch, Wanaka, Greymouth and Wherever Land. Miraculously all the larger properties were let in a few days and a few of the smaller ones. A significant number of families are combining forces with grandparents and renting larger properties.
    Another interesting sign of the times is what I call my bellwether suburb. I was doing my regular drive up Emano Street and Murphy Street last week and it struck me that of the few real estate “for sale” signs there, most if not all, had a sold sticker on them. These areas are traditionally difficult streets to sell in so clearly investors and new home buyers are running out of decent areas to buy in at the moment.
    However some of the tenants are struggling to pay their rent. I had 18 miss their rent last week. Some of these people had never missed before. These new ones are more of a worry than the regular slow ones.

    Tony Alexander’s BNZ weekly comments of the 23 March are worth reading. Some, but not all of you might have already read them. If you have it does not hurt to see them again. Sorry my IT skills do not extend to exporting graphs.

    HOUSING MARKET UPDATE

    House Prices Down Almost 9% So Far
    This week Quotable Value NZ released the only truly definitive measure of house price changes in New Zealand in their quarterly indexes. They show that during the December quarter of last year average house prices in new Zealand declined by 2.0%. This was just less than the 2.1% decline during the September quarter and the 4.5% fall during the June quarter. It means that compared with the peak in the house price cycle a year earlier average NZ house prices have declined by 8.9%. Over the same period of time they have declined 18.6% in the United States and approximately 18% in the United Kingdom. Nelson fell 7% so we are not much different to the rest of the country.
    Looking at things going forward we still think there is scope for house prices to edge down a tad further. As we have strongly noted for some time now there are many supporting forces such as a housing shortage, collapsing construction, low interest rates and accelerating population growth. But there is also the fact the economy remains in recession with the unemployment rate set to rise firmly.
    Migration Boom Underway?
    In March there was a net gain to New Zealand’s population from permanent and long term migration flows of 313 people. This compared with a net loss in March last year of 1,009 and means the annual net flow has now risen to 7,482 from 6,160 in February and a cyclical low of
    3,569 in November.




    Disclaimer. Anyone stupid enough to act on advice or comments in this newsletter without thinking for themselves deserves to suffer the consequences.




    In seasonally adjusted terms the flow for the month was a gain of 1,720 people compared with 1,600 in February, 810 in January, and 320 in December. How does this turnaround so far compare with the experience of 2001-02 which we have often cited? Back then in the year to June 2001 there was a net loss of 9,266. A year later there was a net gain of 32,815. That was a massive 1% boost to the population. The low point in the migration cycle back then was -13,214 in the year to February 2001. Four months later the flow was -9,266 or an improvement of 3,948. This time over the four months since the low in November the turnaround has been 3,913.
    One would be silly to blindly extrapolate this turnaround to an exact replica of the previous experience but there is nothing appearing in the data to dissuade us from the view we have long championed that NZ sits on the cusp of a decent net migration turnaround courtesy of woes offshore discouraging emigrants and encouraging a shift back here. As we have pointed out, when these turnarounds happen it is not just one thing changing but usually a number – basically more people shifting here or shifting back here, plus fewer of us already here leaving. So in the three months to March we can see that the number of people shifting to NZ was ahead 5.7% from a year ago while the number leaving was down 9.7%. For the moment we think it remains acceptable to count on a net migration gain come the end of this year somewhere between 15,000 people and 30,000. At a time when there is an existing housing shortage and construction is plummeting it is fairly easy to work out the housing market price support implications. For your guide the net migration gain over the past ten years has been 10,671 p.a. and we are still below that. We will probably be above that come May however given the rate of turnaround recently experienced.
    Key Forecasts
    Dwelling consent numbers to fall from 24,500 in the year to March 2008 to below 16,000 in the year to March 2009 with a slight recovery late this year then above average activity after that as attention turns to a shortage of dwellings.
    Real estate sales have probably reached their weakest level. Activity is likely to fluctuate and begin a drift upward before year end.
    House prices at worst to fall another 5%, stabilising now possibly, then rising slightly over 2010.


    STINKING THINKING

    One of the members asked me to write on interesting Tenancy Tribunal cases. I have stolen the above heading from a sermon that Rev Tony Barnett once gave. It is not normally recognized but the RTA provides for penalties for those landlords who think the wrong thoughts. This is true the “unlawful act” is not what you did but what you thought when you did it. No kidding this happened recently in Nelson.
    The tenant took a landlord to court for a few things with the substantive claim being for damage to his car when a large tree fell down on it during a storm. That portion of the claim was dismissed but the adjudicator, perhaps feeling sorry for the tenant, awarded a moderate compensation for other things. The owner, at this point, had enough of being a landlord and decided to sell the house. He told the tenant he was selling and gave him ninety days notice. He issued the notice seven days after the first tribunal hearing. By the time the tenants had left the market had changed, prices and interest rates had plummeted. I was asked to manage the property. I promptly found a replacement tenant at a significantly increased rental rate to the old tenants. When the old tenants discovered new tenants in their old home they applied for compensation on the basis retaliatory notice under section 54. Now section 54 provides for no compensation only one of declaring the notice of no effect. The tenants are required to apply within 14 working days after receipt of the notice. The adjudicator decided to hear the case despite the time limit being exceeded. Section 54 (2) test is “The landlord was so motivated in giving the notice”
    The application was dismissed because the owner showed that he was in fact intending on selling the property. Also the adjudicator pointed out the there seemed to be no animosity between the landlord and the tenant. The full bond was refunded to the tenant and no claim was made by the landlord despite several issues I had pointed out. So the moral of the story is do not think bad
    things about your tenant.






    MENTORING


    We have decided to try our hand at mentoring. We are looking for volunteers who might be interested in taking part.
    Put your names forward if you want to be involved. Send Glenn an email offering to help on the following subjects.
    Tenant problems, maintenance issues, rent and other defaults, decorating, neighbours, financial.


    QUESTION OF THE NIGHT


    In order to allow a bit of interactive participation at the meetings we will be having one question answered by an old hand. If you have a question, please send it into Glenn, and this will be answered by one of the committee at the next meeting night.


    ANNUAL GENERAL MEETING


    Our usual short AGM will be held at our next meeting. Our faithful “hand picked “volunteers have put their best foot forward. Committee members are our valuable pool of ideas rather than a bunch of people who sit around deciding things at meetings. If you would like to put some ideas forward on meeting ideas or what ever this might be your chance to have a go. Let us know if you want to be invited on.


    DBH LANDLORDING 101


    Another popular seminar for new and old landlords is being run on Monday 25th May. 7pm -8pm at the Rutherford Hotel. If interested in attending please contact the Department of Building and Housing.


    NZPIF POLITICS AND OTHER THINGS


    The Federation keeps working on your behalf. Most of the key people are volunteers supported by a superb group of employees and contractors. Have a read of what they have been up to by going to this link. www.nzpif.org.nz/news


    PIZZA AND POLITICS


    This email has come in out of the blue. I am sure some of you will be interested in this. After all who on earth does not like eating pizza.
    Judy Cunningham
    Electorate Secretary
    Nick Smith MP Nelson
    544 Waimea Road
    NELSON
    ph 03 547 2314
    fax 03 547 2315

    Just thought you may be interested in attending Pizza & Politics on May 14th. This is an informal meeting normally with a Minister and next months guest speaker is Phil Heatley who is Minister of Housing and Fisheries.

    It runs from 5.15pm – 6.45pm and costs $10.00 per person which provides you with some pizza and a drink and it is held here at 544 Waimea Road upstairs in the hall.

    Please feel free to invite your membership and all they need to do is let me know so that I can ensure there is enough pizza!


 

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