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NELSON PROPERTY INVESTORS ASSOCIATION
MAY 2015 NEWSLETTER
PO Box 198 Nelson
Our third meeting of the year is being held at the Nelson Suburban Club, Tahunanui Drive on Tuesday 12th May. This month we have Mayor Rachel Reece and Hon Dr Nick Smith MP speaking on their proposed Housing Accord for Nelson Tasman. Initially when I asked Rachel to speak on this subject her response was she was not sure what a Housing Accord involved. My response naturally was to ask, “Well I read in the front page of the Nelson Mail that you were doing it so surely someone must know what they are doing.” Since those initial discussions time has elapsed. Time in the property investment industry allows for things to change and for people to think.
I have the feeling that this meeting will be one of those critical times in history. If the Housing Accord works (or does not) it has the potential to change things! When things change in property some people win and others lose. An optimist would say there will be two winners. Who knows what will happen. If investors cannot figure out what is proposed, what is happening, and what actually happened then my guess is they will be the loser before the game commences. So do not miss this meeting. It is imperative to understand what is proposed. When the promised opportunities present themselves you need to be ready to act. Property investors can only act in three ways. They can buy, sell, or put the rent up. Perhaps Nick and Rachel will tell us which of these three things they want us to do.
The meeting proper commences at 7.30 pm with the meal at 6pm. We will be eating in the Club Cafe which is cheaper but slower so attendees need to arrive at 5:45 pm. If you are coming to the meal please email Glenn by return email. The Suburban Club reserves seats on the basis of my bookings.
THE STORM CLOUDS ARE GATHERING
Property prices and the Auckland housing crises seem to be in almost every newspaper and in multitudes of on line blogs. We are heading into a national sport of “spot the culprits.” In the rush to drag out and burn the witches very few people are stopping to think and figure out what has changed in the world to cause this plague.
I enjoy reading articles on Interest.com.nz and Tony Alexander from the BNZ.
Recent attacks have come from Te Ururoa Flavell suggesting all rental properties throughout New Zealand should have a warrant of fitness because he has seen some unfortunates living in substandard housing in Christchurch. RBNZ's Grant Spencer says the Govt should reconsider potential policy measures to tackle the tax-preferred status of housing investment. It would have been good to hear what special tax privileges residential investors have. Our national office representing us the NZPIF have transformed our political lobbying machine and every day or two they respond to yet again some anti-landlord rhetoric or proposed new tax system that will solve both South Auckland’s rental issues and North Shore’s Millionaires dilemma. As we all know dropping a tax atomic bomb onto Auckland will also take out Nelson. I can imagine some people just shrugging their shoulders when we point this out and say “There will always be some collateral damage.”
Clearly there are problems with the way our industry and society is changing. The percentage of rental properties to owner occupiers is increasing. In Auckland the gross rate of return from residential property investments is dropping to unsustainable levels. The ratio of rent to houshold income is increasing in some parts of the country. (Affordability is getting worse). There are reports of higher occupancy rates. The deposit requirements for first home buyers have become unachievable for many young people.
I travel frequently and normally try to find out a little bit about the property industry along the way. Our situation is not alone. Renters in London now pay 60% of their household income on rent. In the UK the percentage of renting to owner occupiers is going up almost exactly the same as it is in NZ. India’s property market is going ballistic. I sat beside and chatted to a Bangladeshi businessman in Doha recently. He has rentals at home and in UK.
Our net inward immigration is at its highest ever of around 56000. Most people are attributing the rapid price increases to this. Interestingly Australia’s big cities are also on the same upward price track yet their inward immigration is dropping.
So what do all these different things mean? Each country has a different government and different tax system. Different interest rates apply everywhere but most are less than New Zealand. We are not alone when facing planning rule obstacles. Yet virtually everywhere in the world property is going up in value and property investors are active. My take on that is property has a mind of its own. Regardless of the best (or worst) attempts by governments to control it things will happen.
THE MARCH MEETING
Goodness that was a good meeting. Seddon Marshall talked about how the value of money has changed over the years. It was great to hear the feedback from those that attended. I had an interesting number of phone calls and emails about it. They all loved it. Seddon has done things his way. Some will want to emulate him, and why not. Just a little reminder to those of you that are about to pounce and think you can copy others in the industry. By all means get out there and do something. But remember the world is always changing. House price inflation most certainly does occur but it is not an even steady increase. Over the decades that I have slaved away and dabbled I have noticed that price increases have been erratic and the very best years have often been followed by long boring depressing years. I still own my very first rental property, so its value increase is irrelevant. It started off just breaking even after paying the mortgage. However the rent has increased steadily and it now earns 28% on the initial construction cost. This was the main idea that Seddon was talking about.
THE YEAR AHEAD
President Christine Hands and I recently attended a NZPIF communications meeting. It was good to hear about the fantastic NZPIF discounts and special deals that have been arranged for financial members. Read all about it on the NZPIF web site. Are you getting the best deal you can from Bunnings, ANZ bank, ******* Heat pumps, carpets, and many other things?
Our AGM will be held this year at the June meeting. We need someone to look after the Web site, perhaps create a Facebook page, and keep the NZP magazine updated. If you think this could be you please come forward and talk to Glenn or Christine. Great things always start by stepping outside your comfort zone. We need you because Nelson PIA has been slipping up on doing these things.
MAY 2015 NEWSLETTER
PO Box 198 Nelson
Our third meeting of the year is being held at the Nelson Suburban Club, Tahunanui Drive on Tuesday 12th May. This month we have Mayor Rachel Reece and Hon Dr Nick Smith MP speaking on their proposed Housing Accord for Nelson Tasman. Initially when I asked Rachel to speak on this subject her response was she was not sure what a Housing Accord involved. My response naturally was to ask, “Well I read in the front page of the Nelson Mail that you were doing it so surely someone must know what they are doing.” Since those initial discussions time has elapsed. Time in the property investment industry allows for things to change and for people to think.
I have the feeling that this meeting will be one of those critical times in history. If the Housing Accord works (or does not) it has the potential to change things! When things change in property some people win and others lose. An optimist would say there will be two winners. Who knows what will happen. If investors cannot figure out what is proposed, what is happening, and what actually happened then my guess is they will be the loser before the game commences. So do not miss this meeting. It is imperative to understand what is proposed. When the promised opportunities present themselves you need to be ready to act. Property investors can only act in three ways. They can buy, sell, or put the rent up. Perhaps Nick and Rachel will tell us which of these three things they want us to do.
The meeting proper commences at 7.30 pm with the meal at 6pm. We will be eating in the Club Cafe which is cheaper but slower so attendees need to arrive at 5:45 pm. If you are coming to the meal please email Glenn by return email. The Suburban Club reserves seats on the basis of my bookings.
THE STORM CLOUDS ARE GATHERING
Property prices and the Auckland housing crises seem to be in almost every newspaper and in multitudes of on line blogs. We are heading into a national sport of “spot the culprits.” In the rush to drag out and burn the witches very few people are stopping to think and figure out what has changed in the world to cause this plague.
I enjoy reading articles on Interest.com.nz and Tony Alexander from the BNZ.
Recent attacks have come from Te Ururoa Flavell suggesting all rental properties throughout New Zealand should have a warrant of fitness because he has seen some unfortunates living in substandard housing in Christchurch. RBNZ's Grant Spencer says the Govt should reconsider potential policy measures to tackle the tax-preferred status of housing investment. It would have been good to hear what special tax privileges residential investors have. Our national office representing us the NZPIF have transformed our political lobbying machine and every day or two they respond to yet again some anti-landlord rhetoric or proposed new tax system that will solve both South Auckland’s rental issues and North Shore’s Millionaires dilemma. As we all know dropping a tax atomic bomb onto Auckland will also take out Nelson. I can imagine some people just shrugging their shoulders when we point this out and say “There will always be some collateral damage.”
Clearly there are problems with the way our industry and society is changing. The percentage of rental properties to owner occupiers is increasing. In Auckland the gross rate of return from residential property investments is dropping to unsustainable levels. The ratio of rent to houshold income is increasing in some parts of the country. (Affordability is getting worse). There are reports of higher occupancy rates. The deposit requirements for first home buyers have become unachievable for many young people.
I travel frequently and normally try to find out a little bit about the property industry along the way. Our situation is not alone. Renters in London now pay 60% of their household income on rent. In the UK the percentage of renting to owner occupiers is going up almost exactly the same as it is in NZ. India’s property market is going ballistic. I sat beside and chatted to a Bangladeshi businessman in Doha recently. He has rentals at home and in UK.
Our net inward immigration is at its highest ever of around 56000. Most people are attributing the rapid price increases to this. Interestingly Australia’s big cities are also on the same upward price track yet their inward immigration is dropping.
So what do all these different things mean? Each country has a different government and different tax system. Different interest rates apply everywhere but most are less than New Zealand. We are not alone when facing planning rule obstacles. Yet virtually everywhere in the world property is going up in value and property investors are active. My take on that is property has a mind of its own. Regardless of the best (or worst) attempts by governments to control it things will happen.
THE MARCH MEETING
Goodness that was a good meeting. Seddon Marshall talked about how the value of money has changed over the years. It was great to hear the feedback from those that attended. I had an interesting number of phone calls and emails about it. They all loved it. Seddon has done things his way. Some will want to emulate him, and why not. Just a little reminder to those of you that are about to pounce and think you can copy others in the industry. By all means get out there and do something. But remember the world is always changing. House price inflation most certainly does occur but it is not an even steady increase. Over the decades that I have slaved away and dabbled I have noticed that price increases have been erratic and the very best years have often been followed by long boring depressing years. I still own my very first rental property, so its value increase is irrelevant. It started off just breaking even after paying the mortgage. However the rent has increased steadily and it now earns 28% on the initial construction cost. This was the main idea that Seddon was talking about.
THE YEAR AHEAD
President Christine Hands and I recently attended a NZPIF communications meeting. It was good to hear about the fantastic NZPIF discounts and special deals that have been arranged for financial members. Read all about it on the NZPIF web site. Are you getting the best deal you can from Bunnings, ANZ bank, ******* Heat pumps, carpets, and many other things?
Our AGM will be held this year at the June meeting. We need someone to look after the Web site, perhaps create a Facebook page, and keep the NZP magazine updated. If you think this could be you please come forward and talk to Glenn or Christine. Great things always start by stepping outside your comfort zone. We need you because Nelson PIA has been slipping up on doing these things.