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Market focus update

The latest from the ANZ Economist Market Focus report The portion below relates to the property market taken from the attached report (this information should be read along with the disclaimers in the attached report) To read the whole report ANZ-Market-Focus-20110411 WHAT’S T H E VI E W? The OCR is a blunt instrument. Emergency cuts will help prop the economy up but they are likely to provide stimulus to all interest rate sensitive sectors whether they were the intended target or not. This week’s REINZ housing market data will provide a useful litmus test as to whether the housing market is receiving any benefit. While we expect sales volumes to move sideways, this will largely be the result of a collapse in Canterbury sales. Other regions appear to be holding up pretty well and in fact strengthened in Auckland in particular, if the March Barfoot and Thompson data is anything to go by. Housing indicators over the coming months are going to be particularly critical as a timely barometer of traction. Mortgage approvals figures suggest the Barfoot figures have substance behind them and will extend into April. Of course some housing demand is likely to be due to intra-regional migration pressures associated with the quake. Yet mortgage approvals started the year on a firmer note than in 2010, suggesting more demand was in the pipeline. Late 2008 and early 2009 showed us that monetary policy works: the housing market responded to OCR cuts. So we have a better preceding pipeline and extra stimulus to boot. While we expect general deleveraging to stymie the potential for the housing market...

10 Mistakes often made by Property investors

1. Having all mortgages and security properties with one lender. 2. Having both your Family home (whether in trust or personal name) and rentals with the same bank. 3. Mixing salaried cashflow with tax deductible debt in a revolving credit account. 4. Paying principal and interest on tax deductible debt e.g. on rental property, while repaying any debt that isn’t deductible e.g. owner occupied property. 5. Not maximising tax deductible debt to replace non-deductible debt e.g. raising finance against the owner occupied home to purchase investments. 6. Paying principal and interest on all debt rather than using a combination of interest only alongside a revolving credit facility 7. Having all mortgage debt on a floating rate 8. Having all mortgage debt on a fixed rate. 9. Dealing with one mortgage lender only 10. Mixing the salaried cashflow with tax deductible debt in a revolving credit account. It is critical to consider the potential tax implications. Don’t underestimate the importance of seeking professional advice for a solution to suit your specific circumstances”. 10 Mistakes often made by Property...