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Residential property 2018

According to the ANZ economic outlook there are still enough positive forces that should see growth returning to “broadly around trend” over the next couple of years (abut probably not much more). The outlook still has a positive hue overall. The first RBNZ OCR hike is now expected no sooner than August which is positive for those with mortgages. To read the full report from ANZ please go to https://www.anz.co.nz/resources/f/0/f06fb659-6d33-481d-ab7c-03239667008d/ANZ-Market-Focus-20180130.pdf?MOD=AJPERES The housing market is soft with low turnover. Houses are taking longer to sell. the LVR lending levels have softened a little with the lenders being able to go over the 80% for owner occupied and 60% for investment. However, they can still only lend to these higher LVR’s for a certain percentage of their overall portfolio. That means existing clients and new clients in a stronger financial position may get priority. Another good site to check for economic updates is www.interest.co.nz Every economist has their own ‘educated’ point of view but nothing is set in concrete. At the moment it is still possible to refix interest rates under 5% for 1 year or in the early 5% for 2 and 3 years. It’s not that long ago that anything under 7.4% was considered a good rate. This is a good time to pay down existing lending however, no one can see rates hiking up dramatically at this stage. There are changes coming up in regard to residential property investment. Most seem to be in favour of tenants. As from 1st April 2018 all residential landlords will have a duty to provide safe warm and ‘healthy’ housing. However, it is...

Changes to the residential tenancy act

Proposed law changes will require action by landlords From 1 July, laws in the proposed Residential Tenancies Amendment Bill are due to come into force. The changes aim to reduce fire-related injuries and deaths and make homes warmer, drier and safer for the million New Zealanders who live in rental accommodation. Some of the proposed changes are: Smoke Alarms From 1 July landlords will need to have working smoke alarms installed in all their residential rental homes. Any replacement alarms installed after that date will need to have long life batteries and a photoelectric sensor. Hardwired smoke alarms are also permitted. Tenants will be responsible for replacing worn-out batteries in the smoke alarms and informing their landlords of any defects. Insulation All residential rental homes in New Zealand will be required to have insulation to keep a home warm in winter and cool in summer. Social housing (where tenants pay an income related rent) must be insulated by 1 July 2016 and all other rental homes by July 2019. Landlords will be required to provide a statement on the tenancy agreement about the location, type and condition of insulation in the rental home. Tenancy abandonment process The proposed law introduces an expedited process for a landlord to regain possession of their rental property when the property had been abandoned. The expedited process for regaining possession will enable a Tenancy Adjudicator to decide the case based on evidence landlords have provided in their expedited abandonment application. Landlords will not need to be present when the Adjudicator considers the evidence under this new process. The Tenancy Tribunal Application Online form will...

financial news links

Here are some good links for up to date news as it happens N.Z. Holds Rates Amid Global Slowdown, Benign Inflation How Europe got itself into such a financial mess, what might happen next and what it might mean for New Zealanders Weak profits dim NZ business confidence for third month  Treasury forecasts govt still on track for 2014/15 surplus, but warns of big downside risks due to global market uncertainties Consumers price index shows inflation of 0.4% in Sept qtr, lower than expectations of 0.7%, giving RBNZ more time to keep rates ‘lower for longer’ NZ pace of inflation probably slowed enough to keep central bank calm Long road seen to sustained property pick up  ...

Creating passive income toward Retirement

  The current Super Annuation payment is nothing flash and does not give the majority of us the lifestyle choices that we would like and are used to. Many more retirees are now ‘choosing’ to work longer and take on extra jobs because of financial pressures. Those in their 60’s are getting used to the idea of working up till 70 to be able to get themselves into a stronger financial position. If your vision for your retirement is to sit at home wondering if you can afford to take out the car for a drive or go shopping then this article is not for you. If, however, you feel that you have worked all your life and would like to have the freedom to choose what you do, during what is sometimes called “the golden age”, then it is time to make a positive start in that direction Is property for everyone? No, of course not, some use the stock market, option trading, currency trading to name a few. There is lots of talk about negative gearing but that is not advisable if you are looking to create extra income. Any costs such as interest, rates, insurance and repairs will be offset  by the rental income but at this stage of life you really need to know that the property will generate additional income. Property can take a bit longer to gain in value, depending on when you enter the property cycle. There are times when property appreciates faster than others and there are times when values sit or even decline. However, if you look at historical charts...

Is it still possible to buy a home with a 10% deposit?

  It would be very easy to listen to the news media and think that because finance has tightened up that it is almost impossible to get into your first home. After all, 20% deposit is a large chunk of money to save especially if the house you would like to buy is in the $500k plus range. In November 2009 I wrote an article that stated “The availability of finance has tightened so much that it’s hard to know what is and what is not possible in the current market.  What are the banks looking for at present, what are some of the other available finance options available through the ‘very’ few non bank lenders that are still around. Is 90% lending is it still available?”  Here we are in 2014 and the same article could be written. The lending landscape in between these 2 dates had gradually improved where 90% + loans were once again available only to be suddenly taken off the table. The mainstream banks are under pressure from the Reserve Bank to reduce the amount of lending over 80% to a smaller percentage of their overall exposure. They aren’t  allowed to let borrowers have a 2nd mortgage to cover the shortfall, although there are some lenders not affected by this policy They are not the only lenders around at good rates, please contact me if you’d like to know more Mainstream banks These banks have had a monopoly but there are some very strong non bank lenders who have survived, and thrived  during the GFC and who have money to lend at competitive rates....

80% loan to value lending restrictions

  80% lending restrictions December 2013 News The introduction of the loan to value ratio limits on mortgages (LVR’s) by the Reserve Bank on the 1st October 2013 has been a very controversial introduction to policy. There was a surge in house sales from the time that the new policy was made public as coming into effect in October . Purchasers urgently found homes they could purchase using loans up to 90% before the lending became reduced to 80%. It seems likely that there will be a decline in house sales in December as a result. March 2014 Update 80% lending is now the norm but there is still finance available at 90%. This is a more expensive option since 10% will generally be as a 2nd mortgage at higher rates and to be repaid over a shorter period of time. Those with equity in their home can still purchase investment property as long as the overall lending ratio (LVR) isn’t more than 80% over the properties held as security by the funder Wanting to refinance? if you currently have a loan between 80% and 90% and want to refinance then the banks can go over the 80% limit but will not advance any extra cash. Construction loans can be up to 90% by most major banks. This change came about a little way down the track from the initial introduction of restricted LVR limits. Learn from history Bear in mind that, just like past fashions becomes fashionable again at some stage so there will inevitably be changes to policy. If you don’t have sufficient deposit at the moment...