Calls for govt to help bring big events to NZ
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RNZ News
an hour ago
- RNZ News
Return of the smaller-scale property investor
Photo: RNZ Smaller-scale property investors are back in the market , primarily looking for cheap properties, data firm Cotality says. It has released its latest chart pack, which shows mortgaged-multiple property owners are now about 25 percent of the market, compared to 21 percent in mid last year. Chief property economist Kelvin Davidson said their attention had shifted a bit. Now that all properties' home loan interest was 100 percent deductible for tax purposes, and not just that of new builds, the incentive to buy new was not the same. "There's evidence that this investor comeback is towards the lower end of the market … the bottom 30 percent of properties by value, which probably tends to correlate with the shift a little bit more towards existing properties, which tend to be a bit cheaper than new builds." He said there could be better rental returns on offer from those homes, particularly if investors added a bedroom or bathroom to boost cashflow. Davidson said property investors were also being enticed back because lower interest rates meant they had less of a gap between rent payments and mortgage repayments to cover. "That has shifted the balance for many landlords, allowing them to re-engage in the market and for newer investors, giving them the incentive to build a portfolio in more favourable conditions. "Think about your cliched mum-and-dad investor, probably what matters most to them is 'how much cash am I putting in?' and the big shift there has been lower interest rates. "Last year, a standard rental property might have might have needed $400 or $500 a week in terms of a cash flow top up … now it's $200. "It's a lot still, but that's a very visible change for a mum and dad investor, you know simply that we're putting in a lot less cash than we might have had to do last year." He said interest rates continuing to fall would keep investors engaged. But he said there were factors against them. Council rates were going up and there was a perceived risk if the government changed. "There's a perception out there amongst some investors that the tax rules could shift again back against property investment in terms of interest deductibility. So some people out there [are] very concerned about that. It's never one way traffic, some things in favour, some things against." He said rents were sluggish. They were still high in relation to income overall, limiting the scope for further increases. Migration was soft. "Rents have actually fallen in Auckland and Wellington in the past year, something that doesn't happen often. "The weakness is illustrated by the MBIE bonds data, with the median national rent in the three months to June slightly lower than a year ago - one of the first declines since late 2009. It's difficult to see a strong return to growth in the near term." But investors' yield was trending higher as property values fell. From a low of an average 2.7 percent in 2021, investors were now getting an average 3.8 percent, the highest since mid-2016. Davidson said first-home buyers were also still active in the market. KiwiSaver was helping people pull together a deposit, he said, and banks were willing to lend to people with smaller deposits. "A lot of that money has been going to first-time buyers. So you know, first-home buyers definitely don't need a 20 percent deposit to get into the market. And I think that's been a big factor as well as just simply lower house prices, lower interest rates, those things have helped." Moving owner-occupiers were less active. That might be because of the mechanics involved in buying and selling, he said. "It's simply been a little bit tricky to get a sale for your own property and line up a purchase in short order. The lack of certainty around buying and selling has made it tricky, so maybe people have just stayed where they are instead." He said if confidence returned and the market freed up, pent-up demand could start to come through. "I think the owner-occupier market will be a bit busier next year but it could be that we've just got to get through a few quieter months first." He said while it remained a buyers' market, there could be some more competitive price pressure building in the next few months as the employment market improved and interest rates were lower. "It does feel as if the market conditions will be shifting by the start of next year." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
RNZ News
an hour ago
- RNZ News
Council's housing density plan will bring more people to inner Auckland, architect says
Auckland Council has voted to take the draft changes out for consultation. Photo: RNZ / Kate Newton An Auckland architect says the council's draft plan for housing density around key transport routes and town centres will change suburbs for the better, if done right. The plan provides an alternative means for the council to meet the government's goal of Auckland accommodating two million new homes over coming decades. Auckland Council's Policy and Planning Committee met in the town hall on Thursday to discuss changes to the Auckland Unitary Plan that would replace Plan Change 78, while keeping its focus on housing. The draft changes would allow for more apartments and terrace homes in walking distance of train and bus stations, more restrictive consenting requirements to increase resilience, and an increase in mixed housing suburban zones. The changes were a response to the widespread flooding in the region in 2023. Auckland Council has voted to take the draft changes out for consultation, with two councillors opposing. The plan will now go out for consultation with local boards and mana whenua, with a final decision on whether or not to replace Plan Change 78 in late September. The Urban Design Forum's Graeme Scott told Morning Report they had strong support for the draft changes. "The idea of just spreading three-storey terrace houses over the whole of the isthmus and beyond is not working very well," he said. "There have been some spectacularly poor ones built and we think a rethink is needed, and this is along the right lines." Scott said there were ways of carrying out the plan that had great urban outcomes, attracting people who want to visit the areas, and not just those who lived there. "We that, given the right process that council's embarking on, let's give it a go," he said. "We have to try." More people were needed in the living closer to town to drive the Auckland economy, Scott said. "The population in the inner suburbs of Auckland is actually falling, because wealthy people can afford more space," he said. "That's exactly the opposite to what we need, we need a lot more people close to the centre to get the economic activity and the productivity of the city up." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
RNZ News
2 hours ago
- RNZ News
Timber industry braces for more mill closures in troubled times
Building consents are down 20,000 since 2022. Photo: RNZ / Nate McKinnon The timber industry is battening down the hatches, as it struggles with low demand, increased running costs, and wars and tariffs overseas. Carter Holt Harvey has announced plans to shut its Eves Valley sawmill near Nelson and consolidate its operations to Kawerau in Bay of Plenty, blaming weak markets. The closure would affect 142 jobs. Timber Industry Federation executive director Jeff Ilott told RNZ demand had dropped, with building consents down from 51,000 in 2022 to 34,000 in the year to June. The lack of demand, combined with increased running costs from electricity, compliance and insurance, meant sawmills felt the squeeze. The overseas markets were also unstable, due to conflict and tariffs. "Hopefully, we might see a bit of a glimmer of light in the future in terms of building consent numbers starting to climb again, but really, it seems like a distant thing at the moment," Ilott said. "It's just batten down the hatches and try to do the best you can." He said the loss of sawmills could be devastating for small towns, where they were often the largest employer, but despite the tough times, most mills were family businesses and people would not walk away easily. "Some mills in New Zealand are now into their fourth and fifth generation, so they don't walk away from that sort of lifetime commitment lightly." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
