The government have made changes to two areas of legislation that affect property investors: tax (interest deduction and bright-line), and the Resource Management Act.
In October the government finally introduced legislation into parliament setting out the proposed interest deduction rules. Here is a summary of the highlights.
a) We still do not have finalised legislation. Even these draft rules are yet to go through select committee. We do not expect it to be finalised legislation until around March next year and there could still be changes to come. Highly unsatisfactory.
b) The definition of new build is different to expectations. Any property where CCC is issued on or after 27 March 2020 qualifies. This broadens the catchment of the new build definition, which was previously expected to apply to new builds where CCC was issued after the announcement in March 2021.
c) Interest can be claimed on borrowing in relation to new builds for a 20-year period. The 20 years runs from the issue of CCC. This means that multiple investors may be able to claim interest in relation to the same property as it changes hands over time – until the 20th anniversary of the issue of CCC arrives.
d) A new exemption has been included for properties that are rented out as social housing. This is a welcome inclusion for investors who rent properties to the Crown or community housing providers.
e) There is a real lack of clarity around whether boarding houses are exempt from the rules or not. There is no reference to boarding houses in the list of exempt residential property, but accompanying commentary suggests that “larger” boarding houses could be regarded as “hostels”, which are a listed exclusion. Naturally there is no definition of a hostel nor what constitutes a “larger” boarding house.
f) Interest that cannot be claimed as deductible will be able to be offset against any subsequent taxable gain realised when a rental property is sold. While this would be common sense drafting to most readers, it was not an assured outcome, so we are pleased to see this taxpayer-friendly inclusion.
g) The proposed “rollover relief” rules have been included. This is also taxpayer friendly and will allow investors to restructure the ownership of assets without triggering adverse tax consequences in certain circumstances. However, there are catches to this and it does not apply as widely as it should.
h) A five-year bright-line period has been confirmed for the sale of new build property, with the definition for these purposes being a property acquired before 12 months have passed from the date of issue of CCC.
i) There has been further amendment made to the main home exemption from the bright-line rule. What once qualified as a reasonably complex definition has now flowered into a near indecipherable mixture of multiple defined terms and mathematical formulas that would take me several pages to explain to readers.
With cross-party support, the government recently announced arguably the most systemic changes to development controls that New Zealand will witness in our lifetime. Essentially, the main features that enable high-density housing under the Auckland Unitary Plan are being spread across much of NZ. However, the proposed rules have reduced or no parking requirements and even more permissive controls than those adopted in Auckland. The rules will release huge development potential for infill housing and high-density development across the country.
The changes are part of the Intensification Streamline Planning Process (ISSP), and will cause the main centre Tier 1 Councils and a year later, Tier 2 Councils to adopt the standards a year faster than under normal RMA timeframes. Councils are required to report back with their proposals to adopt the suggested framework by August 2022. If councils do not get on board with the proposed density and development controls, the government, through the independent hearings panel, will force the changes into their district plans.
The proposals might be characterised by Aucklanders as Mixed Housing Urban (MHU) zoning, with more permissive height in relation to boundary (HIRB) rules (more like the THAB HIRB rules), and with even smaller living courts and outdoor living spaces. Let’s call the proposed Medium Density Residential Standards “MHU on steroids”.
The proposed Medium Density Residential Standards (MDRS) will release huge volumes of permitted dwellings across NZ in areas traditionally restrained by density rules (e.g. one dwelling per 450m2 or 600m2).
The Government’s release of draft legislation this week was disappointing on a number of fronts.
First, what was expected to be complex legislation has been successfully made nearly indecipherable. Second, it is of course disappointing that they are pressing ahead with the rules being effective from 1 October despite only this draft version being available to taxpayers at this time. Third, there is no detailed commentary to accompany the draft.
In working through this, it is important to bear in mind that this draft legislation is yet to go through the select committee process, so there is a chance of details changing between now and when it finally becomes law.
Bits that were as we expected
A five-year bright-line period has been brought in for new builds.
New builds have been defined as property purchased within 12 months of their code compliance certificate (CCC) being issued, with that CCC being issued on or after 27 March 2020. (Note this is not a typo – the date for the issue of CCC is on or after 27 March 2020, being one year before the 10-year bright-line period applies.)
The interest deductibility rules kick in from 1 October 2021 as expected, and there are exemptions for:
Renting out part of the main home.
Business premises – this excludes a business that involves the provision of accommodation, unless it is a hotel, motel, inn, hospital etc. Boarding houses are notably not included in this list of business premises, which suggests an intention for them to be caught by the new rules. I suspect there will be more to come on this.
Property bought as part of the business of dealing in or developing land or erecting buildings.
New builds – more information on this below.
The government has followed through on extending the “rollover relief” rules. Rollover relief means you can transfer property within your structure without triggering adverse tax consequences (like resetting the bright-line period for 10 years). Under this draft legislation, rollover relief will apply to the transfer of residential land or a property that is subject to the interest deduction limitations by an individual(s) to a trust, provided that the individual(s) transferring the property are beneficiaries of the trust and the principal settlors; and every beneficiary of the trust is associated to that individual(s).
It appears this will apply to transfers on or after 1 April 2022. This is excellent news and will open up scope for transferring property into trust ownership.
There is also rollover relief when transferring residential land or property subject to the interest deduction limitations to an LTC where the shareholding in the LTC mirrors the ownership of the land pre-transfer. I see this as being of less significance, as there is typically unlikely to be much advantage gained by transferring a property held personally into an LTC where you own the shares personally.
It is also confirmed that the existing rollover relief that applies to transfer of assets under a relationship property agreement also applies for the purposes of the interest deduction limitation rules.
Main home exemption
The main home exemption has now undergone a further change for bright-line purposes. This exemption currently applies as long as most (i.e. more than 50%) of the property in question is used as a home. This has meant that if you rented out 50% or more of a property, so that you cannot say it was mostly used as your home, then you got no relief under the main home exemption. In other words, you would have had to pay tax on the full gain if the property was sold within 10 years of acquisition.
A new proportionate approach is now able to be applied where less than 50% of the property is used as the main home. By way of simple example, if you applied 25% of a property acquired on or after 27 March 2021 to your own private residential use, and then you sell it within the bright-line period, 25% of the gain realised on sale will be exempt.
New build exemption
The new build exemption for the interest deduction limitation rules applies for a fixed 20-year period. This means that if you have a property that qualifies as a new build, then interest can be claimed for a period of 20 years from the issue of CCC by all owners during that period who rent it out residentially.
As noted above, a new build is a property where CCC has been issued on or after 27 March 2020. This opens up scope for interest incurred on properties bought prior to the announcement in March 2021 continuing to be deductible under the new build exemption – subject to the 20-year time period.
Interest can be offset upon sale
Denied interest deductions can be offset against taxable gains realised on sale of the property if that sale is taxable either due to the application of the bright-line rule or other provisions (for example the tainting provisions). While this is what we perhaps should have expected, as it is only fair for the interest costs incurred by an investor to be allowed as a deduction if taxable income arises on sale, this was not guaranteed so it comes as a pleasing inclusion.
Social housing exemption
Also exempt from the interest deduction limitations are properties that are applied towards provision of social housing. This means if you rent your property to Kainga Ora or a registered community housing provider, who in turn uses the property to provide social housing or temporary accommodation for people in need, then you can continue to claim interest deductions. This exemption is better than the new build exemption because there is no time limit attached. You get ongoing interest deductibility for as long as the property is applied towards this purpose.
The government need to treat investors and developers as the solution, not the problem. Supply is the long-term solution – and it comes from developers and investors. You need both.
The investors buy the assets from the developers. If the government continue to make it too hard and annoy property owners (the “landed gentry”) with uncommercial tenancy laws and rifle taxes on property (e.g. interest non-deduction, which is manifestly unfair), then the housing crisis gets worse, not better, because as an industry we will increasingly sit on our hands and wait for a more commercial government.
Instead of vilifying and blaming property investors to deflect the issue away from government, I suggest Labour, academics, and the like do the following:
1. Stop worrying about what investors get, and look at what they actually do for NZ. They supply and manage housing, an essential service. They are one of your most important suppliers. Look after and help them, and you will get more supply. If you really encourage supply with good zoning and infrastructure on tap, you will see developers build too much stock and oversupply the market. (Arguably this is happening in Auckland at present.) Oversupply is the answer to the government’s problems: rents drop and so do house prices. Everyone gets a house.
2. Stop disrespecting investors. You get no respect or buy-in from our industry by pelting us with insults and labels; you just look like envious socialists playing the blame game. And the attitude pervades through public policy. Creating scapegoats (investors) for what is a problem caused by successive governments’ under-investment in housing, is nasty. Calling us tax cheats, alleging our “real motivation” is untaxed capital gains, demonstrates the government does not understand investors’ business model and intentions at all. (We can’t retire on capital gains; we retire on cashflow, which is taxed.) If you really can’t live with the gains being untaxed, then damn well step up and go to the election on a CGT platform; get permission to do it.
3. Instead, make it easier for developers and investors to succeed, and you will get more supply.
a. Immediately seek consultation with our community on how you can assist us to solve the housing supply problem.
b. Immediately look at how successful the Auckland Unitary Plan has been at reducing land costs in Auckland, by allowing multi-unit sites and high density housing. (Splice a million dollar section into 10 units, replacing one McMansion. Land cost dilutes 90%, houses get cheaper.) All cities and towns across NZ need this zoning change now. I know developers building to rent, and the zoning rules in small towns and most cities come from the 1960s, where everyone gets a quarter acre section. Times have changed; zoning needs to keep up.
c. Immediately assist landlords with rolling back the no-cause 90 day termination notices you abolished. This makes it nearly impossible to manage anti-social tenants, and makes me (and others) very, very picky with tenants, amplifying your emergency housing problems. Do they not see the link?
d. Continue to ramp up and forward-fund infrastructure. (Brief accolade here to Labour. They inherited a hopelessly rundown national infrastructure from successive National and Labour governments’ under-investment in housing infrastructure. They have pledged $3.8b to infrastructure, and more, and it’s already helping small towns and cities. I’ve seen it first-hand.) Keep doing this and spend more building sewers, stormwater, telecommunications, and all infrastructure. Upgrade roads and public transport. This is the best investment in the future of NZ housing supply.
e. Don’t charge developers a development contribution that exceeds the cost of their actual pro rata share. All this does is encourage developers to land bank and sit on the land undeveloped because they feel like they are being taxed through the back door with exorbitant development levies. If you want supply, do what they did in Australia and forward-fund the 20 years of future development infrastructure. Charge developers a pro rata and fair connection fee as they connect to the infrastructure. There is talk at the moment of doubling development levies and there’s consultation going on about it. Quite simply, if this happens, many developers will just sit on their hands, and this will undermine supply. Moreover, developments that do proceed will simply pass the cost on to the buyers. Government needs to socialise the cost of forward funding, with a long-term scheme socialising the cost over the total potential number of connections. Not slam the current developers in a tax grab.
f. Stop with infusing ideology into Resource Management Act reform. It seems the government’s main agenda coming out of their initial work in this area is implementing He Puapua and Iwi rights into land development and the environment concerns. I thought this reform was about cutting red tape? They have lost perspective here.
g. Repeal interest non-deductions. Otherwise, when interest rates go up, you will send cashflow poor investors broke. This is because a rise in interest rates will no longer trigger tax relief, smashing the cashflow of fixed income households. The damage that will be done to supply by taxing the net yield (i.e. income before interest costs), rather than the net cashflow, won’t be seen until the phased in non-deduction rules bite in the 2025 and 2026 financial years, 3-4 years away. A downturn like this will inevitably stall investment in housing and reduce supply.
h. Understand that the rough end of the tenant pool is now toxic to private investors, due the removal of the no cause tenancy termination. Labour made this rod for the government’s back because they don’t understand the housing market. Their emergency housing demand is blowing out. One of the reasons is because landlords are under-supported in the tenancy tribunal, and now without the ability to remove a tenant with ‘no cause’, most landlords won’t touch tenants with social problems. It’s just too hard. So it rebounds on to the government and will continue to do so, until tenancy laws are made more commercial. This is directly caused by these tenancy rules. I speak from listening to clients.
There is no one simple or specific cause to problems of housing affordability, lack of supply, and wealth inequity. But it’s obviously not tax that causes all these problems. It’s cheap money, loose lending practice, and a desire to benefit from leveraged gains, which unleveraged investments (like stocks)
Apart from a few special rules, any cost necessary to run your business will probably be tax deductible.
However, there are a few things to be aware of – some items that you might assume could be claimed can’t be, and conversely, there may be others you didn’t realise are legitimate expenses.
If you have “incurred” an expense, you can claim it, even though you might not yet have paid it. Note that some costs that provide future benefits, like insurance, may not be fully claimable in the year incurred.
Inland Revenue may not tell you how to run your business. If you want to run a Mercedes car, it is your choice. You cannot be told a cheaper car will do the same job. However, if the expense has a personal flavour about it, such as a couple going out to dinner and calling it a directors’ meeting, you will not be allowed to claim the cost.
Business versus private expenses
Some payments appear to be necessary for business but are deemed private. Here are a few examples:
• Travel from home to work and back
• The clothes you wear to work unless they are protective clothing like overalls for a painter and sneakers for a roofer. To qualify, the clothes have to be subject to undue wear and tear or of a specialised type – not normal apparel. For example work-boots, overalls.
• Socialising with mates in a pub
• Costs of getting into business, such as a lawyer’s bill and the cost of creating a limited liability company
• Usually, the cost of taking your non-working partner on an overseas business trip
• The costs relating to installing new machinery, including travel to go and evaluate it
• The debt repayment portion of hire purchase, finance lease or other loans
The above costs are either considered to be personal or costs to put you in a position to do business, as opposed to actually doing it.
Expenses which have an ongoing benefit to the business over a period of years are “fixed (or non-current) assets.” You can only claim a proportion of their cost each year, known as depreciation.
Use of home
If you use part of your home for business, IRD will accept a claim for a portion of the costs. The portion is work out as a percentage of the total home. For example, if the home office is 9m2, and total home is 100m2, then the portion of costs will be 9%. The standard costs would be:
• Interest on mortgage
• Repairs and maintenance
A few things to note:
If the business uses the garage, include this as part of the area used for business
Substitute rent for interest on mortgage etc, if you do not own the house
Keep supplier tax invoices
You can also claim GST on the business share of these costs
If your business is a company, the home office-related bills will not be made out to it. In this case, claim reimbursement from the company because you are one of its employees.
Generally, where income is only interest and dividends, there is no claim for use of home to run your investments.
Motor Vehicle expenses
Sole Traders and Partnerships
In order to clearly establish the apportionment between business use and private use, you need to run a logbook. Based on the logbook, there are two options that can be used for the calculation: the cost method based on actual costs, or the kilometre rate method.
Under the cost method, you claim a deduction based on the business proportion of your actual motor vehicle costs.
For example, a business owner collects all the receipts and invoices related to motor vehicles expenses (including registration and insurance etc), which total to $12,500. Based on the logbook, 60% of the vehicle’s use is for business. So, the calculation will be:
$12,500 x 60% = $7,500
Therefore, the total to claim is $7,500.
Kilometre rate method
Under the kilometre rate method (also often referred to as “mileage”), you are required to keep a logbook for at least 90 consecutive days to determine the proportion of business use versus personal use. This is then applied for a term of up to three years.
You must make an election to use the kilometre rate method. Once the election is made, it is irrevocable, and the kilometre rate method must be used until the vehicle is disposed of. In other words, you cannot switch between the kilometre rate and cost methods.
It is important to note that without the election, you are deemed to have chosen the cost method.
Two tiers of rates for the kilometre method
There are two tiers of rates for the kilometre method.
• Tier 1: 82 cents per kilometre for the first 14,000 kilometres related to business use.
• Tier 2: Over 14,000km, the rate per kilometre drops significantly to 28 cents.
**Note the per kilometre rate changes regularly – check the IRD website for the latest rates.
Example: A car is used for business and private use. The logbook shows the car is used 60% of the time for business purposes, and travelled 20,000 kilometres for the year. So the calculation will be:
14,000km x 82 cents x 60% = $6,888
Plus (20,000 – 14,000) x 28 cents x 60% = $1,008
Therefore, the total to claim is $7,896
What if I don’t keep a logbook?
If you don’t run a logbook, then deductions are limited to 25% of the use of the vehicle. So for the cost method, this means you can claim 25% of your actual costs.
For the kilometre rate method, you can only apportion a maximum of 25% of the kilometres travelled to business use, with the same tier rates applying. This means that without a logbook, Tier 1 equates to the first 3,500 business kilometres (14,000 x 25%).
Example: To illustrate, we’ll use the same circumstances as in the example as above, i.e. the car is used for business and private use and travelled 20,000 kilometres. At least 25% (or 5,000km) was for business, but this time, no logbook was maintained. Now the calculation looks like this:
3,500km x 82 cents = $2,870
Plus (5,000km – 3,500km) x 28 cents = $420
Therefore, the total to claim is $3,290.
By not keeping a logbook, in this instance, you miss out on a claim of $4,606.
In summary, if your business use is more than 3,500km per year, it is well worthwhile keeping a logbook for the first 90 days to be able to claim the full deduction you are entitled to.
Companies Ordinary companies with five or fewer shareholders have different rules that they are required to follow in relation to motor vehicle expenses.
Fringe Benefit Tax
Fringe benefit tax (FBT) must be calculated and paid to the IRD if a company’s vehicle is available to employees and/or shareholder employees to use privately, even if they do not actually use it. The FBT regime is complicated to follow, especially in relation to the quarterly calculations and annual FBT reconciliations, so seek help from a qualified accountant.
If the vehicle is temporarily unavailable for private use (for example, being repaired), or it was used for an emergency call, then it is exempt from FBT during that period.
Exemptions from FBT
Fringe benefit tax does not apply if you notify your employees in writing that the vehicle is not available for private use, except for travelling between home and work and travel related to the business (e.g. detouring to the post office for business related matters on the way to work).
To be exempt from FBT, there should be a separate document outlining the conditions, which is called a restrictive use agreement. Please get in touch with us if you need one.
Cost or kilometre methods for companies
Close companies are also allowed to use the cost or kilometre rate methods as an alternative to paying FBT, provided that the vehicle is the employee’s only non-cash benefit. The election should be made via the company’s tax return and once it is done it cannot be revoked.
Unless you keep records to show the contrary, IRD allows you to claim half domestic telephone rental/internet for business if the phone/internet is used for both private and business, so long as the business element is reasonably significant.
Interest is generally tax deductible. However, borrowing to buy real estate can be tricky, as there are new rules surrounding interest deductions for residential investment properties.
Don’t be tempted to pay yourself an expense allowance. IRD gets concerned that not all of it will be spent on business costs – they prefer actual expenditure.
If your business is a limited liability company, an expense allowance may be permissible on the basis you are an employee of the company. You need to discuss this with your accountant before you determine the amount of the allowance.
If you need cash for parking meters, keep a float in the car and draw cash to top it up from time to time as needed. Try to keep some evidence to show the money was really spent on parking. (You can only do your best.)
Pay as much as you can through your business bank account. For other small petty cash items, keep a notebook. Record the date, nature of cost and amount. Keep supporting receipts where you can. When the business owes you a reasonable amount, get reimbursed from the business bank account and record this in your notebook.
On first look through the document, the following points are worthy of mentioning. Before going on, I stress that these are all proposals subject to feedback and finalisation (i.e. things could yet — and probably will — change).
Interest limitations will not apply to property outside of New Zealand.
Interest limitations will not apply to the home. For example, if you rent out three bedrooms of your home, interest expenses will be deductible as usual.
They are giving consideration as to whether serviced apartments and short-term stay accommodation type properties that are not “suitable substitutes for a home” should also be carved out from the interest limitation rules.
There is a fair bit of detail on what they anticipate a new build to be. The underlying philosophy is that the concession is available where there is an increase in housing supply. The following examples are given of newbuilds:
Adding a dwelling to land where there is no existing dwelling. Note that this does not have to be a new build constructed on site; it includes relocatable houses.
Replacing an existing dwelling with one or more dwellings. Therefore even a one for one replacement is proposed to qualify.
Adding a second or further dwelling to land that already has a dwelling on it.
Attaching a new dwelling to an existing dwelling; for example, building on top or developing underneath.
Splitting an existing dwelling into multiple dwellings. They give an example of a six-bedroom house converted into 2 x 3 bedroom units.
Converting a commercial building into residential.
The exemption means that interest will be deductible from the point of acquisition if you buy one of these properties within 12 months of the Code Compliance Certificate (CCC) being issued or from the point of CCC being issued if you develop it yourself.
The concession will only apply to new builds where CCC is issued on or after 27 March 2021. There is a limited exception to this rule for a new build where CCC was issued before 27 March, but the property is sold to a new owner within 12 months of the issue of that CCC.
They are considering whether the concession on interest deductions should apply only to the first owner of the building or whether it can pass on to subsequent owners. They are also considering whether there should be a time limit on the ability to claim interest deductions on new builds.
Additionally, there is a concession for developers, which is to say if you incur interest costs developing a new build then you can claim those costs as you go through the development process until the point of sale or issue of CCC. If you retain it as a rental once you have CCC, you then qualify for the new build exemption.
The government is considering allowing denied interest deductions to be claimed on sale, but I am not optimistic about this. They have set out several options here, but have not tipped their hand as to what they prefer.
The options range from extraordinarily taxpayer friendly, which would include claiming interest deductions not only if they exceed any taxable gain but also claiming them when a property is sold for a capital gain, through to taxpayer unfriendly options where there is no offset against future gains even if they are taxable.
My pick is they won’t land on the taxpayer friendly option, but there might be a middle ground, e.g. allowing deductions to be claimed as long as don’t exceed the gain.
The most surprising inclusion in the discussion document is that they are considering rollover relief both in respect of bright-line rule and interest deductibility on transferring properties into a trust or transferring rentals into an LTC where the owner(s) hold the shares in the LTC.
If this were to come in, it could allow transfer of residential property into a trust without resetting the bright-line clock, for example.
I’m seething about these tax changes and it’s not just the fact that Labour lied to us; it’s the whole bigger picture and the implications for ordinary New Zealanders.
This Government is attacking middle New Zealand with all these housing initiatives and tax reforms – it’s mums and dads being hit, not property oligarchs. According to February 2021 stats from MBIE, 80% of landlords in New Zealand own just one rental property. And 96% own four or less.
In other words, six out of seven properties are provided by private landlords and NGOs. This begs the question: who is going to provide the houses if landlords give up?
The 96% of the landlords that own four or less properties are hardly rich listers, but they are being treated like economic terrorists and scapegoated for successive governments not solving supply.
Investors are being labelled ‘speculators’, ‘tax cheats’, and are now accused of running potential rent cartels, to name a few recent characterisations in the press and from Labour. Property investors are suffering the most sustained attack by this Government: loss ring-fencing, the cost of Healthy Homes, ridiculous tenancy rules, 60% LVRs, and now interest non-deduction rules and 10-year bright-line rules. Soon to be added, if we read between the lines, are rent controls and removal of interest-only loans. The latter is very serious.
And when investors start to exit the market, which they will, who will provide the housing? The state? That’s called socialism. That’s what that is – the government seeking to centralise and control, and stifle private initiative, stop a middle class trying too hard, and especially stop any one group getting too far ahead. The reward for trying hard, being smart, sacrifice and investment is wealth. This Government calls it a wealth gap, and sees this as a problem, not a means to greater productivity and self-determination. It’s socialism, and envy politics is part and parcel. Turn the poor against the rich, using labels like ‘speculator’ and ‘tax loophole exploiter’.
The solution is to vote against these socialist (but well-meaning) zealots; vote against these ideological academics, that went straight from school to university to politics, and apart from one of them working in a fish and chip shop, none of them have run large businesses and built productive business units in their lives. Yet they are running our country.
Look at how they run the health system for example, and the gaping holes and problems there.
They just want to take from the rich and give to the poor, seek out victims to virtue signal to, hug and apologise to the world. But they don’t know how to consult and facilitate the very clever and efficient private sectors. They are so arrogant, they think they know better; they shoot from the hip with poorly thought-through policy like these tax changes, rather than from informed discussion in select committees and taking advice through community and expert consultation.
Make sure you educate your peers and mates on the utopian problems that come out of Marxism and this socialist government.
Strong demand for housing, extreme shortage of listings, strong interest from overseas buyers inc. expats, some buying sight unseen. Strong sales in the high-end bracket $3 to $6m.
Swamped with buyer enquiry. Everyone seems to be clambering to get a slice of the action. Bare land, sections, new builds existing houses. All attracting huge buyer interest.
Software improvements are making deals quicker & easier. More information available. Prices still rising. Plenty of FOMO.
Many townhouses being built with low maintenance in handy location.
Continuation of market from December. Listing numbers are very low with new property coming to market and being sought- after by multiple buyers. With the current fundamentals of low interest rates and people arriving back in NZ, along with the shortage of homes, we see plenty of legs in the market for the foreseeable future.
Christchurch market, hot with dramatic market conditions especially at the entry level 1st home buyers, there is some ‘trickle-up’ but properties in the $800,000 to $1,400,000 are slightly slow in comparison. Possibly more caution with this group being professionals and business owners?
I am in residential property in the lakes area around Rotorua. Demand has been stronger over this summer for lake properties than in the last 5 years I’ve been working in this area. Challenge is in getting listings to meet demand. Prices are up dramatically even for leasehold properties which have at times struggled to get any interest from the market.
There is vendor apathy…not signing Agency Agreement in a timely fashion…dragging out process & they lose their vigour/drive to go to market. (Then they were not real vendor’s in the first place). Potential vendors want to sell but need a property to buy before moving, not enough stock in desirable areas of Auckland. Anything from $1.2M to $1.3M; Vendor expectations – they’ve seen the house on their street sell before Christmas 2020 for a ridiculous amount & now want the same money. Competition is still fierce amongst some buyers in the market. Anecdote: a property in Remuera (Seascape Rd) I am told, had 100 groups through in the first week of open homes (at least 200 bodies – came through to view property).
Few people are listing, strong demand – these are second homes in the main. There is a lot of confidence and desire to invest in NZ real estate especially in the South Island from what I’m told by prospective buyers.
There is a shortage of stock/listings.
Crazy buying and limited stock.
Strong FOMO amongst buyers, demand is outstripping supply. There is real confidence in the marketplace. Some owners late last year expecting more than the market have are now easing to allow market to dictate.
There is a lack of properties for sale with a high level of unsatisfied buyer demand.
Properties are selling fast & for great prices – FOMO. Not enough stock.
There is a lack of listings.
Even more buyers, but even fewer sellers!
Simply lack of stock. There are no other significant frustrations.
Property valuation…The market is continuing to increase with demand continuing to outstrip supply. Will be interesting to see now that Auckland is on the move again if we continue to see out of town buyers looking to the regions.
High buyer demand low stock numbers.
Problems are the continuous trend of escalating price of property due to lack of choice for the consumer, and the continuous decline of new listings coming to the market – potential vendors are concerned about selling and then having nothing to buy due to lack of stock.
Lack of listings, loads of buyers, very frustrated first home buyers missing out, very high prices being paid.
Housing affordability and potential government meddling and legislation. Availability of buildable land and low property listings combined with low deposit buyers less than 20% deposit finding harder to secure properties.