THE WEST AUCKLAND RESIDENTIAL LANDLORD NEWSLETTER No. 14

Hello,        

Welcome to the fourteenth edition of the West Auckland monthly Residential Landlords Newsletter.

I am a landlord myself and have been for over 30 years. I have recently brought more rental investments last December in West Auckland and another in Millwater, Silverdale in May. I currently own rental properties in South Auckland, the North Shore and West Auckland. Being a high preforming Real Estate Agent (top 1% in New Zealand) for over 26 years and always working in West Auckland I know the real estate market and the rental market very well.  

In this and ongoing newsletters I hope to provide ongoing up to date information relevant to landlords who own rental properties in West Auckland.  

Regular features will include: 

·         Current sale prices

·         Current mortgage rates

·         Current rents

·         A monthly suburb spotlight review

·         A relevant feature article each month

 

I hope you will find it useful. I am available for free advice and opinion on any residential or lifestyle real estate matter.        

	Sale Prices
Suburb	Median selling price June 2015	No sold	Days to sell
Titirangi	$770,000	21	29
Green Bay	$809,250	8	26
West Harbour	$911,000	19	25
Glendene	$715,000	9	29
Henderson	$770,000	67	26
Hobsonville	$855,500	12	31
Massey	$718,000	48	23
Ranui	$610,000	27	27
Sunnyvale	$740,000	9	26
Swanson	$750,000	10	24
Te Atatu Peninsula	$965,000	21	24
Te Atatu South	$800,000	31	24
Glen Eden	$652,000	45	25
New Lynn	$630,000	45	26
Kelston	$750,500	10	30
Royal Heights	$726,500	4	20
Laingholm	$580,000	3	26
Oratia	$720,000	4	26
Waitakere	$665,000	3	27

 Source REINZ

Current Mortgage Rates (26/09/2015)
	Float	1 yr fixed	2 yr fixed	3 yr fixed	5 yr fixed
ANZ	5.99%	4.49%	4.65%	5.25%	5.49%
ASB	6.00%	4.35%	4.69%	4.79%	5.09%
BNZ	5.89%	4.35%	4.65%	5.19%	5.35%
Westpac	6.15%	4.99%	5.15%	5.19%	5.65%
Kiwi Bank	5.90%	4.85%	4.59%	4.85%	5.50%
Best of other lenders	5.59%	4.35%	4.49%	4.49%	5.09%

Source – J Goodrum – Internet search

Current Rents
1st April - 30th Sep 15
Glen Eden	Average Rent	Bonds Paid	Royal Heights/Massey
2 brm flat	$350.00	17	2 brm flat	$350.00	15
2 brm house	$390.00	30	3 brm flat	$417.00	6
3 brm house	$450.00	113	1 brm house	$290.00	5
4 brm house	$550.00	19	2 brm house	$365.00	19
Glendene			3 brm house	$450.00	137
1 brm flat	$300.00	9	4 brm house	$550.00	36
2 brm flat	$370.00	11	5+ brm house	$610.00	19
2 brm house	$385.00	18	Te Atatu South
3 brm house	$450.00	64	1 brm flat	$250.00	7
4 brm house	$500.00	18	2 brm flat	$350.00	17
Henderson			2 brm house	$397.00	22
1 brm apartment	$320.00	5	3 brm house	$470.00	53
2 brm apartment	$380.00	5	4 brm house	$550.00	11
2 brm flat	$370.00	55	5+ brm house	$692.00	6
3 brm flat	$365.00	12	Te Atatu Peninsula
2 brm house	$375.00	61	1 brm flat	$307.00	6
3 brm house	$450.00	214	2 brm flat	$375.00	17
4 brm house	$530.00	83	2 brm house	$395.00	21
5+ brm house	$652.00	22	3 brm house	$480.00	69
Kelston			4 brm house	$590.00	16
1 brm apartment	$290.00	26	5+ brm house	$490.00	5
2 brm apartment	$330.00	5	Titirangi
1 brm flat	$290.00	9	1 brm flat	$287.00	24
2 brm flat	$352.00	2	2 brm flat	$375.00	8
1 brm house	$300.00	7	1 brm house	$307.00	6
2 brm house	$377.00	14	2 brm house	$400.00	30
3 brm house	$450.00	72	3 brm house	$500.00	73
4 brm house	$510.00	13	4 brm house	$580.00	23
New Lynn			West Harbour
1 brm apartment	$310.00	21	1 brm flat	$300.00	11
2 brm apartment	$385.00	12	2 brm house	$392.00	16
1 brm flat	$290.00	15	3 brm house	$475.00	93
2 brm flat	$377.00	72	4 brm house	$585.00	34
3 brm flat	$450.00	7	5+ brm house	$700.00	11
1 brm house	$315.00	10	Western Beaches/Rural
2 brm house	$400.00	35	1 brm flat	$295.00	8
3 brm house	$460.00	99	2 brm flat	$350.00	5
4 brm house	$540.00	16	1 brm house	$330.00	5
Ranui	Average Rent	Bonds Paid	2 brm house	$380.00	50
2 brm flat	$245.00	7	3 brm house	$440.00	46
2 brm house	$375.00	10	4 brm house	$540.00	21
3 brm house	$435.00	99	5+ brm house	$545.00	8
4 brm house	$500.00	12

Source NZ Government building & housing

 

 

Spotlight on capital gains
Oratia
Date	Median selling price	5 year gain %
Oct 1995	$206,500.00	-
Sep 2000	$340,000.00	64.7%
July 2005	$605,700.00	78.2%
Sep 2010	-	-
Aug 2015	$720,000.00
Over 20 years		248.7%
Spotlight on capital gains
Laingholm
Date	Median selling price	5 year gain %
Oct 1995	$225,000.00	-
Nov 2000	$266,000.00	18.2%
Sep 2005	$482,000.00	81.2%
Sep 2010	$470,000.00	-       2.5%
Aug 2015	$580,000.00	23.4%
Over 20 years		157.8%

Source NZ department of statistics

Should I buy now or wait?

Have house prices peaked and could they be on the way back down?

Here are two graphs that suggest prices in West Auckland have indeed peaked and are on the way down.

 

 

Does this mean prices are going to keep falling because as the Reserve Bank and many others have been saying, Auckland prices are overvalued?

Absolutely not is my opinion.

Why have prices fallen in the last month? And why will that not continue?

There are several possible reasons for the fall we have seen: 

1.     Global Factors

a.     The Chinese Stock Exchange followed by many other stock exchanges fell sharply.

b.    The refugee crisis in Europe – what hundreds of thousands or perhaps even millions of refuges could do to many countries’ economies.

These factors create uncertainty and many people don’t buy, sell or make investment decisions during such times. 

Share markets in China and around the world have now largely recovered, although in China that was brought about by Government intervention. Now at least the scare is over. 

The refugee crisis is ongoing but now not all over the news every night and that scare is also receding.

 

2.     NZ Factors

Possibly the biggest factor in the price slip has been the cumulative actions of the Reserve Bank and the NZ Government. 

The Reserve Bank has (effective 01/10/2015) introduced for Auckland an LVR limit of 30% for investors. This means that investors buying a property (not to live in) need 30% deposit. The other requirement in for the bank to hold more cash reserves to offset the risk of lending to investors.

Add to this Governments move to tax any residential property sale bought by an investor and sold again within 2 years, plus the requirement for overseas investors to have a NZ IRD number and a NZ bank account. 

Again the measures bring uncertainty and a lot of would be investors wait to see what it is all going to mean for them. 

So why do I think that prices will not only quickly stabilise but continue to rise significantly?

There are lots of “little” good reasons and one massive overriding reason.

 The little ones include: 

1.     We saw the same thing when the 20% LVR for all borrowing come in and then we had 20% price increases in a year.

2.     The 30% deposit will have little or no effect on investors – their current properties have gone up around 30% in the last 2 years = plenty of equity for 30% deposit for another investment.

3.     The OCR has fallen three times in a row; June - 0.25, July – 0.25, September – 0.25 and the probability is another 0.25 before the end of the year, making borrowing cheaper for everyone and good for investors.

4.     Massive improvements in West Auckland’s infrastructure. Westgate Development, motorway improvements, the tunnel link to the airport etc.

5.     The NZ dollar has fallen over 20% against the US dollar in the past year or so. This makes NZ houses much cheaper for overseas investors.

 AND THE BIG REASON? Supply v Demand.

The fundamentals of the property market in Auckland is that there is a huge shortage of homes and a very large demand. This alone will drive up prices. No matter how many Auckland Council or NZ Government build more homes initiatives are launched it will take 3-5 years to correct the shortage of houses.

There is a shortage of tradespeople to build homes in Auckland and there are record (50,000+) per annum net migration figures being recorded.

I predict one or possibly two months of uncertainty and then the market will again see prices rise in Auckland. Prices this time next year will probably be 12 – 15% higher than today in West Auckland.

It’s a good thing to buy a rental investment while there is still some uncertainty in the market.

Until next time,

Best wishes,

John Goodrum

Licensee Agent REAA 2008

021945140, 09 838 8895

thelegendofthewest@gmail.com

Barfoot and Thompson