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					   Rental Property Focus
Investors sit in wait                                                                         New Zealand real estate sales figures
A recent survey has found the changes announced by the                                        According to the latest figures released by the Real Estate Institute of New Zealand
Government in Budget 2010 have had little impact on the                                       the median residential property price in June increased on both the previous
                                                                                              month and on June 2009, lifting to $352,500. Sales however continued to trend
confidence of property investors.
                                                                                              down, with only 4575 properties sold - 631 fewer than in the previous month and
The recent quarterly survey by QV, which for the first time included a set of                 1465 less (-24%) than in June 2009.
questions specifically for property investors, showed that despite the taxation
changes few are planning to sell.                                                             REINZ has also reported the median number of days to sell a property rose to 45
                                                                                              in June.
In fact, over half of property investors said they intend to keep their current
portfolio and a total of 20% intend to buy investment properties - 12% intend                  Month                  Median price        No. of sales      Median days to sell
to buy more and 8% are intending to sell then re-buy.                                          June 10                   $352,500            4575                  45
                                                                                               May 10                    $350,000            5206                  43
Of the few that said they are intending to sell, most are either going to do so
                                                                                               April 10                  $356,000            5207                  40
quickly or not for at least six months.
                                                                                               March 10                  $360,500            6161                  35
Meanwhile of those planning to buy, few intend to do so within three months,                   February 10               $350,000            5029                  46
with 31% saying they intend to buy in three to six months, 31% saying it                       January 10                $350,000            3666                  43
would be in six to 12 months and 29% indicating they intend to wait at least                   December 09               $360,000            4957                  33
six months.                                                                                    November 09               $355,000            6056                  33
                                                                                               October 09                $355,000            6091                  31
The survey also found that while 39% of property investors intend to leave
                                                                                               September 09              $350,000            6464                  33
rents unchanged over the next six months the majority of landlords (53%)
                                                                                               August 09                 $342,250            5878                  34
intend increasing rents in that period, mostly by 1% to 5%.
                                                                                               July 09                   $340,000            6014                  37
In terms of the changes announced in the Budget, some 35% of the property                      June 09                   $340,000            6040                  41
investors who responded to the survey said they considered the biggest                         Source: Real Estate Institute of New Zealand
financial impact to be from changes to depreciation rules, 27% cited the GST
increase, 24% said lower personal income tax while only 10% said changes to
LAQCs and the use of Trusts would have the biggest financial impact.                          Rental prices (New Zealand totals)
Frank Newman, a property investor and the author of numerous books on
                                                                                              The latest data available shows a decline in the volume of properties let, with
property investment, says the survey confirms investors remain optimistic
                                                                                              only 8734 properties let in June compared to 9709 for the same time last year
about the outlook for property investment but most are taking a cautious
                                                                                              (down 10%). However, there has been an increase in median rents between
approach, at least in the short-term.
                                                                                              June 2010 and the same month last year, with the biggest gain (4.9%) in the
“Clearly most see little need to buy properties while prices are flat or even                 four-bedroom category.
falling, preferring to wait knowing that negative cash flow is unlikely to be
recovered by rising property values,” he says.                                                 JUNE           Median Rental               Range                    Number let
                                                                                               No. of rooms 2010       2009       2010          2009             2010 2009
“They are instead taking a cautious approach, keeping their funds and credit
                                                                                               One            $227     $220 $169 – 285 $170 – 280                1383 1456
lines in reserve and waiting to re-enter the market.
                                                                                               Two            $285     $280 $235 – 350 $230 – 340                2856 3185
“Further, while thinking about increasing rents it seems most do not intend to                 Three          $340     $330 $290 – 400 $285 – 390                3545 4011
aggressively pursue this course.”                                                              Four           $430     $410 $350 – 530 $340 – 500                 950 1057
                                                                                               Source: Department of Housing and Building



   Harcourts is New Zealand’s largest real estate group with around 180 offices nationwide, more than 1800 sales consultants and a
   property management team of more than 150 staff who together manage in excess of 11,000 properties. Harcourts also has offices
   in Australia, Fiji, Asia and Africa, and is entering the USA. Visit www.harcourts.co.nz for more information.
New industry-leading landlords insurance                                                                                RTA changes now law
Clients of Harcourts’ New Zealand property management team can now benefit                                              The Residential Tenancies Amendment
from two industry-leading insurance products available exclusively to them.                                             Bill has now become law.
The new Landlords Dwelling Insurance and Landlords          Advantageous features of the Insurance Express              The bill, which according to the Government
Protection Insurance products have been developed           policy include:                                             aimed to better meet the needs of landlords and
by Harcourts’ specialist division Insurance Express         •	 claims for loss of rent due to malicious damage are      tenants in today’s rental market, was passed
in association with Ansvar Insurance Limited.                  paid from day one;                                       into law by Parliament on 21 July with no last-
                                                            •	 there is only one excess for damage (rather than         minute changes.
Exclusively available to landlords with property
                                                               one excess per room)
managed by Harcourts, the new insurance                                                                                 Amendments to the original 1986 Act include clearer
                                                            •	 there is no excess for broken glass or lost key
products are believed to be the best in the market,                                                                     and fairer processes for terminating and renewing
                                                               claims.
says Mortgage Express and Insurance Express CEO                                                                         tenancies, measures to encourage landlords and
Andrew L’Almont.                                            Mr L’Almont says the Insurance Express team is so           tenants to comply with their statutory obligations,
                                                            confident about the cover it offers, underwritten by        and enhancements to dispute resolution.
“Like Harcourts Property Management team we
                                                            Ansvar Insurance Limited, that there is 30-day money
know how important it is for landlords to protect their                                                                 The Act has also been extended to cover boarding
                                                            back guarantee (providing no claim has been made
investment and to ensure they are covered for loss of                                                                   houses.
                                                            during that period).
rent or malicious damage for example, and we wanted
to be able to provide Harcourts’ clients with a product     Harcourts New Zealand Property Management Business          A key change for landlords is that abandoning
superior to those on offer through other channels.          Operations Manager Carol Benny says the initial             tenancies with rent arrears and no reasonable excuse
                                                            feedback on the unique new offering has been positive.      will be unlawful, and tenants could be required to pay
“So, having researched what was already available                                                                       up to $1000 compensation.
in the marketplace, we have put together two                “I’d encourage all landlords to talk to their Harcourts
products that combine the best of all of the existing       Property Manager about the new insurance products           The new laws will come into force later this year,
options to create what we believe is industry-leading       available exclusively to them as I’m sure they’ll find      once supporting regulations have been approved
landlord cover.”                                            what is on offer is definitely the best on the market.”     and published.



Did you know?                                                   largest commercial real estate service providers
                                                                has entered Australasia. Combining the best of both,
                                                                                                                       •	 In recent weeks new Harcourts offices have opened
                                                                                                                          in Auckland’s Greenlane suburb and in the city’s
•	 Harcourts is entering the USA in a joint venture with        NAI Harcourts will provide world-class commercial         Westgate Shopping Centre, plus in Canterbury’s
   Altera Real Estate which has 21 offices in California,       and industrial real estate services in New Zealand        Pegasus Town and in Wairoa on the East Coast. A
   one in Oregon and one in Hawaii and a total of 700           and Australia.                                            new property management office has also opened
   sales consultants.                                        •	 At the 2010 REINZ National Real Estate Auctioneers        in Lower Hutt.
•	 In the most significant development in the                   Championships Harcourts’ auctioneers were named        •	 More than $660,000 has been raised for The
   commercial property market in years a new joint              winner and runner-up in both the senior and novice        Harcourts Foundation and over $350,000 donated to
   venture formed by Harcourts and one of the world’s           competitions.                                             81 charities in New Zealand and Australia to date.




   While every effort has been made to ensure that the information in the publication is accurate
   we recommend that, before relying on this information, you seek independent specialist advice.

				
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