Worst flea infestation landlord had seen. Covid vaxers in Vanuatu. And 9 other insights affecting investors in property news this week…
Property News This Week is intended for intelligent investors. The aim is to provide you with relevant economic and property insights gleaned from the torrent of news so you can dine on only the most relevant property news of the week.
Do let us know in the comments below if you have any questions or feedback.
In property news this week…
- Mortgage advisors report weaker recovery in investor interest
- Tenant damage leaves landlord $6,500 out of pocket
- Flea infestation was worst landlord had ever seen
- Interest rate update
- Reserve Bank signals further interest rate falls
- PFI founder joins Provincia Property Fund
- Commercial property prices are rising
- Summer comes early for housing market
- Another record month for mortgage lending
- Housing shortage bigger than thought
- Covid vaxers in Vanuatu
Mortgage advisors report weaker recovery in investor interest
Last week Tony Alexander ran his monthly survey of mortgage advisors from around the country and received 72 responses. It showed a bounce-back of first-home buyer and investor interest.
The most interesting factoid I gleaned from his results, though, is that the recovery in investor interest is weaker than the recovery in first-home buyer interest.
A net 40% of advisors say that they are seeing more first home buyers, whereas only 28% are seeing more investors out there.
I put that down to some investors getting back into the market, but more selling up to escape the government’s war on landlords and the massively increased costs of doing business as a residential property investor.
We are seeing an increasing number of new Provincia investors who are reducing their residential property portfolio.
Just last night we had a savvy couple who have sold their entire residential rental portfolio. They’re moving the proceeds into managed funds, with a big chunk of that going into Provincia.
They’re not the first and they won’t be the last.
Tenant damage leaves landlord $6,500 out of pocket
A landlord and former tenant are locked in a standoff over a $6,500 bill for carpet damage, writes Susan Edmunds.
Property owners Catherine Buchanan and Ian Thomson say they have been left significantly out of pocket by damage to their Kāpiti property.
They say pet damage, including faeces and urine on the carpet, meant months of work to get the house back in a condition that it could be relet.
But the tenant says she feels taken advantage of as a low-income, single-mother dealing with experienced landlords.
Flea infestation was worst landlord had ever seen
A landlord says damage to his property included one of the worst infestations of fleas he had ever seen.
Damage to the Te Awamutu property required carpet cleaning, professional cleaning, pest control, repairs to a door handle, kitchen floor, bench and cupboards, book case and walls, and repainting of ceilings and walls.
“The landlord claims that the tenant left gunge, slime, food and beverage marks on carpet in each room except the hallway,” the Tenancy Tribunal ruling said.
Photographs showing the bathroom sink and bath with cigarette burn marks were also produced as evidence.
“The ceiling in the bathroom and the laundry were so badly affected by mould that after cleaning the landlord had to repaint the ceilings and walls.”
The landlord said that while the tenancy agreement was for four people to reside at the property, more than eight lived there at any one time.
He also said that when he entered the property on March 4 this year “he discovered what he describes as one of the worst infestations of fleas that he has ever experienced as a landlord.”
Interest rate update
There were no changes in mortgage interest this week, and only tiny falls in term deposit rates.
As Tony Alexander put it, “This week there were no meaningful changes in wholesale interest rates. Tiny falls were recorded, consistent with a rise in global heebie geebies associated with rising infection rates offshore and reintroduction of some control measures.”
With record low interest rates resulting in precious cash sitting idle in term deposits, our NZ Interest Rates Forecast page shows that a retiree whose only source of income is the pension and interest on a $1 million term deposit will earn a pitiful after-tax income from that whopping $1 million term deposit of only $9,487 p.a.
It’s not a pretty retirement, is it?
Reserve Bank signals further interest rate falls
In an economic note on Wednesday covering the Reserve Bank of New Zealand’s (RBNZ) September Monetary Policy Review (MPR), ASB Bank economist Mark Smith predicts continued easing of interest rates.
Smith said the RBNZ “cited that progress had been made on developing alternative monetary policy instruments, flagging that a Funding for Lending Programme will be introduced by the end of the year.
“We expect the RBNZ to sequence policy easing, with a funding for lending programme to be introduced later this year before the OCR is lowered in early 2021.
“Prior to this we expect the RBNZ to maintain a strong pace of asset purchases to push yields lower. Such moves are designed to further lower borrowing costs in the economy.”
COMMENT: For those buying assets, it just keeps getting better. For those surviving on interest income from cash rotting away on term deposit, it’s time to roll up your sleeves and look at alternatives.
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PFI founder joins Provincia Property Fund
Provincia Property Fund announced on Wednesday the appointment of Malcolm McDougall, a founding director of Property For Industry, to the Board.
Property For Industry (PFI) is now an NZX 50 listed property investor with a market capitalisation of over $1.3 billion.
McDougall is an experienced company director, chairman of Villa Maria Estate Ltd, and director of several other companies.
In conjunction with McDougall’s appointment, Carl Burling stepped down from the Board and was appointed CEO of Provincia.
Burling describes the changes to the board as part of an exciting evolution of the fund as it continues to grow and improve the security and return to investors.
The fund currently owns seven industrial properties valued at $50 million.
Provincia asset manager Jack Revill, who is in charge of identifying acquisition targets and managing the fund’s properties, is excited about McDougall’s appointment.
“Malcolm helped grow PFI into a listed company worth over $1.3 billion and I’m looking forward to tapping into his expertise to grow Provincia the same way.”
Commercial property prices are rising
Tony Alexander’s monthly survey of valuers around New Zealand attracted 35 responses and the results are consistent with many others showing property not doing what many expected when Covid-19 struck.
A net 21% of valuers say they have become less conservative in their pricing of commercial property, meaning that they have adopted more of an upward bias to their valuation estimates.
This has resulted in a net total of 57% saying they believe commercial property prices are rising.
This is a huge swing from June when the pendulum was 42% in favour of falling commercial property prices.
Summer comes early for housing market
Auction activity is up 79% versus this time last year and is already running close to last summer’s peak.
That activity is translating into sales too, with the 72% sales clearance rate at auction well up the 51% sales rate for the same period last year.
Another record month for mortgage lending
The housing market’s bounce back from the lockdown has continued strongly, with mortgage lending last month hitting a record high for an August, writes David Hargreaves.
The latest Reserve Bank residential mortgage lending by borrower type figures show that nearly $6.8 billion was advanced in mortgages last month.
This follows a record for a July of nearly $6.6 billion the month before. The RBNZ has been compiling this series of monthly data since 2013.
The $6.8 billion borrowed in August 2020 was up some 26% on the figure for the same month a year ago, and easily surpassed the previous record August tally, which was $6.1 billion in August 2016.
Housing shortage bigger than thought
On Wednesday, Statistics NZ updated their population estimates to reflect the results of the 2018 census. They substantially lifted population estimates for all regions except West Coast.
Tony Alexander says if you run a model to predict house prices based on things like population growth versus consent issuance (he doesn’t) then you’ll now have to recalculate to produce greater shortages in your areas of interest.
Stats NZ has lifted its estimate of the NZ population in June 2018 by 60,000, and by 62,000 for June 2019.
That means the country is short about 23,000 more houses than anyone’s previous calculations would have suggested.
Covid vaxers in Vanuatu
Nothing at all to do with property, investing or the economy but too funny not to share. An American investing newsletter I subscribe to contained this reader feedback from Vanuatu resident “Sailaway Pete”…
“We are reading you loud and clear from way down here in the Southwest Pacific nation of Vanuatu, enjoying its 40th year of Independence and still COVID-free thank you.
“Yesterday I volunteered for the vaccine trials for COVID-19, held in our local hospital… The vaccine is one that was created in Russia.
“I received my first shot yesterday at 4:00 pm, and I wanted to let you know that it’s completely safe, with иo side effects whatsoeveя, and that I feelsh я чувствую себя немного странно и я думаю, что вытащил ослиные уши.”
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