We pulled 8 gems from the torrent of property news this week to keep you abreast of the most important insights affecting investors. 8-14 February 2020
In property news this week…
- Provincia Investor Information Evening – $10m Industrial Acquisition
- What’s The Deal With Commercial Property? Video & Podcast
- Term Deposit Rate Volatility
- OCR Unchanged at 1%, Coronavirus Expected to Be Short Lived
- Beneficiaries in Motels Must Now Pay After First 7 Days
- Government to Spend $300m and Provide 1,000 Additional Dwellings For Short-Term Accommodation
- HSBC Drops 2-Year Home Loan Rate
- Higher Demand For Lower Yield
- BONUS: Happy Valentine’s Day image!
Provincia Investor Information Evening – $10m Industrial Acquisition
Provincia Property Fund has a prized industrial property in Wiri under contract and is nearing the end of the due diligence phase of the acquisition process.
We expect to commence a capital raising shortly and invite you to an investor information evening to find out more…
- DATES: Mondays 17-Feb, 24-Feb and 2-Mar (or by appointment)
- TIME: 6:15 PM for a 6:30 PM start
- WHERE: Our offices at 268 Manukau Rd, Epsom
- NOTE: Refreshments will be served
- RSVP: Reply to this email or email firstname.lastname@example.org or complete the online form here »
What’s The Deal With Commercial Property? Video & Podcast
Jack and Brandon were guests on the NZ Everyday Investor podcast/video episode titled What’s the Deal with Commercial Property? Download or watch it here…
Term Deposit Rate Volatility
Kiwibank and BNZ have both let their Chinese New Year ‘specials’ lapse and revert to previous lower rates. BNZ’s special was on its 1-year term, while Kiwibank’s was on its 5, 6 and 7 month terms.
Meanwhile, ANZ has increased the rate it offers on 8-11 month and 1-year terms.
New 1-year term deposit rates from the major banks are…
- Kiwibank: 2.7% (unchanged)
- ANZ: 2.7% (up from 2.6%)
- BNZ: 2.65% (down from 2.88%)
- TSB: 2.6% (unchanged)
- Westpac: 2.6% (unchanged)
- ASB: 2.55% (unchanged)
If you don’t trust the banks, risk-free Government Kiwi Bonds are now being offered at 1.00% interest. That is nearly half the inflation rate of 1.9%, a substantial penalty to pay for going risk-free.
OCR Unchanged at 1%, Coronavirus Expected to Be Short Lived
The Reserve Bank of New Zealand left the Official Cash Rate unchanged at 1.0% on Wednesday, expecting the coronavirus impact to be short and economic growth to accelerate over the second half of 2020.
Here is the RBNZ’s overview…
“Employment is at or slightly above its maximum sustainable level while consumer price inflation is close to the 2% mid-point of our target range. Low interest rates remain necessary to keep employment and inflation around target.
“Economic growth is expected to accelerate over the second half of 2020 driven by monetary and fiscal stimulus, and the high terms of trade. The outlook for government investment is stronger following the Government’s announcements in December. There are also indications household spending growth will increase.
“However, soft momentum in economic growth has continued into early 2020. Slower global growth over 2019 acted as a headwind to domestic growth. In addition, competitive pressures and recent subdued business confidence have suppressed business investment.
“The global economic environment has shown signs of stabilising and trade tensions have receded somewhat. However, the COVID-19 (coronavirus) outbreak is an emerging downside risk.
“We assume the overall economic impact of the coronavirus outbreak in New Zealand will be of a short duration, with most of the impacts in the first half of 2020. Nevertheless, some sectors are being significantly affected. There is a risk that the impact will be larger and more persistent. Monetary policy has time to adjust if needed as more information becomes available.”
Beneficiaries in Motels Must Now Pay After First 7 Days
People placed in emergency housing, like motels, will need to start contributing towards the cost of their accommodation.
“Motels were only ever intended as short-term emergency accommodation of up to 7 days, but the average length of stay has increased to over 7 weeks,” Housing Minister Megan Woods said, noting there are about 4,000 households currently staying in motels.
And it’s hardly surprising, because that’s what the Government’s emergency housing program incentivises. Beneficiaries living in emergency housing pay nothing, whereas tenants in shorter-term transitional housing and longer-term public housing pay rent equivalent to 25% of their incomes.
This has created the perverse situation where beneficiaries living in emergency housing are better off staying there rather than seeking alternative, more stable accommodation.
The Government spent $48 million issuing 30,941 Emergency Housing Grants in just 3 months to December 2019. The cost has skyrocketed more than the number of grants issued as more people are housed in costly motels.
The rules change is expected to take effect next month.
Government to Spend $300m and Provide 1,000 Additional Dwellings For Short-Term Accommodation
The Government is ramping up its efforts to stop using motels for emergency housing, announcing an extra 1,000 transitional housing places will be ready by the end of the year.
Housing Minister Megan Woods, announcing the government’s Aotearoa New Zealand Homelessness Action Plan, said the $300 million plan would reduce demand for emergency motel accommodation by adding 1,000 new transitional housing places, amongst other measures.
HSBC Drops 2-Year Home Loan Rate
HSBC’s new Premier fixed rate for two years is 3.20%, down from 3.54%.
This special home loan rate is being offered “for a limited time” to new HSBC Premier customers, and existing HSBC Premier customers who borrow an additional $100,000 or more.
But HSBC’s new 3.20% rate isn’t the lowest in New Zealand. China Construction Bank offers 3.15% and 3.19% for various fixed terms, and ICBC offers 3.18% for various terms.
Higher Demand For Lower Yield
The latest $250 million Government tender for the May 2031 bond attracted bids of $853 million at an average yield of just 1.58%, down from 1.67% the previous bond tender. That means investors will accept lower yields than last time. The smart money obviously doesn’t expect interest rates to go up any time soon.
Happy Valentine’s Day!
Last but not least, I hope you are planning to invest in your relationship tonight! Here’s an image to warm any property investor’s heart…