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A year to remember in property

Property investment has never been for the faint hearted. It can be a rollercoaster ride: the ups and downs of prices, changing rules, difficult tenants and long lulls. But the past year will have tested the mettle of even the most seasoned investor.

By: Sally Lindsay

1 May 2021

Turning back the clocks to mid-2020, we saw Covid-19 and lockdown, rental freezes and experts predicting property price plummets. A year on the market is soaring, with median prices up nationwide by nearly 25% year-on-year (according to REINZ data for April).

Landlords have been racing against the clock to get their homes up to standard for the Healthy Homes deadline of July 1. And the Residential Tenancies Amendment Act came into full force onFebruary 11, including the controversial axing of the no-cause tenancy termination provision and roll over of fixed-term tenancies to periodic at theend of the term.

Then, on March 23, the announcement of the extension to the bright-line test from five to 10 years, and the removal of interest deductibility on residentialinvestments from October 1. It’s been awhite-knuckle ride for all those involved in our industry.

Of all the changes made to rules around property investment under the watch of the current government, the removal of interest deductibility will have the greatest impact. It’s likely to mean that investors without big bucks, or those who are new to the industry, are counting their coins in order to make ends meet.

The longer-term effects of the March 23 changes are hard to predict. For this issue we have asked some of the country’s leading residential property investment experts to get out their crystal balls. Some predict rent rises; others foresee a move to new builds (which have been let off lightly in the recent changes); and others feel that newer investors may be forced to sell up.

But interest rates are low, and money needs a home. So do the many thousands of New Zealanders unable
(or unwilling) to purchase a residential property. Given this as background, there are industry experts who feel the latest changes will have limited impact on the residential property market. That, in time, it will be seen as another twist in the rollercoaster.

To coin a truism “time will tell”. But for now, it’s worth noting that amid all the noise and panic, an important fact remains. Tenants and landlords need each other. A good tenant/landlord partnership can be mutually beneficial (in most cases, it is) and positing the two as enemies does no one any favours. Often it’s best to ignore the “clickbait” headlines, and keep on trucking.

Billy Belton knows about the ups and downs of investment. The former well-known muso is an investor with decades of experience in both residential and commercial real estate. He’s weathered many storms and is a great example of how staying power can yield results – you’ll find him profiled on page 18.

Investors looking to add value will find our second lead of much interest: provided by the experts at Builderscrack it’s a great insight into cost-effective methods of renovating.

We hope you enjoy our May 2021 issue of New Zealand Property Investor magazine and encourage you to ask for help if you need advice on the latest changes to the rules. Your local property investor association is a great first port of call: check online to see which one is closest to you www.nzpif.org.nz

Until next month, stay positive.

The team at New Zealand Property Investor.


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