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ANNUAL APARTMENT REVIEW 2018
There’s a LOT going on. Our crystal ball prediction is
another solid year, without any major upheavals.
Personal Profile
Charles Lindsay
Licensed Real Estate Salesperson (REAA 2008)
Member of the REINZ
2018 - a year in review
Charles Lindsay is a licensed real estate agent and has achieved
industry accreditation and qualifi cation to be able to use the letters
AREINZ. He has been in the industry since 1988. He owned and
M 027 447 3874 operated his own successful real estate business for more than 15
E charles@redcoats.co.nz years and upon selling he has joined theProfessionals, Redcoats
Limited team.
It’s been another fascinating year for NZ’s property
It has been clearly established that Charles has expertise and
knowledge of real estate in the Wellington environment.
market in 2018. With volumes low (but stable) and
During his career he has facilitated sales of quality homes values generally showing consistent growth across the
and apartments throughout the inner suburbs of Wellington. country (except for Auckland and Christchurch), a lot of
Sold over Despite the ever changing market, he consistently sets high
the market interest has focused on government policy
$300 MILLION standards and achieves record results. Charles has sold over
and measures to stifle property speculation
worth of property $300 million worth of property with some contracts in excess of
$4 million. He has over 25 years experience in the industry.
Charles has intimate local knowledge and an educated and So, we’ve dusted off our data and Foreign Buyers between domestic and foreign
Some contracts in reliable understanding of the market where he communicates
analytics-driven crystal ball, and The foreign buyer ban has already buying), which can be as much
excess of openly with all clients, matching buyers with the right property to
present to you our 2019 property
and economic outlook. Here’s our
been in place for a few months
(from 22nd October) and on 8th
as 10% of activity. These figures
are national by the way, they’re
$4 MILLION ensure a stress free experience.
Charles thrives on the competitive nature of real estate
top 10 list, summarised: February 2019, we’ll get Statistics
NZ’s data on their Q4 activity in
higher in Queenstown and central
Auckland.
the final three months of 2018. It’s Getting back to that ban, if
and has an innate ability to maximise the value of a client’s LVR changes probably too soon to decipher any effective (and effectively policed),
25 YEARS most valuable asset within the most challenging of market The first milestone for 2019 will
be the relaxation of the LVR
flow on effects of the ban just yet,
so we’ll be watching the figures
purchasing by foreign buyers
should have fallen away towards
experience selling conditions. He maintains a sensitive and confi dential approach
restrictions on 1st January 2019. closely as the New Year begins. In zero.
real estate in all his business dealings. He has an impressive list of local and
international clients and is one of the most reputable and highly
We’re cautious about the effects
these changes may actually have
terms of how big the foreign buyer
market actually is in New Zealand,
Although it’s not often talked
about, it’s important to note
skilled agents in the industry. on market activity because banks it hovers at 1-2% of net ownership that there are loopholes. Foreign
are likely to stick to tough lending changes (buying less selling). We do buyers can still buy into NZ if
criteria, so the pool of potential however caution that this doesn’t they are buying off the plans and
borrowers who can meet those factor in corporate transactions holding apartments in bigger
requirements may not be that big. (where it’s hard to distinguish developments (20 apartments or
more). This is important funding reduce the amount you’re taxed that 1,000 KiwiBuild modest, Building Consents migration is still very high and will than the bottom. But whether
and commitment to buy can help on other income sources. The new affordable properties would be New Zealand is currently in the take a fair while to diminish. they’re 80,000 or 85,000, sales will
kick off at a time when securing approach is basically saying that completed by mid-2019, and midst of one of the three biggest still be well below previous peaks of
development finance from banks any losses can still be applied for according to the dashboard booms for building consents in more than 100,000.
Interest rates
has become harder. Sure, the tax relief, but limited to the asset tracker on their website, they the past 50-odd years, driven
The official cash rate will remain
numbers won’t be massive, but class of property. So, landlords look reasonably on-track to meet by Auckland and a gradual shift Property values
at 1.75% in 2019 (and probably
ultimately, everything helps when can still use losses to reduce tax that. They’ve announced some away from standalone houses Now for the million dollar question
most of 2020) and that should help
it comes to increasing NZ’s housing across their current property developer partnerships, have sold and towards smaller dwellings that every property owner or buyer
interest rates to stay reasonably
stock. They can rent them out, just portfolio by applying losses from 40 homes, completed another (townhouses, apartments, flats). wants to know: will prices move
low and stable. However, the
not to family or associates. one property against profit from 33 homes, with another 77 under However, looking at Auckland up, down or stabilise? Generally
balance of risks around mortgage
another property and/or from one construction and a further 4,047 specifically, we estimate that of speaking, we’d anticipate similar
rates is to the upside. Flow through
Capital Gains Tax year to the next. What is no longer contracted to build. the 12-13,000 consents per year,
effects from higher offshore rates
patterns to 2018, with average
The Tax Working Group will be permitted is applying that loss An interesting aspect to all this only about half are resulting in a prices across the country rising
cannot be ruled out, and the
submitting its final report to the against other forms of income. It’s is whether the homes do actually genuine chance in the stock of by 3-5%. It would be no surprise
signaling by the Reserve Bank that
government in February 2019 with targeting the speculative end of end up with First Home Buyers. If a housing: because there’s a lot of to see Dunedin and Wellington
capital adequacy requirements will
a recommendation of whether the market who are in it for the property goes through ballot and infill development going on, i.e. outperforming that figure, and
be raised over the next five years
or not to impose a capital gains capital gain. doesn’t sell, it can be sold to other knocking down a property to build Christchurch and Auckland
could also see mortgage rates rise.
tax, and in what form (if the It will be really interesting to buyer types (e.g. investors) but still a replacement(s). underperforming. Many regional
Any increases in 2019 will probably
recommendation is indeed for a see if this triggers some existing at the capped price. That’s part In short, consents and actual centres that have fared well this
be small, but we’ll still be keeping a
tax, which seems likely). However, landlords to leave the sector. The of the system and not a failure construction volumes need to stay year (e.g. Napier, Whanganui,
close watch.
it’s important to note that the bigger investors may restructure in – KiwiBuild’s primary aim is to high - or perhaps even rise further Palmerston North, and Invercargill)
government would then have to advance, but on its own the ring- raise the stock of ‘starter’ homes to make a real dent in the current may well do the same in 2019.
accept that recommendation fence seems unlikely to cause a available, and if they end up with shortfall of housing. That could be Market volumes
and also survive the next election mass exodus. FHBs then that’s a good secondary problematic in 2019 for an industry How all of these factors above In summary
(2020) before any tax would come result. already running at full tilt. interact with each other, and other There’s a LOT going on. Our crystal
into law, so it’s certainly not a short KiwiBuild Another related topic is the macro factors such as GDP growth ball prediction is another solid year,
term impact. Then there’s KiwiBuild. The influence of KiwiBuild on the Immigration and the labour market, will go a without any major upheavals. The
Ring-fencing of rental property programme has had its fair share construction sector. In a year in At least the easing in the net long way to determining the path local market is more stabilised,
losses for tax relief. of teething problems to date, but which several major companies migration balance, which is very for sales volumes in 2019. but there’s still the unknown risk of
Moving forward to April 2019, they’ll be hoping to really ramp up went bust, and development likely to continue in 2019, will help Our central forecast is that offshore dynamics.
the intention is to ring-fence momentum in 2019, both in terms funding became a bit harder, could to take some of the steam out of volumes will stay at around 80- Either way, it’ll be another busy
rental property losses for tax relief of construction volumes and buyer this means firms pivot their focus – property demand and dampen the 85,000 in 2019 (similar to 2018), year, with plenty to watch. Of
purposes. At the moment, if you’re take-up of the houses actually perhaps towards smaller dwellings pressure on the construction sector. with the LVR relaxation likely to course, if you’re thinking of buying
a property investor and you make built. (independent of KiwiBuild, or pre- However, the effect may only be mean that the actual figure is or selling, do your research and you
a loss, you can use that loss to Their first headline target was fabrication? One to watch. small and slow – after all, net more towards the top of that range know where to go for that!
Ring-fencing of
tax losses for
rental properties
Investors say they should be given more
time to adjust to changes that will limit
their ability to claim tax breaks.
A
bill that will introduce capital gains, particularly when them. With gradual rent increases the regions more.” “In conjunction with the
ring-fencing of tax house prices are high compared and five years to put extra money Matt Gilligan, of property extension to the bright-line test, REAL ESTATE
losses for rental to rents. into the mortgages, many people accountancy firm Gilligan Rowe ring-fencing losses from rental INSTITUTE CHIEF
properties has But the bill would instead would have been able to make it and Associates and an investor properties would make property EXECUTIVE BINDI
been introduced to require that the losses were only work. himself, said the tax was “socially speculation less attractive and NORWELL SAID SHE
Parliament and is likely to get its claimed against future rental “Now they are faced with sell regressive”. level the playing field between WAS CONCERNED
first reading on December 12. property income. or suffer. Sure, exchanging tenants “If interest rates increase in the property investors and home ABOUT THE IMPACT
It means investors who run a The change would be for home buyers means at a future, which they always do, it will buyers. The new rules will not OF THE CHANGE.
property at a loss will not be able introduced in the 2019/2020 tax numerical level people still have have little impact on those with apply to a person’s main home or
to claim that against their other year, rather than being staggered a house so it kind of nets out but low loan-to-value ratios (LVRs) and a property that is rented out and a less appealing investment
income. or phased in over a couple of that’s statistics. At an individual those with high incomes, who will used privately such as a bach.” choice. This may lead to a
At the moment, if a rental years. level, tenants and their family no have the cash flow to manage. Real Estate Institute chief reduction in rental properties,
property costs more a year to own Nick Gentle says the fact the longer have a home and oops, On the other hand, those with executive Bindi Norwell said she thereby increasing pressure on
than it provides in rent, you can change isn’t phased in could be a there aren’t rentals any more in lower incomes and higher LVRs will was concerned about the impact the rental market and driving up
use the difference to reduce your problem. the leafy safe suburbs close to the surely be served up as insolvent of the change. rental prices,” she said.
other income. Investor Nick Gentle, who also schools they’ve always gone to.” dishes to people in better financial “We consider restricting the use “This is particularly undesirable
For example, if you had a loss operates property finding agency He expected to see investors positions as they struggle to cope of rental losses for investors could in the current environment
of $10,000 you could reduce your iFindProperty, said that was a selling up in pricier areas and with spikes in rates and lose the negatively influence the rental whereby home ownership is at its
salary from $75,000 to $65,000 problem. using the money to buy cheaper ability to get tax relief from such market, either by investment lowest level in 60 years and the
and pay less tax on it as a result. “For whatever reason a lot of houses, where the rent would fluctuations because of ring- property owners passing on the number of people living in rental
Many landlords use this as a investors have negatively geared go further to cover the cost of fencing.” cost of the reduced benefits to accommodation is increasing at
way to help them hold properties real estate. They’ve just had the ownership. Revenue Minister Stuart Nash renters through increased rental a greater rate than those living in
long enough to benefit from rug pulled out from underneath “Which will push up prices in said it was an issue of fairness. prices or making rental ownership their own homes.”
The capital ended 2018 with rents up 5.8 per
cent year-on-year, to an all-time high of a
median $565 asking rent on Trade Me.
W
ellington is now this is driving demand. the fifth month in a row at $480,
the country’s “In December, the number of up 4.3 per cent on the year prior.
most expensive rental properties in Wellington fell “If we take a closer look at
city in which to 7 per cent on the year prior and the regions, the median weekly
rent, according we’ve seen a 15 per cent increase rent in the Bay of Plenty (up 9.1
to Trade Me. in the average number of inquiries. per cent to $480), Manawatu/
The capital ended 2018 with This supply versus demand Whanganui (up 16.7 per cent to
rents up 5.8 per cent year-on-year, equation is pushing rents up really $350), Marlborough (up 6.5 per
to an all-time high of a median quickly and there isn’t any relief cent to $450) and Southland (up
$565 asking rent on the site. in sight for now. We’re already 10.3 per cent to $295) all reached
Head of Trade Me Rentals seeing huge demand and interest new records in December as the
Aaron Clancy said rental prices in rental properties across the first rental market in the provinces
would typically drop in December few weeks of 2019. heated up.
as people went on their summer “Tenants in the capital city can “The only region which didn’t
holiday. But that was not the case now expect to pay $780 more a see an increase in December was
for the capital as some tenants year than those in Auckland but Nelson/Tasman which was down
tried to beat the rental rush. while rents in Wellington soared 2.4 per cent on December 2017.”
WELLINGTON
One property, on Adelaide Rd, in December, Auckland remained Clancy said Auckland’s flat
Newtown, had 137 inquiries in its stagnant at $550 per week.” prices might not last.
first two days on the site. Clancy said the wider “Auckland experienced the
“Tenants in the capital have Wellington region was in slightly usual seasonal lull in December
RENTS MOST
become accustomed to the better shape but the median as Aucklanders headed off on
annual rental madness that hits weekly rent had reached a new holiday, however, with a huge
the region around January and record of $520 after climbing 8.3 number of tenancies up for
EXPENSIVE IN
February, this year it appears per cent on the year prior. renewal in the first few months
many tried to beat the rush and “Tenants planning to move out of the year and the annual influx
secure a property before 2019 had of the city to the likes of Lower of students coming back to the
even begun.” Hutt or Porirua for better rents are city for University, we expected to
COUNTRY
Clancy said, with growing likely to find it easier than central see some big jumps in rent in the
demand for rental properties in Wellington but demand is still very coming months.”
the Wellington region, and tight high right around the region. A Clancy said a three- or four-
supply, there would be more property in Wainuiomata, typically bedroom house in Papakura and
record-breaking rents to come. a very quiet suburb for rents had a small house in Howick were tied
“As house prices in the capital 95 enquiries in its first two days on for the most popular Auckland
continue to rise, more Kiwis are Trade Me.” rental in December, both receiving
having to stay in their rentals Trade Me’s national median 49 inquiries in the first two days
longer to save for a deposit and weekly rent remained stable for on the site.
WELLINGTON AUCKLAND
WELLINGTON OCT-DEC 2018 OCT-DEC 2017 AUCKLAND OCT-DEC 2018 OCT-DEC 2017
NO. OF BDRMS AVG. PRICE AVG. PRICE NO. OF BDRMS AVG. PRICE AVG. PRICE
ONE $493,000 $403,000 ONE $457,000 $456,000
TWO $570,000 $514,000 TWO $700,000 $670,000
THREE + $971,00 $893,00 THREE+ $1,345,000 $1,150,00
SALES HISTORY 13 College Street Te Aro January 2018 - December 2018
SALES HISTORY The Peak 170 Taranaki Street Te Aro January 2018 - December 2018
SALES HISTORY 72 Tory Street Te Aro January 2018 - December 2018
SALES HISTORY 163 The Terrace Wellington Central January 2018 - December 2018
SALES HISTORY 370 Oriental Parade Oriental Bay January 2018 - December 2018
SALES HISTORY 74 Taranaki Street Te Aro January 2018 - December 2018
27 Buller Street Te Aro Wellington 6011
Tel 04 385 9965 Mobile 027 447 3874
charles@redcoats.co.nz
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