Northland Property Investors' Association
The following is a summary of the political or regulatory news or comment affecting the residential property market.
MINISTERIAL SPEECHES OVER THE LAST MONTH
22 April - New tenancy website launched - Nick Smith. Read more
23 April - Minister vows to hold slumlords to account - Te Ururoa Flavell. Read more
23 April - Good progress on Christchurch housing welcomed - Nick Smith. Read more
30 April - Annual consents top 25,000 - Nick Smith. Read more
6 May - Next steps in social housing reform announced - Bill English and Paula Bennett. Read more
8 May - 191 inner-city homes from Christchurch Housing Accord - Nick Smith. Read more
10 May - More targeted approach to earthquake-prone buildings - Nick Smith. Read more
13 May - Reserve Bank announces new LVR restrictions on Auckland housing. Read more
17 May - Budget 2015: Extra property tax measures - Bill English and Todd McClay. Read more
25March - $500,000 boost for emergency housing providers Paula Bennett Read more
26 March – KiwiSaver HomeStart Bill passes - Nick Smith Read more
8 April – State Housing Action Network comments unfounded - Bill English Read more
14 April - Budget 2015 will be delivered on 21 May - Bill English Read more
ISSUES UNDER WATCH
Building (Earthquake-prone buildings) Amendment Bill
(Nat: Nick Smith)
Sets a requirement for buildings to be earthquake strengthened – also applies to multi-storey or multi-unit residential buildings
Bill referred to the Local Government and Environment Select Committee. Submissions closed: 17 Apr 2014. Committee report due: 30 July 2015
Healthy Homes Guarantee Bill (Lab: Phil Twyford)
That every rental home in NZ meets minimum standards of heating and insulation
Bill awaiting first reading
Energy Efficiency and Conservation (Warm Healthy Rentals Warrant of Fitness) Amendment Bill
(Greens: Metiria Turei)
Through the introduction of a “WoF” regime require minimum energy performance standards for all residential rental accommodation
Bill awaiting first reading
State house WOF trial
Trialling a WOF system on 500 state houses
Minister of Building & Housing decision on trial was due by the end of 2014. No date yet announced.
(Department of Internal Affairs)
The Rules Reduction Taskforce is looking at updating housing and property rules in New Zealand. They are looking for rules or issues that people find frustrating.
Submissions close 1 June. Online submissions at https://www.govt.nz/browse/housing-and-property/rules-reduction-submissions/
Major banks have raked in record-breaking interim profits, but their bosses are unhappy about new property investment rules threatening to slow the golden run.
HAMILTON CITY LANDLORDS TO PUSH AHEAD WITH EARTHQUAKE STRENGTHENING -11 May
Hamilton city landlords are unlikely to take the extra time afforded to complete earthquake strengthening work on buildings but will instead push ahead with upgrades to meet tenants' expectations. Waikato fell into the medium risk seismic risk zone with new timeframes for assessment of 10 years and strengthening work to be carried out within 25 years
PREDICTION RESERVE BANK WILL BE FORCED TO DROP OFFICIAL INTEREST RATE -11 May
ANZ economists are now picking that the Reserve Bank will be forced to drop official interest rates as soon as next month - and follow up with a further cut a month later. The forecast - almost an urging - from the country's biggest bank adds to pressure on the RBNZ ahead of its Financial Stability Report on Wednesday, which is sure to focus on Auckland's raging hot housing market. The interest rate cut prediction, from ANZ chief economist Cameron Bagrie, followed release of the ANZ's monthly inflation gauge.https://www.interest.co.nz/news/75403/anz-economists-now-expect-rbnz-official-interest-rates-june-followed-another-cut-july
NEW SALVATION ARMY REPORT ON THE REGIONS - 12 May
Regional economic growth is quickly becoming an 'us and them', according to a new study from the Salvation Army. However, the Government insists it's on the right track. The report, called Mixed Fortunes, singles out Northland and the East Coast as regions which are lagging behind, while other findings predict Aucklanders will be younger, wealthier, better skilled and more ethnically-diverse than the rest of the country. Alan Johnson, Social Policy Analyst for The Salvation Army's Social Policy and Parliamentary Unit, said it was "virtually a North Island/South Island thing". http://tvnz.co.nz/national-news/study-says-nz-regions-getting-left-behind-cities-6312063 - 12 May
Report - Mixed Fortunes by the Salvation Army
RESERVE BANK ANNOUNCEMENT - 13 May
Videos of the Reserve Bank announcements and an interview of Bill English
NEW RULES WILL NOT COOL SURGING HOUSING MARKET - 13 May
A banking expert says new lending restrictions targeting Auckland property investors will make banks' loan books safer but may fail to significantly cool the city's surging housing market. And there is a risk that some banks might race to do as much high loan-to-value (LVR) lending to investors as possible before the new rules come into effect on October 1, said Massey University's David Tripe. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11447881 – 13 May
TENANTS ARE THE LOSERS
Landlords have expressed dismay at 30 per cent rental property loan-to-value ratio (LVR) rules, saying tenants will suffer, rents will rise and Auckland rental properties will become more scarce. Andrew King, NZ Property Investors Federation executive officer, said Auckland was already suffering from a rental property shortage and the Reserve Bank would exacerbate that. "This is going to hurt tenants and there is actually a shortage of rental property in Auckland," he said.
Andrew Bruce, Auckland Property Investors Association president, expressed unhappiness about the new measures. "If the Reserve Bank is wanting to create distortions and unintended consequences in the market they'll achieve this with the latest policy.
David Whitburn, Auckland Property Investors Association immediate past president, predicted Auckland rent rises now running at about 3.5 per cent would almost double. "They'll go up 5 per cent annually, which is higher than wage inflation.http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11447836 – 13 May
RESERVE BANK ACTS TO COOL AUCKLAND MARKET - 13 May
http://www.radionz.co.nz/audio/player/201754227 - 13 May - interview of Andrew King on Checkpoint
RESERVE BANK NEW RULES AND MORE IN OCTOBER
Property investors in the Auckland Council area will have to have a deposit of 30 per cent under new lending rules announced by the Reserve Bank. The Reserve Bank will introduce a new asset class from October 1 covering property investors, defined as any mortgage secured on a home that is not an occupied by its owner. The bank had been in talks with private lenders to agree on a definition, which would then require lenders to hold more capital against those loans, Mr Wheeler said. To recognise more subdued housing markets outside Auckland, the Reserve Bank will ease the restrictions on high-LVR lending for all residential lending to 15 per cent from the existing 10 per cent. The 10 per cent speed limit will stay in place for Auckland owner-occupiers. The new restrictions on Auckland lending won't apply to mortgages to build new houses or apartments.http://home.nzcity.co.nz/news/article.aspx?id=206571 – 13 May
BANKERS ASSOCIATION CHIEF EXECUTIVE COMMENTS ON RESERVE BANK MOVES - 13 May
Sean talks with Bankers Association Chief Executive Kirk Hope about Reserve Bank's moves to limit options for property investors in Auckland.
Duncan Garner asks the Finance Minister for his views on the new rules
ANDREW KING INTERVIEWED ON TVNZ - 13 May
The new measures have surprised the Property Investors Federation which claims the Reserve Bank hasn't attacked the root cause. NZPIF executive officer Andrew King claims the measures will have a "negligible effect on Auckland house prices" while leading to a reduction in rental properties and higher rents." got 53,000 people coming in," he says. "The supply and demand issues are way out of kilter because we're not building enough houses for that amount of people."http://tvnz.co.nz/national-news/new-housing-regulations-more-holes-than-slice-swiss-cheese-6312328 - 13 May
NEW RULES COULD HELP CHRISTCHURCH - 14 May
The Reserve Bank expects its new rules could boost house prices outside of Auckland by one per cent. ANZ bank chief economist Cameron Bagrie expected the new rule "would have a little bit of an effect" on the Christchurch housing market. The city's house prices were still elevated but were starting to soften as more homes were built, and this would help young buyers as well, Bagrie said. http://www.stuff.co.nz/the-press/business/your-property/68515504/Good-news-for-first-home-buyers-in-Christchurch - 14 May
NO HARD SCIENCE BEHIND 70% LOAN-TO-VALUE RATIO RESTRICTION - 14 May
The Reserve Bank settled on a 70% loan-to-value ratio restriction as the upper limit of how much residential property investors can borrow when buying a house in Auckland due to analysis of global investor markets. So says Bernard Hodgetts, head of the Reserve Bank's macro financial department, who acknowledges the analysis has "no hard science" behind it. The new restriction, planned from October 1, is expected to cover about half of all lending to Auckland residential property investors from bankshttp://www.interest.co.nz/news/75462/rbnzs-bernard-hodgetts-regulators-about-face-auckland-specific-lvr-restrictions-and-why - 14 May
HAWKE’S BAY HOUSING MARKET BOOSTED BY CHANGES - 14 May
Tremains Real Estate director and co-owner Simon Tremain also welcomed the proposed changes. He said the LVRs would encourage investors to look outside the Auckland market. "Anything that releases the Reserve Bank restrictions is going to be good, and anything that gives more buying power to the regions over Auckland has also got to be good." He said the region's housing market was the best he had seen it since before the global financial crisis, as evidenced by climbing prices.http://www.nzherald.co.nz/hawkes-bay-today/property/news/article.cfm?c_id=1503451&objectid=11448496 – 14 May
HOLDING MORE CAPITAL FOR INVESTOR LENDING - 16 May
To cut a long story short, although we applaud the Reserve Bank from taking a stand as part of its financial stability mandate, we do not agree with the proposed approach to solve the concentration of housing investment risks in the banking sector. Purporting to have false accuracy by finely tuning relatively untested policies seems like a complicated way for the Reserve Bank to achieve a simple goal. If the Bank really wants to protect the financial system from these risks, then a less convoluted approach would be to directly increase the amount of capital that banks’ must hold on their balance sheet to cover their residential investment property loan book. Not surprisingly, the chorus of support for this approach among economists is rather quiet, given that most regular commentators work for the banks themselves.http://www.interest.co.nz/opinion/75515/benje-patterson-wonders-why-requiring-banks-hold-more-capital-property-investor - 16 May
PM’s ANNOUNCEMENT ON MEASURES TO CRACK DOWN ON PROPERTY SPECULATORS - 17 May
Prime Minister John Key has announced Budget 2015 will include a range of measures to crack down on property speculators who sell houses within two years, and he has announced foreign buyers will have to register with the IRD and have a New Zealand bank account. Key said the Budget this week will contain several measures to bolster tax rules on property transactions and to help Inland Revenue enforce them. They include:
· Providing Inland Revenue with extra funding for compliance and enforcement.
· Requiring non-residents and New Zealanders buying and selling any property other than their main home to provide a New Zealand IRD number.
· Requiring non-residents to have a New Zealand bank account and to get a New Zealand IRD number.
· Introducing a new "bright line" test to tax gains from residential property sold within two years of purchase, unless it's the seller's main home, inherited or transferred in a relationship property settlement.http://www.interest.co.nz/property/75520/key-announces-budget-2015-changes-crack-down-property-traders-selling-within-two - 17 May
REACTIONS TO PM’S ANNOUNCEMENT OF CAPITAL GAINS TAX - 17 May
Capital gains tax on people selling residential property within two years of buying it, announced by the Government today, is an admission that there is a housing crisis, says Labour leader Andrew Little. .http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11450124 – 17 May
INVESTORS QUESTION HOUSE TAX MOVE - 18 May
Investors and housing commentators have blamed speculators for driving up Auckland house prices and the new policy targets this group. However NZ Property Investors' Federation executive officer Andrew King is not sure the change will do much to curb prices. "Whether this policy actually reduces house prices in Auckland will really depend on whether speculators or traders are a big part of the reason why house prices are going up in the Auckland area. “If they are, then this will have an effect on prices. But if they're not, then it won't." Mr King said the reason it was hard to tell how much speculators were affecting the market was because it was difficult to track them, and there was little information on other major players like foreign investors either.http://www.radionz.co.nz/news/regional/273872/investors-question-house-tax-move - 18 May
Andrew King interviewed on TVNZ Breakfast programme - 18 May
Audio of John Key talking to Mike Hosking about the new measures of tax on capital gains - 18 May
Video of Mike Hosking on the capital gains tax