Home Staging and its Importance in Todays Market

If you are one of the tens of thousands of homeowners attempting to sell your home at any one time now then you know how hard it is becoming to both get people to the home and once there get them to like it enough to put an offer on it. You will have been undoubtedly been told that times are tough and to expect to take a hammering on the price of your home. Not only are homes all over the country losing value, but sellers are having to compete with mortgagee sales at lower than market value and the credit freeze that is preventing a lot of people from getting financed. So what is the secret to selling in today’s market? If you are really serious about selling. Over the past few months I have been flooded with reports with people saying they know the answers to how to make that sale in this market and there seems to be a clear point that all seem to agree on. And this is Staging.

Chances are, if you’ve bought or sold in the past few years, you’ve heard of the term “staging.” Staging is the art of preparing your home to appeal to the most buyers through de-cluttering, organizing, cleaning and repairing, and then marketing to your target audience. The last one may sound like a business pitch, but it is vitally important. The first four on the list are not only important, but will benefit your family and your well-being by bringing about a change and newness to your home and ultimately prepare you for your next move.

De-Cluttering:
This can be a touchy subject for some people. We all know that many items in our home are sentimental but when you have to resort to trailblazing a path to the front door, it’s time to let go. If you MUST keep 100 copies of your favorite magazine, rent a storage unit while your house is for sale. You will get back the money you spend when your house sells faster and who knows, you may even learn to enjoy the extra space!! De-cluttering also includes de-personalizing. Start your packing early by putting family photos, heirlooms and other personal items in storage. Replace them with neutral accents or nothing at all. A buyer has to feel as if the home they walk into could be their home.

Organizing:
This goes right along with de-cluttering. Organization and placement of items in your home will not only make your rooms and closets look much larger, it will show the buyer that the current owners are organized and accountable and believe it or not, trustworthy. Check out home décor magazines for inspiration and ideas.

Cleaning and Repairing:
We all put off home repair or remodeling projects due to lack of funds, schedules and other priorities, but now is the time to get serious. Any project that has been left undone needs to be finished or at least finished to the best of your ability/budget. This will be your advantage over foreclosures; many of them are left dirty and in disrepair. If your home shines and looks well cared for, the buyer’s perception is their reality! The number one complaint from real estate agents who show or visit your home is a lack of cleanliness. Cleanliness also happens to be the hardest part of staging. If you have animals or children, you undoubtedly find a mess as soon as one is cleaned up. Deep cleaning is the first step. Clean your drapes, dust your window blinds, and by all means, keep your kitchen spotless! If you are leaving the appliances, make sure they are thoroughly cleaned with a grease cleaner, oven cleaner or specialty cleaning agent for your appliance. Don’t forget the top of the refrigerator and range hood! You never know how tall your potential buyers may be! Then have your family make a pact and be diligent about it until the house is sold.

Reaching your target audience:
This is where the little touches make a big difference. Make sure your home is inviting from the inside out. Neutral paint on in the interior, adding greenery on tables and shelves, and dressing up the front porch or entry with a wreath or nice patio furniture will all make an excellent first impression. Put away any kids’ toys in the front yard and hide garbage cans the best that you can. Don’t forget to make a lasting impression by having a sheet with all of your home’s information– schools, shopping, library, golf course, etc. And last but not least, treat your potential buyers like a new friend: have warm coffee or tea brewing, bottled water and cookies or other snacks readily available in the kitchen.

These are the very basics of home staging. You can find many more tips and suggestions on the internet, home and garden programs or with your real estate company. Also, there are many professional home stagers who will do the job for you. If the project overwhelms you, this may be a practical and worthwhile solution. Find these professionals online, in the phonebook, ask a friend, or enquire in your local chamber of commerce.

The benefits of home staging are lasting long after the ink is dry on the contract. You may just make a habit of staging your next home…for yourself!

February 25 2009 | Sellers | 7 Comments »

WHAT THE BANKS DONT TELL YOU

PRINT THIS OUT AND KEEP! I have had too many people emailing me over the past few weeks asking about budgeting and there seems to be hundreds of people searching on how to budget and how to save money etc. There seems to be a trend and people want to know how to deal with the banks. So I have decided to give away a whole chapter of an e-course I developed about a year ago that I sell on the internet to my subscribers list but I think there is a need for it and here you can have it for nothing.

Traditionally in New Zealand we have had savings banks (designed to cater mainly for the public’s everyday banking) and commercial banks (designed to handle commercial businesses and international transactions). The distinction between the banks has become almost non-existent as different banks merged and competition has meant they have to do everything.

Banks consider themselves a profit centre and so make no apologies for making a profit when looking after your money. They are very aggressive when charging fees and marketing their “add on” sales such as insurance’s and bank services. In some banks, these “add on” sales can make up 25% of their profit.

Banks are also becoming more technical utilising electronic means of paying (such as EFTPOS) and transferring money between accounts and to pay creditors (such as telephone transfers). Whichever way we look at it, banks are becoming less personal all the time and only seem interested in you if they can make money from you through fees or additional products.

Bank managers have a great deal of autonomy and how you are treated in a branch can be largely determined by the relationship you have with the key people in it. If you are getting on well with the loans officer or you have an understanding bank manager then that person is worth keeping in contact with – even if they change branches.

Within the rules laid down for business by the banks the bank manager has a great deal of discretion when it comes to applying those rules on things such as overdrafts, clearing cheques quickly or being more lenient when you are a few dollars short of making an automatic payment work.

FEES

It is not at all unusual for the average person to be faced with $240 worth of fees per annum! Check your own bank charges – you could be surprised.

So how do we avoid fees? As a rule Savings and Loans Societies and Credit Unions have less fees but offer less services.

When you conduct a transaction at a bank counter, as many as 17 people handle that piece of paper before it is finally filed and forgotten. This is why transactions by staff members are so much more expensive than using the electronic and automated systems. Here are some do’s and don’ts:

Do’s:

· Use the ATM machines whenever possible for less fees.

· Use EFTPOS transactions and get cash out while buying goods – two transactions at once saves fees.

· Use automatic payments or direct debits when possible.

· Utilise telephone transfers to move money between accounts and to get account balances.

· Use telephone transfers to pay bills.

· Ensure there is money to action all your automatic payments as the charges from the bank if you fail to leave sufficient money in your account are often $25 every time.

Don’ts:

· Make cash withdrawals at the bank.

· Make cash deposits at the bank.

· Use any teller transaction at all such as getting printouts or moving money from one account to another.

· Leave insufficient funds to cover your automatic payments and telephone transfers. This will incur fees at the bank and penalty interest on loans.

In summary, avoid using personal services whenever possible and make maximum use of electronic and automated systems.

The reality is the banks will be very hard on any small customer that does not keep their account in good order. If you talk to a bank manager they will tell you that if you bounce too many cheques or fail to let too many automatic payments fire then they will happily close your account down and see you on your way.

WHAT TYPE OF ACCOUNTS SHOULD YOU USE?

· Current / cheque accounts – the bank has designed these accounts to handle the majority of your transactions and money movements.

Fees charged are on a “per transaction” basis to reflect the high usage on the account. Interest earned on this account is usually low.

These accounts are ideally suited for telephone transfers, automatic payments, direct debits and other forms of money movement activity.

· Ordinary savings accounts – these accounts will pay more interest than a current/cheque account as they are designed for savings but they will also allow a fair amount of activity on the account e.g. telephone transfers, automatic payments, cash movements in and out.

As a result, you still get charged a reasonably hefty fee per month and possibly a higher fee per transaction to discourage you from moving your money in and out too often.

These are very useful accounts if you are saving money for things such as car repairs, house maintenance, school fees, and other short term saving goals.

· Incentive savers – these savings accounts are designed to reward you for putting money in but not taking money out. For example, if you put money in during a month but make no withdrawals they will often pay you a higher interest rate for that month. If you take your money out, you will often get far less or no interest paid that month.

Also to discourage you from moving your money, the transaction fees are highest on incentive savers while monthly account fees are often very low.

This account is excellent if you are saving for a holiday in a couple of year’s time, a deposit on a house or any long term savings project.

SETTING UP YOUR BANK ACCOUNTS

When we set up bank accounts we are trying to achieve certain things:

· To set them up in such a way that our bills are paid as a natural progression of our bank accounts and not something we have to remember all the time.

· To minimise bank fees and costs.

Banks will often ask you to have a sum of money when you open a bank account and this can be difficult to achieve sometimes. You could take your money from savings to start an account or borrow a small amount on a credit card or from a friend. The interest is minimal if you hand the money back as soon as you start the account and you can save a lot of money if you become more efficient in the way you handle your bill paying.

You could reduce all personal expenditure for a short period of time to get the money together or ask the people you owe money to for a period of grace and put that extra money aside.

1. All income should go into one savings account. Do not let yourself be paid in cash if you can possibly help it as cash in the hand is easily spent. If all the money goes to the savings account then you will minimise money “leaking” out of our system.

2. This savings account will end up holding all our money for:

· Extra expenses.

· Holidays and gift savings.

· Extra savings.

· $2000 as a minimum buffer.

			Savings Account # 1
									No ATM or EFTPOS access
		Transfers per pay period $………………………… $…………………..
	Savings Account # 2 For allowances						Cheque Account # 1 For committed expenses

Top up $………………. Top up $……………….

(comfort level) (to cover bank fees and

keep account in credit)

The reason we have this money going into a savings account is that when we take money out for our allowances and committed expenses, whatever is left will naturally start going towards savings – this makes savings a lot easier.

Note – there is no EFTPOS or ATM access on the first savings account or the cheque account to stop us taking money from the wrong place.

3. Every pay period we must transfer the right amount into our second savings account for allowances so that we cannot spend any more than we are allowed, as there simply isn’t anymore to spend. While we call this a savings account, you should find an account that costs the least amount possible to operate.

4. Every pay period we must transfer the right amount into our cheque account to cover our committed expenses. We put this amount in here to make sure no more is spent on our committed expenses than is necessary. By putting a limit on these expenses we have to make sure we stick to our budget.

5. Both the second savings account and the cheque account will need a sum of money transferred to cover things such as bank fees and to top up if we do overspend. Every pay period we must make sure we put in the extra we have planned in our budget to cover such costs.

6. In both savings account number 2 and the cheque account we need to have a minimum level of money to ensure that we never overdraw these accounts and fail to meet our commitments. If our automatic payments and commitments are not met then the extra bank fees (often as high as $25 for an automatic payment that doesn’t work) will soon make our budget very hard to achieve.

The number two savings account might have an amount of, say, $100 in it to make sure that we never run out of money and bank fees don’t overdraw the account. Use this $100 as your minimum balance and make sure you never go below this.

The Cheque account also needs an extra amount in there to cover fees, as this is the most active account we have. You will also have to make sure that there is extra in there to accommodate the fact that you may not have a full payment ready to go out once a month. For example, you might have to pay $100 a month on a hire purchase.

When we did our calculations we multiplied $100 a month x 12 to get an annual figure. In this case it is $1200.

We then divided this by 26 to find out how much of our fortnightly pay has to go into the account to meet that. In this case, it is $47.50 a fortnight.

If you only have 2 pay periods until your monthly automatic payment is due then you will have a total of $95.00 in the account – this is obviously not enough. We need to put a little more in right at the beginning to make sure that there is enough there to take into account the fact that there are 4.3 weeks in a month.

Likewise, the cost of setting up automatic payments etc. is something else the bank will deduct from the account so that if we are setting up our bank account system and we are setting up 4 or 5 automatic payments we must allow money for the bank charges. If we do not, our whole system will fail right from the beginning.

It is worth noting that automatic payments will come out in a certain order. Some banks pay the largest first. Others will pay them in the order they are loaded.

This means if you move into a new flat, for example, if you load new automatic payments for your rent, it will be the last thing paid when it should be the first. Ask the bank to rearrange the order.

It could well be necessary to calculate an amount of money that needs to be put into the accounts when you first open them, as a lump sum, to ensure that you will always be able to pay your bills on time.

7. What if you do not have a lump sum or you simply find it too difficult to calculate the extra amount that you need to make sure your bank accounts stay in order?

We can change the amount we put aside each week or fortnight towards our payments to make sure there is always a little more going in than is actually necessary. When we calculated how to work out our weekly and fortnightly payments before we used the following formula:

For weekly payments divide the annual amount by 52 – for example, $520 per annum divided by 52 = $10 per week.

For fortnightly payments we took the annual payment and divided it by 26. For example, $520 per annum divided by 26 = $20 per fortnight.

We can replace these two formulas with ones that give us a months payment every 4 weeks:

For the new weekly payment we divide the annual amount by 48. For example $520 per annum divided by 48 = $10.83 per week.

For fortnightly payments we will now divide the annual amount by 24. For example, $520 per annum divided by 24 = $21.67 a fortnight.

What this will do is make sure that you have the full months payment every four weeks. This means that you will always have enough money by the end of the month to pay all your bills. You will also build up an extra amount going into the accounts (1 month of extra bills) by the end of the year. This will help leave extra in the accounts for unexpected fees or forgotten payments and will mean that you are far less likely to miss any automated payments – why would you, you will actually have too much money in the account.

This way of calculating your weekly or fortnightly payments is an excellent way of simplifying your budget down and making if far more likely to work because of the extra amounts going into the accounts.

The problem with this way of doing things is that if your budget is so tight that every cent counts, you may well not be able to put the extra small amounts aside. You can’t move money to accounts if you simply don’t have it to move!

If you have got the extra money then this is a very good way of helping your budget stay on track and is recommended highly.

8. We have used two savings accounts and one cheque account because savings accounts have less fees and so they are more economical to run. Most banks will not let you have automatic payments coming out regularly from a savings account and so you will need one cheque account to do this.

If the bank does allow automatic payments from a savings account then you can combine savings account #1 and cheque account #1 to save more fees. This also has the advantage of increasing the amount you have in savings because every cent not spent stays in your savings account automatically.

The disadvantage of combining the two accounts is that you have to be very careful that you do not take too much of your savings out each time you withdraw money – you could be spending your automatic payment money.

People often prefer to have their income split between two different accounts (or even two different banks) to make sure the savings and/or automatic payment account is truly out of sight and out of mind. It is a good idea.

9. By setting the system up this way it doesn’t matter whether your automatic payments and hire purchase payments etc. come out monthly and you are paid fortnightly, this system will accommodate this difference.

You must remember that if you finish paying off a hire purchase or put another commitment on that you have to change the transfers from the first savings account to the cheque account to make sure that the right amount is being transferred. If you do not, you will run short of money or have too much in the wrong place.

If you succeed in paying a bill off and therefore have extra money you can start to leave extra money in the savings account or keep the money going to the cheque account and pay more off one of your other bills. Either way, you will have to remember to change the automatic payments that are in place.

10. We have all your pay going into the savings account at first because it means that every cent you don’t spend on allowances and committed expenses is saved. This is how you will eventually manage to become more financially independent.

Check your calculations every two or three months to make sure that everything is running smoothly – review your systems regularly. If you find that a regular commitment did not get paid on time – find out why because it may be an error that will happen again.

DIRECT DEBIT VERSUS AUTOMATIC PAYMENTS

An Automatic Payment is a more traditional form of making a payment automatically. Once it is set up it will keep going until an expiry date or until you cancel it.

The advantage is that you have control over it and can alter or stop it whenever you want. If you miss a payment it will often fire next attempt.

The disadvantage is that if your payment changes (for example a change in an insurance policy premium) you must remember to alter the payment or you soon fall behind on your commitments.

With a Direct Debit only the company that puts it in place can stop it – you cannot, even though it is your account. (In truth some banks will do it for you but they are not meant to!)

Organisations like Insurance Companies use direct debits because they do not need to get a new authority signed every year. This means instead of chasing clients and overdue payments they simply write you a letter and inform you of the new payment. They adjust the schedule sent to the bank and take the new amount from your account.

They can also take missed payments more easily by requesting a double payment from the bank the next month.

They usually simply send you a letter and “tell you” what they will do if you do not contact them. Most people do not bother to contact them.

There is nothing wrong with direct debits. It is simply that people do not like feeling they are not in control and do not like having others tell them how much is going to come out of their bank account.

BANK LOANS

Currently, banks are moving towards using either “blue chip” security (mortgages and term deposits) or unsecured lending. They believe that they will either give a good interest rate if the security is solid or take their chances on an unsecured loan but charge a lot more money. The difference in interest rate between a secured loan and an unsecured loan is often about 3%.

Loan Requirements

All banks have criteria that you must fulfil if you are to get a loan from them. These are:

• A good credit rating. The cleaner your credit rating is the easier it will be for you to get a loan.

• If you have had a “black mark” on your credit rating the bank will still consider your application if that credit has been paid off and this shows on a credit check. If you have been a bad risk to someone else and you still owe them money they will not consider your loan any further.

• You will be asked to explain how the bad credit rating occurred and if the story is reasonable and the loan is not too large they may well consider your application.

• Sufficient disposable income. Banks will usually use two criteria to judge whether you have enough money to pay for a loan:

Ø They will allow you 35% of your gross wage before tax towards your fixed commitments. For example, if you earn $1000 a fortnight they would allow $350 a fortnight towards fixed commitments.
A fixed commitment is an obligation you have to pay money on a regular basis and will usually be either a loan of some sort (such as a credit card, hire purchase, store card) or an obligation (such as rent). If you do not pay your fixed commitment then someone will bring it to your attention and act to obtain the money from you.
Included in this fixed commitment will be the amount that you will be paying for the loan that you are currently applying for.

Ø You must have a “net surplus” after you have paid all your fixed commitments. Banks will use an indicator such as $800 a month net surplus after all fixed commitments for an individual, $1300 per month for a couple plus $120 for every child.

For example: if Joe earns $2000 a month the bank will allow him 35% of that towards fixed commitments – this is $700 a month.

If Joe is currently paying $250 a month in board and a credit card, then $750 less $250 means the bank will allow $500 towards future loans. If Joe’s loan is $300 a month, then he will meet this requirement.

Joe must also have $800 surplus funds when we take the tax and the fixed commitments off his $2000 a month. If Joe’s tax is $400 a month and his fixed commitments are $550 ($250 board and a credit card + $300 loan) then we can see that Joe also meets this criteria. $2000 – $400 tax – $550 fixed commitments = $1150 surplus per month.

• How long you have had accounts with the bank and how you have conducted those accounts (e.g. have they been overdrawn, are you late with your payments, are they always chasing you for arrears) also play a major part in whether they will lend you the money or not.

• The security you offer can make a difference. If it is good security then it will make it easier for the bank to lend you money.

• All banks will charge a minimum fee of, say, $250 for a loan but can charge as much as 1% of the amount that you borrow.

SECURED LOANS

Banks look for mortgages and term deposits as their best form of security. They will also consider things such as shares, insurance policies and personal guarantees but they will modify the rate to accommodate for the fact that they don’t consider this class of security to be as good. As a general rule, banks will no longer use motor vehicles as security.

Advantages of a secured loan are:

• A better interest rate – probably 3% lower than unsecured lending.

• It is easier for the bank manager to lend you money if it is secured.

• If you have security in place with the bank (e.g. a mortgage) then it will also make future loans easier to obtain.

• Fees are higher and you do need to have the security.

On the whole banks are more comfortable with secured lending because they feel that if the customer has something to lose (such as a house), they are less likely to default on the loan. They will be more committed.

UNSECURED LOANS

Banks are quite happy to take the risk on unsecured lending because they charge a higher interest rate. These days it is cheaper to sue the few people who default on their loan than it is to put securities on every loan. Unsecured lending can include credit cards, overdrafts and unsecured loans.

If you are new at the bank you will often find a $200 overdraft or credit card is an automatic part of opening an account at the bank. Getting more unsecured lending will rely very heavily on how long you have been with the bank, how much money you have going into the bank and how you have conducted your accounts in the past.

A lot of bank managers will start with a smaller limit such as $500 and work up as you prove yourself but will set maximums depending on your income and the amount of money coming into the bank. For example, you may find that the bank will not lend more than 10% of your income or that they will not give you more in the way of an overdraft than you have money coming in every pay day – this means you clear your overdraft every pay day.

Advantages of unsecured lending:

• Fees are often less, as you do not have to pay for things such as mortgage documentation and lawyers fees.

• You can still obtain money when you have no security to offer.

• Unsecured lending is often for a smaller amount and therefore you have less to pay back.

• If you default on the loan you will not lose any of your personal possessions – although you will have a bad credit rating and possibly be taken to the debt collectors and courts if needed.

It is not unusual for banks to insist that you have some form of risk protection such as life cover or income protection if they are doing an unsecured loan. The reason for this is that they have no car, house or term deposit to cash in should the loan fail if you were to die or become unable to work. What they do is cover themselves with life insurance policies and income protection plans.

From a legal point of view they cannot insist that you have this insurance to cover the loan. Unfortunately, most banks will not lend you the money if you decide you do not want to put this sort of cover on a loan. As a result, while they cannot legally insist that you have this cover they can decline your loan if you don’t take it.

Banks often use a point scoring system to determine how much they will lend you. They look at a number of areas such as:

- How long you have lived at your last address?

- How long you have been in your last jobs?

- Have you had loans before? How did they go?

- Are you married?

- Is your credit rating good?

They score you on each area, the less points the better. They then have a chart they rate you against and this says how much they can lend you.

For example, if you have had 3 jobs in 2 years, have moved 4 times, no stable relationship and already defaulted on a loan – you will not get much of a loan if any loan at all.

If you have held a job for 5 years, lived at the same address for over 7 and are married and your previous loans have run well, the bank will score a loan application more kindly.

Banks will lend $15,000 or more unsecured these days.

Banks often score you on a points system to see how much unsecured lending you can have. The lower the score, the better.

For example, if you are in a rental property, are an unemployed teenager with bad credit and never saved any money with the bank, you would score highly.

If you owned your own home and were happily married in your late 30’s with 2 children and had all you wages deposited along with regular savings, you obviously have a better (lower) score and will receive more credit.

If you have just changed jobs or houses but been in the previous one for a long period of time, make sure you let the bank officer know as this effects the score.

CREDIT CARDS

Credit cards have got more people into trouble then any other form of lending. They are the most expensive form of lending with interest rates often in the 20% range and they are designed to trap you into using your credit card right up to the limit and leaving it there.

In New Zealand, more than 60% of people who have a credit card always have it at the maximum limit. If you cannot control your spending then you are better to apply for overdrafts and small loans to make sure you do not over commit yourself. It can be cheaper in the long run.

If you buy goods on your credit card then you will have up to 55 days to pay the card off completely before incurring any interest. If you only pay the minimum 5% each month it can take 7 years to pay off and you will pay 3.5 times what you spent.

If you get a cash advance on your credit card then you will pay interest from the day that you took the money off your credit card. There are some advantages:

• You pay approximately $20 a year as an administration fee and you do not have a $250 up front administration fee as you do for a loan.

• Once you have a credit card limit you can use it repeatedly without having to reapply for further funds from the bank.

If you lose a credit card (or cheque book) report it straight away and you will probably not be responsible for fraudulent use (except perhaps the first $50 or so).

If you find a card missing and do not report it, you could have to pay some or all of the fraudulently taken funds.

HOW TO USE A CREDIT CARD TO YOUR BEST ADVANTAGE

Because of the lack of upfront fees, the credit card can be useful for small purchases/bills that you can pay off in a couple of pay days.

Credit cards tend to have a 55 day billing cycle. This means that you use your credit card and every 30 days you are sent a bill. You have 25 days to pay at least the minimum amount.

30 days plus 25 days + 55 days

If you clear the whole debt before the 55 days, you pay no interest. Plan your purchases so you buy on the first day of the billing cycle. This allows you the maximum time to pay the bill completely.

For example – you need to buy a $150 tyre for your car to get a warrant of fitness. Suppose your billing cycle is the 1st day of each month, then buy the tyre on the first of the month. If you are paid fortnightly you will have 3 paydays in the 55 day cycle. If you pay $50 each payday you will pay the card off before the minimum payment is due.

This means you will pay no interest because the card is paid off before the due day on day 55.

This is the best way to use your card. If you have some money still owing on the 55th day you will usually only pay interest on the outstanding balance. But watch out if you do not clear the whole card – read their rules carefully.

WHAT ABOUT CAR LOANS?

Most banks are interested in doing small, unsecured loans (up to $5000) or large long term loans (such as mortgages) – they are not particularly interested in things such as car finance.

It is usual for banks to have a relationship with an established finance company that caters for the loans between $5000 and $25000 that are most common for car loans. For example, Westpac Bank owns AGC Finance: BNZ Bank has created BNZ Finance and National Bank has a working relationship with UDC Finance.

In this way, their clients are able to obtain car loans but they do not have to be party to an area of lending they do not want to be involved in. Banks rarely use cars for loans any more.

GUARANTORS

If someone acts as a guarantor on your behalf they have an equal amount of responsibility for the payment of the loan. It is very important that you make a guarantor aware of their responsibilities.

If you do not pay your loan and your guarantor has far more substantial assets (such as a house, car etc.) then the bank has the right to pursue the guarantor instead of you if they feel they have more chance of getting their money back.

Most banks will not take a guarantors unsecured signature and will require some sort of security from the guarantor to use on the loan.

A bank usually uses personal guarantees when a well-established customer asks the bank to allow a less established customer a loan facility.

For example, if mum and dad have been at a bank for 20 years and they ask the bank manager to help their son with a car loan, the bank may ask the parents to go guarantor on this first loan. The bank manager usually entertains this as a favour to the parents as he might not normally do this loan for a newcomer to the bank.

The majority of guarantor secured loans are not successful – if the bank will not lend you the money there could be a good reason. Many people who act as a guarantor swear they will never do so again!

PERSONAL GUARANTEES

Be very careful when a bank asks you to sign a personal guarantee. This is one of the most all-encompassing documents that you are ever likely to see!

On the front of a personal guarantee a bank normally puts a waiver that you are required to sign. This waiver says that you have foregone the opportunity to take that guarantee to your lawyer and have them look at it and give you advice. The reason this is here is because the guarantee is so complete that they are required to suggest you get legal advice.

It’s probably a good idea!

A bank will often ask a director of a company to sign a personal guarantee over the company’s undertakings. If the director does this, then they have no more protection from having a limited liability company.

A personal guarantee will not just guarantee the transaction that you signed it for (for example, the purchase of a car) but will mean that you have personally guaranteed every transaction and every loan on all your accounts from that point onwards – not just that first transaction. You could now be responsible for every overdraft, bounced cheque, or other loans, etc.

Not only that, but personal guarantees live on after your death. This means the bank has the right to pursue your estate for any money owing.

If you must sign a personal guarantee then ensure you get a letter from the bank saying that you can have that guarantee released upon the successful payment of the loan that they used it for. It is far too powerful and gives the bank too much control to just let it keep going.

Ideally, never sign them in the first place!

WHAT TO DO IF YOU LOSE A CHEQUE BOOK OR CARD

It is important to let the bank know as soon as you realise that your chequebook, credit card or ATM card have been lost or stolen.

Look up the bank in the phone book and ring their 0800 number (you can do this whether you have a telephone service or not) and report the loss.

If you report it straight away you will not be responsible for any fraudulent spending or use. This is because you have told them as soon as you know. This means that you have acted in the best way possible and done what you can to minimize the bank’s loss.

If you delay then you could well be responsible for any card usage or cheques written after you know about it.

For example, suppose you notice that you have lost your cheque book on the 10^th, but do not ring the bank straight away thinking you might have it in the car or at home. Having looked, you ring the bank on the 12^th. You could be responsible for any spending between the 10^th and 12^th because you are meant to ring them straight away so they can cancel the card or cheque book to minimise the loss.

The bank will ask you when you noticed the loss – It is important NOT to admit it was a couple of days ago. Always say that you have just noticed.

Thieves can be clever. They may do something like steal just your credit card but leave the rest of your wallet where they found it. This means they have the time between stealing your card and you noticing it to spend on it – it could be weeks before you notice!

BE CAREFUL

February 21 2009 | Uncategorized | 9 Comments »

Internet Blackout vs Guilt Upon Accusation laws

FOR IMMEDIATE RELEASE
Tuesday 17 February, 2009

CFF announce Internet Blackout against Guilt Upon Accusation laws

Today the Creative Freedom Foundation announce a nation-wide Internet Blackout Campaign against Guilt Upon Accusation laws in NZ. The blackout, taking place from 16-23 February, is a reaction to Section 92A of the Copyright Amendment Act, due to come into effect in NZ on February 28 unless the Government suspends or repeals the law.

The controversial law reverses New Zealander’s fundamental right to being presumed innocent until proven guilty, punishing internet users with disconnection based accusations of copyright infringement without a trial and without evidence held up to court scrutiny.

The blackout has already drawn international support: world renowned actor, comedian and author Stephen Fry has blacked out his twitter profile stating that “Stephen Fry is blacked out: Stand up against Guilt Upon Accusation for New Zealand”

The movement is rapidly growing, with thousands of people in New Zealand modifying their websites, blogs, FaceBook, MySpace, Twitter and Bebo accounts to show their opposition to the law. Instructions on how to take part in the blackout can be found onwww.CreativeFreedom.org.nz

The blackout is part of a week of action against S92. A S92 song remix challenge will be announced tomorrow, and various other initiatives including video commercials and radio broadcasts will follow.

The week will culminate in a major web blackout on Monday the 23rd seeing blogs and websites “dimming the lights” as a means of drawing attention to the issue that could leave New Zealander’s in the dark when they face having their internet cut off. Hundreds of confirmed participants include Kiwiblog, Zoomin and Public Address with more to be announced over the coming week.

Creative Freedom Foundation Director Bronwyn Holloway-Smith says “If the government choses to keep this law, they will be going against international trends, treating NZ as an international lab-rat for this kind of legislation”. Similar legislation has recently been proposed and rejected in other countries: Germany said Section 92A-like laws were ‘unfit for Germany, unfit for Europe’. The UK rejected them due to “impracticalities and complexities” and the EU rejected them saying they were against “a fair balance between various fundamental rights”.

But its not all gloom: one popular solution to the problem of illegal downloading is a Copyright Court. Operating similarly to the Disputes Tribunal, this would be a fast and cost-effective way of resolving disputes while preserving public justice and therefore public respect for copyright.

Over 5600 people, including over 2700 artists, have signed theCreative Freedom Foundation’s petition against Guilt Upon Accusation laws in NZ. The petition can be signed by artists and the wider public at http://CreativeFreedom.org.nz

ENDS

February 17 2009 | Uncategorized | 6 Comments »

House Hunters International Coming To New Zealand!

An opportunity exists NOW for a property buyer in New Zealand to participate in an International TV documentary. If you’re looking to buy a home or vacation property and would like to have it documented on an American TV show that airs in several different countries around the world, including New Zealand then I need to hear from you.

About the show:

The show takes the viewer through the buyers process from touring houses to making offers, each episode of HOUSE HUNTERS INTERNATIONAL highlights the experiences of finding and purchasing a property. Each episode breaks down as follows:
* First, we meet the buyers in their current residence to find out what type of property they are looking to purchase and what they would like in a new home. They give us a tour of their current residence.
* Then, we meet the agent who discusses the home buying trends in the area and shows the clients three comparable properties that suit their needs.
* Finally, the clients select a property to purchase and the episode ends with the homebuyers already moved into their new home.

To have a look at the show go onto Youtube.com and type in House Hunters international or follow this link to HOUSE HUNTERS INTERNATIONAL

For the person/people chosen to participate cameras will follow you as you tour 3 different properties and ultimately choose the one to buy and move into. This is a great opportunity for you. Whether you like the thought of being on TV or if you like the thought of being able to have a professional documentary of you buying a property, this is for you.

The show is looking for outgoing, lively people who are planning to purchase a place in the next 3-6 months. Please note that shooting usually takes about 5 days. If you are interested, please contact me on deon@deonswiggs.com or deon@propertyprofitsecrets.com or call me on my mobile 0274620350 for more information.

February 14 2009 | Buyers and Sellers and The Market | 2 Comments »

Latest QV Figures Are Confirms a Continuing Trend

This is an update from QV for the month of January.

From where I was on the ground there seemed to be alot of positives and enthusiasm as the interest rates have come back to record lows and this coupled by the drop in prices making housing affordability more realistic than it has been for many years. Although with the tightened up criteria the banks have been excersing it is making it hard for investors and first home buyers to stay or enter into the market. The fact of the matter is that prices are expected to drop further, sales volume isnt expected to rise by much but interest rates will drop further as the RBNZ tries to stimulate the markets. But there still is very much alot of uncertainty within the market. There are some that see that there are opportunities out there to make positive cashflow out of investments where others think that the market still has to much recovery to go before it will be viable to make any commitments. 

My opinion is that prices will continue to fall for most of this year. I feel the mortgagee market is going fuel this downward spiral into proabably the third quarter. This doesnt mean that opportunities are out there because they are and are waiting for any one of us to snap up, and generally they are pretty quickly. If you want some more reason to think why property prices may drop have a look at the housing affordability post on here. As with any market or situation its what you make of it. Here is what the official word is from QV..

Christhchurch Property Trends

Property values in Christchurch decreased by 8.8% over the last year (calculated over the three months ending January 2009 in comparison to the same period last year), deteriorating further from the 8.0% annual decline reported in December 2008. The average sale price for the city decreased slightly from $348,953 to $347,157.

Melanie Holcroft of QV Valuations said; “The change in property values experienced between October and December 2008 showed that the rapid decline could be easing, but these latest figures show that the situation is still worsening. Average sales prices continue to decline; this could be influenced by low sales volumes and the mix of property being sold.”

“There have been anecdotal signs of an increase in investor activity, driven by decreasing property prices and lower mortgage interest rates. In short, if consumers have the equity or available funding it appears to be a good time to buy residential investment property” Ms Holcroft said.

“Overall the market has continued to soften, but at a slowing rate on those levels experienced in mid 2008. Lower interest rates have been slow to stimulate market activity, a pattern usually observed.  This is attributable to a decrease in confidence in the employment market and rising food and fuel prices. We expect this pattern to continue for the next quarter” said Ms Holcroft.

		CHRISTCHURCH
Waimakariri -7.1% $310,683   Southwest -8.9% $324,962   Selwyn -8.0% $360,820				East -8.6% $279,214   Central & North -8.5% $410,849   Hills -9.1% $448,679   Banks Peninsula -12.5% *$388,333
		New Zealand -8.3% $382,762     Annual Property Value Change     Average Sales Price

February 12 2009 | The Market | No Comments »

Being Made Redundant – What Can You Do.

If you have been made redundant and own a house there are schemes that the banks will do for you to help you with this. There are mortgage holidays that you can use and there are schemes where the bank will take into account the loss of your job and take into account of what your partner is earning and halt part of your payments to help you get through the time of no income.

Thanks again everyone for your support in your emails and phone calls.

Deon

February 09 2009 | Uncategorized | 23 Comments »

A Quick Guide To Buying A Home. What To Look Out For, What To Watch.

There is probably no better way to become aware of the condition of a home than to have your home inspected by a licensed inspector. However, there are several considerations on which only you, as the purchaser, can decide. And, as I’ve said in other articles, it’s my belief there are some things you must do yourself: Manage your money.  Raise your children.  And, also… purchase your home!

1.    Location, location, location…

Probably the most important factor is that your new neighbourhood is a good fit.  Take some time to drive around the area and make sure you like it. Check out the traffic at rush hour – if the home you like is on a main street, make sure the traffic noise won’t be a problem for you.

Additional location considerations might include: Where are the closest schools?  Having schools nearby can be great if you have young children yourself.  It can be rather annoying with noise or traffic, if you don’t!  Does the lot back to a wash? If you have cats or a small dog, they might be at risk to urban coyotes and other wildlife. Is there an alley? Alleys have both positive and negative features. They provide a buffer between you and the back neighbor, but they also give opportunities for clandestine behavior since they are relatively private.

You might want to check the crime statistics for the area, something you can find by googling “neighborhood crime data” along with the community of your choice.  You may also go to the county sex offender registry and make sure you are comfortable with your neighbors. I

Check into nearby vacant lots. You never know when the lot your kids play on will be developed into something you might not want to have as a neighbour.

You can even ask your agent to speak with your potential new neighbors. Find out if there is any unreported crime; ask if there is a rock band that practices all afternoon. Find out if there is a problem neighbor at whose address the police have a reserved parking spot. Ask the immediate neighbors if they plan any major remodeling or additions. This could lead to a year of construction vehicles and noise from sunrise to sunset. A few minutes of due diligence can prevent an unhappy ownership situation.

Make sure the lot has good features; i.e. not located in a flood area, and not the lowest lot in the area (sure to be 3 inches deep in water every time it rains). Generally this is not a big issue because most municipalities will not give a building permit for such areas.�
 

2.    What do I really need…?

The home you pick should meet whatever needs you or your family have. Think about the future. Having kids? Already have kids? Kids leaving? Getting married? How big a home do you need, how many bedrooms and bathrooms? For later resale, the most popular single family home is a 3 bedroom 2 bath home. Homes with only 1 bathroom or only 2 bedrooms are more difficult to sell than the more standard 3/2.

Take the family and spend a little time in the home. Spend a couple hours, especially during the morning or afternoon rush hour. Make sure the noise and activity levels are acceptable, and make sure the home has all the conveniences you like.

Is a pool important? Somewhere to relax on those hot summer weekends? Be sure to inspect the pool closely, using a professional inspector. Pool maintenance can be quite expensive and time consuming. I personally do not have a pool service, instead I have an automatic chlorinator and an automatic pool sweeper. These items are a significant up front expense, but can yield years of virtually maintenance free pool enjoyment. Insist that all pool equipment be in excellent working condition.

3.    Last year’s remodel… this year’s nightmare?

Many older homes may have been converted from a one bath to a two-bath home. You can usually tell.  Make a careful inspection and see if this was done.

Sometimes a master bath has been divided and made into two bathrooms. If the remodel was done well and permitted (a permit was obtained from the municipality), this is a better situation than a poorly done, unpermitted change. You can often find permit information at the city planning office.

Sometimes additional square footage has been added to a home, either by converting the garage into a bedroom or office, or by enclosing the patio. Telltale signs of this might be: No garage, or a garage door that is still there but has no purpose; a slanting floor (garage floors and patios often slant to provide drainage); unusually low ceilings in one room; no air conditioning vents in the room; an outdoor carriage light on the wall of the room; a room with one cinderblock wall and 3 wood frame walls.

Some homes built with a carport have had the carport enclosed. This is an inexpensive and useful remodel, provided it was done correctly and with the proper permits. Things to check for: A window from the house into the garage; garage door is not self closing and/or is not  a solid core door; one garage wall is block, the other walls frame; no power outlets on the garage walls except on the back wall.

Look at the flooring in the home. Flooring is an upgrade many homeowners attempt on their own, but without sufficient skills. Often before selling, owners will rip out old carpeting and install laminate wood flooring. Look for the seams in the laminate; one of the more difficult things for the unskilled installer is to plan the job appropriately so that the seams in the flooring come out right, with no gaps. Further, many installations run right up to the baseboard – sometimes there are two baseboards, the old original and then the new baseboard to cover the gaps from the flooring!

The proper installation is generally to remove the old baseboards so that the flooring is seamless from wall to wall and only a single baseboard is installed. New baseboards should be installed – this minor step costs little and makes a big difference. You can often see a discoloration at the bottom of the old baseboard where the carpet used to be. And, most do-it-yourselfers are not good at mitering the corners and fitting the baseboards perfectly. Just look at the joints and the corners – you will be able to tell, easily, whether the installation was done well.

Tile is another homeowner do-it-yourself favorite, and again, without the proper skills, the job can look terrible close up. Uneven levels in the tiles, grout lines that are not straight, and poorly done corners are just a few examples. Just look at the work, you will be able to tell whether it was done professionally or not.

Finally, look for additions. This is often evidenced by one part of the home leaning away from another part – look at where outside walls meet. Look at joints in the outside walls and see if they are pulling away from each other. Look at the flooring in the home at the same point; if there is carpeting, it is harder to tell, but sometimes the addition will have a different slope from the main part of the house.

For information about remodel work, trust your home inspector. This sort of thing is often more cosmetic, but might make a big difference upon resale.

4.    Who built the ark?  OR….

How is the home constructed? Some older homes are slump block, and this is a wonderful thing, as the utility bills will be substantially less than for a frame house. These homes stay warmer in the winter and cooler in the summer.

While my personal favorite construction is slump block, a close second would be block homes. With these homes, you may find the cable TV companies complain when they have to drill through the block to add an outlet! Block or brick, or some form of masonry, can provide a strong, stable framework that has inherently good insulating qualities.

For some time, homes were literally built by framing the home, wrapping it with insulation and chicken wire, and then using a gunite machine to spray stucco on the outside. I know I am not characterizing this very well, but it is probably the bargain basement construction method. Unless this process is completed carefully, the stucco can develop cracks. Newer homes are built with framing, then engineered wood (plywood or particle board), then insulation and stucco. This is much more stable than chicken wire over framing!

Any of these construction methods, done properly, are acceptable. My opinion is that the risk of problems is lower with masonry of some sort.

When my grandparents bought their last home they did not check any of the electrical outlets. The inspector verified that they worked, but the brand used by the contractor must have been the very cheapest, because none of them will hold onto a plug – the spring action is so weak that the plug literally falls out of the outlets, this is just something to keep an eye out for.

Similarly, look at the valves under the sink and toilet. Make sure the lines are copper and not galvanized. Galvanized pipe, installed in the 70’s, will almost surely be rusty and possibly leaking now, 35-40 years later. Insist on a repipe to copper at the seller’s expense. Have your inspector make sure the plumbing is copper.

I like to make sure the inspector checks the shut off valves under the sinks and toilets, because in older homes, they are often frozen and impossible to use. If there is any evidence of leaking, have the seller replace them with new ones which are less prone to freezing. When you have to have your sink or toilet worked on, you won’t have to shut off water to the entire house for half a day.

5.    Rules, rules and more rules…

who ever your agent is they should make sure you get a copy of any Covenants, Conditions and Restrictions on the property. These are rules associated with a property which are part of the deed and run with the land. 

Other things to think about (this list is by no means complete):

-    Cost of homeowner’s insurance

-    Taxes/Rates

-    Utility costs

-    Garbage pickup / bulk pickup

-    Neighborhood watch

-    Internet service

-    Sky

-    Street condition, paving

-    Security system

-    Paint condition

-    Driveway condition

-    Roof condition

-    Age of air conditioners

-    Septic or sewer?

-    Age of faucets and other fixtures and their condition

-    Type of electrical wiring (aluminum, copper?), electrical panel, breakers

-    Condition of shower enclosure and tub area (mold?)

-    Insurance claims history

-    Street utility manhole in front of house?

-    Distance to fire hydrant?

-    Water pressure?

-    Condition of watering system for grass, shrubs?

Finding the perfect home for you and your family should be an enjoyable experience.  I hope these guidelines will help you in your search and home buying experience! Good luck.

February 08 2009 | Buyers | 1 Comment »

New Zealand Housing Affordability Is The Second Worst In The World

The article below is an article that has been published in the New Zealand Herald and after reading it though I thought was one of the most informative and interesting articles that details the problems that we are facing in terms of our New Zealand housing market. Simply put the prices of our houses in New Zealand are high. Housing affordability is becomeing alot better but is still a long way off the rest of the world. Have a read through this article and leave your thoughts at the bottom in the comments box. 

According to the 5th Annual Demographia International Housing Affordability Survey, buying a home in New Zealand is prohibitively expensive due largely to planners. 
The reality, however, is far more complex.

In this instance, coming second to Australia is not so bad. The Aussies are the undisputed world champions in unaffordable housing – a home in the lucky country costs 6.3 times the average annual household income.

But New Zealand is not far behind. Buying a house in Godzone is prohibitively expensive too – 5.7 times average household earnings. Crikey. That’s almost double the rule of thumb for affordable homes – that they should cost no more than three times annual household income. In Canada the “median multiple” is just 3.5. And in the United States, it’s 3.2. How the hell did things get so out of whack Downunder?

According to the 5th Annual Demographia International Housing Affordability Survey, the root of the problem is planners – specifically the way their zoning rules and regulations constrain the supply of land.

Free up the supply of land, especially at the city fringes, says Demographia and housing will become affordable again. More suburban sprawl brings housing for all.

What may be surprising about Demographia’s analysis is not that it reflects a property developer’s ultimate fantasy, but that the Government is buying its message.

“National understands there’ll be property cycles, but the recent cycle has been so extreme as to suggest there are fundamental problems with how the market is operating, notably around the supply of land,” said Housing Minister Phil Heatley last week.

“This research proves that many first-home buyers are excluded from entering the property market by a number of factors, including restrictive zoning and consent laws, which not only make life difficult for ordinary Kiwis but are major factors in New Zealand’s poor productivity and economic growth levels.”

Actually, the research doesn’t prove anything about restrictive planning. And before jumping on the Demographia bandwagon, the minister might want to take a closer look at the survey.

The non-profit social change agency, Shelter New South Wales, commissioned research in October 2008 to do just that. It found the overarching methodology flawed, pointing out that it includes all house prices across an entire city – multimillion-dollar properties alongside lower cost homes.

That can easily give a skewed impression. “A city with a high median multiple might have large numbers of affordable properties that operate as separate housing markets in the city,” says the research. Demographia only includes home purchases, excluding dwellings in the public and private rental sector, which are important sources of affordable housing supply.

Andrew Coleman of Motu Economic and Public Policy Research is concerned too that Demographia’s analysis doesn’t take into account the essential financing cost of a house over an extended period of time. “For most of the last decade New Zealand has the highest interest rates in the OECD, so that makes housing far less affordable in New Zealand than elsewhere.”

Another feature not taken into account is the increase in the average size of new houses in New Zealand – from about 130 square metres in 1990 to just under 200 square metres today. He notes too that the boom in house prices in New Zealand has occurred in places like Timaru which have few problems with land availability. “It’s not really obvious that we have constraints in finding sites to build on .”

Shelter NSW’s research argues housing affordability is a complex mix of supply and demand variables including income levels, employment trends, access to (and the cost of) finance, demographic shifts, and housing preferences.

“The Demographia surveys reduce this very complex issue to a simple casual relationship between house prices and assumed planning constraints on land supply,” says the research.

The research takes issue with Demographia’s claim there is an economic consensus regarding the role of “prescriptive planning” in causing housing affordability loss.

Demographia: “There is a growing consensus that more land must be made available on the urban fringe to accommodate new residences and that a competitive land market needs to be restored.”

Shelter NSW: “Most authoritative economic sources focus on demand factors (eg falling real interest rates, strong economic growth, immigration rates, and, in some countries, weakening lending standards and easy credit) to explain house price growth…”

Shelter NSW’s research also criticises that lack of empirical data on whether a city’s planning regime is “prescriptive” (bad) or “responsive” (good) and concludes that Demographia’s planning data “conveniently reflects the subjective impressions of the authors.”

But while Demographia’s view may be understandable, given that one of its authors is Christchurch property developer Hugh Pavletich, the overall finding that housing here, and especially the land component, is overpriced, can’t be denied.

Other housing affordability indexes paint a similar unaffordable picture. But unlike Demographia, they focus on the cost of mortgages and highlight the fact that – thanks to falling house prices and falling interest rates – the tide is turning rather sharply.

Interest.co.nz shows that it now takes 59.6 per cent of one median after-tax income to pay the mortgage on a median priced house purchased in December, down from November’s 63.8 per cent. The index was a whopping 81.1 per cent a year ago and 52.3 per cent five years ago. It reached its highest point – 82.9 per cent – in November 2007.

But as Interest.co.nz managing editor Bernard Hickey points out, while prospects are improving, housing is still out of reach for most. “We reckon housing isn’t affordable again until we get near the 40 per cent mark, where it was in 2002 and early 2003.”

For household incomes the picture looks better. “Median-priced housing is now affordable for families in New Zealand when both adults work,” says the website. On this measure it now takes 38.9 per cent of a median household take-home pay to service a mortgage of a median home purchased in December. That’s down from 41.6 per cent in the previous month and a year ago, when it was 52.8 per cent. But it’s not as good as five years ago when the index was 34.5 per cent.

First-time buyers, however, continue to struggle. It now takes 52.2 per cent of one median income of a person in the 25-29 age group to pay the mortgage on a lower-quartile priced house in December, down from November’s 54.4 per cent.

“Essentially a single median income for a first-home buyer is not high enough to buy a lower-quartile priced house, even with a deposit around 10 per cent of the house’s value,” says the website. “However, a couple/family with more than one income may find the lower-quartile house price is affordable.”

Massey University’s Home Affordability Index to November paints a similar picture – showing affordability improved 4.6 per cent over the last 12 months. The national index is based on median house prices, average personal income and mortgage interest rates. In November it was 32.31 – still a long way off an affordable 20 last seen in November 2002. (A low index equals improved affordability).

But just when the trend towards affordability is improving, a new barrier has emerged – the banks’ increased deposit requirements. Whereas in the past, banks regularly lent 95 per cent and sometimes 100 per cent of the mortgage, they now require a 20 per cent deposit. “Based on current income and house prices it will take an individual 8.2 years to save the 20 per cent deposit as now required by most banks,” says Interest.co.nz. A first-time buyer wanting a lower quartile priced house will struggle too – taking 6.6 years to save the 20 per cent deposit as now required by most banks.

Despite such hurdles ahead, Demographia maintains freeing-up land on the fringe of metropolitan urban limits will save the day. Pull up the boundary fence and let the city limits push out. In its vision of suburban paradise, Demographia does not dwell on the downside – that a more sprawled-out Auckland for example would result in increased infrastructure, transport and social costs.

There’s another problem too. Changing zoning laws doesn’t automatically lead to cheaper land – especially when greenfields land is concentrated in the hands of a few land-bankers.

Professor Bob Hargreaves, of Massey University’s Property Foundation, points out that the land-bankers would need some other incentive to sell. “Research shows that freeing up the land doesn’t make much difference. The reality is, it’s not in the developers’ interest to suddenly dump a lot of sections on the market at low prices. There has to be some penalty on developers if they just sit on land and don’t bring it into the market, but I’m not sure on how you do that.”

From a developers point of view, Hargreaves says it makes sense to corner the market and drip-feed sections on to the market to get a higher price.

A closer look at Demographia’s list of 87 “affordable” housing markets in North America gives new meaning to the word. “Is it any coincidence that the top 20 most affordable markets are in economically distressed regions?” asks Keith Hall, chief executive of the New Zealand Planning Institute and a member of the American Institute of Certified Planners. “These are mostly the ‘rust belt’ cities of the American Midwest and neighbouring Ontario in Canada, areas chronically plagued by high unemployment among predominantly blue collar auto industry workers. The one exception to the auto-steel industry connection among the top 20 is a community on the equally distressed Atlantic Coast of Canada.”

Hall, who stresses his views are his own and not the official position of the New Zealand Planning Institute or American Planning Association, says many of the cities in Demographia’s affordable regions are mostly inland cities in the vast Midwestern flatlands of humid summers and extremely cold winters. “The first Sunbelt city on the list, Killeen, is best known for its large Army base, and a 1990s mass murder that made global headlines.”

Unplanned and unzoned Houston is often touted as an example of how the lack of growth management and the absence of planning can maintain regional affordability. But the irony of Houston is that it’s a city with lots of planners. “That is where I began my career in planning,” says Hall.

Yes, planning processes in Houston are certainly different, and both the regulatory environment and the flat coastal landscape allow unabated sprawl in nearly every direction. But, says Hall, a key advantage to Houston’s system of planning is that it has facilitated central city intensification. “Even in free market Houston, there is strong demand for high quality, medium and high density housing in walkable, mixed-use neighbourhoods with good public transport access.”

Hall also owns a house in Houston – a convenient six blocks from a tram line that passes close to every sports stadium, most of the city’s world-class museums and performance venues, two universities, and the headquarters of many corporations. The convenience did not happen through random dropping of a sports stadium here and a museum there says Hall. Planning took place to ensure that these major investments captured “the synergies of co-location”.

As to affordability, Hall points out that while mortgage interest rates are significantly less in the United States, property rates, insurance, and utilities costs offset Houston’s affordability when compared to Auckland.

Looking at Demographia’s 64 “severely unaffordable” housing markets in North America, Hall notes most are coastal cities and many are near mountains. “Never mind the artificial constraints that politicians place on these cities with their growth management and zoning regulations, these cities face real limitations on growth in constrained geographies.”

“If you want to live in an affordable housing market, why not move to the most affordable city on the list?”, says Hall. Homes are affordable in Youngstown in Ohio because more people are relocating away from, rather than to this prime location also known as “Murder City,” and offering the “Youngstown Tune-Up” – auto worker slang for the city’s frequent car bomb assassinations.

A close reading of the Demographia data shows “affordable housing” is found largely in flat terrain with extreme climates, high levels of crime, dying economies, few natural amenities, and limited prospects for academic and professional achievement for the next generation.

But Hall, like Shelter NSW, says the value of the Demographia reports is that they highlight housing affordability issues and serve as starting point for a dialogue between developers, planners, economists, banks and government that urgently needs to happen.

Hall agrees there are planning and growth management challenges in the mix, but other complex issues also contribute to the problem. If a dialogue were to occur, Hall and others say the taboo subject of a capital gains tax on investment property should be on the agenda. So should government incentives for first-time buyers such as cheap interest and suspensory loans – especially for new houses.

And, if the Government is serious about finding ways to stimulate the economy, getting builders out there building – invigorating a supply chain that reaches all the way back into our forests – seems a good place to start.

February 01 2009 | The Market | 3 Comments »

www.drinkcocaine.co.nz Cocaine Energy Drink in New Zealand

For more information please visit www.drinkcocaine.co.nz

A great tasting drink that is now found in most dairies in Christchurch and New Zealand. If you want to buy or find out more about the product you can contact me direct or visit the website mentioned above.

Be Smart Do The Drink!

February 01 2009 | Uncategorized | 4 Comments »