Christchurch Real Estate

The “A” Word

Auction – there it is, out in the open! Love ‘em or hate ‘em there is no doubt that auction is a common marketing strategy in Christchurch.

I make no secret of being a sales person who advocates auction to many of my clients, however, I do believe that it is not suitable for everyone and may not be the best solution in all market conditions. But this post is not about discussing the pros and cons.

Anyone who has regularly read my personal blog will know that I think that following the weekly results of auctions can provide a timely snapshot of current market conditions. So today at the Holmwood Auction Rooms – 12 auctions called and only 2 sold under the hammer. Not as bad as that in reality, I have a multi-offer to deal with tomorrow on my auction that was passed and there was bidding on about half of the auctions – and in at least 1 case it could be argued that the owner had an opportunity to sell but chose not to!

But that said, I think what can definitely be gleamed from our results today and those in other rooms around Christchurch, is that buyers have the upper hand right now. If you want to buy a home that is up for auction you are probably best served attending and waiting – if you don’t have to bid, why would you? Bide your time and make an offer afterwards – certainly as a strategy it is hard to argue with right now.

This begs the question of why the market is how it is. A number of factors spring to mind -  many investors are choosing to wait and see exactly what changes are coming in the budget, there has been a strong seasonal increase in listings and I detect a tightening of financial conditions – anecdotal evidence from clients suggests banks are less keen to lend than they were at the end of last year.

Will these conditions last? Obviously that is the $64,000 question and one I wish I knew the answer to with absolute certainty! I suspect the market will improve into and through winter as the excess stock is mopped up, and will again be swamped in late spring / summer.  I also think lending conditions should ease in the new financial year. So what would I be doing if I wanted to sell – I think pricing competitively is a great strategy at the moment – buyers hate the lack of prices with auctions, and well priced property will always catch the eye and attract offers.

March 04 2010 | Buyers and Home Sellers and Buyers Guides and Sellers and The Market | No Comments »

Home Hints – Should I Sell It, Do It Up Or Rent It?

What are your options?

Before you decide to sell, here are a few things to think about first

• could you get the home you want by renovating or extending instead?
• how much more will you have to pay to get the home you want – can you afford it?
• would it be a good idea to keep your current home as a rental investment?
• if you’re selling so you can retire do you have any other options?

Should you do up or move?

Selling and moving can be an expensive business. So if you like the area but the home no longer meets your needs, renovating or extending may be a good option instead of selling.

On the plus side

You save the cost of moving and selling your home. Estate agents fees could be up to 4% or more of the price you sell your home for – and moving could cost you several thousand dollars. There’s more about costs later on, and a list of costs in the guide Tool kit.

On the other hand

You need to be careful that you don’t overcapitalise and spend more on your home than it’s worth. If you alter your home would this make it better than other homes in your street or area? If the answer is yes, you may not get all your money back when it’s time to sell.

It’s not for everyone

Doing up a home is not for everyone. It can be hard living in a home during renovations, and if you have to move out for a while it can add quite a bit to the cost of the project.

There’s more about renovating in the ‘Building and renovating’ section, and some advice on what may or may not add value to your home.

What will it cost to move?

The main costs you will have when you sell are the real estate fees and your moving costs. But you also need to be prepared to pay some one-off expenses for your new home, for instance if you need to make repairs or buy new appliances and furniture.

Real estate fees

The real estate agent is paid by the seller when the house sale becomes unconditional.

The fees and costs can vary quite a bit from company to company. Some companies charge a base fee plus a commission based on how much your home sells for. Others charge just a commission and some charge a fixed fee no matter what your home sells for.

Base fees are usually around $500 plus GST. Commissions are usually about 3-4% (plus GST) of the sale price, but may work out less for more expensive homes – or you may be able to negotiate a fixed fee. You may also have other costs such as advertising (which you pay even if the home doesn’t sell).

You may be able to get a better deal, especially if you sign up with just one agency, so be prepared to talk with several agents and negotiate the fee. However, the fee is not the only thing you should think about.

Moving costs and insurance

Moving costs vary considerably. You could expect to pay anything from $1,000 to $3,000 to move within the same town or city. It also depends on how much of the packing you will do yourself.

Most contents insurance policies don’t automatically cover your belongings during a move, so you’ll probably need to ask your insurer to give you extra cover for the day. Or the moving company may be able to provide the cover. If you’re planning to do any of the packing or moving yourself, it would pay to check what the insurance will cover.

Should you keep your home as an investment?

Many New Zealanders own a second home as an investment. It makes sense to do the sums and think about the possibility of keeping your current home as a rental property before you decide to sell. It could be one way to start or expand your investment portfolio.

On the plus side

If owning a rental property is something you have in mind for the future, keeping your current home when you move could be a practical way to achieve it. It means you’ll save on the time it would take you to look for a suitable rental property to invest in, you won’t have to pay a real estate fee to sell your current home, and you should have a good idea of what maintenance might be needed.

On the other hand

Not all homes are suitable rental properties. You need to be sure the home will be easy to rent, and that you can get enough rent to cover the costs of keeping it. We can help you work out how much you might need to borrow, and what your loan would cost.

Will the rent cover the costs?

To get an idea of the rent your home might fetch, check similar places listed with local rental agencies. The Department of Building and Housing website provides information on average rents for homes around the country.

You could also ask a rental agency, or property manager, to give you an opinion about how easily your place might rent and what rent you could expect to get.

Ideally your rent should cover your loan and all expenses for the property. You need to allow at least 25% of the rental income for running costs such as rates, insurance and maintenance – and more if you use a property manager.

Would it make a good rental?

You need to try to think about your home in a detached way (which is not always easy).

Ask yourself

• is the home in a good, safe area?
• are there good facilities nearby, such as shops, medical centre, sports grounds?
• is the home close to public transport?
• is it in good condition?
• is it easy to maintain?
• are the grounds easy to look after?
• is it sunny, sheltered and not damp?
• are the living areas a reasonable size?
• does it have 2-3 bedrooms?
• does it have a modern bathroom, kitchen and laundry?
• are appliances and fittings in good order?
• is there a garage or off-street parking?
• is there private outdoor living space?
• how much rent could I expect to get?
• would the rent cover the loan, rates, insurance and upkeep for the property?

If you’ve answered mainly ‘yes’ chances are your home has reasonable rental potential. But you also need to check with local authorities to see if there are any plans for major changes in the area that could affect the property’s future value, such as zoning changes or plans to build a motorway nearby.

Try to avoid ‘having to sell’

It’s best if you don’t have to sell in a hurry. So if you’re making an offer on another home, give yourself plenty of time to sell. And make your offer conditional on your home selling at a price acceptable to you. If you can’t sell by the date set and don’t want to miss out on the new home, ask your lender if you can get ‘bridging finance’ (a short-term interest only loan) to tide you over.

If you’re in a position where you think you may have to sell, it could be a good idea to put your home on the market sooner rather than later, to give yourself more time to find a buyer willing to pay the price you want.

May 28 2009 | Buyers and Home Sellers and Buyers Guides | No Comments »

Home Hints – What Legal Stuff Needs To Be Done

Your lawyer’s job is to protect you by checking contracts, explaining your rights, and making sure the property’s title is in order. They also do the legal work to transfer the property to you (the conveyancing) and register your mortgage on the property title.

They’ll provide advice on things like different ways to own the property (for example as joint tenants), negotiating the price and things you need in your sale and purchase agreement.

They may also help with arrangements for your loan and insurance. And they’ll probably suggest you make a new Will and Enduring ower of Attorney, so your affairs are in good order if something happens to you.

Before you make an offer

You should always seek a lawyer’s advice before you make an offer to buy a home.

They can help you by

• checking the sale and purchase agreement, auction or tender documents
• making sure you have the right conditions in your offer to protect you
• arranging valuations and reports
• advising you on ownership matters and any legal issues
• providing advice on negotiating the price.

If you’re buying at auction or wanting to make an unconditional tender, your lawyer will need to do all the legal checks first, such as checking the title and LIM report.

When your offer is accepted

Once your offer is accepted your lawyer makes sure the conditions in your agreement are met and starts doing the legal work to transfer the property to your name.

The transfer is done electronically using Landonline (the electronic dealing system of LINZ, Land Information New Zealand). Your lawyer signs online on your behalf, so they will ask you to sign a form giving them authority to act for you.

At this stage their job usually includes

• checking the title for any ownership restrictions
• checking the LIM for things like consents, and potential problems
• checking local authority plans to see if any major changes are likely
• checking all the conditions in your agreement are met
• preparing the authority form for you to sign and confirming your identity so they can act on your behalf
• setting things up in Landonline – a lot of the legal work is done in advance
• explaining your loan agreement to you and arranging the mortgage
• checking rates and other costs are paid up to date
• making arrangements with you and the bank for payment of your loan and your share of the purchase price.

Your lawyer will also check the property is insured – this is a condition of your home loan. We can arrange all your insurances when you apply for your loan.

You should never sign an offer or any legal document without asking your lawyer to check it first.

Do a final check

Before settlement day it’s a good idea to do a final check to make sure

• the property is still in the same order
• any agreed repairs have been done
• everything you’ve bought is still there.

If there’s a problem, talk to your lawyer before everything becomes final.

On settlement day

On settlement day your lawyer works to settle the deal and does the transfer of ownership.

This work includes

• doing a guaranteed title search
• liaising with the seller’s lawyer to make sure you receive a clear title
• paying the money to the seller’s lawyer
• ensuring the seller’s lawyer does their side of the electronic dealing
• completing the transfer using Landonline
• final details such as where you get the keys and when you can move in!

The money paid on settlement day takes into account the deposit you’ve already paid on the home to the real estate agent.

After settlement

After settlement the lawyer will

• register the new mortgage and the transfer of the title
• provide you with a statement showing all the purchase details
• send a copy of the title, mortgage and certificate of insurance to your lender
• give you a copy of the title showing you registered as the new owner.

Are you buying with someone else?

There are two main ways of sharing the ownership of a home. You can have a joint tenancy where you own the home together and if one person dies the others take over the ownership – this is the way most couples own a home together. Or you can have a tenancy in common, where you each own a share and can leave your share to anyone you wish in your Will – this is more common when there are several owners. Another option is a property sharing agreement. Your lawyer will advise you on the best way to set things up for your situation.

What types of ownership are there?

Most people buy a freehold home, but there are quite a few different ways to own a home.

Freehold – this is the most common type of ownership. It means you own the land and house with virtually no restrictions on your ownership rights. The term freehold is also commonly used to mean that you don’t owe any money on the home.

Leasehold – with this type of ownership you lease the land and pay rent to the landowner. You own the house but your use of the land may be restricted, and the rent can go up. You can sell the lease if you want to move, but you may need to tell the landowner first.

Cross-lease – this is where there are several homes on a piece of land and all the owners own the land together. Each owner leases the land their home is on from the others for a small cost.

Unit title – you own or lease your unit but common areas (like stairways and parking) are managed by the body corporate.

Company title – if you buy a flat with company title, you buy ‘shares’ that give you the right to live there. The company administers and maintains the block of flats.

Licence to occupy – with this type of ownership you don’t actually own the land or buildings, but you have a right to live there for life. This is the most common type of ownership for retirement villages.

May 25 2009 | Buyers and Home Sellers and Buyers Guides | No Comments »

Home Hints – What Do I Do When I Want To Buy My Home In New Zealand

Well by now hopefully you have chosen what you want. Done your research and found what you need to find and are able to make an educated decision when it comes to buying your home.

There are three main ways to buy a home

1. by offer and negotiation – you make an offer and then negotiate if necessary until you and the seller agree on a price

2. at an auction – you go along on the day and everyone interested bids against each other until only one bidder is left

3. by tender – everyone interested in buying puts in a written offer for the seller to consider, usually all at the same time.

Most homes are still sold by the first means. But auctions and tenders are often used in sought after areas, or if a home has a special feature, or needs to be sold by a set date.

Buying by offer and negotiation. This is normally done through a real estate agent using a standard sale and purchase agreement. You make a written offer using this form, which the agent takes to the buyer.

If the buyer accepts your offer, they sign it and the form becomes your sale contract. But the seller may want to negotiate and make a counter offer (where they change something in the offer then sign it). The agent will come back to you to see if you agree to the change and if you do, you sign the change and the deal is done. Or you might decide to change something yourself and the process is repeated until an agreement is reached or one of you decides to stop.

The big plus about buying this way is that you can take time to think – and you can put in conditions that let you check the place out before you’re fully committed.

Important things to know

Your sale and purchase agreement is a legal contract. You need to have it checked by your lawyer before you sign it – and if any of the conditions change during negotiation. The agreement becomes binding once both you and the seller have signed it and initialled all the changes. You can stop negotiating at any time up until then.

You can take your time. You don’t have to have everything agreed in one day or evening – although this is what the agent may be hoping to do.

If the seller changes something, you can change the offer. So if the price goes up you may want to extend the settlement date or ask for something else to be included in the deal. Or you may want to make your offer more attractive without raising the price by taking some conditions out.

Paying a deposit to the agent

Once everything’s agreed you pay a deposit of 5–10% of the sale price to the agent. The rest of the money is paid on settlement day. The agent pays the money to the seller when your offer becomes unconditional (when all the conditions are met and the sale is definitely going ahead). You get your money back if the sale falls through because the conditions are not met. Butyou can’t usually get it back if you want to back out after everythingis unconditional.

The deposit is held in a trust account and is protected by law. No one can take it if the real estate company goes broke and there’s a fidelity fund to cover missing money.

If you’re buying privately

The process is much the same if you’re buying privately but it may be more difficult negotiating directly with the seller, especially as they may be expecting more from the sale. It’s very important to use your lawyer at each step. If you buy privately, pay the deposit to your lawyer so they can arrange for it to be held in a safe trust account.

The sale and purchase agreement

The agreement mainly used these days is a standard one created by the Real Estate Institute and the Auckland District Law Society. It’s about 10 pages long and in small print, so you may want to get a copy from your agent and read it in advance so you understand

what’s in it.

It covers things like responsibilities under various laws and what happensif settlement is late – and lets youinsert your own dates, amountsand conditions.

Is your offer conditional?

Making your offer subject to conditions gives you time to check that everything’s okay. If your conditions are not met you don’t have to go ahead, or you can renegotiate – for instance you might be happy to do repairs if the price is lower. It’s very important that your lawyer checks your offer and any conditions you add. The other thing to remember is that too many conditions can put a seller off.

Is your offer unconditional?

If you make an unconditional offer you need to sort out your loan and everything else beforehand because once the offer is accepted you have to go through with the sale. If you break the contract you can be sued.

Sellers can add conditions too

Sellers can also add conditions, although this is less common. One you may see is an ‘escape clause’. This means if they get a better offer they can give you a deadline to make yours unconditional. If you can’t meet the deadline they can accept the other offer.

Important dates

Your offer has several dates in it. The finance date is when you need to have your money arranged by and settlement date is the day you take over the home. I suggest you put in a date that your offer ends if the seller doesn’t accept it – that way you’re not left

wondering while the seller possibly waits for a better offer.

This offer is subject to…

Here are some common types of conditions buyers add to the agreement.

• finance – this gives you time to arrange your loan. Make sure it says finance on terms satisfactory to you or you could be forced to borrow on terms you don’t like

• title search – so your lawyer can check there are no problems with the title, or restrictions, covenants or easements you need to know about

• valuation report – so you can check the market price. Your lender will probably want you to get one anyway

• LIM report – so you can check what the council knows about the property and make sure there are no problems with things like consents or flooding

• building inspection report – so you can check the building is sound and find out about any problems that might cost money

• engineer’s report – so you can check any structural or land issues

• sale of another home – if you need to sell one home to buy another.

You might also want to add other conditions covering things like repairs they’ve said they’ll make or extra items they’ve agreed to leave.Your conditions need to state that the report, finance or repairs must be satisfactory to you. Otherwise you will still have to go ahead even if you’re not happy with the results.

Your lender will need to see the sale and purchase agreement after the deal is done. But talk

to them beforehand to check if they have any specific clauses they want added.

My advice is to always get legal advice and get the agreement explained to you before signing anything. Although I myself think this is annoying when your trying to secure a deal I honestly believe this is the safest thing to do. An agreement is binding and I would hate to think that your going to be bound by something you dont fully understand.

May 23 2009 | Buyers and Home Sellers and Buyers Guides | No Comments »

Home Hints – Things You Need To Look Out For Before Buying Your Home

When you have decided on a house you need to take a good look at it and make sure that you are going to be buying it in a reasonable condition (do a building inspection) – this is where every dollar counts because there are some things that can be a disaster for you and cost you thousands if you do not look into them properly. If there is anything wrong with the property it is always a good idea to know what it is before you go into putting offers in. You will need to budget for these other things into the amount you can afford for the house. For example if it needs a new roof you should not pay a rice for the property that is assuming it has a good roof.

Here are things to look for:

May 21 2009 | Buyers and Home Sellers and Buyers Guides | No Comments »

Home Hints – What Are The Things To Keep In Mind When Buying Property

Once you’ve found a home you’re interested in you’ll want to check it out carefully. It really is a case of buyer beware. You don’t want to end up with a lemon, or costs you hadn’t planned for. Here are some ways you can check out the place you’re interested in.

1. Check the place out

When you visit a place you like, take your time. Go back several times. Ask the agent lots of questions, and do a thorough check for things you may have to fix or want to change.

2. Contact the council

Ask your local and regional councils for information about the area and any future plans. Talk to the town planners (and ask them if there’s anyone else you should talk to). Ask about the district or resource plan. It sets out the rules for development in the area, including zones and building heights. You can also get things like drainage and building plans and copies of permits for the property from your council.

3. Apply for a LIM report

A Land Information Memorandum (LIM) from the local authority gives you all sorts of valuable information about drainage, roads, flooding, erosion, consents etc. There’s a charge for LIM reports and prices vary around the country but you can expect to pay around $150–$350 (costs are generally higher in the larger cities and you usually pay more if you need an urgent report).

While LIM reports can contain a lot of valuable information they may also be missing vital bits (such as accurate boundaries, or mention of Wahi Tapu or sacred sites), so it’s a good idea to also talk with the staff and try and find out what other information the authority may have about the property and its neighbours.

4. Get expert advice

Get a report on the property from a licensed building surveyor. Make sure you choose someone with a good reputation and ask them what their report will and won’t cover. Also ask them to give you an idea of what it might cost to fix any problems they find. If there could be any problems with the land or large structures you should also get a report from an engineer.

You my also want to check with the Weathertightness service (see the Useful contacts section) to see if there has been a leaky home claim for the property.

5. Check the title to the property

This will tell you if there are any restrictions that could affect your ownership or use of the property. The agent should have a copy of the title. Also talk to your lawyer about the title and any other checks they think you should do.

You might also want to ask your lawyer about title insurance. It could help protect you if you find later on that the boundaries are wrong or there has been illegal work done on the property.

Is the home in good order?

Before you buy a place you want to be sure it’s in good order, or at least know what repairs are needed and how much they may cost. Your best protection is to get a report from a building consultant. But you probably won’t want to pay for a report until you’ve done some checks yourself and are fairly sure it’s the home you want.

Here are a few pointers

When you check the home look for structural problems, or things like rotten wood or leaks that can be difficult and expensive to fix.

Signs of movement and sinking include cracks in walls and doors or windows that are crooked or jammed. Rotting or borer filled timber is soft and spongy. Rotting wood sounds ‘dead’ when you tap it and crumbles if you push a key or something sharp into it.

Signs of leaks include mould, mildew and bulges in the wall. Often the place will smell musty as well. Musty or unpleasant smells can also be a sign of problems with the drains or sewerage.

Be wary of fresh paint and plaster especially if only some areas have been done up – it could well be covering up a problem. Furniture and pot plants can provide good camouflage too, both indoors and out, so don’t be embarrassed to look behind or under them.

Some common problems include

• poor ventilation and lack of insulation

• lead paint and asbestos problems

• dangerous wiring

• deterioration in wall claddings and roofs

• rotting timber windows

• perishing seals on aluminium windows

• breakdown of silicon sealers

• leaky homes.

How much will maintenance cost?

The cost of repairs and maintenance depends on the age and condition of the home. But you’ll probably need to allow at least $3,000-$5,000 a year. It doesn’t mean you’ll spend this much every year. But over the years you will have maintenance costs, sometimes quite big ones, and you need to be prepared for this. Here are some rough estimates based on an average size home.

May 19 2009 | Buyers and Home Sellers and Buyers Guides | No Comments »

Home Hints – Where Do You Start When Looking To Buy Real Estate In New Zealand

How do you find a home?

Once you know what you want and can afford, you want to get a ‘feel’ for the market. You could start by

• searching the Internet – try trademe.co.nz or realestate.co.nz

• reading the papers – weekend papers often have lots of adverts

• driving around areas you like, looking for ‘For Sale’ signs and open homes

• looking at homes in real estate agents’ windows, or on their websites.

Real estate companies

Many people find their homes through a real estate company. Often homes are only listed with one company, so ask agents from different companies to show you suitable homes. If a home is a ‘sole agency’, only that real estate company can show you the home. A ‘general agency’ means the home can be listed with a number of companies.

Private sales

Not all homes are listed with real estate agents. Some people try to sell their homes privately and they may use a ‘private sale’ company to help them with marketing. Don’t assume a private sale means you’ll pay less – the owner may be trying to get more from the sale by not paying an agent – and dealing directly with the owner may be quite stressful.

Finding it yourself

Some homes never come on the market. If you know where you want to live you could put a short note into letterboxes in the area, ask locals if they know of anything coming up, or even put your own advert in the paper.

Things To Ask Your Real Estate Agent if you use on (Just a Hint – A Real Estate Agent if your buying a property can be your best friend if you know how to use them properly, but speaking from experience you need to know how to ask the right questions as at the end of the day the agent is working for the seller).

• why are the owners selling the home?

• how long has it been on the market?

• how much interest has there been?

• what is the Rateable Valuation?

• how much are the rates?

• what are the properties nearby worth?

• what have other places nearby sold for recently?

• what are the neighbours like – do they have children, pets, or noisy parties?

• what facilities are in the area?

• what are the schools like, are they zoned?

• is the house north facing (for sun)?

• when does it get the sun?

• what is the prevailing wind direction?

• is the home sheltered?

• is there noise from traffic, trains, planes?

• is there a danger of flooding or erosion?

• are there any major redevelopment plans for the area?

• are there any zoning restrictions?

• what type of title (ownership) does the property have?

• are there any covenants (restrictions) or easements (rights) on the title?

• are there any protection orders over the trees or buildings?

• where are the boundaries?

• is the home suitable to renovate?

• could the section be subdivided?

• does the home need any urgent repairs?

• has this home been a ‘leaky home’?

• have there been any alterations – do these have consents and certificates?

• has it been re-piled, re-plumbed or rewired – and when?

• what heating and insulation does it have?

• what fittings are being sold with the home?

May 18 2009 | Buyers and Home Sellers and Buyers Guides | No Comments »

Home Hints – How Much Can You Afford?

How much can you borrow?

The amount you can borrow depends on

• the value of the home you want to buy

• how much equity or deposit you have to contribute

• how much you can afford to pay towards your loan.

These things all need to balance, so if you can afford a bigger loan you may need less equity or deposit.

How much is the home worth?

How much you can borrow is based on the market value of the home. Every lender has different lending guidelines but most will let you borrow up to

• 80% of the home’s market value (or the price you pay, whichever is less) depending on your situation. In some cases you may be able to borrow more.

• 70% for a purpose built apartment, or up to 65% for a converted apartment

• 40–70% of the land’s market value for a section depending on the area and services such as water and power.

What equity or deposit do you need?

Generally you need to have put in at least 10-20% of the money yourself before you can get a home loan – this is your deposit. It depends on the value and location of the home and your financial situation. This money could come from either equity you already have in a home, from a deposit you have saved, or from being in KiwiSaver.

The word deposit is also used to mean the money you pay the real estate agent as the down payment on your home.

What about KiwiSaver?

If you have been saving with KiwiSaver for at least 3 years you may be able to take out some or all of your contributions (plus your employer’s contributions) to help you buy your first home. After 3 years of saving you might also get a Housing New Zealand first home subsidy of up to $5,000 depending on how long you’ve been saving. If you qualify you’ll get $1,000 a year for up to 5 years’ saving. Couples who both qualify could up this amount to $10,000 between them. To qualify there are certain income and home price levels.

What if you already have a home?

If you already own a home and want to sell it to buy a new one, you can usually use the equity in your current home as the deposit for your new one. Equity is the portion you own yourself after your home loan is paid off.

Or you may be able to keep your current home as an investment and use some of the equity you have in it to buy another home. If you’d like to find out more about investing in property and whether your home might be a suitable rental home.

What loan can you afford?

There’s no easy way to work out what you can afford – because everyone’s situation is different. You might like to start by doing a simple budget so you know what your current situation is and how much you might be able to afford to spend on a home loan. There’s a budget worksheet in the tool kit at the back that you might find useful.

Most lenders say your total loan payments (for all debts) can’t be more than about a third of your income before tax. But they also take your other expenses into account and want to know that you have spare income left over for unexpected expenses – and so you can still have a life after buying your home.

Here’s a quick guide…

May 17 2009 | Buyers and Home Sellers and Buyers Guides and Uncategorized | No Comments »

Home Hints – What Type Of House Do You Want To Live In

After you think about the area you want to live in you need to decide what type of home you want to live in. Sometimes this can change the area you will need to look in so you need to get this step sorted out relatively early so that you can get it right so that you are not left at the drawing board for too long. Here are some of the things you have to ask yourself and think about when trying to decide what type of home you want to live in.

Would you prefer an older home?

An older home can provide character in an established setting. Rooms are often large with decorative details. But don’t get carried away with the character and forget to think about the work and money that might be needed.

Here are a few things to consider

• older homes can be hard to heat – they often have no insulation

• the layout may not suit modern living – often the living rooms are at the front, away from the kitchen and private garden

• it can be hard to know what’s ‘behind’ the walls, so alterations can be expensive – builders may want to work for an hourly rate instead of giving a firm price

• the age may mean wiring, roofing, piles and plumbing need replacing

• sometimes even if you want to make small changes you’ll end up having to do other work to get consent

• some renovations need special care – asbestos products were used until about 35 years ago, and some paints contained lead until about 15 years ago.

Check everything carefully, get expert advice first, compare as many homes as you can – and ideally find one where the major work has been done for you.

Do you want a new home?

New homes are generally well insulated, need little maintenance and have modern kitchens and bathrooms. But you may have the extra costs of landscaping, buying curtains and carpets, and commuting. A new subdivision can take a while to start to look established. If you’re keen to build, read the section on building and renovating later

Do you want an apartment?

Living in the city is popular and an apartment can be the ideal first home or retirement unit. An apartment can provide convenience, security and less maintenance, and make it more affordable to live in a good location.

On the other hand, a small two bedroom apartment with no parking or outdoor space in town can sometimes cost more than a three bedroom home further out. And not all apartments are good investments.

Apartments in older converted buildings can be a problem and make finance and insurance harder to get. Why? Because older buildings may need expensive maintenance, and many earlier conversions were poorly done by people out to make quick money.

There can also be problems with newer apartments, for example with building quality or sound proofing. And in some areas the large number of smaller, poorer quality apartments built has affected prices.

In general it’s not a good idea to buy ‘off the plans’ in a new complex where you have no proof of the finished quality. Some owners spend years getting problems sorted out.

Many people say they love apartment living and it’s one of the best moves they’ve made. But there can be pitfalls so it’s important to do your research and get good advice first. Here are a few tips to get you started

• talk to your local authority and ask them if they know of any problems – they do all the consents and inspections

• get advice from an independent valuer with experience of apartments in the area you’re looking – don’t rely on a developer’s valuation

• choose buildings by local architects, builders and developers with a good track record

• be wary of buildings where apartments often come up for sale – there may be problems with the building or the body corporate.

When you’re looking ask

• is there enough space to suit your lifestyle and belongings?

• does the home have the features you want? Use our checklist over the page

• does it have storage and parking? Can you get in and out of the park easily?

• does it have good safety and fire prevention features?

• will noises and smells from the area bother you? Visit at different times to make sure

• what happens to the rubbish? Check it’s not stored near your unit

• can you hear the neighbours? Check for living and plumbing sounds at times others are home

• is there a live-in manager? If there is, meet them and ask how things run

• what work has been done recently and is there money put aside for new work?

• have there been any problems with the apartment or the complex, such as leaks, and what has been done about them?

• what are the body corporate rules and the levies you have to pay?

• is there a fund or savings plan to cover large maintenance work?

• what are the other owners like – are they mainly owners or renters? This may affect how quiet and well kept the complex is

• what is the area like – how is it likely to change in the future?

What’s the body corporate?

Most apartment complexes have a body corporate. All the owners belong and pay a levy to cover building running costs and maintenance. The group is responsible for looking after common areas such as stairs, hallways, garaging, car parks and grounds. It also sets the rules for the complex and these can affect what you can do with your unit (for instance you may not be able to alter your unit or run a business from home). Every body corporate is different and it’s important to find out how it works and what the rules are, because it can affect both your use of the property and the value of your investment.

May 16 2009 | Buyers and Home Sellers and Buyers Guides and houses | No Comments »

Home Hints – Where Do You Want To Live?

By now if you’re looking to buy a property you will have been told about the saying, Location, Location, Location. But why do people go on about this so much? Why is it so important?

Well your home is one of the biggest assets most people will ever buy in their lives. It is therefore important to be happy with where you live because if you’re not happy you can’t pick the house up and move to somewhere better. You have to go through the whole process of selling which is both expensive, time consuming and stressful.

When you look for a house to buy you need to look for a house in the most desirable area your money can afford. Desirable areas hold their value better because others want to live there, and when prices do increase the more desirable areas tend to rise first and faster than other areas. Also you will be likely to get the money you invest initially back.

How do you find a good area?

·         Talk to family and friends about the areas they live in.

·         Ask real estate agents and valuers about local sales in the areas, price and sales volume trends. Look for areas that are selling fast and with holding values in this market.

·         Look for areas with good facilities such as transport, shops, schools, cafes, sporting venues and entertainment for the family and yourself.

·         If you’re looking in an older area of town look at the places that are getting renovated – and if it’s in a new area look for signs where people are taking the effort to make homes look loved, i.e. landscaping and variety of design.

·         If there is variety in landscape where there is flat land with water and views, this will always sell well.

When you decide with is important for you in an area and what would suit you look at the pro’s and con’s of where you’re living.

Here are some things to consider:

·         How close do you want to be to work, family and friends.

·         Are you prepared to commute – what will be the costs.

·         Do you like to be in a quite location or in the heart of the action.

·         If you’re preparing to run a certain activity from your home, will the zoning allow you to do this?

·         What sort of people do you want to be living amongst, do you want to be in newer homes or older homes.

At the end of the day you need to look at lots of homes in many different areas to get a feel for what you like and can afford. A home to buy and live n is not a short term thing, so bearing that in mind you need to keep in mind what will the area I like now be like in the future. In order to do this you need to check the zoning for the area with your local council and ask if there are any changes planned. You want to be sure the area is still going to be a nice place to live in the future. Zoning allows and restricts activities that can happen in an area, such as running factories or businesses. An area may seem quiet now, but if it’s zoned commercial you may find yourself surrounded by businesses later on.

Here are some of the advantages of investing in property

• If values go up you’ll make a gain

• There’s usually no tax on capital gains (the profit you make if the property goes up in value)

• Many people are better at paying off loans than saving

• You could make money by buying carefully, or with some types of renovations

• It’s a relatively low risk investment that should keep up with inflation

• You own your home and end up with an asset instead of just paying rent.

But you need to look at the options that are available to you.

• Other investments may earn more

• Property prices can go down as well as up

• It may take time to sell – if you’re in a hurry you may have to accept less

• You have ongoing extra costs like maintenance, rates and insurance

• If you don’t keep your home in good order its value may go down.

If buying a property is what you want then to make the most of your investment

• buy in the best area you can afford (buying the worst house in the best street is still good advice)

• check everything out thoroughly first to avoid problems (there’s a checklist later)

• keep your home well maintained

• get advice from a valuer before you do any major alterations – changes don’t always add value.

May 15 2009 | Buyers and Home Sellers and Buyers Guides and Sellers | No Comments »

Reserve Bank Of New Zealand Lowers OCR To 2.5% April 30 2009

New Zealands Official Cash Rate has been cut again to 2.5% which is a further sign that the Reserve Bank is trying to stimulate the economy. Dr Alan Bollard this morning said to the people that he sees the Official Cash Rate being low for around the next 18 months as the economy is finding its place and evening out.

Bollard says “We expect to keep the OCR at or below the current level through until the latter part of 2010. The OCR could still move modestly lower over the coming quarters,” he went on to say; “The world economy deteriorated further than expected in the first quarter of 2009. While monetary and fiscal policy responses in many countries have been substantial and there are some signs of stabilisation in some countries, we still expect the adverse economic forces generated by the crisis to remain dominant throughout 2009. The timing and extent of global recovery remain highly uncertain.”

The OCR is the lowest it has been for 10 years and is now at a record low for New Zealand. Bollard wants to see banks passing on this cut to the consumer. The last OCR cut saw an increase in the 5 year interest rates which didnt impress many of the NEw Zealand public but due to the high cost of borrowing from overseas the banks couldnt sustain the low rate on the 5 year loans. To the right is the graph of the OCR trend in the previous 5 years; picture supplied by Christoph Lukasser

Westpac Bank has moved quickly in response to the OCR cut, saying it was cutting its 6 month home loan rates by 0.4 per cent. This brings its 6 month home loan rate to 5.39 per cent, due to come into effect this Friday. As with most times when the OCR is cut our New Zealand Dollar dropped again this time The New Zealand dollar plunged nearly 1cagainst the American Dollar from US57.34c to US$56.46c

Bollard went on to give a little optimism to the markets by saying; “We expect the large decline in the OCR over the past year to pass through to more borrowers over coming quarters as existing fixed-rate mortgages come up for re-pricing. This, together with the stimulus from fiscal policy, will act to support the New Zealand economy and eventually see activity trough and pick up thereafter. However, the scale of the global financial crisis and domestic adjustments underway are such that it is likely to be some time before economic activity returns to robust and healthy levels.”

In my view there is still a long bumpy road ahead for the economy in New Zealand and around the world. The Swine Flu has not helped matters at all with already Pork exports stopped, tourists from around the world cancelling their trips and New Zealanders deciding not to travel abroad. This will cause the econonomy to retract even further than it already has and with winter on its way will hurt many businesses in the pocket. With Bollard saying the OCR will stay low for around 18 months will give businesses and people confidence of knowing what levels to look forward into, espessially over the summer of 09/10 where many businesses including mine are going to have to plan ahead for and try and grow.

It will be rather interesting to see how the New Zealand economy is going to fear in the next 6 months over the winter period with all the things happenoing in the world at the moment. What do you feel will happen?

April 30 2009 | Buyers and The Market | 1 Comment »

March 2009 QV Statistics And New Zealands Housing Sales Volume

Christchurch

This is the latest Press Release from QV.

Property values in Christchurch decreased by 9.7% over the last year (calculated over the three months ending March 2009 in comparison to the same period last year), deteriorating further from the 9.1% annual decline reported in February. The average sale price for the city increased slightly from $344,816 to $349,442.

Melanie Holcroft of QV Valuations said; “The Central and Northern suburbs are holding as the strongest areas of Christchurch City, with the Eastern suburbs mirroring the Canterbury market.  The Hill suburbs have decreased from -8.1% in February 2009 to -9.9% in March 2009. The upper end of the market seems to be experiencing less activity compared to the middle and lower sections”.

“Property values since December 2008 continue to decline, although this appears to be at a slowing rate. Whilst the average sale price for Christchurch City shows a small lift, it must be kept in context as this data is easily skewed by normal market fluctuations and the mix of property being sold,” she said.

“The anecdotal signs of increased market activity with properties that are well priced continue on from last month, and buyers are showing plenty of interest in these. It should be noted however that the overall sentiment is still cautionary, with job security appearing to be the key driver affecting purchasing decisions. Local banks are also reporting a noticeable increase in pre-approvals, but this is still slow to filter through into market activity. We anticipate a slower market over the winter months, with current trends in line with seasonal behaviour,”Holcroft said.

Here is a snap shot of New Zealands Median Price for Property over the past 9 years.

Now here is the median for the same 9 year period in Christchurch.

The trend is very much the same.

Now the big change that agents have noticed is the drop in sales volume. Here is a graph from treasury that shows the drop in sales volume over the last two years and how it has changed.

As you can see there is a huge drop of with sales volume at about the time of the housing crisis in The United States which has evolved to the global credit crunch. But on the other side of this look at how steep the sales volume grew. This is post the 9/11 Twin Tower events which saw the number of migration of ex pats and new people to New Zealand grow at very fast rates as the graph below shows.

Now whether 9/11 was hoaxed by the Illuminati in a bid to change the world and protect certain people wealth or it was a real act of terrorism are still up for debate but the after effects have been more than anyone can detest. The jobs and employment from the upbeating of security was massive and in New Zealand the return home of thousands of New Zealanders pumped billions into the economy. But this caused the bubble that just kept getting bigger and bigger and created more and more debt. This debt is the real reason for the market the way it is. Now we have inflated prices with less capital and the same amount of debt.

When will the housing market start to move again.

Signs are already of more activity and there is a clear sign of migration numbers increasing as more people return home. These people have to live somewhere.

April 25 2009 | Buyers and Sellers and The Market | 1 Comment »

Points To Consider When Looking To Build A Green (Eco) Home.

Financially as well as environmentally, if you are building your own home, it is increasingly making sense to build eco homes. Done properly, not only are there huge running cost savings to be made from an eco build, but also an element of future proofing when it comes to current value and future resale value, if and when you come to sell.

For many though, providing a family-safe, non-toxic home and reducing the environmental impact while still enjoying the comforts of modern living remains the main motivation. It doesn’t mean you have to build with straw bales or rammed earth, though these are options; most successful eco builds are very conventional in appearance. But it is much more than just choosing environmentally friendly materials and paint.

The main priority should be designing a home which reduces energy use and therefore production of CO2 which is whats been blamed for climate change. Conserving water comes a close second.

Consider the following, especially if you normally worry about your car use, or the advent of cheap flights – these stats I found from the UK energy wise website.

* Homes in the UK use three times more energy than all our cars.

* Buildings are the fastest-growing source of the UK’s CO2 emissions, currently responsible for 46 per cent, with homes responsible for 27 per cent.

* More than half – 56 per cent – of water supplied is for households, and demand continues to increase.

* Energy use in non-domestic buildings is increasing as fast as fuel for air travel.

When you think of an eco home you need to look at all the angles. These include the location of the materials ie where they come from and how they’re transported. Who is making and transporting these materials and here do they get their training from. A big thing is are they local people so you are putting back something into the local economy.

Building an energy efficient eco house is highly technical, so it is important to check credentials and skills, which are currently in short supply. And you need to properly understand the concept. People are getting the wrong messages. Tacking stuff like a wind generator onto your roof won’t do it; you have to look at the fabric of the building, otherwise everything else is bolted on. Also if you build a 300 sq m mansion it can never be an eco build. Build to your limits.

If you’re building from scratch, even your dream home, it makes sense to consider its marketability should you want to sell. Meanwhile the social housing market already insists builders conform to various eco requirements, such as energy efficiency, as well as considering the local environment. One thing that is coming to New Zealand is double glazing in new builds.

Will it Cost More?

In the past as recently as the 1980s, we were limited by a very small supply of the materials alone. But things have changed. You can now build a low energy house as cheaply as you can build a standard house. There are now more and more places that will help you build an energy efficient home and as more and more people invest in these homes it’s becoming more affordable.

The building budget is always going to be an issue but you have to take into account cost over the lifetime of the property as well as the initial cost. That includes the running costs where owners can look forward to major savings. This is because at this time the supply is and manufacture of the materials to build and eco home are still not common.

Here are some of the things you should look out to do when you build a new energy efficient home.

* Insulation, throughout the house; make sure it is not compromised too by building construction, eg the accidental creation of ‘thermal bridges’ allowing heat to travel out; design should also include airtightness and ventilation.

* Water: conserve and minimise use of water. The average person uses 140 litres per day but should aim to reduce this.

* Energy: includes using natural materials such as wood for burning to heat water while renewable energy systems including wind turbines and solar panels.

* Lighting: should maximize the use of natural light, while energy efficient lighting is used throughout.

* Electrical appliances: eliminating the need for some eg providing a clothes natural drying space, while ensuring A++ energy efficient standard for others.

* Materials: consider those which are natural and from a renewable source; use locally grown timber; also more durable wood such as heartwood which reduces the need for preservatives. Look at the energy involved in production/transportation, and use manufacturers which can provide such information. Avoid PVC.

* Recycle or reuse where possible.

April 21 2009 | Buyers and Sellers and sustainable houses | No Comments »

Renting vs Buying – A Personal Perspective

Many people wonder whether renting or buying a home is better decision. Most of the time, history has shown it is a smarter financial move to purchase a home than to rent.  The final decision is unique to each situation of course. Here are a few points to note about both renting and buying.

 Buying

• May require a larger initial investment – the deposit (usually a mortgage is 20% of the sale price)
• You must be responsible for all upkeep otherwise value is affected
• If you want to move, your home generally must be sold
• Equity may go up, down, or stay stagnant depending on the home’s value
• Over time, the mortgage balance decreases and equity builds
• The ability to remodel and redecorate the home to match your needs and desires
• There can be tax advantages attached to home ownership

Renting

• Smaller amount of “up-front” cash
• When the lease is up, you can just move
• Costs for the term of the lease are more fixed
• Not gaining equity, but not losing it either
• Generally less work in maintaining a home or apartment
• Even if the property goes up in value, you will never gain equity
• Limitations on what you can do to “make it your own”
• No tax advantage to renting

Today we live in a more transient society. People move around a lot more with their jobs, are getting married later and want more flexibility with their living arrangements. There also doesn’t seem to be as much emphasis placed on the importance of having your own home.  Long term renting is becoming more and more common. A concerning reason for this trend is that it is becoming increasingly difficult to afford to buy a home, firstly save for the deposit and secondly be able to afford the mortgage repayments, especially in the major cities and more highly desirable and expensive areas. Housing affordability has increased from 2.1 times the average income to over 5 times the average income over the last couple of decades.

Under the cureent economic situation I have myself looked into buying another home. But for myself I cant get conventionally a 20% deposit as the eqity in my first home has fallen below the loan amount which I know has happened to many many people out there. Although this is not a problem for me bcause I do not intend to sell. The rent covers the mortgage payments and it works for me. But due to this I cant get another loan for another home to live in in Christchurch. So I have been forced with renting.

What I have found though is for my situation renting may not be the worst thing for me to do at the moment because housing prices are surely to come down further as this year unemployment and money problems worsen in this country. In saying that there has been some hugely increased sales volumes as of late. I am putting this down to the low interest rates where hungry cash ready investors see some good buys out there at a good interest rate. An investor friend of mine told me they were not worried if the price of the property dropped another 10% in value over the next year. They can see good returns at the current prices and the current interest rates to make it work. They also went on to say which is correct that the rice of property will go up again. A recession doesnt last forever.

If you are in my situation and find yourself unable to buy at the moment a house whether its your first or second or what and you find yourself haing to rent the best thing I think to do at the moment is find a relatively good priced property and cut your expenses down and save for a while. I believe the current cycle of good buying will not be over for some time. So if you sit down now and save you might be able to buy again when the horse is about to take off again. Thats what I am doing

April 19 2009 | Buyers and The Market | 1 Comment »

Mortgage Applications Rise Upwards

Here is an interesting article from the Herald Website:

Baby boomers are returning to the housing market in droves – but younger first home buyers are still doing it tough.

Mortgage applications last month were up 38 per cent compared to the same month last year, and were the highest monthly total since November 2007.

The information was supplied by credit information firm Veda Advantage.

Baby boomers (44-62 years old) in particular appear to be showing a disproportionate interest in the housing market, with a 45 per cent increase in mortgage applications on March 2008.

Generation X (28-43 years old) experienced a 34 per cent increase, while Generation Y (less than 28 years old) had the smallest growth with a 16 per cent increase on March last year.

“We are experiencing a level of activity in mortgage applications that we have not seen since house prices began falling in late 2007″, said Veda Advantage (NZ) chief John Roberts.

“This activity reflects the lower interest rates stimulating demand, and shows the market going to fixed terms to lock in these rates.”Roberts went on to say the much larger increase in the number of baby boomers applying for mortgages, compared to younger age groups, suggests that they are more cashed up and in a better position to snap up perceived bargains in the housing market.  Generation Y have increased only marginally over March 2008

My take on this is people in general have been taking advantage of the lower interest rates avaliable at the moment. But the big point to consider is that now because of the lending criteria being so tough ie 20% it is hard for the younger people (gen y) to get the loan. Naturally the older generation of people have a bit of money behind them, possibly in equity and or savings. Leaving the younger generation with out of the equation.

Most of the older generations of people (generation X and the Baby Boomers) will probably have their own properties already and could be buying an investment property to fill up their nest egg for retirement.

My question to you is… Due to the current trend we are seeing here are we going to see a huge influx of rental properties come up for rent soon and in 10 to 15 years time when these older generations come to retirement and cash in their nest eggs, are we going to see this influx of rental properties come to the market again?? Makes you think doesnt it.

April 07 2009 | Buyers and The Market | No Comments »