Reasons why Renting might not be good for you…

Sept 15th 2015

Sub-title – “AKA Fergus is back in the news again**…”

Well I guess someone had to give it a shot one day, and it serves as a stark reminder of one of the number one reasons why a person should work hard to own their own property if at all possible. It means you have control, well that and the banks too I suppose. 14-09-2015 headline

Not exactly someone who shies away from a headline is he?

However on the other side of the coin is renting, and our ole friend “900 property Fergus**” has made headlines again in the ole dart this week with the news that Fergus is upping his rents by over 30%!! (And yes, you read that right.)

14-09-2015 up33

In fact he has already started doing it.

Not exactly unafraid of making political like statements, Fergus’s comment when asked why he has to increase rents….

“…he says landlords have no choice in response to budget tax changes that will slash the amount of tax that can be offset against mortgage interest paid. Many landlords are saying they simply will have to charge more rent. It is the distinct shortage of houses that is fueling the rent increases. If the government wish to control rents, it must supply more houses, and quickly.”

…should ring a bell with our friends across the ditch with regard to politicians bantering around taking negative gearing away.14-09-2015 again

 

 

 

 

 

 

 

 

 

 

 

Fergus loves headlines obviously. 14-09-2015 Offshore

And when the time is right, hes not afraid of a bit of controversy too. Fergus is looking to fast track his new strategy too… (as The Guardian reports…)

He will now be seeking similar rent increases across his property empire.

“I will not be asking them to leave but will serve them with a Section 13 Notice to increase the rent so that they have the opportunity to move to another landlord should they wish. That is if they can find a house of the same quality and a price they can afford. By the time they have paid out fees etc, some will take the view there is not much in it.”

Is he worried about it? Here’s his answer….

“He said a red-hot lettings market in Kent means he can fill houses within hours.”

Almost sounds like somewhere else doesn’t it? Michael Byrne over at the Irish Examiner sounded this piece of caution recently too…14-09-2015 global

 

 

 

 

…and writes an interesting piece, with a bit of background on the Celtic Tiger thrown in.

Perhaps its not much to be worried about, but I guess the same could have been said for Australias “Management Rights” industry once upon a time. Now players like Mantra are really taking a share.

Interesting times we live in….

** see previous post here on the “unique” man – especially if you want something to bring a smile to your face

August 2015 Nelson Home Sales Results – REINZ Data

Aug15 chart Was a busier month was August 2015. This screenshot above is from data I compile monthly for my database* clients.

June saw Nelson City start with 398 homes for sale, yet by tonight, Sunday 13th Sept, that number sits at just 279. I believe they call it Supply and Demand folks.

Therefore its no surprise to see REINZ report this past week that … “Nelson/Marlborough recorded the largest percentage increase in median price compared to July with 3%, followed by Otago with 2% and Wellington, also with 2%”

Today I was in attendance at an the first open home of a new Stoke listing, and that by far, had the largest turnout of open home visitors I’ve seen all year. (Video above was of about 10minutes of the open, as I’d missed the busy first 10minutes because I was showing a buyer around the home)

  • – send me an email and add “Subscribe to Data” in the header if you’d like to get this sort of thing on the local market.

Jetstars News is Nelsons Fabulous News….

31st August 2015

This is what shoppers are seeing on the street today. The News is out.
A Win for Nelson...

 

 

 

 

 

 

 

 

 

 

 

With Jetstars announcement of entry to the Nelson skies, along with the much celebrated other towns starting with an “N” (or not according to a few today)…..
31-08-2015 Jetstar

 

 

 

 

 

 

 

Nelson Real Estate has been given a real boost in the arm. Everyones hopes that we will finally get “decently priced” airfares, will mean even more people will (“can now afford to..”) see the advantages of FIFO situations. While the family live a lifestyle in the Nelson region, a central bread winner can easily afford to work in Auckland, Wellington or even Christchurch (once the inevitable competition kicks in...) yet fly home in the weekends / when they have their time off.

Nelsonians have long tolerated trips to main centres being more costly than an advertised international airfares to Australia, Fiji or afield.

With the entry recently of OriginAir, now Jetstar and Kiwi Regional Airlines still to come before the end of the year, times have never looked brighter for New Zealands 4th busiest airport.1

The only really puzzling thing for me is the lack of any Nelson <-> Christchurch flight sectors, as my (& friends I chatted to today) experience all the time, the first “Grabaseat” AirNZ tickets to sell out and therefore never be available when you log on yourself to check are those on this sector! Maybe someone out there in the airline industry can enlighten me as to why, eg; landing fees at Christchurch, etc?

How Do Nelson/Tasman House and Land Values Compare with Income over the Past 20 Years?

Well that’s actually the title of an article written by a local valuer that I have respect for, Barry Rowe from Duke & Cooke Valuers. Regular readers here, or followers of my twitter feed will know I regular re tweet Duke & Cookes informative weekly Nelson & Tasman region property update.

2015 apm

Barry happens to be their Residential Team Leader, and after a phone call today, I am privileged to be able to forward onto my readers his report below…(starts now)

How Do Nelson/Tasman House and Land Values Compare with Income over the Past 20 Years?

Nelson/Tasman region house and land values are increasing, but how do increasing house and land prices compare with wages and salaries over the last 20 years? Nelson/Tasman is a popular place to live and often tops New Zealand’s sunshine hours. The region also boasts golden beaches and productive tourism, wine, horticulture and fishing industries. With its warm climate, spectacular scenery and access to various marine playgrounds, Nelson/Tasman is one of New Zealand’s fastest-growing regions and popular as a retirement and lifestyle destination.

As a result of being a desirable place to live, the Nelson/Tasman population continues to grow. The 2013 census reports Nelson’s population as 46,437 and Tasman’s 47,154. Between 2006 -2013, Nelson’s population increased by 8% and Tasman’s population increased by 6%. The total population for New Zealand increased by 5% over the same period. As our population grows, the growth puts pressure on resources, especially house and land resources.

Each month real estate professionals publish housing statistics about how the property market is performing. Local statistics have shown property values continue to rise. In Nelson, house prices are growing faster than the national median. The only cities in which it is less affordable to buy a house are Auckland, Wellington, Christchurch and Queenstown. Although we continue to hear about increasing house and land values, little is reported comparing house and land values with wages and salaries. Therefore, we have analysed the increase in house and land values against wages and salaries over the past 20 years. Our analysis shows there have been significant increases in both house and land values compared with wages and salaries as shown in the table below.


Median-House Price and Land Value Increases in the Last 20 Years

While there have been some fluctuations, the comparison over the last 20 years shows:
• The median-house price has increased from $130,000 to $357,000, an increase of 175%.
• Land value increases have been more pronounced ~ from $50,000 to $225,000 ~ a staggering increase of 350%. These increases clearly show that land value increases have been greater than house price increases.

House and Land Increases Compared with Wages and Salaries

Today, it takes more years of annual wages and salaries to purchase a median-priced home or section than 20 years ago.
• Twenty years ago, a median-priced home took five years of annual wages and salaries to buy, whereas it now takes about 7.5 years.

15-06-2015 CHART

[ click chart image for full sized chart]

• Twenty years ago, a median-priced section took two years of annual wages and salaries to buy, whereas it now takes 4 years.

These results show house prices have increased 50% compared with wages and salaries, while sections have increased 100%. This shows it now takes proportionally more income to buy a section as compared with buying a house. In 2003/04, the property market surged with house and section prices rising rapidly and continuing into 2005. This was the point over the last 20 years when houses and sections were the least affordable. It took almost 9 years of income to purchase a median-priced home and just over 7 years to buy a median-priced section. The market surged again in 2007/08 when it took just over 8 years of income to buy the median-priced home. Since the 2007/08 surge, the market has settled. It now takes about 7.5 years of income to buy the median-priced home. Over the last 20 years, the median-priced home has steadily increased and is now at its highest point. Wages and salaries have also steadily increased and are similarly at their highest point. Both have moved in tandem and at approximately the same ratio.

Conclusion

Buying a median-priced home or section costs more of one’s annual income from wages and salaries than it did 20 years ago. While attention is usually about the cost of buying a house, our research shows buying a section is now proportionally far more expensive in relative terms. Unfortunately, we do not see this situation getting any easier as there is a shortage of sections coming onto the market. Sections that are on the market now have a median price of $224,500, and we don’t see this price dropping due to the associated costs of developing them. The Nelson/Tasman region has always been an expensive area to buy a house and this does not appear to be changing. As the population increases and places more demand on resources the cost of housing continues to increase. The Nelson/Tasman region is one of New Zealand’s fastest-growing regions and continues to be a sought-after place to live for all those reasons detailed above.

Above Article written by Barry Rowe (Registered Valuer – Residential Team Leader) DUKE & COOKE VALUERS, NELSON, NZ

Barry can be contacted at barry@dukeandcooke.co.nz or via NZ (+64) 0274 478 842

Also must give credit where its due…..OCR Transfer from PDF to WORD doc format via http://www.onlineocr.net/