Is the Auckland property frenzy over?

This month I’ve got a few predictions for you, as well as a couple of recommendations – as always, let us know if you are interested in finding out more about any of the following; we’re happy to have a chat!

I’ve taken a bit of time to speak to a few real estate agents over the last week and it seems like over the last two weeks the open home numbers have dropped and the clearance rates at auctions have reduced. We experienced the same thing when the Reserve Bank imposed LVR restrictions in October of 2013.

I predict that the frenzy may now subside and it will return to a more normal market whilst people get to grips with the new rules. I don’t think property prices will fall as such but it might take a little longer to sell substandard properties or achieve great prices for the more expensive properties. The main factors affecting the market still exist therefore I don’t think prices will fall (for example, low interest rates, strong positive net migration and a shortage of housing).

Are lawyers going to become the new gate keepers for the IRD?

Another prediction from me - I suspect that, in time, lawyers are going to have another job. That is, retaining settlement funds from clients whom the lawyer suspects that they might be liable for tax on the proceeds of the sale of their property. This is especially likely to affect foreign buyers who are selling a property within two years of purchasing it.

Under the new proposed tax bill any investment property bought after 1 October 2015 and sold within two years will be liable for capital gains tax. For more information on “The Taxation (Land Information and Offshore Persons Information) Bill”, visit the Land Information New Zealand website here.

Hot off the press:

We can now get funding for apartments of up to 90%* and funding for investment properties in Auckland of up to 80%. Give me a call if you are interested in any of the above.

*As always, T&C’s apply

Mortgage borrowing strategy:

Variable and carded rates have fallen further this month, with one and two year special rates offered by some lenders close to multi-decade lows. These rates look attractive as they offer a low rate, whilst striking the balance between providing flexibility and an option to lock in even lower rates if the reserve bank makes another cut in the OCR. With the OCR expected to remain lower for longer, that is my recommendation but if you are looking for certainty then the longer term rates are really quite exceptional compared to historical rates.

As always give me a call if you have any questions in regards to rates or investment.

Nick

0211 9444 24

nick.kotze@loanmarket.co.nz