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Aug 3, 2022
The Real House Tour
Ever wondered what was behind the doors of some of the most stunning properties in the Mid-North? Maybe you’re looking for inspiration on how to bring to life your own design ideas? Some wonderful homeowners have generously opened their doors to support Hospice Mid-Northland, and let you in to see behind their facades... Presented by Hospice’s long-term partners REAL Property Kerikeri, the REAL House Tour will showcase a selection of awesome and unique properties… prepare to be delighted and inspired! Your $75 donation covers: - A self-tour viewing inside a selection of unique propertiesaround Kerikeri from 10am-3:30pm - Cooking demonstrations and tasty treats from Hospice New Zealand's ambassador, Jo Seagar MNZM - Goodie bag from local suppliers - Glass of wine and nibbles at the special after-tour function from 4pm-6pm at a local winery - Entertainment, raffles and fundraising auction at after function STRICTLY LIMITED NUMBERS - GRAB YOUR FRIENDS AND GET YOUR TICKETS TODAY! [gallery link="none" size="medium" ids="9927,9928,9929" orderby="rand"] Please note: due to limited accessibility unfortunately the Tour is not suitable for people in wheelchairs or with walking frames. If you have mobility issues but would like to join us for the after-party, please contact Tiffiney at fundraising@hospicemn.org.nz. The Tour is not suitable for children under the age of 13 years. [siteloft_button text="BUY TICKETS NOW" link="https://hospicemn.infoodle.com/f/REALHouseTourticketForm" target="_blank" ]
Jul 1, 2022
Winter 2022 - Market Cycles, Are we in a softening market?
It is times like this we must remember that there are always buyers and sellers for real estate no matter what stage of the cycle we are in. People move for employment changes, need to upsize or downsize, lifestyle change and many other reasons. Generally people are buying and selling in the “same” market. If you are in property for the longer term, history shows that values typically increase better than CPI (Consumer Price Index). Even with a correction as we are seeing around the country, most sellers are still achieving a good return on their investment. Here are a few key summary points for the Greater Kerikeri property market: The volume of sales through May 31st is down by 27% for the same period last year a further decline from 21% down last month. The median house sales price dropped in May driven by a mix of lower priced properties being sold during the period. The quarterly moving average median price indicates prices are starting to soften. How this unfolds will be more clear as we see more results in future months. Inventory levels have increased year on year but are fairly level compared with last month (190 listings this month compared with 188 last month). i.e. the sold and withdrawn listings are about equal to the number of new listings. Our feeder markets Wellington and Auckland continue to show lower median prices and lower sales volume. Uncertainty continues about the impact of interest rate hikes, inflation, tougher lending rules and the economic effects of the war in Ukraine. Now we also have the first real data showing negative net migration into New Zealand (touted by the media as the” brain drain”) and news that the global financial markets have declined into bear territory. The cost of building keeps increasing and are likely to increase even further when new building regulations are enacted in September. This cost is unlikely to drop and underpins the floor to which property prices are likely to drop to. There are still other positive tail-winds as Covid restrictions are lifted and more people from around the world are able to travel resulting in higher levels of enquiry from returning ex-pats and overseas buyers. Some first time home buyers also are getting some relief as banks implement more reasonable screening as part of their lending criteria. We have seen an increase in enquiry from investors and first time home buyers in recent weeks. Enquiry from local buyers has picked up also now they have more confidence they will have a place to move to and less competition from buyers moving from the cities. Vendor vs. Vendor... In May we witnessed the second month in a row where sales volumes were 30% to 40% below average. It is too early to see the effect on median prices as we need several months of results to notice a trend. Our experience of other cycles tells us that price declines usually follow volume declines within 3 to 6 months. Other evidence of a softening market is more properties selling below their asking price than last year, fewer multi-offers, fewer sales under the hammer at auctions and vendors, particularly in higher brackets, lowering asking prices to meet the market. The buyer versus buyer market of 2021 has transitioned to the vendor versus vendor market in 2022. Vendors therefore have to be “best in class” to attract offers away from other vendors. That means top level presentation, targeted marketing across all media platforms and sharp pricing. Interestingly sales of well-presented, low maintenance homes below $1,100,000 are still selling reasonably quickly and some are even achieving record level prices. In this bracket we have a steady stream of buyers and limited stock available. In price brackets above $1,100,000 higher stock levels are now providing more choice for buyers and most seem to be more cautious than last year and are taking their time in their searches. As a result, on average properties at this level are taking a bit longer to sell than last year. The value of experience. Our focus on family values, supporting each other, ethical behaviour and a cooperative, collaborative approach to selling real estate means our company experiences extraordinary low levels of staff turnover. As a result our people have many years of experience working in Kerikeri. Most of us have been through several industry cycles. Our newer members get daily hands on coaching from other team members so they are up to speed quickly too. As a result we have great depth and experience of how to produce the best results for our vendors in various stages of the market cycles. At this time, this experience is very important to you if you are selling your home. As we say, anybody can sell in a hot market, but the real value of experience comes to light when times are tougher. If you want to find out more about what’s happening in our market or obtain a no obligation appraisal, please give any of our team a call or pop in to the office for a coffee and a chat. ACHIEVING GREAT THINGS TOGETHER
May 17, 2022
The Greater Kerikeri Property Market
The media does a great job of commenting on the property market at the national and regional level. And the commentaries are coming fast and furious at the moment. At the national level, trends are highly influenced by what is happening in the major centres such as Auckland and Wellington due to the relatively high volume of transactions that occur there. We hope that our breakdown of what is happening on the ground in the Greater Kerikeri area is more useful to our customers, both current and future. Here are a few key summary points for the Greater Kerikeri property market: The volume of sales in Greater Kerikeri through April is down by 21% for the same period last year Median house prices starting to flatten on a quarterly moving average basis. We have yet to see the type of price decreases that the larger centres are seeing. Inventory levels have increased year on year but are fairly level compared with last month Our feeder markets Wellington and Auckland are experiencing lower median prices and lower sales volume, as much as 40% less in Auckland Uncertainty continues about the impact of interest rate hikes, inflation, tougher lending rules and the economic effects of the war in Ukraine There are some positive tail-winds as people are freer to travel now that Covid restrictions are lifted, more enquiry from returning ex-pats and overseas buyers on our shores, continued interest from city escapees and some relief from the prohibitive rules put in place on lenders in December 2021 that should allow more loans to be passed from June. While other parts of the country are reporting declining prices, Kerikeri is still holding its own. Kerikeri’s 3 month moving average median house sales price was at a similar level to last month at around $1,070,000 starting to signal that price rises are flattening out. There are a few warning signals as direct enquiry levels are down and fewer multiple offers are being negotiated. Kerikeri appears to be returning to a relatively normal state historically where most buyers visit, take their time looking and sell their homes to move here. We call it a “drip feed” market as opposed to a market where they are 4 or 5 buyers for every property for sale as soon as it comes on the market. It is critical that selling strategies need to adjust accordingly. Residential sales volumes are down 21% in the first 4 months of 2022 compared with the same period in 2021. 111 unconditional sales reported compared with 130 in the same period last year. Higher stock levels are now providing more choice for buyers and most seem to be more cautious than last year and taking their time in their searches. As a result, on average properties are taking a bit longer time to sell than last year but they are selling and prices appear to be holding for now. Professional advice becomes more important than ever... The days of pricing ahead of the market are gone for now. Our advice to vendors is to seek to fully understand the market they are looking to sell in and how much competition they are up against within their price band. If there is a lot of competition in your band then it is critical that your marketing accentuates the benefits and outstanding features of your property and the price will need be among the “most attractive in class” to sell in the shorter time frames. This is where our professional advice becomes more valuable than ever. Our team at REAL is the most stable team in Kerikeri, thanks to our family values and cooperative and collaborative approach to selling real estate. Most of us have been through several industry cycles and our newer members get daily hands on coaching from other team members so they are up to speed too. As a result we have great depth and experience of how to produce the best results for our vendors in various stages of the market cycles. At this time, this experience is more important to you if you are selling your home. As we say, anybody can sell in a hot market, but the real value of experience comes to light when times are tougher. If you want to find out more about what’s happening in our market or obtain a no obligation appraisal, please give any of our team a call or pop in to the office for a coffee and a chat.
Mar 29, 2022
Uncertainty slows the market nationally but is Kerikeri bucking the trend?
If there is one word that sums up the current real estate environment across New Zealand it is UNCERTAINTY. Uncertainty about new bank lending rules implemented December 1st 2021 and their affects Uncertainty about rising interest rates Uncertainty about the effects of the war in Ukraine and Uncertainty about the safety of travel as Omicron spreads. Our experience is that most people deal with uncertainty by pausing on major decisions until the uncertain environment becomes normalised and life carries on. A lot of property markets across the country are feeling the impact of this tendency towards inaction. Fear of missing out (FOMO) has switched to fear of over paying (FOOP) and a wait and see approach is being taken by the more cautious. Against these headwinds, our staff are still seeing plenty of interest by city dwellers who want to move to Kerikeri for a better quality of life. No longer tethered to their location close to the office, these folks are now bringing their jobs with them, to start new lives in Kerikeri for their families. The lifestyle provided by our location in the beautiful Bay of Islands, temperate climate and good schools combined with the conveniences of fast internet for work access, relatively close proximity to Auckland and an airport make this an easy choice for city dwellers looking to make a move. Consequently, Auckland is now one of the few places in the country where population is rumoured to be shrinking while the provinces prosper from extraordinary growth. Our new listings are stacking up “Watchlisters” on platforms such as Trade Me and Realestate.co.nz. A large percentage of these are from areas outside of Northland. Interestingly, attendance at our open homes has been predominantly from local buyers. Many out of town buyers who we have spoken to are waiting for Omicron to peak before making travel plans to view our listings. Some cannot travel from being in self isolation. While other parts of the country are reporting declining prices, Northland is an exception, rising 7.9% in the last 3 months. Kerikeri’s 3 month average median house sale price set a new record at $1,080,000 and has now been over $1 million for 4 consecutive months. We are still experiencing multiple offers on properties and especially those priced under $1million. Residential sales volumes are down 27% in the first 2 months of 2022 with 51 unconditional sales reported compared with 70 in the same period last year. There is no doubt that the panic buying of 2021 has dropped away in 2022 and that higher stock levels are now providing more choice for buyers. Properties are taking a bit longer time to sell than last year but they are selling and prices appear to be holding for now. The trend in 2021 was for vendors to have price expectations a little ahead of the market and often above the recommendations of our appraisals. Now our advice for vendors in 2022 is to price properties sensibly within the appraised range as they are competing with more property sellers. If you want to find out more about what’s happening in our market or obtain a no obligation appraisal, please give any of our team a call or pop in to the office for a coffee and a chat.
Nov 22, 2021
Kerikeri prices continue rise, inventory levels starting seasonal rise but still at record lows
Similar storyline to last month. Record prices still being achieved but signs prices are levelling off a bit. The number of properties for sale and the time to sell is at record low levels. The Auckland lockdown has resulted in homes being sold sight unseen. What’s happening with house prices? The quarterly median price for a house in Kerikeri for sales completed during the 3 month period of August, September, October was $905,000. That is up a massive 31% from the same period 1 year ago and down 0.5% from last month. What are the market drivers? As we have covered in previous reports, the effects of low interest rates, returning expats and strong migration of New Zealanders from the cities to the Far North has caused a dramatic upsurge in enquiries and sales. This has led to diminished inventory of properties for sale across the district. The latest Covid-19 lockdowns have reinforced how people around the country can successfully work from home. We are hearing time and time again from city dwellers that they are fed up with taking the brunt of lockdowns. As soon as lockdown lifts they are looking to travel up and find their new home so they can work where they want to live. With the opening up of Auckland getting nearer on the horizon, we are anticipating a onslaught of direct serious enquiry. Auckland sales volumes are down 39% during the latest lockdown months and it is expected that a “sugar rush” of buying and selling over coming months will create more cashed up buyers for Kerikeri and other provincial towns. Despite the level four lockdown in Auckland we have received offers “sight unseen” on properties often from buyers desperate to find a new home in the area. Fortunately, technology allows our industry to continue operating efficiently as agents, vendors, buyers, lenders and solicitors all interact on-line. This has kept the majority of existing sales moving forward even in the highest levels of lockdown. There is no doubt that more Auckland buyers would have taken action had they been able to come up and inspect their prospective new homes. How are the number of sales tracking? Kerikeri and surrounds had 92 unconditional residential, lifestyle home and bare land sales in August, September and October compared with 165 sales in the same period last year. A 44% percent decrease driven by low inventory levels and the fact that most bare land sales are awaiting title with Covid delays extending the subdivision timeframes. Bare land sales are significantly down from 33 over the August, September and October period last year to only 16 this year. There are very few sections now left available for sale in Kerikeri and those development that have come on-line in the last year have sold out off the plan well before titles are issued and often before the works have even begun. What about bare land sales prices? The median price for a section under 1ha in Kerikeri reached $475,000 for June, July, August but has dropped to $360,000 in the last 3 months. This has been driven by some older subdivision titles coming through with historic sales values and statistical variance due to low sales volumes. In fact the number of sections on the market is at a 20 year low with fewer than 4 for sale under a hectare and no fully serviced sections for sale at all. How long is it taking to sell? Days to sell have dropped from an average of 65 days for sales in August, September and October 2020 to 35 days in the same period of 2021. This is well below the normal 10 year average of 55 to 60 days for our area. How are inventory levels tracking? Inventory levels are up to 145 listings for sale on Trade Me in November from 125 a couple of months prior and down from over 200 a year ago. The average number of properties for sale was around 400 over the last 10 years. How many new listings are coming to the market? New listing levels are starting to pick up as vendors who put their plans on hold come to the market and the usual Spring rush of activity begins. Also, vendors don’t want to miss out on the heat that has been in the market and the anticipated rush as Auckland opens up. FOMO from vendors with rising interest rates could bring more stock to market over coming months. However, with many buyers who have already sold and are ready to buy, enquiry is very high immediately after the advertising starts and sensibly priced, well-presented properties are often flying off the shelf quickly. So, despite an increase in new listings coming to the market, inventory levels are expected to remain relatively low. What is the outlook for the Kerikeri market? Interest rate increases over recent months and LVR restrictions are starting to unnerve some vendors and buyers. More interest rate rises are expected. First home buyers, who have not traditionally been a high percentage of the market in Kerikeri are often priced out of the market. Based on high numbers of enquiry levels from out of town buyers we are expecting the migration to the Far North to continue strongly. Assuming these trends continue then we can expect our local market to stay strong for the foreseeable future. As lockdowns lift around the country and Aucklanders are freed for travel it is anyone’s guess as to how much pressure this will put on the Kerikeri market place. There may never be a better time to sell. Pop in for a coffee and a catch up with any one of us if you are thinking of buying or selling. Source *REINZ
Sep 27, 2021
Kerikeri prices continue rise, inventory levels at record lows - Market Update
What’s happening with house prices? The quarterly median price for a house in Kerikeri for sales completed during the 3 month period of June, July, August was $925,000. That is up a massive 37% from the same period 1 year ago and up 3.9% from last month. If you had purchased a home 20 years ago at the median price of $200,000 It could now be worth over 4.5 times that. It’s no wonder so many Kiwis invest in real estate as their primary investment choice. What are the market drivers? As we have covered in previous reports, the effects of low interest rates, returning expats and strong migration of New Zealanders from the cities to the Far North has caused a dramatic upsurge in enquiries and sales. This has led to diminished inventory of properties for sale across the district. The latest Covid-19 lockdowns have reinforced how people around the country can successfully work from home. We are hearing from city dwellers that they are fed up with taking the brunt of lockdowns and are now actively looking to move so they can work where they want to live. Who wouldn’t want to be near the beach or 5 minutes from the boat-ramp, versus tackling the congestion of the city and potential further extended lockdowns. Despite the level four lockdown in Auckland we have received offers “sight unseen” on properties often from buyers desperate to find a new home in the area. Fortunately, technology allows our industry to continue operating efficiently as agents, vendors, buyers, lenders and solicitors all interact on-line. This has kept the majority of existing sales moving forward even in the highest levels of lockdown. The only slowdown has been the physical inspections by building inspectors and valuers at level 4. How are the number of sales tracking? Kerikeri and surrounds had 102 unconditional residential and lifestyle house and bare land sales in June, July and August compared with 132 sales in the same period last year. A 23% percent decrease driven by low inventory levels and existing agreements being extended out past the end of August due to Covid-19 lockdowns. Bare land sales are significantly down from 33 over the June, July, August period last year to only 16 this year. There are very few sections now left available for sale in Kerikeri and those development that have come on-line in the last year have sold out off the plan well before titles are issued and often before the works have even begun. What about bare land sales prices? The median price for a section under 1ha in Kerikeri was $475,000 for June, July, August compared with $270,000 last year a huge increase of 76%. How long is it taking to sell? Days to sell have dropped from 79 for sales in August 2020 to 27 in August 2021. How are inventory levels tracking? Inventory levels are down to 125 listings for sale on Trade Me from over 200 a year ago and an average of over 400 over the last 10 years. The recent lockdowns have exaggerated this as some vendors have hit the pause button on coming to market. How many new listings are coming to the market? New listing levels are starting to pick up as vendors who put their plans on hold come to the market and the usual Spring rush of activity begins. However, with many buyers who have already sold and are ready to buy, enquiry is very high immediately after the advertising starts and they are often flying off the shelf quickly. So, despite an increase in new listings coming to the market, inventory levels are remaining very low. What is the outlook for the Kerikeri market? Indications from market economists are that interest rate increases and LVR restrictions will be implemented by the reserve bank in coming months to try to kerb this continued upward price pressure. Despite interest rates set to rise, they will still be historically low for a while yet and the rule changes will likely affect first home buyers more significantly. First home buyers have not traditionally been a high percentage of the market in Kerikeri due to our above average prices. The migration to the Far North appears to be continuing strongly. Assuming these trends continue then we can expect our local market to stay strong for the foreseeable future. Consequently, we are anticipating a busy Spring in the Far North as lockdowns lift around the country. There may never have been a better time to sell. Pop in for a coffee and a catch up with any one of us if you are thinking of buying or selling. Hospice update This year we have joined forces with Hospice and are donating $1000 from each sale to help Hospice assist others in our community. Our relationship with Hospice has blossomed and we are like two families coming together. We are delighted to announce we have raised over $64,000 this year so far. The fantastic nurses and Administration team at Hospice now have two new vehicles to help with their incredibly valuable work. Every one of our team members dig into their own pockets to help with this valuable cause. We have also pledged to continue our relationship with Hospice next year and beyond. Click here to discover more... Other news in the community You done have to look far to see there is plenty of development going on around the town. It is great to see so much activity that is so needed to bring the infrastructure to Kerikeri required to support our incredible growth. Domain works and skatepark Works have begun on the revitalization works to the Domain in central Kerikeri. This an exciting time for the community and particularly for the many youth who will be able to enjoy the upgraded basketball and skateboarding facilities when completed in early 2022. Taking advantage of the Provincial Fund grants, it will create a destination for families in the community to come together and enjoy the outdoors right in the centre of our town. Windsor Landing What an amazing facility has been built at the end of Inlet Road. Plenty of parking, all tide access. Boat, kayak or stand up paddle direct from public space on the shoreline. It has been a long time coming and locals are already taking advantage of this huge improvement to our access to our fabulous marine playground – The Bay of Islands. Click here to locate Windsor Landing. Waipapa Sports Fields The first stage of the new Sports Park in Waipapa are underway with the formation of the entrance and construction of other service connections to accommodate the ablution block and changing rooms. Watch this space as the first 5 new fields, parking areas and walking areas come together in the first stage. The longer term vision has the potential to accommodate a hockey field, baseball diamonds, cricket nets, clubrooms, a dog training area, cycle paths, croquet lawns, children’s play zone and a gymnastics facility in the later stages. Developments selling fast – Arvida, Quail Ridge and Inlet Estate Interest has been strong in the new Arvida retirement development and 16 houses have been completed very quickly with many more under construction. Quail Ridge at the end of Rainbow Falls Rd continues to expand changing the views from the golf course and town. Inlet Estate has only a handful of packages left. Large integrated development proposals for the Bing land off Kerikeri Road behind King St and for the Brownlie farm behind the golf course have been presented to the Council. These two developments alone have the potential to house 3 to 5 thousand people. It is becoming clear that right now is a major turning point for Kerikeri. The population of Kerikeri and its immediate surrounds have grown to nearly 20,000 now and we continue to see rapid growth far greater than most other areas of the country. Recently our town missed out on any central government funding from Waka Kotahi NZ Transport Agency to solve our traffic problems. With over 11,000 traffic movements daily on Kerikeri Road currently, nobody has an answer to how our community is going to cope with the future challenges of moving around our town in light of the current population explosion we are witnessing. One thing is for sure, traffic is going to get a lot worse before a solution is in place. Make sure you have your say on how our town progresses. Submit your views on Council plans including the upcoming Draft District Plan which will have affect on the next 10 to 20 years of Kerikeri’s development. Get a louder voice by participating or volunteering with community groups such as Our Kerikeri or Vision Kerikeri. Talk to your elected councillors and members of the Community Board about things that concern you. Positive change will not happen without our community having a voice.
Apr 30, 2021
Kerikeri, a town experiencing a population boom
Kerikeri market commentary April 2021 Kerikeri is the Far North district’s largest and fastest growing town with an annualized growth rate of close to 2% which is higher than most places across the country. Kerikeri’s population is often misunderstood as internet sites usually only quote the population in its central residential areas. Greater Kerikeri is the township and the surrounding areas where people in our community live and regularly come to Kerikeri for services, work, leisure, school and to shop. This encompasses the area inside the triangle formed by Kapiro Road, State Highway 10 and Kerikeri Road plus the Doves Bay peninsula including Rangitane, Doves Bay and Opito Bay, the Purerua Peninsula with its communities in Te Tii and Tapuaetahi, north from Waipapa to Sandy’s Road, West to the ends of Pungaere, Puketotara and Wiroa Road where they join with Waiare Road, and South to Puketona Junction and Waimate North Road to Okokako Road, the Inlet Road area including Reinga Heights to the end of Wharau Road, Shepherds and Riddell Roads and its branches. Estimates from the Council’s demographers, .id, show the population of Greater Kerikeri to be higher than 16,500 people at the last census in 2018. More recent informal estimates put the population at somewhere between 18,000 and 20,000. This represents more than 26% of the entire Far North district population and compares with Greater Kaitaia that has around 14% and Greater Kaikohe that has about 12%. The population increase in Greater Kerikeri accounted for over half of the population growth of the entire district over the last 10 years. That’s over 6 x the growth experienced in Kaitaia and 100 times the growth experienced in Kaikohe. It’s no wonder it seems like our infrastructure is creaking at the seems. Median house prices in Kerikeri have risen over 8% in the last 12 months caused mostly by an increase in northward migration caused by recent Covid 19 events. Prices are approximately double where they were 10 years ago. The median price in Kerikeri for a house is $850,000 for the first quarter of 2021. This compares with $620,000 for New Zealand ex Auckland and is double the median price of both the Te Hiku (Kaitaia and surrounds including the East Coast beach areas) and Kaikohe/Hokianga wards. Annualized median prices for sections have risen 8.6% over the last 12 months. The median price for a section in Kerikeri over the last quarter was $350,000 compared with $280,000 for New Zealand ex Auckland. Section prices have tripled in the last 10 years. Covid-19 has led to more people around New Zealand working from home and they can now choose to work where they want to live versus stay in the city near the office. This has created a “Zoom-town” affect, where attractive provincial towns are attracting people who can work from anywhere and commute via the Internet. Kerikeri is particularly attractive because of its location just 3 hours from our largest city, its airport, fast fibre internet connectivity, temperate climate and desirable lifestyle opportunities. In particular, the Far North beaches, golf courses and the fishing, sailing and boating on the Bay of Islands make for an inviting playground for many. No longer are job opportunities a limiting factor on Kerikeri’s growth. In addition, ex pats are migrating back to New Zealand and choosing the Far North and particularly Kerikeri as their home because it provides the services and elements of the cosmopolitan culture they are used to. The lockdowns in 2020 provided an opportunity for people across New Zealand to re-evaluate their lives and make their moves to escape the rat race they have been thinking about for years. Our opinion on the outlook is for these fundamental forces to be likely to continue because: more and more New Zealanders are reaching retirement age and looking for lifestyle change. This is supported by the huge investment being made in the area by companies like Arvida, there are still many ex-pats wishing to return home and live in the Bay of Islands, low interest rates are forcing retired investors to choose to buy land or houses over traditional Term Deposits to achieve higher ROI’s On the supply side, Kerikeri has a shortage of homes and sections available to meet the high levels of demand. Listings are the lowest we have witnessed in 20 years of servicing the Kerikeri area. Many larger developers have ignored the Far North for some time as high growth rates and profit opportunities in Auckland and other larger centres have provided better opportunities at low risk. There was an oversupply of land for sale in Kerikeri after the construction boom leading up to the Global Financial Crisis. These sections are now all long gone. Those developers who have brought new sections to the market in the past few years have sold their land off quickly. Many recent subdivisions have sold out prior to construction being completed and titles being issued. In addition, constraints on wastewater infrastructure have led to a virtual complete stop in development of fully serviced sections of the past 5 years. Those developers fortunate to have secured connections have reaped the benefits of high demand and low supply resulting in rising prices. For example, Inlet Estate has struggled to build homes fast enough and has sold 31 of 48 house and land packages in just over a year which included Covid lockdowns. The recent completion of the wastewater treatment plant has opened opportunities for more land and more affordable house package options to meet the demand of this growing community. Although the property market across New Zealand is likely to come under the influence of change in the future, we believe the Kerikeri market is better situated to deal with change, particularly because of the short supply and high level of demand being likely to continue especially in the retirement sector. Project H REAL has pledged to give $1000 from every property sale during 2021 to Hospice Mid-Northland aiming to raise over $130,000. You too can help make a REAL difference to Hospice. List your property with REAL or please refer us to a friend or relative so we can present a no obligation marketing proposal to them. We promise to deliver our friendly and professional service, produce the best results for our clients and provide REAL support to Hospice and their patients in our community. Containing our opinion as local market real estate agents only. We are not registered valuers or real estate market economists. We recommend seeking independent advice before making any real estate purchase or sale decisions.
Mar 24, 2021
The latest Tax changes.
The following article on the latest Tax changes was provided by Mark Withers of Withers Tsang & Co Ltd A one-two punch on the nose to Property Investors that were already on the ropes and bleeding. The Government has announced two significant changes set to impact Residential Property Investors. 1. The phased removal of interest deductibility 2. Doubling the Brightline from 5 to 10 years These changes, particularly the removal of interest deductibility will certainly go a long way to achieving the governments stated goal of dampening enthusiasm for residential property investment in NZ. So what are the key details…. Firstly, the changes are aimed at the existing housing stock, new builds will be exempted from both changes. Interest deductibility removed. Interest deductibility on any residential property purchased after 27 March 2021 will no longer be deductible after 1 October 2021. Interest on loans for investment properties purchased before 27 March 2021 will be phased out over four years with deductibility reduced by 25% per year over each of the next four years with all deductibility gone by 1 April 2025. This change will impact leveraged investors hard by requiring them to pay tax on profits, that in reality, don’t exist. Pressure will come on cashflows as a result and we expect many investors who will be stretched by this will look to deleverage and reduce their debt exposure. The measure is sure to bring more property to market in the short term. We stand ready to help clients budget the impacts on their own circumstances. I encourage everyone to read the attached link to get more detail on the change. Interest deductions on residential property income - Proposed changes Extension of the 5-year Brightline to 10-years. This change has been well anticipated by investors and aligns the Brightline with other ten-year hold rules that apply to traders, developers and builder’s other land. The Brightline will move from 5 years to 10 years for properties acquired after 27 March 2021. New builds will be exempt from the Brightline extension but will still be subject to the five-year Brightline. The main home exemption will continue and inherited property will still be exempt. The new rules do contain a new “Change of use“ provision with respect to the main home exemption. Currently, it's all or nothing based on whether the main home has been used as such for the predominant amount of time it has been owned. But for property purchased after 27 March 2021 that experiences a change of use from main home to rental property tax will be payable based on an apportionment of the time it was used as a home as opposed to a rental. So, by way of example, a property purchased in 2022 for $ 800,000 that is not a new build, is used as a main home until 2028 when it is rented out. It is sold in 2030 for $1.1 Million. The property is owned 8 years so is caught by the 10-year Brightline. Despite being a main home for 6 of the year's tax will still be payable on 2/8ths of the $300,000 gain, i.e. tax of $75,000 will be payable. This new apportionment rule only applies if the property has been used as the owner’s main home for more than 12 months of the ownership tenure. This change will water down the main home exemption and drag many more taxpayers into the tax net if they have rented their home out for more than 12 months during their term of ownership. I strongly encourage you to click this link for more info on the changes. Brightline test proposed changes Conclusion. This is big. The removal of interest deductibility will particularly hurt highly leveraged investors. We encourage clients to engage us to budget the cashflow impacts this will have as tax will be payable even where no actual profit is being made. Some people will need to sell and reduce the size of their portfolio if they can’t afford the loans and the tax. The flow of property to market is likely to tip the supply equation closer to the demand equation at least in the short term. If you need to move, selling a property that is not impacted by Brightline to reduce debt and interest costs that will no longer be claimable after 2025 will be worth considering. For those looking to buy, new builds just got a whole lot more attractive. Mark Withers [siteloft_button text="Search for Property" link="https://www.realkerikeri.co.nz/listings/?saleOrRental=sale" target="_blank" ]