Tony Alexander: Don’t expect landlords to lower their rents
The return of interest rate relief won’t have much of an impact on tenants.
ANALYSIS: A few journalists contacted me over the weekend regarding tax changes bringing investors the ability to deduct 80% of their interest expenses from rent income for the financial year starting this April 1 and 100% a year later. I declined interviews because apart from a small tweak on the Government’s promise for the year ending there was nothing new.
The issue is what the impact of the ability to do what every other business does (deduct interest expenses) will be on landlord behaviour. Will they pass on the restoration of their after tax income to what it was a few years ago into lower rents? No they won’t. Why?
Because it is hard to find evidence that progressive removal of this deduction ability caused much extra upward pressure on rents. In the five years before investors started to progressively lose their deduction ability, average nationwide new rents in the dataset gathered up and reported by Statistics NZ rose on average 3.3% a year. Since then rent growth has averaged just over 4%. The increase is small. So, if there is any giving back it will also be small.
But it pays to remember that there is a structural lift underway in the cost of owning a property – be it rented out or lived in by the owner. Council rates are soaring with increases casually bandied about of 15% - 25% and more. In a market where councils hold full monopoly power there is no restraint on them putting through whatever rises they want, and this problem is putting people owning their house on fixed incomes in a difficult situation. Rates are eating up an ever growing portion of their superannuation payments. Owning your own home mortgage free in retirement is not looking as beneficial as before.
Insurance costs are also soaring with increases this year of around 30% for most people. As the cost to NZ insurers of getting offshore reinsurance likely continues to rise (now they remember we are pluvial and shaky), these types of rises could easily continue.
Add in maintenance costs (plumbing, electrical etc.) and the problem for elderly homeowners is growing at a rapid pace. For landlords these cost escalations mean scope for cutting rents is minimal and pushing rents higher will inevitably continue.
One thing I think which may happen is some landlords will shift their properties away from property management companies to save costs. But the flow the other way into professional pooled management could be greater given the tendency for agencies to extract larger rent rises than individual landlords who often feel uncomfortable putting rises through on their tenants.
Is there an answer? With rising construction costs, rapidly falling consent issuance for multi-unit developments (they can’t get sufficient presales to advance), strong population growth, and ever-rising construction standards, intensification and consenting reform would have to be radical beyond belief to provide much offset.
Rents will keep rising, and once interest rates start solidly falling, house prices will follow.
Briefly, last week I discussed the results from my latest survey of real estate agents run with NZHL. They showed that we are firmly back in a buyer’s market again partly because many sellers are stepping forward to take advantage of upward house price momentum which for the moment has stalled.
This week I have most results in from my monthly survey of mortgage brokers sponsored by mortgages.co.nz and they also show some new housing market weakness though not to the same degree for investors. A net 21% are seeing more first-home buyers through their doors, down from 46% last month and 38% two months ago. A net 23% are seeing more investor clients, down from 28% in February and 29% in January.
Buyers are for now backing off while sellers step forward.
-TonyAlexanderisanindependenteconomicscommentator.Additionalcommentary fromhimcanbefoundatwww.tonyalexander.nz
Autumn Is An Awesome Time To Sell
Summer is often seen as the most ideal time of the year to list your home but it can be smart to wait until autumn to hammer that ‘for sale’ sign into your lawn. After all, the kids are back in school, the weather is still temperate and people are traveling less creating a more captive audience.
Rest and relaxation
Summer months are meant for relaxing, and spending time with family. Keeping the house clean with the kids home all day coupled with having to work around open houses can really be overwhelming. Wait until the dust has settled and people are closing up baches and coming home from the beaches.
The charm of autumn
There is something so lovely about the changing leaves and a crisp cool morning with a cuppa in your hand. Have a cookbook open on your countertop to a recipe for a hearty stew next to a bowl full of red apples and home buyers will be able to picture themselves getting cosy during a night in. Plus, the autumn palette on your trees can make your garden more appealing.
Heating and cooling during a cooler market
In summer, heatwaves make sweltering indoor temperature a glaring issue. Attendees at open homes often find themselves sweaty and uncomfortable while viewing properties, especially during mid-day viewings. Prospective buyers then become aware of how hot a home could be and it might therefore appear less appealing. Autumn temperatures make for a more pleasant period of time with weather extremes less of an issue. Plus, things like heat pumps and fireplaces (more common than air con) become big selling points.
Less competition
There are fewer homes on the market during the autumn months so your property will potentially receive more attention and have less competition for buyers.
Less competition for your power team
Having the right photographers, salesperson, home stagers and cleaners can be game changers when putting your house on the market. During the summer, these coveted services can be more expensive and the “best of best” can be fully booked. Waiting until the fall means there is less demand for services so you can score an appointment and you may be able to negotiate lower rates.
Buyers tend to be more serious
Autumn home buyers tend to be more focused on what they want.They have had the summer to hone down their property wish list and will be more likely to move quickly to purchase. Another motivation is that few want to brave winter’s cold temperatures when packing and settling in.
Top Tips on Selling your Home in Autumn:
1. Concentrate on kerb appeal
Remember, you only have one chance to make that all important great first impression. Make sure it’s a first impression that leaves your viewers wanting more. Make sure garden, the path, the front door and the windows are clean and clutter free. Mow the lawn, sweep up the leaves and, if possible, tuck the bins away out of sight. Dirty doorsteps and windowsills can be very off-putting for a potential buyer so give them a really good clean before each viewing.
2. Enhance your entrance hallway
Autumn can bring stunning views and colours to our gardens, parks and country walks. It can also bring a deluge of wet leaves and hallways overladen with muddy boots and shoes. Make sure the first thing the viewers see when you open the front door is a clear, clean and spacious hallway offering the universal dream of a bright, clutter-free lifestyle. Build on that great first impression and clear away all mess and clutter from the hallway. Hide away the shoes, coats and school bags. And if the hallway is where you keep your bikes, remove them for the viewings. The hallway is the window to the promise of better things to come so make that window is a clean, bright and appealing one.
3. Clear and clean inside and out
If you’re selling your home in autumn, this is the ideal time to clear away the summer paraphernalia ready for the big move. Clear away the summer clothes and sandals, tennis rackets and picnic blankets. Put the barbeque and paddling pool away in the shed or garage and give everywhere a thorough clean. If you don’t have room to store the things you don’t need out of sight, pack it in boxes or suitcases and ask a friend or relative store it for you.
The autumn sun can be deceptively revealing so make sure every surface shines, including the floors and especially the windows. Spiders are out in full force so clear away the cobwebs and maybe help the spiders find a new home. If the carpets have seen better days, have them professionally cleaned. If badly worn, consider replacing them. This may feel uncomfortably expensive but you will more than recover your money in the sale.
4. Love the light
Poor light in a home is one of the top buyer turn-offs. So, as we have fewer sunny days, it’s more important than ever to make sure you bring as much natural light into your property as possible. For every viewing make sure your curtains are tied back and blinds are fully open. Remove items of furniture or accessories and cut back plants that may be obscuring windows. Dirty windows can cut out a surprising amount of light so make sure windows are spotlessly clean inside and out. As the nights start to draw in, make sure all the bulbs are working and that there are sufficient lights and lamps to make your home feel light and bright. For dark corners, simply add a small table with a lit lampshade or put an up or downlighter there to add warmth and ‘open up’ the space. For evening viewings, put the lights on in all the rooms before your potential buyer rings on the doorbell.
5. Feel the warmth
Whatever your perfect temperature, remember warm and cosy is what most buyers wants from a home. So avoid the temptation to keep the central heating off till the first flurry of snow and visualise the additional energy cost converting itself into higher notches on your sale price. Similarly, make sure your windows and doors close properly so no drafts and make sure north facing or particularly nippy rooms are well heated.
6. Get the garden ship-shape
Gardens are a real bonus for any property on the market. They can provide an extra room to the house, a beautiful vista and nourishing connection to the changing seasons. However, as summer flowers and shrubs start dying back, gardens can look tired and neglected. Spending a bit of time pruning and clearing away the leaves and dead plants and making the garden look and feel really loved can make a big difference to a sale. Viewers often fall in love with a property because of the garden. However, a neglected garden can be very off-putting.
7. Time is of the essence
Don’t delay sprucing up your property and getting the photos on-line. There’s a small but important window of opportunity to enticing your potential buyers to your home between storing away the beach towels and preparing the Xmas lunch menu. The evidence is clear – the more appealing the photos, the higher the number of viewings and the higher the potential offers.
The autumn can be the ideal time for selling your home but unless it looks ship-shape and ‘shiny’, it won’t get the price it deserves any time of the year. If you need help preparing your property for sale, get in touch with a professional home stager. They can provide expert advice and simple DIY tips on how to achieve the best and quickest sale for your property.
Tips information source: https://jspropertystaging.co.uk/top-tips-on-selling-your-home-in-autumn/
Thinking of buying or selling a property? Please contact our award winning team today. We look forward to being of service to you and help with your property needs.
Sales Property Management
Ph: 09 520 6221
Email: epsom@barfoot.co.nz
Ph: 09 529 0969
Email: rental.epsom@barfoot.co.nz
