MARY HOLM’S TIPS HEY, PAY ME MORE! GET RICHER Frances Cook explains Martin Hawes: It's all How to get the best how to get a pay rise about risk and reward out of term deposits
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What We Like A showcase of the hottest products and places that are the talk of the town. Fable tells a beautiful story What’s not to like about golf, skiing, breathtaking scenery and great food and wine? There is somewhere where you can get it all, at a luxury resort in Canterbury. The iconic Fable Terrace Downs Resort has just started a new chapter with a new owner after becoming part of the Fable brand in March. Just an hour’s drive from Christchurch and nestled in the shadow of Mount Hutt and the Southern Alps, the luxury resort has become a destination in its own right. It features a prestigious 18-hole golf course, a clubhouse, restaurant, conference, event facilities and 25 luxury villas. CPG Group Operations Manager, Ronnie Ronalde, says the opening of this, Fable’s third property in the South Island, signals a new chapter for the resort. “It has a rich legacy in this area and we’re looking forward to elevating Fable Terrace Downs Resort even further to become the premier luxury resort in the Canterbury region.” Golf draws many to the resort. Views over the Southern Alps and the Rakaia Gorge make it a truly unique scenic alpine course. The par-72 Fable Terrace Downs Resort golf course was designed by Sid Puddicombe and has been ranked by New Zealand Golf magazine in the country’s top five courses. If you want more than golf, there’s also horse riding, archery and clay bird shooting available. After a day skiing or playing golf, enjoy the best of local produce at The Clubhouse Restaurant, which has a menu focused on local inspiration, whole foods and sustainable produce. WI NTE R 2 0 2 2 | I N F O R M E D I NVESTO R 1 2
W H AT W E L I K E
Softy, Softly Cashmere has long been referred to as ‘soft gold’, says the Kiwi founder of Modern Love Cashmere, Jo Lloyd. “It’s the standout choice for warmth and versatility, while the composition of the fibres allows for a higher level of design,” she says. “Also, if like me you can’t wear wool next to your skin, cashmere is a dream.” Lloyd has designed a collection of cashmere winter classics designed and made using 100 per cent pure cashmere, meaning it has not been mixed with other yarns. She believes consumers today are demanding more sustainable choices, so she supports a move to slow fashion – to pieces that are not trend-driven, but wearable season after season. She also traces each garment to the fair-trade Mongolian farm the yarn was sourced from. Lloyd launched her brand in 2020, after a long love affair with cashmere. “I can still remember buying my first piece, aged 23, at a vintage cashmere store in New York,” she recalls. “It made me feel like one of the models you saw stalking around Soho! It was a beautiful shade of pink, so soft, and when I pulled it on with my black jeans and high suede boots, I was enthralled.” Lloyd says she’s part of a huge trend globally. “The market for luxury goods has taken a notable step away from short-lived trends. “Modern Love Cashmere is part of that movement – a boutique retailer with sustainability at the core of the brand, starting at the very beginning of the supply chain. “Each batch of yarn can be traced right back to the goat, and farm it comes from. “To know that the animals, farmers and grasslands are being looked after and protected is incredibly important to me, and to our customers.” www.modernlovecashmere.co.nz
Think pink Yes, it’s a beer, and yes, it’s pink! Garage Project and Resene have joined forces for a colourful craft beer they’ve called Scrumptious. The beer’s soft kettle sour base has been saturated with purple pitaya (dragonfruit) and pineapple. It pulls off a convincing taste sensation matching the fuchsia of Resene’s Scrumptious paint colour. The collaboration was born because both businesses started in Wellington garages. Resene’s first ColorShop is just metres away from Garage Project’s Wild Workshop, so it made sense they should join forces. Buy it at www.garageproject.co.nz WI NTE R 2 0 2 2 | I N F O R M E D I NVESTO R 1 3
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PERSONAL FINANCE
How to Get a Pay Rise You can get rich faster by having more income to invest. Frances Cook explains how to get pay rises, how to be more valuable at work and how to be strategic, in this extract from her new book.
A new job is the best time to get a pay rise. You look for new opportunities, ones that sound like a good step up from where you are now. In the interview focus on the role and its responsibilities, and what you and the company can offer each other. And then when you are (hopefully) offered the role, you negotiate a salary that’s nicely above what you’re getting now. They’ve already offered you the job, so you know they want you. Try to get them to offer you a figure first – they know more about industry rates than you do, and you don’t want to name a figure that sounds like a lot to you, only to find out later you could have got more. Once they make you an offer, ask for something above that. Bear in mind, that’s how this dance goes every time. They will make you that first offer expecting you to ask for more. They’ve offered you slightly less than they’re willing to give. If you take that first offer, you’re leaving money on the table. When I was at journalism school, one of my lecturers told me about a job offer he had right when he was starting out. When he received the offer, he looked at the person and said, “Once I’ve been here six months, and have started talking to people, will I become unhappy with this offer?” They upped the offer. So, get all the information that you can. It’s your best weapon. After that, here are some concrete strategies to use. Ask for more This is almost too obvious to include, and yet, so many of us fail at this.
For starters, always negotiate when you start a new job. It’s so much easier to negotiate a higher amount at the beginning than it is to ask for a raise once you’re there. Once you’ve been offered a job, you then start negotiating how much you will earn for it. And I promise you, they expect you to negotiate. You also want to negotiate pay rises once you’re in a job, if you can. I’ve always found it helpful to think of it as ‘arguing from the other person’s point of view’. Don’t talk about why you personally want a pay rise. Your boss doesn’t care about that, not from a business perspective. But if you think about what matters to them, and argue based on that, it’s much more persuasive to them. Talk about what you’ve achieved for your boss or your company, how you’ve helped them achieve their goals, and why that should translate into more money for you. It helps if you’ve kept a running ‘show-off file’ of your best work, which shows your wins or money that you’ve brought into the company. Here’s a blueprint to start talking to your boss about salary. Ask your manager for a meeting to talk about ‘career growth’. Then ask for some clear goals of what they would like from you over the next year. Make sure it’s things that are solid, like a new skill they would like, so you can
immediately go and sign up for a free online course and learn it. Have these catch-ups with your boss regularly. Keep notes about the goals and how you’re achieving them. Then, when you want to talk to them about a raise, you have a solid case on how you’ve improved to hit their goals. One of the ways you can start the conversation with your boss is what’s called a ‘gratitude sandwich’. The first slice of gratitude bread is how much you enjoy working at the company. Then comes the meaty filling. You would like a pay rise, because of all the things you’ve been achieving and, according to your research, people doing that are usually paid X amount. Then you finish it off with a last slice of gratitude bread; that you love working there and you appreciate them taking the time to have this conversation with you. Become more valuable A company is essentially paying for the value you give them. So if you can spot the valuable skills, particularly rare ones, and then learn them, you’re going to be worth more. Which should eventually translate into you being paid more. If at all possible, it’s always best to upskill for free first, so that you don’t have to spend the extra money paying off what it took to get you there. There’s an amazing number of places where you can learn new skills for free. The first, of course, is your workplace. Say “yes” when you’re asked to take on new roles, to fill in for people. WI NTE R 2 0 2 2 | I N F O R M E D I NVESTO R 3 3
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PERSONAL FINANCE
Inflation Negation Can you use investments to safeguard your money against rising inflation? Ben Tutty talks to the experts and discovers you can.
Making ends meet in a ridiculously expensive country like New Zealand is hard. A block of cheese will set you back about NZ$17, gas has almost tipped NZ$3 a litre and a house deposit could cost you an arm, a leg and your first-born. The worst part is – inflation is on the rise, so the cost of living here will probably keep increasing. Is this something we should be worrying about and preparing for? And what can everyday investors do to protect our wealth against inflation? The inflation situation Inflation, or the rising cost of goods and services, decreases the buying power of your money, or in other words, after inflation the same amount of money buys less stuff. When inflation is chugging along at 1 to 3 per cent, it’s usually a good thing for us and the economy, but when it’s higher for a sustained period it can be bad news. As of December 2021, inflation was running at 5.9 per cent and ANZ is forecasting it could rise past 7 per cent and beyond. For younger Kiwis this is an entirely new phenomenon, but Mary Holm, New Zealand’s foremost personal finance journalist, says older generations have seen this before. WI NTE R 2 0 2 2 | I N F O R M E D I NVESTO R 4 3
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PERSONAL FINANCE
Survive the Cost of Living Crisis The cost of living is starting to bite into household budgets. And Amy Hamilton Chadwick says it’s only going to get worse.
You’re standing at the petrol pump looking at $3 per litre. At the supermarket checkout, you’re spending an extra $30 a week. Every day you get an instant reminder of how much prices have risen for every Kiwi household. Why have costs increased so quickly, and how long will this last? And what can you do to help your household keep up with your new cost of living? Why is the cost of living increasing? The cost of living has been rising around the world, thanks mainly to factors caused by the Covid-19 pandemic. The pandemic changed how we live, what we buy, and who we see. The previous balance of supply and demand has been completely upended. We stopped spending, then we started spending far more on products and far less on services. That threw our supply chains into chaos and it’s only just beginning to emerge from it. Toss into the mix a war in Ukraine and you have a recipe for supply shortages and rising prices. “This is a global phenomenon,” says ASB senior economist Mark Smith, who recently published a Household Living Cost Outlook. “The price of tradable goods, supply-chain frictions, oil prices – they’re adding a lot to inflation at the moment. “You can then see it broadening out to include domestic prices picking up. “As demand has switched towards goods and away from services, the economy in New Zealand and around the world needs to reorientate, and it doesn’t have the capacity to do that quickly.” WI NTE R 2 0 2 2 | I N F O R M E D I NVESTO R 6 1
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There’s a Clear Shift in Market Dynamics There's been a cooling in investor demand, but the property market is still attractive, says Jen Baird, Chief Executive at REINZ. The property market is cyclical. We’ve seen a long period of exceptional growth over the past couple of years, despite Covid-19 uncertainty. This period of high activity and growth saw property prices reach a record median high of NZ$925,000 in November 2021. Momentum has since slowed and we’ve seen a clear shift in market dynamics. We now find ourselves in a market that’s changed gears to a more settled pace. Property prices tend to be more sticky when they’re decreasing than increasing because people simply chose not to enter the market, or to not sell if they can’t achieve their price expectations – this is a dynamic we’re seeing now. Month-on-month, across New Zealand the median property price increased 0.6 per cent. However, in many regions prices dipped, with Otago (down 8 per cent) and Southland (down 7.4 per cent) seeing the greatest decline from February to March. Prices continue to increase year-on-year in most areas across New Zealand and nationally we saw an increase of 7.9 per cent, but the rate of annual price growth has eased significantly. Further, sales activity is down, and stock and the median days to sell are up. A market changed We’ve talked a lot about the economic headwinds that gathered through 2021. These macro and micro economic factors are now embedded, and it shows in the current market sentiment. Tighter lending criteria, loan-to-value ratios (LVRs), and increasing interest rates, coupled with inflation – worsened WI NTE R 2 0 2 2 | I N F O R M E D I NVESTO R 9 0
by the Ukraine war – are contributing to uncertainty and conservatism. Last year we saw a fear of missing out (FOMO), but so far 2022 has been marked by a fear of over-paying (FOOP). A recent survey of real-estate professionals conducted by REINZ and economist Tony Alexander found FOMO is now essentially non-existent – replaced by FOOP. In April, only 6 per cent of agents surveyed reported buyer FOMO, compared to 70 per cent in October last year. The effect is a smaller pool of buyers willing or able to pay the prices reached towards the end of 2021.
A time to sell New listings are not soaring. Investors haven’t exited the market en masse, nor are owner-occupiers rushing to sell, comfortable in a strong labour market that means they can service their mortgages. Vendors remain motivated in many parts of the country. The property market is partemotion, part-rational. Some may choose to hold off selling, but others will keep upsizing, downsizing, or making lifestyle changes. The wheels of the market won’t stop turning. The challenge for vendors now is adjusting expectations. They should talk to realestate professionals to understand the nuances of their local market. Property investment There’s been a cooling of investor demand, but the property market remains attractive. Many predicted the tax changes of March 2021 would see an exodus of investors but, while some took a step back, the exodus never materialised.
Real estate professionals across the country report a fall in the number of first-home buyers and investors, in particular.
Despite the challenges of rising interest rates, tax changes, Healthy Homes standards, and tenancy law changes, investors continue to hold residential investment property long-term.
Is this a buyer’s market? Today’s dampened demand coincides with an increase in supply. It was that lack of supply that gave urgency to the market through 2021. In March, many regions recorded a significant increase in stock levels, partly because properties were longer on the market as the time to move a sale through to completion increased.
Tony Alexander noted most did not over-borrow when LVRs were removed between May 2020 and February 2021, and banks’ requirement for borrowers to be able to service a mortgage increase rate of 3 per cent or more has provided a buffer for most. With 40 per cent of New Zealanders renting, there’s a clear need and opportunity for rental properties.
Basic economics says a decrease in demand and increase in supply tips the scales in the favour of buyers. In theory, more stock is good news for all buyers, giving them more time to shop around and do their due diligence. However, compounding factors make for a more complex scenario.
Many of us have seen similar downturns before. Downward pressure from LVRs, decreased affordability, tightened lending, and rising interest rates have moved the market to a more measured pace. This will continue, but it’s impossible to pick when it will reach the ‘bottom’ or pick up again.
Property prices remain firm and the current environment has curbed some buyers’ access to finance. But buyers backed by equity now have more choice and more time.
When you’re investing in property, it’s not about timing, it’s about time on the market. The longer you hold the property, the better your outcomes.
PROPERTY
Median House Prices Month-on-month March 2022
Northland
$820,000
Bay Of Plenty
$937,000
Auckland
$1,200,000
Gisborne
Waikato
$715,000
$845,000
Taranaki
$650,000 Mananawatu/Wanganui
Hawke’s Bay
$610,000
$780,000
Tasman
$870,000
Wellington
$939,300 Nelson
$800,000 Marlborough
$660,000
West Coast
$345,000
Canterbury
$701,000 Southland
$440,000 Otago
$735,000
National Median Price
Up 0.6% $890,000
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Snuggly Style
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Take inspiration for your home as the season changes. 7
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Cosy into colour.
Resene Reservoir
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Resene French Grey
Resene Galliano
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Resene Dark Knight
Wrap your walls in cosy and soothing hues to brighten the dullest days. 1210
8. Bottle salt and pepper grinder in grey - superette.co.nz, 9. Keepsake earrings - silkandsteel.co.nz, 10. Mohair scarf in steel - deadlyponies.com, 11. Moma cube clock alume in grey - boltofcloth.com, 12. Ivy locker in slate - nood.co.nz, 13. Kenzo World by Kenzo 75ml EDP - farmers.co.nz
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