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Making property a long distance love affair

Friday, July 16th 2010, 5:37PM 7 Comments

by Philip Macalister

It’s often said that New Zealanders have a real love for property, but I wonder how far it will stretch?

We know the government has been trying to break up this long term love affair, but with little success. Judging by two surveys, one run by Landlords.co.nz and the other by QV, investors are going to remain property investors.

However this week we have had more evidence that the local housing market is pretty flat and there are low sales volumes. In a word it’s lethargic.


Investors have been used to active markets in recent years and could well be interested in something more exciting than the local market.

It seems quite a few New Zealanders have bought property in Australia but I wonder how attractive the “lucky country” is currently.

I did read a piece which said the Australia has one of the most expensive house markets in the world.

One of the “new” things that I’m hearing about in the market is a number of companies wanting to promote the idea that Kiwis buy residential property in the United States.

Yes this sounds a little outlandish at face value, but the numbers being bandied around will look attractive.

I assume a lot of these properties are ones where the lenders have foreclosed on them and wanting out.

I have come across this idea before. One of the first times was when I profiled a quite remarkable Rotorua-based property investor Tracey Hintz. She owned lots of property in New Zealand and employed many different strategies.

However she also bought some property in the United States and made some good money.

There is a warning with this story. It’s not all plain sailing and the US housing market is remarkably different to ours and how it operates. No doubt this is more we will hear about soon.

I’m interested to see how many investors would consider investing in the US? Once I have some examples of the numbers being talked about I’ll post them here.

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Comments from our readers

On 16 July 2010 at 7:17 pm tony said:
Would be interesting to hear Rolf De Roos take on the above article or even Robert Kiosaki.
On 16 July 2010 at 8:52 pm Chris said:
They sold all their property years ago and now are living under other names.... in various exotic regions of the Globe! Did I make that up?.......
On 17 July 2010 at 5:12 pm cam price said:
Grass always look greener over the other side of the hill. I think we just might have to sit back and wait for solid energys projects down south and the oil barrons creating some activity.Unfortunately that could take for some time given the nature of the nz councils red tape . Farms in southland arnt being funded for finance and has stalled the dairy boom,although commodity prices are high. John key is certainly getting the mining and oil off to a silent start .Trying to follow auz for the minerals and norway for the oil. Cant blame him auz and norway are rich........
Property is a long term investment this recovery is long term
On 19 July 2010 at 9:46 am Ricardo said:
I bought in California in 2009. Some property was available for 10% of the prices 3 years prior. Banks were offering maps with foreclosed houses. Drive around and come back if you like the look of one. All stock in good condition. Rents were still in the same relative ballpark, just that no-one in the US can buy, and the US banks won't lend. Can purchase using a NZ credit card. All very straight forward. As the land alone is worth more than what the properties are being offered for, how wrong can it be long term? At some stage prices must start to rise again? I envisage a ten year investment.
On 19 July 2010 at 12:12 pm Christopher said:
Being local and in regular contact with the tenant and making regular inspections also means the properties get looked after. That might be a bit tricky with a property in the US or to a lesser extent on the gold coast unless you accept a 3rd party looking after the property for you. The US sounds like a capital gains punt for when the US economy gets going but there are large numbers of existing properties available before house prices consolidate.Unemployment is at 9.5% in the US so even getting a good tenant might be difficult. Have to get a return commensurate with the long distance risk.
On 20 July 2010 at 6:53 am Steve said:
A couple of comments:

1. NZ's major structural economic weakness is its heavy load of foreign debt. This is mainly private sector debt, and much of it is attributable to banks having to go offshore to fund mortgage loans into what remains one of the world's most grossly overvalued real estate markets (relative to earnings). Whilst the Treasury can't seem to summon enough nerve to bight the bullet, the bravest step it could take to protect the nation's long-term economic health would be to eliminate real estate's privileged tax position in order to reduce the private sector's debt load and redirect savings to more productive purposes.

2. As for Kiwis investing in the US. Sure, there might be some very long-term opportunities. However, there is a need to be realistic about what is going on: first, demographics (ageing boomers wanting to downsize and monetize what's left of their real estate 'investment' to fund retirement) will sit heavily on medium- and high-end property for years; second, property as an investment has benefited inordinately (worldwide) from a credit expansion which began in the early 1980s and went parabolic after the turn of the century - and it isn't coming back any time soon, which will place a heavy burden on properties in all price ranges. The world has changed immeasurably in the last two years. Beware of trying to catch a falling knife and, at the very least, ask why so few cashed-up Americans (of whom there are still a lot) are rushing back in. Probably because there's a lot more pain to come, certainly in the bubble states.
On 30 July 2010 at 11:14 pm Hamish said:
Was at the local earlier and my mate was saying how his friend had bought a $100k propperty in the states with $500 per week rent.
Commenting is closed

 

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.24 6.79 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.24 6.79 6.65
ASB Bank 8.64 7.24 6.79 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.24 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.84 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.04 - -
Co-operative Bank - Owner Occ 8.40 7.24 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.74 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.75 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 ▼8.09 ▼7.59 ▼7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 ▼9.09 ▼8.59 ▼8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.74 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.04 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.24 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.49 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.89 6.65
Median 8.64 7.29 7.32 6.65

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