Property in New Zealand. Photograph by Sherelee Clarke

The property market in Auckland

Crises… What Crises?

I am not sure what all the fuss is about when it comes to the Auckland property market. It seems the journalists are talking up the property market once again as well as certain politicians. Especially David Shearer, who seems to be trying to save his leadership role by making outlandish irresponsible statements like the one about foreigners buying up all our residential properties! Where does he get these ideas?

I suppose a desperate man will do anything to stay in power. Like the statement he made during the Mighty River Share float saying that Labour will nationalise all energy companies. What this did instead was lose $500,000 of the share price. Was that good for New Zealand?  Of course not!  It is a type of economic espionage and in many other countries he would have been sent to jail for saying something so out of control in the middle of an asset sale. Now let’s get back on track to the property market.

I have studied the property markets in Australia, South Africa, USA and New Zealand and have been directly involved in the property market for 35 years. There is no magic wand or crystal ball but there are facts, trends and values. Markets move from time to time because of the prevailing political environment or financial and mortgage rates but, in essence, it is the old adage of supply and demand. For the past 5 years during the global financial crises property in New Zealand has plateaued and there were little, if any, increments of value during that period. What is happening is that the property market is playing catch up. If you go back 40 years of New Zealand property prices you will see that properties increased by an average of 10% per annum – not consistently but up and down zigzagging across the graph. Draw a straight line and the increase is, on average, 10% per annum. (See Dolph de Roos’s book).

Auckland property prices are only re-adjusting to this trend. The biggest mover is the lack of property stock caused by low building numbers. Before 2007 there were between18 000 to 20 000 new houses built in New Zealand every year with the bulk being built in Auckland. That figure dropped to between12 000 to 14 000 per year for the last 5 years, a drop of approximately 30,000 houses that were not built because of slow demand during the GFC, together with higher mortgage rates. New Zealand has fared extremely well during this period because of the tighter monetary policies of our banks and a more conservative attitude to risky derivatives which affected the rest of the world. I believe that Europe will take 15 to 20 years to get back to where they were before the GFC.

So crises, what crises?

Due to the shortage of stock with the 30,000 shortfall we need to build more houses, create the density that the City Council is advocating, keep the mortgage rates low and encourage saving. It has never been easy to buy your first home.

I can remember at 24 years of age and trying to buy my first home. Maxed out my credit card, secured a loan from my employer, 5 years of savings and a small loan from Daddy. It was the cheapest house in the street and in the worst suburb. But you have to start somewhere. Today, kids want double garages, two bathrooms and 200m2 of house as their first home. Get real.

As far as foreign buyers are concerned – are they buying up all the residential properties? The answer is no. Just because you see lots of Asian faces at auctions does not mean they are foreigners and not kiwi residents. They know property is more important than the average Kiwi. At this stage only 4% of the residential sales are to foreign buyers, which is a drop in the ocean comparatively. This investment is crucial to New Zealand’s economy. Suddenly because of all the misinformation we are in need of capital gains tax because too many investors are buying investment property. Well, imagine no house to rent, what then? The government of the day will be even more hard pressed to supply affordable rentals to people who need shelter at the cost of the tax payer and the economy. The more government spend on housing the less money it has for roads, trains, infrastructure, etc. New Zealand needs a rental pool of houses at no cost to the economy.

Capital gains tax is also not the answer. Most countries to have adopted this system would rather have not gone in that direction as the collection costs of such a tax is enormous and sometimes very difficult to monitor. It also has a tendency to reduce the rental pool. Most people who protest about capital gains taxes have no real idea about property, the way it works, or taxes at best.

Right now the law for any property speculator, buying and selling houses, is it’s a taxable commodity. For example, a so called property investor who buys a house, renovates it and then sells it, is liable for tax on the profit. Nowhere in all the articles in the New Zealand Herald have I heard this argument. It is always to nail the investor/speculator because he is profiteering. Rubbish! We all pay our dues and one has to look at the bigger picture. Ignorance is often bliss. Unfortunately labour has it wrong in this case but will get the votes of everyone who does not have a house. And if Labour gets into power the story will change again. I rest my case!

No government can afford to give houses away but they can have subsidised schemes where the deposit can be the rental for 5 years.  No one can change market trends unless you take drastic action. Unfortunately, like the Greens saying we should print money or Labour saying building a house for $340,000 can be done before doing any homework. However, it is possible with the co-operation of all organisations involved.

Written by Peter Woodberg, Property owner, Entrepreneur, Property Consultant, Mentor, Editor, Immigration Consultant.

Hallowween is celebrated in New Zealand, Photograph by Sherelee Clarke.

When you finally arrive the big rush starts to get your life in New Zealand going. The sooner you can get your life back into a familiar routine, the easier it is going to be to adapt to your new surroundings.

This is especially true for the kids. You want as little disruption to their routine as possible. The sooner they are back in school, making friends, etc. The sooner they will settle in to their new lives as Kiwis.

Below you will find a checklist which will help your remember all the important things that need to be taken care of :

If you have pets then you will need to decide whether to bring them with or not. There is a process to taking pets to New Zealand and we will show you how here.
Factors that you would need to consider are:

1) Will you be able to live with the knowledge that your beloved pet has been left behind?

2) Can you afford to bring the pets with? It can be very costly to bring your pets over. Then the pets also need to be micro-chipped for identification purposes, plus there is also a mandatory quarantine period when they arrive (10 days) which needs to be paid for.

3) Will the pet(s) handle the trip and the 10 day quarantine period?

4) Will your pets fit in, in New Zealand. Houses don’t generally have walls all around the property, so if you have a dog that likes to go walkies every time you open the gate, then you are going to pick up problems here. The same goes for if your dog likes to bark at the slightest movement or noise. You hardly ever hear a dog bark in New Zealand and you never see stray dogs roaming the streets. Kiwis LOVE their pets, especially dogs, but they just that – pets. In South Africa our dogs are actually guard dogs that double as pets. We want them to bark at the slightest noise, etc. Here the neighbours will call the authorities if you have dogs that constantly yap or run around the streets.

5) If you will be renting when you arrive then your choice of rental will be severely limited. Most landlords do not allow pets. The reason for this is because Kiwis like to let their pets enter the house and usually also sleep indoors at night. Pet hairs are notoriously difficult to remove from carpets, etc., and pets indoors can make the house smell, so most landlords err on the safe side by not allowing pets on their properties.

If you don’t then you will need to either find good homes for them, or if the pet is in it’s twilight years and ill, then many owners decide to have the pet euthanized. Either way it will be a very difficult and traumatic decision, especially for the kids.

If you do decide to bring the pets with then you will need to organise :

Shutting down your life in South Africa is a mammoth task and it is very easy to forget something. We have compiled a checklist for you with the most common things you will need to do before you leave.
As you work through the list it will help you remember about other things you need to do. Add them to the list immediately.

Then go through your post from the past 3 months. This will also help you discover the other items that are not on our list.

 Shutting down your Life in South Africa

This is a very emotional, and stressful time. The excitement of your PR being granted will quickly be replaced by the realization that this is not just a plan or idea anymore, this is happening for real. This is when panic and second thoughts can quickly take over so it is very important to maintain your focus. Keep your list of reasons why you are leaving South Africa and your list of reasons why you have chosen New Zealand close at hand to remind yourself why you are doing this. Try to focus less on the emotions of shutting down and focus more on the excitement of starting up again in New Zealand.

Whether you are bringing a container or not, you will invariably find yourself doing a big clean up at the house. Deciding what to bring and what can be sold / dumped. When going through this process always remember that the houses in New Zealand tend to be smaller than in South Africa. In fact, I don’t know a South African that brought a container over, that doesn’t still have unopened boxes in their garage! Ask yourself : “Do I need this?” and answer it truthfully. Chances are if you have not used the item in the last 12 months, you don’t need it. Obviously if you do have space in the container, then you can still bring it with. If you find you didn’t need it after all, then you can always donate it to the Hospice or Salvation Army.

Container to New Zealand or not?

The question of : Do I take my belongings in a container to New Zealand or not? is a tricky one to answer. We have had many discussions about this on the forum and we can honestly say that this is the one topic where there is simply no consensus.

The reason for this is that some folks attach more emotional value to their belongings than others. One family may be quite happy to sell everything off and start fresh with everything new in New Zealand. Other families have found that they were able to settle in to their new life easier with the familiarity of their belongings around them. Others have decided to sell all, only to be sorry after they arrived. Yet others have brought everything including the kitchen sink with and in hindsight feel they should only have brought a small trunk with a few personal effects with instead.

For this reason there is no do or don’t advice to give here. What we can do is give you a few thinking points to ponder on when making your decision.

1) After two weeks on holiday you can’t wait to get back to your house because you are feeling home sick then you may want to consider bringing your belongings with. If however after two weeks you haven’t even thought about your stuff back home, then you will probably be okay selling everything.

2) If you have a large amount of brand new, large ticket items in your house like beds, lounge suites and whiteware it may be cheaper to bring your container along.

3) If the kids are very emotional about the move and the thought of leaving all their beloved toys along. Some kids are more happy go lucky than others and couldn’t care less and actually look forward to having all new toys, while other can become emotionally unstable if they are not surrounded by their belongings. A good test of this is whether your kids are happy to sleep over at Grandma or a friends house. If they can happily do that, then you should be able to leave everything behind without a fuss. If however it is a big rigmarole or impossible to get your kids to sleep out, then they will probably not cope well without their belongings around them in New Zealand.

4) If your furniture is quite expensive then it may be cheaper to bring it over in a container than to buy new in New Zealand.

5) If you have rare items like antiques that cannot be replaced and that you don’t want to part with, then you would at least want to bring those items with.

6) If the thought of starting over, sleeping on the floor until you have bought a bed, running around to buy even the most basic utensils because you didn’t bring them with, is too daunting to even contemplate, then you should rather bring your belongings with.

7) If you are not too worried about new furniture, etc. then you may find that selling everything off and then replacing them here by hunting around the Hospice and Salvation Army stores can actually net you a profit. These stores sell items that other Kiwis don’t use anymore so have donated them to Hospice or the Salvation Army. You know what they say about one mans junk is another mans treasure. We have bought many things at these stores dirt cheap (and we brought a container over). Everybody does it here, it isn’t like walking into a second hand store in South Africa – nobody looks at you funny

8) If your furniture is old and probably due for replacement anyway, then you may want to compare the prices in South Africa and in New Zealand first. It may be cheaper in South Africa, but then you still need to pay for a container to get it here.

9) Selling everything in South Africa means you will have to sell at bargain prices to ensure you get as much as possible sold, otherwise you are going to end up giving it away just before you leave. Will the money you get in be enough to replace those items? If not how long will it take you to replace them on the salary you will be earning in New Zealand.

10) If you bring your container with and then find you are battling to find work, then at least you don’t still have to replace your belongings. Your Rands become very few Dollars when you arrive so if you find you need to live off those Rands in New Zealand, they are going to disappear very quickly. If things go really pear shaped, then at least you have some stuff you can sell.

11) If you don’t bring a container with and then find yourself struggling to find work, then you will be roughing it for a long time using borrowed camping chairs and blow up mattresses, but at least you will have some extra cash which will allow you to survive a lot longer.

12) If your whiteware breaks in New Zealand, then you will probably not be able to have it repaired and will have to replace it anyway.

13) For many a new life with new belongings is just the break they are looking for because with belongings come memories.

What you can do to also help you decide is:

1) Call a removal company and get a quote so you know what it will cost to bring your belongings over.

2) Walk through the house and make a list of EVERY SINGLE item you will need to buy again if you do decide to sell up and start over. Then go price them online. Also mark which are the essentials that you will need to buy immediately when you arrive.

3) Walk through the house and make a list of ALL the items in the house that you can sell and estimate a price you can get for it. Then take at least 30% off of your estimate because we all overestimate the value of our own stuff and how much others would be willing to pay for it. Then work in another % loss to make up for the items that you will end up giving away because you couldn’t sell them in time. Will the money you raise be enough to get your essentials list in point 2 above started?

This should give you enough food for thought and enough talking points for you and your partner to discuss when deciding. In the end of the day only you know yourself and your family and which option is going to be best for your particular situation.