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What you need to know when downsizing

September 2021

 

From the moment most people start their property journey they have dreams of large mansions, sprawling gardens and plenty of space. But there comes a time when you may not reach those dreams, but you know it is time for a lifestyle change and a little less space.

Throughout the years you have probably accumulated a lot of stuff, and the exercise of downsizing will not be the same as any other property move. You will need to thoroughly go through everything you own to decide what to keep and what can go. There will not be enough room in the smaller home to take everything with you.

Before you make the decision, it is important you do some research so you make the right choice.

You first need to consider what sort of property you want to call home. Whether you are after a smaller section and house, or considering an apartment, townhouse or even a retirement village. All of these options reduce your maintenance and costs and increase your convenience.

Reasons to downsize

It is never too soon in life to downsize, even though the term is often associated with retirees. However, there have been many younger families trading in their 4-bedroom houses, manicured lawns and gardens and transplanting themselves to the heart of a city to enjoy the freedoms that apartment living offers.

  • These are some of the reasons many decide to downsize:
  • Reduced utility costs
  • Less time spent on cleaning and maintenance
  • Greater property choice
  • Better access to amenities and transport services
  • What to consider when downsizing?

Don’t take the decision to downsize lightly. Take the time to ask the right questions and objectively assess each option, which rooms of your home you can make smaller and those you can’t, and then you are more likely to make the right decision

Location

If you are no longer going to have extra space and a large section, location is key. Whether you want to be close to friends and family, or within walking distance of malls, restaurants, transport centres, sport clubs, parks or the beach, these are all things you need to keep in mind when deciding on a property.

Your new home will be smaller, so having easy access to these facilities will act as an escape or an extension to your new home. This will also help define what the next chapter of your life will look like.

Leave no stone unturned

If you have set your heart on an apartment or townhouse, you need to know everything about that property. You will be sharing walls, so get to know the neighbours so you do not end up moving next to undesirables.

Once you have explored the area and got to know the community, you need to ask questions so you understand any rules that come with living in that community. Determine if there are Body Corporate fees, what is it and is it likely to change? Find out what rules there are, these could limit the types of pets you can have, or what colour you can paint the walls.

It is best to know everything about the property and the community before you start unpacking your boxes.

Is your current furniture functional?

Downsizing means exactly that, downsizing. This means the furniture that filled your home might not fit in your smaller place. You don’t want to relocate bulky furniture which means you decrease the functionality of the limited space you have. It is important you make all of the space you have comfortable so it can accommodate all aspects of your life.

Keep your future in mind

Sorting through all your belongings and treasures as you start packing up your home to downsize can be a big process. It may also be a process you do not want to go through again. If you only want to move once, you need to consider your future when inspecting your downsized options.

Whether it’s a smaller home and section, a townhouse, apartment or a retirement village, you need to consider whether this home will allow you to live out your twilight years safely, independently and comfortably.

Make sure this property can be your forever home.

 

 

Surviving Interest Rate Hikes

August 2021

 

Borrowing money became cheap in the last year as interest rates fell, which encouraged many to make the leap onto the housing ladder and have a mortgage for the first time.

However, interest rates have already started to jump. For example, ASB’s cheapest rate as of mid-July was 2.55 percent - up from a low of 2.19 percent.

Although it looks marginal, a hike of this level means an additional cost of about $360 a year for every $100,000 of mortgage. When interest rates increase further, people will need to adjust to be able to keep up with their repayments, as it may be a stretch for many homeowners to have to find an additional $3000 or more a year to service their debt.

Mortgage Lab CEO Rupert Gough suggests those who took advantage of the low mortgage rates will need to be prepared for higher costs when their fixed rate expires.

“These mortgage-holders should start planning for the extra $40 or so they will need to find a week. Between feedback from the Reserve Bank on the OCR and this latest move from ASB, all evidence points to interest rates being higher in 2022,” he said.

To prepare yourself, and your budget, calculate your individual mortgage repayment at 3 percent, 4 percent and 5 percent, Gough said.

“Start putting the money aside now and find out how your individual bank treats additional payments on your mortgage - some allow additional payments with no penalty - and try to increase your payments in the near future. A large amount of stress around increasing interest rates is caused by the shock of suddenly paying a higher amount.

“Planning now will minimise this.”

Before interest rates increase further, it could be wise for existing homeowners to consider breaking their current interest rate to try and grab the current low interest rates.

“Breaking a fixed term comes with some risk; you may pay break fees to break an interest rate only to find they go even lower in the future, but the signal of interest rates increasing rather than decreasing has never been stronger,” he said.

“The good news for those looking to buy, be it their first home or an upgrade, the odds of being pre-approved haven’t actually altered much. Banks assess mortgage affordability at a much higher interest rate (usually around 6.5 percent) and, to date, the banks haven’t altered this.

“It does, of course, mean the interest rate you actually pay will be higher but, the message is, this round of rate hikes doesn’t affect your ability to get a mortgage… yet.”

 

The grass is still green over the horizon

July 2021

 

Closed borders, lockdowns, gathering restrictions and social distancing, the last year has been one nobody could have ever imagined. However, the one thing that everyone has been talking about this past year is property.

With uncertainty in the economy and wings clipped that stopped people from being able to travel, people decided to turn their attention and inject their money into the housing market.

Low interest rates helped people get on the property ladder, it allowed investors to expand their portfolio and it encouraged others to buy and sell across the country.

The rush on property meant real estate was in high demand, property sold in record times and a shortage in supply and demand saw prices soar across the country.

Although we regularly heard about the strength of the market in our major cities, and the average house price surpassing a million dollars in Auckland, the same uplift in the market has been felt throughout the regions.

Townies learnt the value of space when they were cramped up at home, and that has encouraged some to look outside of growing cities for extra room, fresh air and a new lifestyle you can only get in the regions.

Having a few acres of land has become very highly sought after, which has seen the number of lifestyle properties sold in the last year increase 46 percent. The Real Estate Institute of New Zealand (REINZ) figures showed 9,942 lifestyle properties changed hands in the year ending April 2021.

The attractiveness of towns and smaller communities has seen prices pick up, increasing property values.

First home buyers have also recognised the benefits of buying their first home in the regions, with a few areas seeing more new buyers active in the market than investors.

 

 

Preparing your home for a hassle-free winter

June 2021

 

The days are getting shorter, the temperature has dropped, and you always grab a coat when you leave the house - winter is nearly here. During these chilly months of the year, you probably want to avoid going out in the cold and try to keep a warm, cosy home to enjoy after a long day.

Before the regular frosts and damp days become a permanent feature, you might want to create a list of jobs to do to help get you through this winter.

Clear your gutters

It is best practise to clear your gutters, downpipes and drains regularly, but it is even more important going into winter as it is likely there has been a build-up of autumn leaves.

The once lively, green leaves, that turned orange and fell could have created a plug that has quickly blocked your gutters. Blocked gutters can lead to drainage problems, water leaks and flooding at ground level.

Water collected in blocked gutters could lead to water continuously running down exterior walls, and this can cause damp to set in.

Also, stagnant water may freeze in the gutters and downpipes, and this may mean they could come loose with the extra weight, or even fall completely. Additionally, any cracks and gaps could expand and create a new entrance for mice and rats to get into your home.

Make sure you take the time to clean your gutters to avoid any problems this winter.

Check all your taps and pipes

Do you know where your water comes from? Do you know where your mains shut off valve is in case of a leak?

There is always a chance of a winter freeze, and with temperatures plummeting that increases the risk of pipes freezing, and even bursting.

Insulating pipes could be a cost-effective way to prevent this from happening. We are lucky our winters are not as harsh in many areas of the country, compared to other countries. Let us hope we do not have a winter storm like the one that halted Texas earlier this year, causing widespread power outages, leaving homes cold and pipes bursting, causing flooding.

However, even though the risk is low in most parts of New Zealand, make sure you know where your main water taps are, and that you have no leaks before Jack Frost visits.

Keep the air flowing

You want to keep as much heat inside when it is cold outside, but it is important to keep good air flow all year round.

Shutting curtains and windows, retaining heat can lead to condensation, which causes dampness. To avoid this, it is good to keep windows open all year round, particularly in the kitchen and bathroom so that warm air has a way to escape.

Moisture that is collected on the internal walls can create a breeding home for mould, which can create health hazards.

 

 

Getting a former rental ready for market

May 2021

 

Long term rental properties do not tend to get the cosmetic updates that homeowners invest into their own properties. While the majority of rental homes are in tip top structural condition and meet legal requirements, they may look tired or not as inviting.

There are two folds when a rental property hits the market, the owner may want to give it an update to make it inviting for potential buyers, or potential new homeowners may need some encouragement to see the true potential.

To show the potential of a property and make it look and feel like a home, it does not need to require deep pockets to get results. Pick and choose what fits your budget and what would enhance the property.

Carpet is a good place to start. As soon as a prospective buyer takes off their shoes and steps onto soft carpet, they have made an instance connect. New, soft carpet will be noticed, but if it did not create a reaction, those floors will not be remembered.

Do not underestimate the benefits of a deep clean. A bit of elbow grease, or getting in professional cleaners, will clear any dust, remove any marks, and will reveal the areas that need to be addressed to make this former rental a new home.

A fresh coat of paint may be all it needs to freshen up the property, inside and out. This will transform a former rental before it hits the market.

Hiring a handyman to walk through a property is a way to pinpoint those small jobs that may annoy buyers and get them fixed right away. Making sure light bulbs are working, doors open and close properly and anything else that might draw the eye and detract from the property.

Once you are ready to sell, staging the property will show how this former rental can be a home. Buyers can sometimes lack

 the imagination to visualise what a home will look like with their furniture, and an empty property will highlight any visual blemishes.

When selecting furniture to stage your property, pick modern furniture that fits the space, do not pack in oversized itemsthat would make the room look cramped and small – you are trying to show off the property’s potential.

You can add colour and character by hanging artwork to bring a personality to the room.

If you have bought a former rental, and you want to make it your home, lighting can make all the difference.

Feature lamps in strategic locations can brighten a room and add character. If it is within your budget, removing old, smaller windows for large picture windows will let in more natural light and change the feel of a room.

If you are going to update the flooring after buying, do not cut corners with cheap underlay. A quality underlay will make an immense difference, you will feel it underfoot and benefit from the added insulation.

New blinds and window coverings do not have to be expensive and can add to the style of a home. If the rooms are small, curtains can clutter a space – so keep that in mind.

It is important that once you move into a new home, avoid making any big decisions immediately. Live in the home and figure out where the light comes from, what way the wind blows, and determine the areas of the property that you can truly enhance and add value to your home.

 

 

Making your home appealing for a winter sale

April 2021

 

Nobody likes a cold and draughty home, and if you are getting your home ready for a winter sale, you want people to know how warm and toasty their future home will be. Before Jack Frost starts nipping at your toes, and ice crystals blanket your lawn, you want to plug all those gaps that allows cold air to bring down the temperature in your home.

A warm and dry home is important for your family’s health, so it is critical to make sure you keep the temperature between 18 and 21 degrees.

Up to 20 percent of heating can be lost through draughts, so your first step should be tracking down and blocking any openings – around doors and windows – to trap that warm air inside and keep the cold out.

Insulation is a smart way to keep a home warm and minimise heating costs. A well-insulated home provides a healthier living environment as it reduces dampness and condensation, while maintaining heat.

Underfloor and ceiling insulation is now compulsory in rentals where it is reasonably practicable to install. However, if you need more insulation to trap in the warmth, there are government subsidies available to help homeowners and landlord.

Once you have your home warm and toasty, and you want to sell, now it the time to make your house look warm.

Spinning the colour wheel and adding a lick of warm coloured paint is an easy way to bring warmth to a room. Warm lighting and natural light add to the ambience. Also, warm coloured bulbs throw out softer light and give a cosy feel to a room.

Although outdoor plants are mostly dormant to survive the winter, indoor plants will thrive in your warm home. Not only do indoor plants contribute to a cosy and inviting feel, by grouping different shaped pots you can create a focal feature.

Do not overlook the outside, although we spend most of our time inside this time of the year, street appeal still matters when you are selling your property during winter.

Get out the water blaster and clear away green slime and dirt. Clean out the gutters, remove any stray leaves to make your home look inviting during the coldest and wettest months.

Those finishing touches, like a soft blanket tastefully laid across a chair, or placing inviting cushions on a couch will help create those first impressions that count.

Once you have your home feeling and looking warm and inviting, you know you have ticked all the boxes and you are now ready for a winter open home.

 

 

Buyers are ‘aggressive’ but not willing to pay ‘silly money’

March 2021

 

New Zealand’s active property market has seen home prices climb at record levels, but buyers are reluctant to overpay for a property. REINZ’s recent survey found that first home buyers (46 percent) and investors (31 percent) made up the bulk of interest in property, and this has led to strengthened prices.

Property prices have increased across the board, and strong buyer demand is at a level that Harveys Te Atatu business owner Paul Vujnovich has not seen during his 17 years in the industry.

“That being said, since Christmas it appears buyers do feel that current pricing levels are bordering on excessive in some situations. We have seen some properties ‘stick’ where sellers’ expectations are just simply not realistic, even given the strong buyer demand,” Vujnovich said.

“This is quite common in a market such as this where sellers increased expectations can get outside where the market sees value, even in a seller’s market such as this.”

 

Despite a lot of aggressive activity, Vujnovich has seen a pushback from buyers who are not prepared to pay ‘silly money’ for property, especially in the $800,000 to $1.2 million bracket.

In contrast, developers appear to have deeper pockets. “Developers are very active and are happy to pay excellent money for ‘slam dunk’ development properties. However, a property having a large land parcel alone does not necessarily present attractively should the zoning, services and access not be favourable,” he said.

LJ Hooker principal Dylan Turner has noticed a real sense of urgency in his local market across South Auckland.

 

“Buyers know they are paying too much, but they understand the market should keep going up this year and continue to increase year on year into 2022,” Turner said.

 

He noted that there are still thousands of New Zealanders overseas who want to come home.

 

“Supply and demand will dictate our market trends for a few years yet,” he said. “Interest rates are still crazy low, and I really think the Reserve Bank is hamstrung with no ability to move upwards in the short term.”

 

Turner’s advice to homeowners considering selling is: “it’s a great time to sell, but be warned, you will want to buy again very quickly as the market can race up by one to two thousand dollars a week when the conditions are like they are now.”

 

 

Positive property market conditions continue in 2021

February 2021

 

Despite the economic slowdown Covid-19 restrictions caused around the globe in 2020, New Zealand avoided getting stuck in an economic rut, and swiftly got out of a recession.

The property market went from strength to strength, home values reached new records and listings were sold in record times.

As experts turn to their crystal ball to predict what 2021 will deliver, conditions remain good for continued market growth.

Low mortgage rates and a tight supply of listings could keep an upward trend of property values throughout the year.

CoreLogic’s Senior Property Economist Kelvin Davidson has noted how the property market has become political to try and cool the heat of rising prices. He said Finance Minister Grant Robertson’s public letter to the Reserve Bank Governor demonstrates it might not be “plain sailing for the property market in terms of regulatory measures in 2021”.

“There’s already speculation emerging about an extension to the Brightline Test (a capital gains tax that currently applies if an investor sells a property within five years), while debt-to-income ratios for new mortgage lending is also rearing its head too,” Mr Davidson said.

LVRs are set to be officially reinstated by the RBNZ on March 1, this will not affect owner-occupiers, but investors will need to have at least a 30 percent deposit instead of 20 percent.

“With general demand still so strong, it seems unlikely that the return of the LVR rules will be a game-changer. Of  course, as we saw back in 2016, pushing investor deposit requirements back up to 40 percent could be more significant – and while it doesn’t seem to be on the table at present, that couldn’t be ruled out if market momentum remains strong,” he said.

Quotable Value’s General Manager David Nagel also expects property prices to continue to rise, albeit at a considerable slower rate than during the back half of 2020.

“I’m predicting we’ll see something more akin to 2019 levels of growth again, when prices increased by an average of 4-5 percent nationally, as opposed to the rampant double-figure growth that we’ve witnessed,” Mr Nagel said.

Although our economic trajectory seems positive, with no guarantee the country won’t be forced back into further lockdowns to squash any Covid-19 community transmissions, more economic strife could come. However, 2020 showed us how resilient our residential property market is, he said.

“While interest rates remain so low, it’s difficult – but certainly not impossible – to fathom a scenario in which prices would fall dramatically. “Until we address this country’s chronic shortage of housing … we’re likely to have more buyers than we do houses, which is only going to keep prices up.”

Portfolio managers will monitor the market closely this year as the strength of the housing market will flow-on to the economy, Milford Asset Management Portfolio Manager Sam Trethewey said.

“There is a risk that the RBNZ may decide to try and take the steam out of the market with renewed lending restrictions or via other macro prudential measures,” he said. “On the issue of limited supply, any material changes to land availably and possible changes to the Resource Management Act should be watched; however we would not anticipate a quick fix solution to supply issues.”

ANZ Research’s latest NZ Forecast Update expects a cooling in the pace of house price inflation during the first half of this year due to affordability and LVR restrictions.

“The market has momentum on its side, and a history of defying gravity for longer than one would think reasonable,” the report reads.

“A longer boom is entirely feasible, though that would bring with it greater chances of a bust down the track, given affordability metrics and already highly strained and household debt at record highs. If the housing market is still going strong in May, the RBNZ won’t be cutting the OCR.”

CoreLogic predicts that property sales volumes this year will be in the range of 85,000 to 90,000, similar to 2020 figures.

 

Top tips for finding that perfect bach

January 2021

Families across New Zealand ventured to the beach this summer. They got their dose of sun, sand and salt water. Folks enjoyed the slow and relaxing life, getting their toes wet, licking up the ice cream before it dripped down their fingers, and enjoying life with their family.

Families across New Zealand ventured to the beach this summer. They got their dose of sun, sand and salt water. Folks enjoyed the slow and relaxing life, getting their toes wet, licking up the ice cream before it dripped down their fingers, and enjoying life with their family.

The summer holidays have finished, and many people have got back into their work routine. But are you left wondering whether a bach is right for you?

Before you make that leap and get your hopes up that next summer you will be spending it with your family in your own bach, LJ Hooker Waihi Beach’s Gary Alway says you need to do your homework, and make sure your finances are in order.

The market is moving quickly, and there is a lot of interest in holiday homes that you need to be sure you are ready to invest and you have the money ready to go.

“Don’t wait for properties to make the internet,” Alway suggests. “If you are serious, we encourage you to meet an agent. Then we can sit down with you, get a real handle on what you want – such as the right location, number of rooms, etc – and then we can take you for a drive around the beach so you can get a feel for the different locations and pricing.”

Going into an office will give you the chance to see newly listed properties before they reach the general market.

“If you wait for a property to reach the internet, chances are our personal database is already in full flight, and clients are already going through the property – there will be people who have a head start on you,” Alway says.

Unlike your family home, Alway says you need to look at a property as a beach house with potential.

“Beach houses have often been in families for generations and they have had bits and bobs added to it over the years,” he says. “You need to remember it isn’t your permanent home and it won’t be 100 percent perfect. If you are looking for perfection, you may well be waiting for a very long time.”

You can also look at your first bach as a steppingstone.

“Your first beach house could also be a first step onto the beach, and not your forever beach house.”

Once you have found your ideal bach, every bit of leverage you can create will help sweeten the negotiation process, and make sure you can put forward the cleanest offer.

“Talking to LOCAL real estate people is key,” Alway says. “Those who know the area well are the ones who can explain all the different locations around the beach.

“Don’t wait! If you are serious you need to act as soon as you are notified the property is on the market.”