Hello,
Welcome to the twenty-second edition of the West Auckland monthly Residential Landlords Newsletter.
I am a landlord myself and have been for over 30 years. I currently own rental properties in South Auckland, the North Shore and of course West Auckland. Being a high preforming Real Estate Agent (top 1% in New Zealand) for over 26 years and always working in West Auckland I know the real estate market and the rental market very well.
In this and future newsletters I hope to provide ongoing up to date information relevant to landlords who own rental properties in West Auckland.
Regular features will include:
- Current sale prices
- Current mortgage rates
- Current rents
- A monthly suburb spotlight review
- A relevant feature article each month
| I hope you will find it useful. I am available for free advice and opinion on any residential or lifestyle real estate matter. | |||
|
Sale Prices |
|||
| Suburb |
Median selling price May 2016 |
No sold | Days to sell |
| Titirangi |
$847,500 |
22 |
41 |
| West Harbour |
$990,000 |
21 |
27 |
| Glendene |
$745,000 |
9 |
25 |
| Henderson |
$775,000 |
77 |
29 |
| Hobsonville |
$910,000 |
12 |
72 |
| Massey |
$678,000 |
51 |
28 |
| Ranui |
$720,500 |
30 |
32 |
| Sunnyvale |
$682,500 |
12 |
27 |
| Te Atatu Peninsula |
$930,000 |
29 |
28 |
| Te Atatu South |
$765,000 |
43 |
35 |
| Glen Eden |
$726,500 |
44 |
19 |
| New Lynn |
$745,000 |
33 |
30 |
| Swanson |
$740,000 |
12 |
25 |
| Kelston |
$789,000 |
11 |
22 |
| Green Bay |
$870,000 |
12 |
38 |
| Oratia |
$1,388,750 |
4 |
31 |
| Royal Heights |
$758,000 |
6 |
10 |
| Parau |
$582,500 |
4 |
13 |
Source REINZ
|
Current Mortgage Rates (14/06/2016) |
|||||
|
Float |
1 yr fixed |
2 yr fixed |
3 yr fixed |
5 yr fixed |
|
| ANZ |
5.64% |
4.25% |
4.35% |
4.99% |
5.30% |
| ASB |
5.55% |
4.75% |
4.19% |
4.39% |
4.79% |
| BNZ |
5.69% |
4.25% |
4.19% |
4.39% |
5.15% |
| Westpac |
5.75% |
4.25% |
4.29% |
4.49% |
4.89% |
| Kiwi Bank |
5.45% |
4.29% |
4.15% |
4.49% |
4.99% |
| Best of other lenders |
5.34% |
4.10% |
4.15% |
4.39% |
4.79% |
Source – J Goodrum – Internet search
| Current Rents | |||||
| 1st Dec 15 – 31st May 16 | |||||
| Glen Eden | Average Rent | Bonds Paid | Royal Heights/Massey | ||
| 1 brm flat | $167.00 | 6 | 1 brm flat | $262.00 | 8 |
| 2 brm flat | $370.00 | 15 | 2 brm flat | $390.00 | 5 |
| 3 brm flat | $455.00 | 6 | 2 brm house | $377.00 | 24 |
| 1 brm house | $320.00 | 5 | 3 brm house | $460.00 | 147 |
| 2 brm house | $385.00 | 25 | 4 brm house | $530.00 | 46 |
| 3 brm house | $450.00 | 107 | 5+ brm house | $655.00 | 8 |
| 4 brm house | $482.00 | 22 | Te Atatu South | ||
| Glendene | 1 brm flat | $260.00 | 9 | ||
| 1 brm flat | $310.00 | 6 | 2 brm flat | $385.00 | 16 |
| 2 brm flat | $360.00 | 11 | 2 brm house | $430.00 | 19 |
| 2 brm house | $390.00 | 27 | 3 brm house | $485.00 | 60 |
| 3 brm house | $450.00 | 49 | 4 brm house | $560.00 | 12 |
| 4 brm house | $530.00 | 16 | Te Atatu Peninsula | ||
| 5+ brm house | $750.00 | 8 | 1 brm flat | $280.00 | 6 |
| Henderson | 2 brm flat | $410.00 | 10 | ||
| 2 brm apartment | $380.00 | 13 | 2 brm house | $410.00 | 28 |
| 1 brm flat | $280.00 | 15 | 3 brm house | $490.00 | 90 |
| 2 brm flat | $370.00 | 51 | 4 brm house | $595.00 | 19 |
| 3 brm flat | $315.00 | 5 | 5+ brm house | $665.00 | 6 |
| 1 brm house | $307.00 | 6 | Titirangi | ||
| 2 brm house | $400.00 | 62 | 1 brm flat | $320.00 | 19 |
| 3 brm house | $460.00 | 205 | 2 brm flat | $390.00 | 21 |
| 4 brm house | $550.00 | 97 | 1 brm house | $320.00 | 6 |
| 5+ brm house | $650.00 | 19 | 2 brm house | $415.00 | 24 |
| Kelston | 3 brm house | $500.00 | 79 | ||
| 1 brm apartment | $300.00 | 26 | 4 brm house | $590.00 | 16 |
| 1 brm flat | $295.00 | 19 | 5+ brm house | $600.00 | 5 |
| 2 brm flat | $350.00 | 10 | West Harbour | ||
| 2 brm house | $390.00 | 22 | 2 brm apartment | $500.00 | 8 |
| 3 brm house | $470.00 | 64 | 1 brm flat | $350.00 | 5 |
| 4 brm house | $560.00 | 15 | 2 brm flat | $400.00 | 7 |
| 5 brm house | $590.00 | 5 | 1 brm house | $405.00 | 5 |
| New Lynn | 2 brm house | $425.00 | 20 | ||
| 1 brm apartment | $320.00 | 27 | 3 brm house | $520.00 | 99 |
| 2 brm apartment | $420.00 | 17 | 4 brm house | $675.00 | 45 |
| 1 brm flat | $295.00 | 12 | 5+ brm house | $795.00 | 20 |
| 2 brm flat | $385.00 | 57 | Western Beaches/Rural | ||
| 3 brm flat | $430.00 | 6 | 1 brm flat | $280.00 | 12 |
| 2 brm house | $400.00 | 39 | 2 brm flat | $380.00 | 5 |
| 3 brm house | $499.00 | 106 | 1 brm house | $355.00 | 4 |
| 4 brm house | $570.00 | 23 | 2 brm house | $377.00 | 32 |
| 5+ brm house | $670.00 | 7 | 3 brm house | $500.00 | 55 |
| Ranui | 4 brm house | $560.00 | 26 | ||
| 1 brm flat | $340.00 | 5 | 5 brm house | $700.00 | 5 |
| 2 brm house | $390.00 | 9 | |||
| 3 brm house | $435.00 | 74 | |||
| 4 brm house | $510.00 | 15 | |||
Source NZ Government building & housing
|
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|
Hobsonville |
|||
|
Date |
Median selling price |
5 year gain % |
|
| May 1996 | $330,000.00 |
- |
|
| May 2001 | $337,500.00 |
+ 2.27% |
|
| May 2006 | $500,000.00 |
+ 48.2% |
|
| May 2011 | $422,500.00 |
- 15.5% |
|
| May 2016 | $910,000.00 |
+ 115.4% |
|
| Over 20 years |
+ 175.8% |
||
|
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|
Glendene |
|||
|
Date |
Median selling price |
5 year gain % |
|
| May 1996 |
$185,000.00 |
- |
|
| May 2001 |
$214,500.00 |
+ 15.6% |
|
| May 2006 |
$320,000.00 |
+ 49.2% |
|
| May 2011 |
$363,500.00 |
+ 13.6% |
|
| May 2016 |
$745,000.00 |
+ 105.6% |
|
| Over 20 years |
+ 301.6% |
||
Source NZ department of statistics
Comparing Residential and Commercial Property Investment
While the following list of comparisons is by no means exhaustive, I hope it proves useful to those trying to decide whether to invest in residential or commercial real estate.
Residential Commercial
| Better understood by most people. | Less understood as it requires leases, perhaps knowledge of business climate and more. |
| Usually a lower investment cost to buy a rental home, flat or apartment than a commercial building. | Typically higher investment cost to purchase although some lower cost commercial property (perhaps with higher risk) can be found. |
| Shorter tenancy is typical – either periodic (3 week’s notice from tenant to vacate) or a fixed term typically 1 year – but possibly longer. If hardship is shown by tenant, a fixed tenancy can be broken – but it is very unlikely the landlord will be able to break the tenancy.
|
Typically at least 2 years fixed tenancy but often 3-5 years is normal with renewal rights following that. |
| Lower vacancy periods between tenancies. Normally only days or a few weeks if fair market rent is advertised. | Often long periods of vacancy between tenancies. It is normally some months and it is not uncommon for commercial property to be vacant for 1 year or more. |
| Little or no difference in the market value exists between a vacant or tenanted rental property. Perhaps a housing New Zealand has a lower value. | A big difference in market value typically exists between a tenanted and a vacant commercial property. |
| The landlord of a rental property is responsible for rates, building insurance, maintenance and water fixed charges with a residential rental property. | The tenant is normally expected to pay all outgoings including maintenance of the building. |
| No need to deal with GST with a residential rental property. | Have to deal with GST both at purchase, during the period of tenancy and upon the sale of the property. |
| Easier funding even in Auckland with a maximum LVR of 70%. | More difficult funding often 65% or lower LVR and commercial (higher) interest rates. |
| Less sensitive to economic conditions – people need a place to live in during good and bad economic times. | Sensitive to the economic climate. Businesses retract in difficult times, don’t renew leases, downsize perhaps or even go into liquidation – often exiting the lease at that point. |
| Often lower yields may be around 0% or 1-3% currently but also often strong capital gains. | Better yields typically than residential. Yields may be 7%+ in the current climate but often lower capital gains than residential. |
| Capital gains are normal over time. | Capital gains are normal over time. |
| Typically quicker, easier and cheaper to sell. | Takes longer to sell and often higher professional (accountant, lawyer, agent, etc) fees to sell. |
Until next time,
Best wishes,
John Goodrum
Licensee Agent REAA 2008
021945140, 09 838 8895