Why Market Panic Won't Crash NZ Property & Central Otago's Record Rents

Is a volatile global market your best window of local opportunity? In this episode, Debbie Roberts from Property Apprentice breaks down why you shouldn't let overseas headlines dictate your financial strategy.

We explore why top economists believe the Middle East conflict won't crash the local property market, and why pulling your money out of KiwiSaver right now is a dangerous move.

Key Topics Discussed:

• The "Pump Tax": How higher global oil prices will squeeze household disposable income .
• Auckland's Intensification: The pushback from residents over 15-story apartments and the reality of townhouse development .
• The End of Speculation: Why the "Sharesies generation" is pivoting to managed funds, and how true property investors manage the fear of Capital Gains Tax .
• A $27 Billion Crisis: 90% of NZ homes need immediate maintenance . Debbie shares tips on regular upkeep to avoid massive bills .
• Rent Milestones: Central Otago's rental stock has plummeted 24%, driving average rents past $900/week .

📢 FREE EVENT: How to Succeed with Property Investing Learn to navigate the current market with confidence at our live, 100% independent online masterclass . 👉 **Register here:** www.propertyapprentice.co.nz 

Transcript

Debbie: 0:00

If you've been watching the news lately, it's incredibly easy to get caught up in the scary headlines from overseas. But this week I wanna bring you some much needed optimism to your day. Why? Right here at home, the New Zealand property market's showing incredible resilience and unlocking some fantastic new opportunities for smart investors. Kia Ora everyone, and welcome to another episode of the Week in Review. I'm Debbie Roberts, owner and financial adviser here at Property Apprentice. Today we're focusing on the silver linings. We're kicking things off with exactly why top economists are urging us to stay calm and confident about local house prices, no matter what's happening in the global economy. We'll also explore the exciting evolution of Auckland's Inner City housing. Dive into some changing cashflow focused mindset of young Kiwi investors. Unpack how staying on top of your home maintenance can put you light years ahead of the competition, and look at a major and lucrative new rental milestone down in central Otago. A lot of data to cover off this week, so let's get into it. So first up for this, Week in review from Oneroof on the 8th of March, Iran war, not a cause for house price panic in New Zealand, say experts. The first topic addresses the elephant in the room, the escalating geopolitical tensions in the Middle East. Despite the alarming headlines, top economists from Kiwibank, Westpac, BNZ, and Cotality agree that the conflict is unlikely to directly impact New Zealand house prices or mortgage rates in the short-term Kiwibank's, Jared Kerr notes that while financial markets often overreact initially, long-term investors should stay cool as there's no need for property panic. The most immediate economic effect will actually be felt at the petrol pump. Higher oil and petrol prices act as an unavoidable tax on consumers, which will limit disposable income for households that are already battling inflation. If the war drags on, it could eventually undermine consumer and business confidence causing buyers and sellers to delay their decisions. However, economists don't expect the Reserve Bank to hike the official cash rate and response. The severe squeeze on household spending actually argues for more caution from the central bank rather than tightening. Cotality's Kelvin Davidson advises Kiwis that he personally wouldn't change any property decisions today based on the conflict, as central banks will likely just ride out any short-term inflation bumps. So let's talk about that elephant in the room: the escalating conflict in the Middle East. The headlines sounds scary and it's completely normal to feel anxious about your finances when the Global News looks so bleak. But as educated investors, we don't just sit around and worry, we take action. While economists agree this isn. Likely to crash local house prices. There are some practical things you can be doing right now to protect your portfolio and take advantage of the uncertainty in the market. The most immediate impact we're gonna feel here in New Zealand is at the petrol pump. Higher oil prices act like a direct tax on your household disposable income. Sit down this weekend and review your living and property holding costs. Build in a bit of an extra buffer into your monthly budget if you can, specifically for fuel and transport over the next six months. Worst case scenario, fingers crossed. If you're looking at buying a new rental, be conservative with your cashflow projections to ensure that higher living costs aren't gonna break the bank. When global uncertainty hits, amateur buyers get spooked and decide to wait and see what happens. That means that the market could potentially slow down for a little bit longer, depending on how long this conflict goes out goes on for. However, also, we know from history that when there's uncertainty in the market, people tend to gravitate towards what they see as low risk investments such as gold, silver, and housing. If you're in a position to buy, use this week's headlines to your advantage. Go to open homes this weekend. Take note of how quiet they are. Use that lack of competition to negotiate and negotiate hard. Start by putting in some cheeky offers. Ask for longer settlement dates, or negotiate with the vendor to fix maintenance issues. The power could be completely in your hands right now. A lot of people hear the word'inflation' and immediately panic thinking that the Reserve bank's gonna hike interest rates again. But actually, most economists now believe that the Reserve Bank will just ride out the short term oil spike. Don't log into your banking app and panic fix your mortgage on a long-term

rate out of fear and worse still: 4:52

don't log into your managed funds and pull all your money out just because the share markets crashed in the last few days. If you are worried about your mortgage book a 15 minute chat with your mortgage adviser or financial adviser. Look at your current fixed terms. Make a logical data-driven plan for when they expire rather than emotional one. Global shocks mean that the sharemarket is volatile. And like I said, your KiwiSaver balance or managed funds have likely taken a bit of a hit this week, but unless you are buying a house or retiring in the next six months, don't touch it. Don't you know, don't touch it because if you switch funds or withdraw your money, you could be locking in losses. Leave it alone. Let the market recover and focus your energy on the physical, tangible property market where you actually have control. I mean, the flip side of that is if you are planning on withdrawing your KiwiSaver in the next couple of months, if the amount that's in there now is still enough to get you on the property ladder. You might wanna pull that money out.'cause if you lock in some losses now, it'll at least protect you from some further ones. But if you've got longer than a couple of months to wait and see what happens, just sit tight. Topic number two. From 1News on the 11th of March, Aucklanders has grappled with housing intensification proposals. Moving on to the second topic. New Zealand's decades long obsession with buying property for untaxed capital gains, maybe facing a bit of a reality check. The Reserve Bank's chief economists notes, a structural change in the market characterized by sideways prices and a glut of empty townhouses. As the market shifts towards this higher density housing, a bit of debate is brewing over Auckland's inner city zoning. While the government pushes for more townhouses and apartments, some local residents are furious describing the potential for developers to build 15 story apartments on their boundaries as a theft of property rights. Conversely, public transport and urban planning advocates strongly support the density push, arguing that it makes logical sense to build up around transport nodes like the new city rail link, rather than forcing people into massive commutes from fringe suburbs. Urban planners point out that people shouldn't panic about sudden high rises taking over their streets. Just because an area zoned for six stories doesn't mean a tower is gonna be built. Developers frequently opt for two or three story townhouses instead, and if you're a developer, you need to do your homework on where the demand is for what types of properties. We know a lot of developers who have stopped maximizing the use of the land instead building what is in demand from buyers at the moment. Topic number three from RNZ on the 7th of March. The detail, the great property breakup. Don't you love headlines like that? So expanding on our structural shift. The third topic asks if the golden era of speculative property investment is over. Speculative property investing. Goodness me. With traditional property investment apparently losing its appeal due to falling rents, rising insurance, and sticky interest rates. Some younger investors are pivoting. Priced out of the housing market the "Sharesies generation" is increasingly turning to KiwiSaver in managed funds to build wealth. ANZ Chief Economist Sharon Zollner points out another major factor keeping investors weary, and that's the growing inevitability of tax changes. While a capital gains tax might not be on our immediate doorstep, the prospect of a capital gains tax denting future profit margins is making investors pause, believe it or not. While this sounds gloomy for speculators, industry experts, see it as a positive correction, business desk property editor, Maria Slade, notes that New Zealand has way too much unproductive wealth tied up in housing. There's so many things in this article that are triggering me right now as investors retreat, first time buyers. Finally have the field to themselves. We may be reaching a turning point where Kiwis finally realize that ever rising house prices aren't actually the best thing for the country's prosperity. I suspect that the person that wrote that article has some severely left-leaning tendencies with their political beliefs. Like it sounds just so biased to me. But anyway, let's have a look at this.'cause it does ask, the big question is the golden era of. Speculative property investment over. Look, my thoughts on this are property investing is not speculative. Property investing is a long-term strategy if you're looking for a speculative property investment strategy that's trading or flipping properties. So, you know, I, I think for decades the standard Kiwi strategy was to buy a house, cross your fingers, and rely on massive untaxed capital gains. But that's the uneducated investors. With sticky interest rates and rising insurance costs, that lazy investor mindset just doesn't work anymore. You've gotta be more professional about your investing decisions. The article notes that younger Kiwis, the "Sharesies" generation of pivoting to those managed funds and kiwis over because they feel priced out of property. Whereas at the moment, first home buyers still make up a massive chunk of the buyers in the market. It's fantastic that young people are investing in shares, but don't completely write off property. You know, if you give up on the idea that you are ever gonna own your own home, that means you are gonna be renting in retirement, and that's gonna take a huge chunk of your retirement income to cover the cost of that. Property offers things that shares don't, and that's leverage. But to make it work today, you've gotta treat it like a business. It's about cash flow and adding value when you can. You can't just hope that the market's gonna do the heavy lifting for you. ANZ's Sharon Zollner raise the point that the growing inevitability of tax changes like a potential capital gains tax is making some investors pause. Here's my take. Only the fear of a potential future tax paralyse you today. I'm not scared of a capital gains tax. You only pay capital gains tax if you sell a property for more than you paid for it. So if you wanna avoid paying capital gains tax. Don't sell. Make sure that you buy a property that you are happy to keep for at least 10 years, and then you're not likely to find yourself in a position where things get tight and you might have to sell. So smart investors base their decisions on the rules that exist right now, and they always build a buffer into their numbers. If capital gains tax does come in eventually, which I suspect it will at some point, a well-structured cashflow, positive property will be a fantastic asset. Business desks Maria Slade makes a very valid point that New Zealanders had way too much unproductive wealth tied up in housing. And I know that's an attitude that a lot of New Zealanders have about property investors with people just sitting on large sections doing nothing with them. But honestly, the majority of property investors in New Zealand support a huge number of self-employed people like builders, handyman, painters, decorators, carpet layers, all of that sort of stuff. So I'm, I don't buy into the argument that property investing is an unproductive strategy. I think as a country with ever rising house. Prices. It's not necessarily the best thing for overall prosperity. I think a stable property market would slow and steady increases instead of massively increasing house prices. That's much better for everyone. Property investors, as well as first home buyers. And recent years have shown that property investors and home buyers, especially first home buyers, can happily coexist in the market at the same time. So for first time buyers, you've got room to breathe and negotiate without the stress of intense bidding wars at the moment, because we're in a buyer's market and for educated investors who focus on the numbers, they're not your competition. Focused investors who know what they're doing, base their decisions on the cash flow and the numbers, so they don't compete with first home buyers. They make their purchase decisions based on the fundamentals. If you're getting value out of this podcast, please open your Apple Podcast or Spotify app right now and hit the follow button. It's the number one way to help us help more first home buyers and property investors gain access to quality content. And if you wanna learn more about investing and you want help with your individual strategy, join me at one of our free events called How to Succeed With Property Investing. These online events are focused around how to teach you more of the fundamentals about investing. And if you choose to become a client of ours, we'll help you on your journey every step of the way. So I'll show you how to navigate the current market with confidence and make better decisions. We are live, online and independent. We don't sell property. So go to www.propertyapprentice.co.nz to secure your free spot for one of our next events. Fourth topic for this Week in Review from RNZ on the 11th of March, 90% of New Zealand homes are in need of immediate maintenance. Moving on to our fourth topic, we look at the physical state of our housing stock, and the numbers are a bit staggering. According to new research by the center for Research Evaluation and Social Assessment or CRESA. Roughly 90% of homes in New Zealand are in need of immediate maintenance. The total cost to fix this and estimated $27 billion. How is that not productive for the economy? CRESA research director Kaye Saville-Smith, explains that a home needing maintenance isn't necessarily falling apart. It includes any home that doesn't operate well, such as losing heat or getting too warm, which leaves it vulnerable to adverse weather effects. AUT Professor of Construction Management, John Tookey warns that major problems usually arise when the outside gets inside. He notes that a major barrier to keeping homes maintained is simply cost and an aging population that's less capable of DIY, joking that we've become victims of our own sedentary lifestyles. His advice for homeowners and investors alike is simple: focus on the small stuff, set aside a regular monthly budget and dedicate one day a month to clearing gutters, touching up paint, and treating wood services. One day a month might be quite excessive for a number of properties. You know, if you don't have trees that are dropping leaves constantly into your gutters, maybe once a year is probably enough. Remember, a low maintenance home doesn't mean no maintenance. Deal with small problems now, otherwise you might have to hire a very expensive professional later, and if you don't have any DIY skills factor in a budget each year to pay for someone to do it. Topic number five, from www.realestate.co.nz On the 10th of March,

over $900 a week: 16:25

central Otago Lakes district sets new national rent benchmark. Our fifth topic today covers a staggering new rental milestone that I just mentioned. Central Otago and Lakes district has officially become the first region in New Zealand to surpass a $900 a week average rent. According to www.realestate.co.nz, the region's average is now sitting at 902 a week, driven heavily by Queenstown at$993 a week, and Wanaka at $924 a week. What makes this so wild is that the rest of the countries trending in the opposite direction with the national average rent easing to $629 a week. This soaring cost is putting a massive strain on the local population, particularly hospitality workers with a standard three bedroom family home now sitting just shy of a thousand dollars a week. In response, KiwiSaver Provider Simplicity is committed to building 600 long-term rental houses in Queenstown, specifically to combat these costs. It all comes down to stock. Supply and demand. While regions like the West Coast saw huge surges in available rental properties, Central Otago saw its available rental stock plummet by nearly 24%. Highten demand combined with heavily restricted supply is forcing incredible competition and driving prices through the roof. So what's the verdict for this week? When you hear news about global conflict shifting zoning laws in a$27 billion maintenance backlog, it's completely natural to feel overwhelmed about where to put your money. But as the data showed us today, times of change are when the best opportunities are created. While the landscape of property investing is certainly shifting away from short-term speculation and towards sustainable, well-maintained cashflow focused strategies, the fundamental need for quality housing isn't going anywhere. If you wanna learn how to block out the noise and spot the real opportunities in today's changing market, I'd love to invite you to come along to one of our free online master classes called How to Succeed with Property Investing. During these live sessions, I cut through the intimidating jargon and I'll walk you through how to protect your cash flow, what to look for to avoid massive maintenance traps, and how to build wealth safely step by step. We're a hundred percent independent Kiwi-owned business, and we don't sell property, so you can trust that our advice is completely unbiased. Go to www.propertyapprentice.co.nz to secure your free spot today. And if you're already a client, make sure you reach out to your coach if you've got any questions or if you wanna review your strategy in light of this week's news, stay focused on your long-term goals, deal with those small maintenance jobs this weekend, if you've got any. And I'll see you next week. And remember, don't touch your KiwiSaver fund, especially if you're not needing it in the next little while. Thanks for listening.