Provincia bags another industrial property. Term deposit rollovers force investors to rethink. And more in property news this week!
Distilled property news for investors. Our aim is to glean the important economic and property insights affecting investors from the torrent of information filling the newsfeeds each week so you don’t have to. We then present them in digestible snack form so you can update yourself over morning tea.
Read on and enjoy your economic and property news this week.
In property news this week…
- Provincia bags another industrial property.
- Term deposit rollovers force investors to rethink.
- RBNZ says ‘not our problem’ to rising house prices.
- Physicist uses candy floss machine to make N95 filters cheaper
Provincia bags another industrial property
Provincia’s quick response saw it secure an industrial investment in the sought after Rosebank Road industrial precinct ahead of two other disappointed buyers.
Jack Revill, Provincia’s asset manager, says the Rosebank Peninsula industrial precinct is a prime industrial area he’s been wanting to get a foothold in for a long time.
It’s very tightly held and there are very limited opportunities to buy into this prime area. Those that do come up are always hotly contested.
Revill said he got his foot on this one before anyone else, and shortly afterwards there were two backup offers on the table.
We don’t know what price they came in at but understand they were higher than Provincia’s purchase price of $4.3 million. That’s good news for Provincia investors.
The property is located at 25-27 Timothy Place and is occupied by a well-established tyre import and distribution business.
Term deposit rollovers force investors to rethink
Tony Alexander says each month more savers roll off their old, high, term deposit rates and are offered the lowest rates for reinvestment they’ve ever seen – less than 1%.
A retiree whose only source of income is the pension and interest on a $1 million term deposit on a brand new 3-year term at 0.85% will receive a mere $7,012 p.a. after-tax income from that whopping $1 million term deposit.
With interest rates predicted to remain stubbornly low for several years, these investors are likely to shift some of their funds to other assets, including property.
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RBNZ says ‘not our problem’ to rising house prices
Minister of Finance Grant Robertson wrote to the Reserve Bank of New Zealand on 24 November 2020 asking how it could address rising house prices and improve housing affordability.
There is pressure on the Government to do something, anything.
Most activists are focussed on reducing demand, especially demand from people they deem evil – investors, foreigners, baby boomers, privileged white people and other bogeymen.
But in a detailed reply to Robertson released today, Reserve Bank governor Adrian Orr rejected the suggestion of adding a house price consideration to its monetary policy remit.
Orr pointed out that many factors affect house prices and housing affordability.
Supply-side factors include availability of land, building regulations and taxes, levies and charges.
Demand-side factors include income and employment, availability and cost of finance, and population growth.
Affordability factors include employment, income and wealth, availability and cost of mortgages, and rental costs.
“Previous government studies have identified housing supply [my emphasis] as the most significant determinant of house prices in New Zealand, with responsive housing supply essential for ensuring positive and sustainable housing outcomes.
“Suppressing housing demand factors can reduce house prices, but will only prove to be a temporary intervention until supply responsiveness is re-established.”
Orr said government agencies already have a “wide range of levers that could be used to address housing issues” but they needed to clarify the “end-goals”.
The Reserve Bank is, however, open to introducing debt serviceability restrictions, such as debt-to-income (DTI) limits, on mortgage lending and has asked the Government to add this to their permitted tools in 2021.
This would have the benefit of increasing banks’ resilience by reducing the number of borrowers with high debt relative to their incomes.
Orr points out the dangers of higher prudential requirements: “Generally imply higher deposit requirements, lower credit ceilings, and higher interest costs for the mortgage borrower. All of these factors disadvantage lower income and lower wealth households.”
And finally, in not-property news this week something too good not to share…
Physicist uses candy floss machine to make N95 filters cheaper
Using a cotton candy machine, Mahesh Bandi of Okinawa Institute of Science and Technology Graduate University can create face masks cheaper and faster than any existing industrial process.
That’s because the unique but expensive electrocharged plastic foam filters that characterise an N95 mask can actually be made with plastic from regular objects like water bottles and shopping bags.
Bandi heats the plastic to a high temperature and spins them in a cotton candy machine until they form a mesh.
The mesh becomes electrically charged – the key aspect that allows them to filter 95% of particles – while it’s spinning around the metal drum of the machine.
Bandi then makes it more electro-sticky by cutting the mesh into squares and placing them on the vent of an air ionizer.
Microscopic analysis and comparisons show his filters are as effective as certified N95 masks at stopping foreign particles, including SARS-CoV-2 viruses, from being inhaled.
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DISCLAIMER
This content is provided for general information only and should not be relied upon or used as a basis for making any investment or financial decision. To the extent that any information or recommendations in this content constitute financial advice, they do not take into account any person’s particular financial situation or goals. As individual circumstances differ, we strongly recommend you seek independent legal and/or financial advice prior to acting in relation to any of the matters discussed herein. Neither Provincia Property Fund Ltd nor Provincia Property Management Ltd nor Provincia Property Fund Management Ltd nor any person involved in this content accepts any liability for any loss or damage whatsoever may directly or indirectly result from any advice, opinion, information, representation or omission, whether negligent or otherwise, contained in this content.
Thanks so much Brandon for your insights throughout the year. A real pleasure to read each week !
Thanks for the feedback Matt, much appreciated 🙂