mortgage brokers christchurch

Talk to us for FREE Personal Mortgage & Home Loan Advice


Mortgage Advice Blog

Get the latest news and tips about mortgage finance and the property market. Scott Miller, mortgage broker from Advanced Mortgage Solutions comments on housing and lending.

February’s Property Newsletter

Published by Scott Miller on Friday, February 12, 2010 in

Well hasn’t a lot happened in the space of one month, we have had a power packed month of news and announcements. I have listed a few I think are worth looking at in a little more detail.
1) AMS releases it’s highly anticipated referral scheme
2) John Key outlining tax reform
3) Please read a little light humour on how the new tax system will work.
4) New housing data from QV
Let’s have a look at these points of interest.

AMS releases it’s highly anticipated referral scheme!!!

We have had a number of referral schemes ideas over the years, and though all of them were good, somehow they lacked in clarity and ease of understanding.

But now we are pleased to announce that Advanced Mortgage Solutions Ltd is offering a referral scheme that is second to none and is open to all those who refer business to us.

Starting this month if you refer family, friends, or work colleagues to Advanced Mortgage Solutions and they settle a loan no matter how big or small you receive 10% of our commission. All you have to do is introduce us to people who you think can benefit from our wealth of experience and we will do the rest.

One of our referrers has already referred 2 clients to us this month and although she doesn’t know it yet is up for a commission cheque of $581.00!!!!!!

This is a great opportunity to enjoy a little extra bonus every now and then, whilst knowing the person you referred is in the best possible hands.

We look forward to hearing from you and helping with you referees needs.

If you would like to know more or have someone who needs our help please click HERE.

John Key outlining tax reform

This week John Key outlined guidelines on what he thinks the National party are likely to announce at this year’s budget on May 20th. I have summarised how this will affect home owners and property investors below.

Proposed Tax Changes for Homeowners

Those with their own homes (and those planning to buy), can breathe a sigh of relief that the proposed tax changes will not affect owner occupied properties. A land tax has been ruled out. This would have been levied in much the same way as rates - a blunt form of tax, hitting hard all those that own their homes as opposed to those who rent. A land tax would have had a negative impact on those on lower incomes, our farming sectors and property owning charities. A capital gains tax has similarly been rejected. A rise in GST is negative for homeowners as any alterations and improvements will cost more. There will be relief from lower marginal tax rates.

Likely Tax Changes for Investment Properties

The big news in the Government’s opening parliamentary speech is the comments about trying to extract extra revenue from the residential property sector, which they believe, unfairly is not paying its way. After ruling out capital gains, land taxes and the notional return, the two areas the Government is likely to target is depreciation and how much in the way of losses can be claimed. There are two types of depreciation, one on buildings or improvements and the other for chattels The change, we understand, will only apply to buildings or improvements. The second change, hinted at, may be ring fencing losses to a certain level or restricting their offset to property income. The Government must be careful in changing of the rules regarding property investment as many people have their only form of superannuation tied up in this sector. Secondly the Government should be encouraging the landlords to continue improving their properties and so improving our housing stock. These changes will not do this. If this sector is made unattractive to invest in, there will be fewer investors - this may well lead to a rental accommodation shortage and hence higher rents, not to mention the real chance of properties devaluing.

Is it a Good Time to Buy?

The property market was quieter in January and agents have put this down to two factors- the number of people on holiday and the uncertainty regarding new property taxes. For potential owner occupiers, this has been removed and they can now consider whether it is a good time to buy. This is always a difficult decision but there are a number of positives out there. We are still in a recession with higher than anticipated unemployment figures being released last month. It can be assumed that interest rates will remain lower for longer. If GST goes up this will cause an increase in the costs of new houses may cause existing stock to rise in price as well. Properties still tend to be priced below their 2007 peaks - it is cheaper to buy today than three years ago. Due to tax anticipated tax changes with residential investments we may see a few more rental properties coming onto the market, which in the short term will increase available supply which is always good for potential home buyers.

Please read a little light humour on how the new tax system will work.

The tax system explained in layman’s terms; explained in beer.

Suppose that every day, ten men go out for beer and the bill for all ten comes to$100.

If they paid their bill the way we pay our taxes, it would go something like this…

  • * The first four men (the poorest) would pay nothing.
  • * The fifth would pay $1.
  • * The sixth would pay $3.
  • * The seventh would pay $7.
  • * The eighth would pay $12.
  • * The ninth would pay $18.
  • * The tenth man (the richest) would pay$59.

So, that’s what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve.

“Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20.” Drinks for the ten now cost just$80.

The group still wanted to pay their bill the way we pay our taxes.

So the first four men were unaffected.

They would still drink for free.

But what about the other six men? The paying customers?

How could they divide the$20 windfall so that everyone would get his fair share?

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so the fifth man, like the first four, now paid nothing (100% savings)

  • * The sixth now paid $2 instead of $3 (33% savings).
  • * The seventh now pay $5 instead of $7 (28% savings).
  • * The eighth now paid $9 instead of $12 (25% savings).
  • * The ninth now paid $14 instead of $18 (22% savings).
  • * The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

“I only got a dollar out of the $20,”declared the sixth man.

He pointed to the tenth man,” but he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar too. It’s unfair that he got ten times more than I!”

“That’s true!!” shouted the seventh man. “Why should he get $10 back when I got only two? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works.

The people who pay the highest taxes get the most benefit from a tax reduction.

Tax them too much, attack them for being wealthy, and they just may not show up anymore.

In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.

Professor of Economics.

New housing data from QV

Property values have increased further according to the QV residential property indices for January released today. Nationally, values are 4.4 percent above the same time last year, and 4.3 percent below the peak of the market in late 2007.



Auckland Region








New Plymouth




Palmerston Nth






























Wellington Rgn









New Zealand



Annual Property Value Change
Average Sales Price

View FAQs on the Property ValueMap

The average sales price across New Zealand also increased to $409,807 in January, up from the $404,671 in December. However, the average sales price is a less reliable measure of value change than the QV index as the average can be skewed depending on which part of the market is active.

Glenda Whitehead of QV Valuations said “market activity in January appears to have been patchy. Overall, activity was lower than expected, although our valuers are seeing an increase in activity in some sectors of the market and a decrease in others. While it is normal for sales activity to be at its lowest over the Christmas period, there is usually an increase in listings activity in January leading into the busiest time of the year in February and March. This January the expected increase appears to be absent”.

Whitehead said “this lower level of market activity in January could be due to more people being forced to take additional leave this Christmas, and only recently returned from holidays. There are also signs of increasing indecision in the market, fuelled by uncertainty over interest rates, employment, which direction property prices are likely to move, and the recently announced tax working group recommendations”.

“The majority of the market activity, particularly in the main centres, is being driven more by existing homeowners and first home buyers rather than investors. Those currently entering the market appear to be taking a cautious approach to their decisions, and are doing their research thoroughly. Some of the frantic market activity of 2009, when there were multiple buyers competing for a property, appears to have eased, at least for the time being” said Whitehead.

“It is still too early in the year to conclude the likely pace of the market in the coming months. There is increasing debate around the likely impact of the options put forward by the tax working group, but movements in property market are driven by a combination of factors, and while any tax changes implemented will impact, that change will be alongside other market factors such as interest rates, employment security, and bank lending policies prevalent at the time any of those tax changes come into effect” said Whitehead.

Values in most of the main centres have continued to increase in recent months and are now all above the same time last year. Values in the Auckland Region are now 7.3 percent up, the Wellington Area is 5.7 percent up, and Christchurch 6.3 percent up. Values in the other main centres have fluctuated in recent months, but still remain above last year by 3.5 percent in Hamilton, 0.6 percent in Tauranga, and 5.0 percent in Dunedin.

In the provincial centres values have been more variable over recent months. However, values in nearly all areas are now above the same time last year. Rotorua is 3.3 percent up, Napier 5.1, New Plymouth 7.1, Wanganui 0.1, Palmerston North 5.6, Nelson 3.6, and Invercargill 4.6 percent. Whangarei is the only centre still below last year at 3.9 percent. Queenstown Lakes is 0.5 percent above last year and this is the first time it has shown year on year growth since May 2008. This is due to an increase in values in the last few months after a relatively flat 2009.

We trust you have found this information to be helpful and at times humours. As always we love to hear your feed back and look forward to hearing your thoughts and observations.

Contact us to get free personal mortgage and home loan advice

* Required

Captcha Image

For discounted interest rates on existing loans

100% New Zealand
SBS BankSovereignTowerWestpacAIAAMPANZAsteronASBAvanti Finance
Liberty FinanceThe National BankPartners LifePublic TrustDBR Property FinanceFidelity LifeGeneral FinanceOnePathBetter Mortgage ManagementThe Co-operative Bank