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The end of the lockdown could be just the beginning of troubles for both residential and commercial landlords, Greg Ninness says

The end of the lockdown could be just the beginning of troubles for both residential and commercial landlords, Greg Ninness says

Both commercial and residential property investors are likely to be stuck in a period of considerable uncertainty once the Covid-19 lockdown ends and for some this will almost certainly end badly.

The lockdown itself would have been bad enough for landlords, with many tenants seeing their revenue streams dry up completely or at least reduce considerably over that period, but worse may be to come, with a prolonged recession likely to inflict even greater damage.

Although the commercial and residential property markets have different characteristics, they do have something in common.

How well their investors survive the looming recession will depend on two things: How much debt they are carrying and the financial strength of their tenants.

Initially commercial property investors are likely to be hardest hit, simply because many tenants will no longer be in business once the lockdown is lifted.

Although the Government is pumping quadzillions of dollars into the economy to keep it afloat it can't save everyone and there will inevitably be casualties.

At this stage we just don't know how many but the longer a recession lasts, the more vacant spaces we are likely to see.

Initially the smaller owner-operated businesses are likely to be hardest hit because so many of them survive on their day-to-day cash flows and have no financial reserves to fall back on, but the ripples will spread all the way up the food chain.

Even large, financially strong companies will be affected and buzzwords around the water cooler will be cost-cutting, restructuring, downsizing and redundancies.

Expansion plans may go on hold, companies that may have been considering a move to bigger or better premises may decide to sit tight, others will seek out smaller or cheaper spaces.

Vacancy rates will increase and periods of vacancy are likely to be extended.

Finding new tenants to replace those that leave won't be easy.

All of this puts downward pressure on rents and that in turn drags down capital values.

Landlords with low levels of debt who are fortunate to have financially strong tennants that can continue honouring their leases may actually see their cash flows improve as their rental income stream continues its course while their interest costs decline.

But they will probably be a minority.

Those who have leveraged up to the max and suffer significant levels of vacancy probably won't survive, even as mortgage interest rates wallow around new lows.

The majority will probably be somewhere in between.

They'll survive but they'll be a lot leaner after a prolonged diet of meagre gruel.

For residential property investors the situation is different.

The immediate impacts of the lockdown and associated measures such as border closures will be an exodus of properties from the holiday accommodation market to the mainstream rental market, while many residential tenants will have suffered a loss of income.

For some tenants the loss of income could be substantial and ongoing.

However while commercial tenants can shut up shop and simply disappear from the market, residential tenants continue to need somewhere to live.

So demand for accommodation will continue at current levels, at least in the short term, but there will be some downward pressure on rents, which should at least be partially offset by recent declines in mortgage interest rates.

But if recession drags on and unemployment keeps rising, immigration is likely to drop away and that could reduce demand for housing and put further downward pressure on rents, while capital values could also fall quite sharply.

With microscopically low interest rates now seemingly locked in for the foreseeable future, investors with low to moderate levels of debt should be reasonably well placed to weather the storm.

But those who have borrowed to the max could find themselves in trouble and the vultures are already circling.

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I see this as a problem that the market can fix,tennants can negotiate with landlords, together they need to come to some agreement or not.
Landlords don't want empty buildings and tenants need to have rents they can afford to pay. It's nothing to do with me or government.

Some landlords might negotiate, however many commercial property owners are wealthy and own the buildings debt free, so if push comes to shove they just lock the doors and idle the property, much the same as so many did during the that ghost town look....


They dont want that as they end up paying rates and repair bills. As a commercial landlord you are better ik the short term having a tenant paying zero than an empty place.


I hope TTP is ok........ Seems to have gone noticeably quiet lately.

Rates and insurance bills on commercial property in Wellington represent a cost of $50 per square metre (approximately).

Vacancies are not what you want, and suggest this could see a continuation of 1960's, 1970's and possibly 1980's office buildings being converted to residential accommodation.

No housing stimulus needed there. Extended commercial vacancies will do that.

Yes, excellent point.

One thing about TTP was that they enjoyed making short term predictions of property prices, by commenting on short term property market activity and sentiment. Very much akin to a property trader.

So after following property for 50 years, and focusing on short term property price developments, they missed seeing the big picture.

TTP also previously commented on a desire to purchase property in Ponsonby but it was always unaffordable. Perhaps, they might get to realise that dream after all.

Ponsonby is full of tiny little villas that are not suitable for modern family living. Every Wed/Thur/Fri/Sat its invaded by hoards who piss in your garden..... it is not a suburb to aspire too.

Clause 27.5 No access in case of Emergency - in most peoples leases (including mine) clearly states that if I have no access to the building "then a fair proportion of the rent and outgoings shall cease to be payable" for the duration of lockout.

Reads pretty clearly to me. They have no choice if this clause is in the lease and you are a non essential business.

Bingo!, you catch my hopeless sarcs pessimism finally - Here's my Easter present for you, do let others know about it.
NZ public & current govt, would love to watch this - during the lock-down period:

If they are like that, they may be wealthy but, not obviously not protected from a much misunderstood disease named "financial illiteracy", quite commonly found in NZ...

@4th estate , I doubt you are correct , many commerical property investors have HUGE gearing levels , few are debt free in my understanding of what I have read

Seems prudent. Markets sometimes need to find new levels, no point in swimming against the stream.


Andrew - but what happens if/when the amount they negotiate isn't enough to pay the mortgage and if the market says the property is now worth less the debt owed to the title?

Then its not just about the market fixing the problem, as the bank will want to protect itself and may force sales. The mania we witnessed on the way up (all the media hype, renovation tv shows etc) could be met with equal mania on the way down. I.e. equal amounts of fear to match the greed. In that case people will all be rushing out the door at the same time. A game of hot potato to see who is left holding the liability.


I can assure you that the MSM will not create 'any' mania on the way down. It will be met by Tumbleweeds alone.

Ind Obs - the 1990s negative equity issue in the UK is a useful lesson that will probably be ignored.When house prices fell below mortgage debt and owners were unable to pay, the Banks initially foreclosed becoming the biggest property owners but paying Rates/insurance and seeing fire sale prices diminish the Banks capital to a point that there ratios came close to requiring more capital or less debt. The answer was to negotiate longer terms, lower rates, various types of mortgage moratoriums. Fractional Banking allows Banks to create money out of nothing so for example, your $1000 deposit account allows the Bank to create $10,000 of funds, the arithmetic for simplicity Bank pays 5% on deposit -$50 and charges 10% on borrowing $1000 which looks a profit ratio of 100%. If Banks as the ultimate rent seekers do not provide effective relief Govt has the opportunity to "encourage them" with legislation, eg Profits above a 7% return on capital are taxed at 99%, executive salaries, bonus's or free shares above $100,000 PA taxed progressively in 10% increments per $10,000. The UK at one point under Dennis (the menace) Healy had some rates at more than 100%, it didn't achieve more revenue but certainly discouraged the rich from profiteering so a short term fix whilst the economy recovers and the future is more certain.

My negotiations are underway with the warehouse I lease, to say the landlord didn't want to give an inch would be an understatement.

Some warehouses are used for storage, and that use may not have changed during the lockdown. An understanding landlord will approach this on a fair and reasonable basis. I would suggest those that dont will be going down anyway; and that includes tenants

We have a few warehouses ourselves and generally the concession has been 25% rent reduction during the lockdown period. We have a tenant that doesnt want to pay anything, yet we know they have the money. This may have to be sorted out by arbitration, which clause 27 provides for; as we have a strong suspicion they are leaving at the end of the current lease term anyway. There are ways other than rental holidays and reductions we are using; as its horses for courses.

Each case is different, and depends on the business and nature of the lease. I would emphasize fairness and equity should be how Clause 27 should be interpretated.

Buckle in everyone, because the next 2 to 3 years is going to be a rough ride for most.

Also - if applicable - first off the Robertson rank, commercial landlords can claim depreciation again.

Im pretty sure the point of this was to enable some trickle down - we all know how well that works...


For many financially weak Landlords, this long anticipated reset will deliver one "L" of a ride.


This is a crisis on steroids crashing at the speed of light and the recovery may be just as quick. That's not a prediction poppy, who knows where this will end

Here's the latest from Bill Gates. He's not looking at a quick recovery.

Houseworks, your recovery won't be just "as quick" when a commercially viable vaccine is 12-18 months away. Unless of course you've got inside information to share with the rest of humanity......

When will the LD end poppy 22 april or later


Houseworks, when will a vaccine be available in commercially quantities to those deemed most at risk? These troubles were imported. I've always looked at things on a global scale. Its served me well. You will see from my previous posts, I always believed a trigger would soon drain this froth. I never anticipated a virus would be the thing that would do it.

Those deemed most at risk will have to stay totally vigilant of the virus until then and probably not go out or allow anybody come to the house. The supermarkets and malls have been asked to bring in retirees hour but so far nothing has happened. Sadly it will be a terribly boring time for them if the govt forces draconian restrictions.

"Sadly it will be a terribly boring time for them if the govt forces draconian restrictions."

I know quite a few retirees are content doing gardening around the house, painting, knitting, & reading. To them it's interesting, fun, and enjoyable, and more importantly they're reducing their risk of infection, they're healthy, and they're alive and well.

IO, Mr gates though I love him he is focused on his own patch which has 465k infected to date and over 16k dead. The usa has 500,000 die from the flu in a bad year


Gates is a dangerous man with an agenda and funding/connections with Imperial, Fauci, etc. If you believe in micro chipping everyone to track vaccinations, etc, then he’s your guy. It’s not the world that I want for me or my children. However, with a complicit media and govts, and people in fear, they will trade all of their freedoms for “saviours” like Gates, much like people looked to Hitler, etc, in the past...

You could interpret the global lockdown as shock doctrine by the elites for the new world order of social control as part of their agenda - those that take the blue pill & those that take the red pill.

That's a bit harsh. Gates is a philanthropist who's donated a significant portion of his wealth away. Many New Zealanders have had scholarships to Cambridge and Oxford paid for by the Gates foundation.



I'm calling BS on your 500,000 made up number.

You’re right, US annual flu deaths are 25-50k in a normal year. Annual global flu deaths are 500k give or take. We’re not at 100k globally for coronavirus yet, so there’s definitely a compelling argument to shut down the global economy for 1-2 months every year. Makes a lot of sense and people will be able to get the time off that they truly deserve.

I struggle to follow your logic Ludwig, you say global deaths due to normal flu is 500'000 people, CV is less than 100'000 people:
"so there’s definitely a compelling argument to shut down the global economy for 1-2 months every year"
or are yo being sarcastic?

Well, if we shut the global economy down for a month for 100k coronavirus deaths, why not shut it down for 3-4 months to get rid of 500k flu deaths annually? Yes, I’m being sarcastic, just trying to adhere to our new police state dogma/indoctrination...


Unfortunately people who only look at current numbers, and fail to grasp the implication of exponential growth (its not an intuitive concept for human brains) then you can easily come to the conclusion the two phenomena are similar.

General flu strains are neither as contagious, lethal and importantly humans have a level of built up immunity (as well as vaccinations available). All this caps the level of infection and deaths from typical flu strains. Covid 19 is a completely different beast, and the only reason we haven't seen millions of deaths is because of the lockdowns and mitigation measures.


1. flu deaths vary every year, it's often well below 500k per year
2. flu is well known, there is a vaccine and vaccine roll out system already in place...many of us have immunity. We don't yet know the mechanism for how SARS-CoV-2 kills, whether it is a virus that will cause longer term abnormalities in 1st/2nd trimester pregnancies or a whole range of factors. The demographic data ranges between countries.
3. they did not shut down the global economy for 100k deaths, they shut down the global economy to avoid the possibility of millions of deaths. We have no idea how many deaths there will be yet because the virus is still fully active and that is *WITH* the monumental interventions that we have made to flatten the curve.
4. during the 1918-1920 pandemic (the next most recent highly contagious pandemic) there were 2 x 2 month periods where infections dropped completely and many thought that the pandemic was over. But the 2nd and 3rd waves were more deadly than the first. And we still don't know how many people actually died in that pandemic
5. Most countries are hugely behind in reporting, the reporting system is new. The global flu deaths that you are so desperately clinging to, are arrived at retrospectively and have the benefit of years of modelling and assumptions on varied reporting across the developed and developing world. At the moment, many countries are mostly only reporting hospital deaths. Not care home deaths, not those who have died at home, certainly not people dying in isolated villages in India, nowhere near a hospital or testing facility. And in countries without advanced reporting or hospital facilities, it will take many years to tally the true death toll of SARS-Cov-2.
6. Because of the huge interventions to increase capacity to treat Covid-19 we will never know what the potentiality of this virus was.

You are cherry picking data to serve your narrative. It's depressing.

Point 5. Doubt you’ve got this right. It’s over reporting of deaths that’s the issue. Just like the lastest 90 year old that died from Coronavirus’s well known in Spain, Italy and yes even the US that deaths that are not solely attributable to Coronavirus are being reported as a coronavirus death. Keep pushing fear because the WHO, government and even the mighty Bill Gates applause the amateur peddlers of fear...

So in your professional medical opinion, why if the flu is so well known that they (virologists) keep having to advise to change the vaccine every year to attempt to combat the next flu strain? If we were so on top of the flu, it wouldn’t kill up to 650,000 (WHO) estimation per year. Dude, what’s your agenda? Shares in Microsoft?

I didn't say we were on top of flu. Like all viruses, seasonal flu mutates and so we take samples all through every year to monitor the mutations and then adjust the vaccines accordingly. Some years are more successful than others.

I have zero stocks or shares. I cashed up everything last year, have no debt and no invested interests and I am no longer an active medical professional. However, I have managed patients and staff in a prior pandemic.

Your lack of any relevant knowledge is no excuse for you to hold a firm opinion on this. Just be quiet.

I prefer my kahawai steamed in the ground.

Sorry I meant 50,000. Sometimes nought means a whole lot more than nothing.


Houseworks. Still spouting off that it isn't that bad. It must be quite confusing for you that the world is lockdown and you don't get it.

What's brought on this little spaz attack have you run out of people to annoy. Follow the debate Kezza from the point by IO about the recovery

A decade of recovery at least.
No V or U shaped recovery. Sorry to hit you with logic.
If I remember correctly, you called me names for saying the boarder should be shut and guess what a week later it was.

Boarder??? Did you go to school to learn or just because you had to.
And hows your logic, kezzaaa. Wanting a long lockdown costing the country billions it doesnt have that props up the property sector pity about that eh. Oh well it's your younger gen that foots the bill. I just ask people to look at the options but instead you resolutely more like stubbornly look the other way ;)

I'll ignore your spelling clutching at straws to discredit me.
I'm 50 so not really the younger Gen your talking about I'm guessing.
The lock down will be as the lock down will be. No getting arround that, you and I have zero control of that.
We are all adversely affected, some have more time to recover than others. Nothing that can be done about that.
Looking at freeing up restrictions. That plays out in the worst case on both options.
I'm just calling it as I see it logically. Yes I call it big and hard and don't mix my words in my red neck way but it has played out as I've called it so far.
I do not mean to cause offence but I'm calling it how I see it and for some strange reason from past experiences my calls somehow play out close to how I call it. It's how I make money and in the last 10 years when I learnt to trust my instincts it has paid me insanely well.

"I'll ignore your spelling clutching at straws to discredit me."
No kezza I picked you up on it because watching "Boarder Patrol" would have a totally different meaning lol. From the tone of your comments I may have misjudged you but I'm sure you dont really believe this will be a drawn out recession/depression. It sounds like you do a bit of property trading/investing so good on you.

The irony of reprimanding somebody for a spelling error when your grammar and syntax are atrocious.

This is not about the pin ( virus) it’s about the bubble.

Interesting that nearly every state reports claims from the 'Health care and social assistance' industry. Anybody know what type of health care/social assistance workers would getting laid off in this type of crisis?


"....residential tenants continue to need somewhere to demand for accommodation will continue at current levels"

Everyone happy with that statement?


I'm seing down sizing of offices and staff working remotely. A shift away from the large CBD office and intercity apartments or close to CBD residential properties.


This is already being discussed at our office... we rent 2 offices in a central akld block. one houses all of the teams, one is used for meeting rooms, break out, demos and such ... 5 teams of about 6 staff... its being suggested we'll have "in the office day" and get rid of the day to day office... each team comes in on the respective office day of the week and works from home the remaining 4...

Personally I would like to do 2 days in office, 3 from home. I like a mix. I don’t like working 5 days a week from home!
There may be new business opportunity in spaces that can be rented by firms two days a week


I hate working from home. I've tried it several times and all that happens is that I get wine stains on my PJ's ;-)

Haha, I thought you had more self discipline Ginga, I've been working from home for years, I love it. It takes me 30 sec to walk from my bedroom to my office, coffee (not wine lol) in hand and sometimes still in my pj's. But yes, one needs a decent amount of self discipline, there are numerous distractions at home

Yvil, well 20 years I spent in healthcare, the latter of those running a busy ward and often not even having time for a wee break, I was ridiculously productive but also thriving. I work well under high stressful, pressured environments and leading a big team. But whilst that was the environment of most productivity for me, it would not have been best for my children. I did try, but I could not work long hours, be on-call evenings and weekends etc and be the kind of mother I aspired to be. My husband and I run our own company (online overseas) and I also manage various side hustles. I polish up okay when needs be, but working from home definitely always leads to more days in pyjamas ;-)

I know you" polish up" well ; )

Hmmmm, beware the Motel owner who always keeps his ladder outside...

I don't think that ol' Kraut can climb a ladder.

You own a motel Yvil..context helps?

Yep I own a Motel in Canterbury, I live in Auckland, not making assumptions helps too

Did you manage to help out the cleaner who did not want to come in - or did you fire her?

I take it you're a sommelier?

I suspect that the productivity gains some have seen with (some) staff working from home during lockdown disappear once lockdown finishes. At the moment you are stuck at home with nothing else much to do, can't go anywhere, cant do much, TV is rubbish. Once things reopen the temptation to pop down to bunnings and get that thing for the bathroom/garden etc is back.

And with a good portion of unemployed, very few will be stretching that envelope too much.

And your only talk about one office. A lot if firms will be thinking this plus the people who like not sitting in their cars for 2 hours a day and the cost associated with that. $15 gas and $20 parking saved a day plus the wear on your car and a coffee. It starts stacking upto $50 a day saving and you get to sleep in and be home early.

As prices drop, some tenants may buy. Supply and demand may start to return to equilibrium. I own property but not the ones I currently live in or lease commercially, I'd be a buyer if it made more sense than renting right now. Id buy at an equivalent rental yield of 7% resi and 12% commercial (or better).

Good point.
It’s going to be very hard to get 7% yields on resi, given rents will drop.
Prices would have to fall 20-30%.

During the last crisis I bough an apartment building on queen street at 15% fully tenanted.

Good deal that's ace. Do you still own it and what's it worth now.

Sold it. Havent touched real estate in 5 years so no idea what its worth now. Current owner probably doesnt either to be fair..

I found a 7% yield in Dunedin yesterday but can't find it again.


This is a serious question. If this landlord still has a mortgage on this house...he will be losing money hand over fist. It will be at least five weeks before a new tenant is able to move in. The house will have been empty for two full months. That’s around $6k. If this is happening all over the country, how is it sustainable?

Well looky here.
This isn't just happening to you, it isn't just happening in NZ. it is happening all over the globe at an alarming rate. No one knows where the bottom is and if the global money system will be able to handle the sizable price reduction.
The US house market is on the edge of tipping and we all know how much that dropped the last time and this time is worse. Now back to my posts which you have been bagging me. Now you are starting to see how big the fallout is going to be but you still won't be getting how bad it will get, it has only just started.
I am watching the market for half finished projects going for a song or half price properties.
Already a house in Dunedin with 1/3rd knocked off the pre Jan price.

For some people, it's now just starting to click.

That realisation is now only just beginning for many highly leveraged property investors as they run out of cash and financial resources to continue meeting their debt service obligations.

That's why I kept asking - what do you not know, that you don't know? what do others see that you don't see?

I ask myself question after question and research anything and everything with properties and then I still have to have a A, very sizable profit, B, a good profit and C, a break even walk away options. If I don't have those I keep on looking. For me it is about finding solutions that other people couldn't fix.

@Kezza R: Which Dunedin property reduced price by (1/3)? Might you post a link or name the address? Thanks

Since posting that I walked past it this afternoon.
There is a house being built out the back. So the RV will be out of whack. I.e. loss of land and the RV hasn't caught up.
It in my view would have been a very good buy at the current asking price before this begun. Now, yeah you knows.
I'll grab the link and post it.
Here you go. The video shows a fraction of the new build out the back. Still I regard it as under price for the location and being 4 bedrooms so close to St Clair and within the St Clair school district.
NB` I live and own in this area and have been an investor. Not just a guess.

Thanks for that follow-up, posting the link, Kezza.


And in Wellington, the listings of overpriced ex Air B&B's has begun


Ah my dear ole hometown. Welli will be ok, as long as there are tens of thousands of policy analysts employed by the govt doing jack shit!

That’s a shed load of money Ms Ninja... who can afford that? Not even govt policy analysts...


Just a minute ago I thought that 3br one for $730 was expensive... My brain just can't comprehend why someone would pay $1200 for this 'villa'. AirBnB prices and long term rental don't mix. What a joke.

That is a lovely location. Still....

$1200 per week is probably what it takes to service the debt on it.

$730 per week for that? Is that normal for a 3br in that area?

My dad still lives in Wellington so I kind of stay in touch with all things Wellington. That rent sounds about right. Ngaio is central (I grew up there), only 10 mins on the train

Rented a nice-ish 4 bed/ 2 bath 2016 in Brooklyn (with great views) for $860 per week.
Rented a less nice 3 bed/ 2 bath 2018 in Karori for $760 per week

Both sold for over a million

Were they furnished with power & WIFI paid for ?

No but both included the gardener.

Was the gardener hot?



In fact so wrong it's not funny


The demand will fall away, as young ones move home, people share more, people on work visas leave the country, less people migrate here etc etc.

200,000 work visas are issued annually. A conservative 40k houses vacant if this dries up. Combined with another 30 to 40k Air BnB's coming on to the marked.

Bingo no house shortage in NZ now.

No, it fails to understand that supply of existing dwellings will increase. First there is the overseas student population that won't add to demand. Then there are the temporary visas that won't be granted and others that are already here that will be refused permanent residency. And then there are the tourists that won't need accommodating.

And, as someone above pointed out - over time, we're likely to get a lot of office accommodation that will be converted to residential accommodation.

And Kaianga Ora has a huge number of residential developments already consented and/or mid construction.

Housing is going to be a whole new landscape in the aftermath of this.

@ Beanie ...............correct , we will not have people living under bridges , if anything the truth about the so called housing 'shortage ' may just come out


(Just posted on another thread, but this is probably a better forum)

Lots of opinions and complicated answer to resolve what we face.
For me, the answer is pretty 'simple'.
Whatever amount of debt we have as a country after we get through the crisis,much of it is in the wrong place.
We will end up with huge Public Debt, and the place to get it from to repay it ( to keep the economic scales somewhat balanced - or % rate will go through the roof!) is from the current 'stock' of Private Debt.
Within private Debt there is Productive Debt and Non- Productive Debt.
We need to encourage the first of those and discourage the latter.
Where is the biggest 'store' of our Private Debt? Property mortgages, by far. They're going to have to 'give back' their productivity capacity to those in the Private Sector to allow them to grow and slowly repay - over decades ( as people repay their Private Debt - mortgage payments etc) - the Public Debt, as businesses thrive and pay more tax.
Those who will get 'caught' with 1, 10, 100 rental properties will be 'quarantined' and protected with their stock by even lower mortgage rates and extended repayment terms - 50 years mortgages etc. New mortgages will be granted for far less $, and purchase prices will have to fall to accommodate them. Rents will fall.
Don't expect to get a mortgage for a residential property for anything other than your sole place of residence, and don't expect to get it at a rate that is comparable to anyone being productive in the housing sector that is actually building new stock.

In short. We already have the debt we need to rebuild. It's just in the wrong place.


Great post - agree. This might finally bring some common sense and prudence to what has been completely idiotic phase of our society. Here's hoping we can bring some positives out of all of this. Residential housing shouldn't be a place of speculation, nor greed. It has been that government was unwilling to regulate that sector when they had the opportunity to do so - i.e. put in place correct incentives to keep the market in check. So now I think their hand will be forced before it destroys itself and takes the economy down with us.

..rental properties will be 'quarantined' and protected..

It's almost as if the reduced interest rates have been designed to achieve this. Many a landlord will be saved, they wont be living in luxury, but they will just survive.

I agree, but the cold hard reality is that productive private sector debt to fund real business, jobs, etc, is going to get crowded out by a massive increase in unproductive (and I’m using that word kindly) govt debt. So, we are witnessing one of the greatest periods in history for the destruction of capital formation. In addition to this, we will witness a huge increase in taxes (most likely a wealth tax coming), which will further suppress business growth and job creation, as well as eliminate what little discretionary spending is available now.

Govt debt will be financed via rbnz via keystroke. The spending will stimulate demand making private sector willing to invest due to sales increasing. Money is not a scarce resource. Government would be stupid to constrain demand by raising taxes in a recession. The govt debt does not need to be repaid. It is not taking money away from a finite pool of loanable funds.

CS - so right!

Lugwig, the reality is that private sector debt has been going to mostly unproductive areas - residential property speculation and share buybacks by firms loading up on cheap debt. As a result, private debt has reached new levels of insanity while govt debt, in NZ at least, is very low. Meanwhile, the productive economy is struggling as banks prefer residential mortgage lending. In my view, the reserve bank should provide guidance to banks on sectoral lending, as described by Richard Werner in his book and video ‘Princes of the Yen’.
Actually, the level of government debt is not really an issue in a deflationary environment and when interest rates are so low. Governments can and should print money to restart the productive economy. It’s times like now, that government need to really ramp up spending, for things like ‘helicopter money’ as described by Milton Friedman and a modern debt jubilee as described by Steve Keen and others.


in my view the single biggest threat to commercial landlords is with organisations learning how to work from home during the lockdown quite a few businesses have suddenly discovered they might be able to do without all that expensive B grade tenancy space for their admin and customer services staff...


However while commercial tenants can shut up shop and simply disappear from the market, residential tenants continue to need somewhere to live.

This is true, to a degree. But younger people will move back home with parents. People renting their own places may chose to share a place etc etc.

But the real kicker will be the combination of record levels of building and failing immigration. Rising unemployment will see immigration dropping substainitially at best. At worst, we will see those on short term work visa's leaving.


Exactly. The game is over.


Hopefully this sort of stuff will end. Mans wife has baby with the "employer".

That is appalling...

Jesus... $50k for a 'grocery store manager' job. I hope the employer will get a hefty fine and his business shut down at least.

Lets hope, but with Labour in control, who knows....
On the other account, I get the feeling that they all deserve each other....


Agree. If I was young I'd move home. Then save hard as for the next 12 months. With the exit of all the foreign students, temporary work visas soon to go with no work, and kiwis kids move home pressure will continue to build on the speculators and banks. Now is the time to squeeze and really break the back of the property ponzi.

FHB buyers need to sit back and kill the market they made 18 percent of last years buyers and paid a very high price to get in.

If only the MSM cared about the well-being of FHB's... The message will be the same as it has been in the past decade: This is a great time to buy, get in quick, house prices will only go up from now!

Immigration is over?? True for the next few months but then the pressure to move to NZ will just be far stronger. So supply forces will increase; remember agents charged $30k to get Indians into NZ. And that sad case of the Vietnamese who suffocated trying to get illegal entry to Britain, they paid over $30k to the people smugglers. Demand for cheaper, docile labour will remain even if tourism dies. There will still be fruit pickers and care-nurses doing work Kiwis 'cannot do'. Our govts need for increased GDP is going to get even stronger. All the forces driving immigration will be strengthened. I just hope we get experienced PhD engineers this time.


What jobs will immigrants come to Lapun?
No jobs = no immigration

The same jobs as previously, the jobs Kiwis don't want to do, fruit pickers, petrol station clerks, Ola & Uber drivers, corner dairy, supermarket checkout, food delivery, phone operators, cleaners, any low-end jobs really. Someone will probably reply and say with rising unemployment these jobs will be filled by Kiwis, I really doubt it, may be a few but Kiwis will rather go on the benefit than do some of these jobs


But many on work visas now will continue on in those roles. So we won't need people pouring in.
Immigration is dead duck, for 2-3 years minimum.

They will just roll them over for another year.

Those will be the lucky ones. Lots in hospo and retail will need to head home...

If there's 20-30% unemployment and fruit on trees not getting picked - guess what people will be doing if they want benefits?

I think Pacific Is people will still be allowed in on temp visas for fruit picking etc. That will benefit both countries but we also have some obligations in that respect.

So the Brits are applying for agricultural jobs in their thousands but you don't think Kiwis would? My money would be on Kiwis to be even more willing if necessity arose.

I know Kiwis don't want to do it from personal experience. We have 25 fruit pickers from the islands at the Motel for serval months, there are 150 of them in South Canterbury alone. I asked the person in charge of bringing them in; "why are you bringing them in from overseas? Can you pay these people less than minimum wage?" he replied "hell no, we just cannot find Kiwis wanting to do this job".
There you go, from the horses mouth

But there's a new normal right here, right now Yvil. Lots of kiwis will desperately need more income, they will do that work.

That sounds perfectly logical Fritz, in the real world, most Kiwis will rather get the dole. I've also learnt that from my motel, we get heaps of requests from WINZ for people on the benefit, a few of them have had a rough deal, only a few, the others…. We have stopped taking almost all people from WINZ (to much trouble), I think we're going to be less picky from now on with the borders closed.


Yvil you really need to get your head around the 'new normal' or you will get into strife.
We are not talking about normal times. Yes long term dole bludgers don't want that work. But we are seeing capable, honest and hard working kiwis getting laid off left, right and centre. Many of those unfortunate people WILL do this work, and do it well.

Well from now on they will have a very defined path. Work or not get a cent. That is how it is going to be or we will get a Govt that will deliver on that.

What are they offering? When my father did it in 1969 he was paid the equivalent of $36 per hour and got dorm accommodation for free. I reckon a few Kiwis would be up for that these days.

If the pickers were paid $36/hour, we would be paying 50% more for our fruits & veggies, we, the consumer, don't want to do that… so the fruit pickers get minimum wage, $18.70 as of last week

That would only be true if retail pricing of fruit and vege was on some sort of cost+ basis, its not. Its purely driven by what supermarket can extract from shoppers and still turn the produce over before it starts going off.

As an orchard owner and with knowledge of what prices we get for apples and looking at the 2nd grade apples being flogged off in super markets. Someone is making a massive profit. 50c a kg export quality is a good return but $3.99 on the self for substandard dose not add up to me. I blame Turners and Growers who are a German company who have a sizable say in thos market. Back to basics and get ride of them and their control to bring down prices.
If I could get 40cents at the gate for that quality and send them off, that would equate to $1.00 for the buyer. I would be able to pay higher wages to the staff as that is the thing to do.
STOP BUYING FROM T&G....... send the message!

A good apple picker gets minimum wage and good one gets over $50 an hour. From some one who pays the wages.

How many hours. Problem with kiwifruit is it's great while you're working, but add in the wet days, short days, shifting orchard days, fruit not quite ready today days and you're eventual earnings are serverly lowered. Worst one was managers/contractors calling people to work and they get there it's light drizzle, so they wait and wait, then go home earning nothing but having paid to get there and wasted a day. At least with apples it doesn't rain in Hawkes Bay ;)

Hmmm. I picked fruit and vegetables in the late 1970s early 1980s for $4.00-$7.00 per day. Perhaps your father remembered earning more as each year passed.

Agree. Also NZ will appeal even more to people as a better place to live comparing with rest of the world.
Great advertising for NZ if we can keep the good work at suppressing the virus spread.

The Gig Economy is over if you haven't noticed.

No, its down, but it will be back once the economy recovers. It is convenient for people that want to do their own thing.

You've already been proved wrong, 90% of the pickers up north are kiwis. Their main jobs are gone so they are into it.

There you go Yvil.

Agree as a orchard owner. Get ride of the likes of Turnerns and Growers who pay crap and keep a strangle hold on the market.
FYI a Germany company. They are the price controllers!

Nah, have a look at this report;

Hort jobs being filled by locals like never before. Why? Because many are getting the government pay from their current employer and that pay doesn't get clawed back because they've taken on new temporary work.

The solution to our hort industry going forward is just that - if the government doesn't dock the government's social welfare net, just becuase you pick up a few weeks of temp work - people will be happy to take on that temp work.

So the answer is to permanently subsidise orchard work?

You really think that when unemployment hits 20% plus we will be granting work visas? So many posting here are still living in cuckoo land. We are entering a depression which will extend for a decade at least. Wakey wakey time children...


If the government keeps letting in immigrants at the any near the level as the last 10 years they will be asking for trouble we need to start getting them back home as the jobs are gone for many of them and we should not pay them a cent to stay here.
The employers who brought them here should all have paid bonds to government to cover the costs to get them back home.
I saw a news story and most of them have zero money to live on now.

Their countries need to pay to get them out if they can't afford it themelves.

And the Mexicans should pay for The Wall...


You fail to understand that they only reason the levels of immigration is acceptable is when the rate of unemployment is at record lows. As unemployment rises, as it must when 10% of our economy (tourism) is effectively shut down, it will be difficult to justify bringing in more people.


Its a fact that most newcomers to NZ decided they needed more than one property, to rent out and earn big capital gains while also putting rents up at the same time. The locals decided to copy this greedy formula unfortunately for fear of missing out. This was never a 'thing' in NZ which is why there never was a housing crisis previously. How about only allowing newcomers the option of purchasing just one property at a time, for life!!!


Yes, I've been of the opinion that residential housing is about family - a place for security and raising your children. It isn't, nor should it be, a place of speculation of prices, where you act in greed and buy as many as you possibly can based upon what the banks will lend you. That practice is morally and ethically flawed - and in all honesty the last few years has been financially flawed as well. Irrational in that sense.

Perhaps landlords/speculators should be treated as foreigner buyers. If they want to add to the current rental stock, they have to build the home from new and add to supply? I.e. they become the fix to the problem that they've been benefiting from (and causing)?

You got any of that evidence to back up your 'fact'? There is no shortage of home grown greed.


Prag and hunhub birds if a feather.

Isn't that the idea behind a mortgage. You spend the majority of your working life paying off that house you bought in your 20's or 30's. Therefore it works out that 1 person buys 1 house. Then we started taking advantage of it. Now, the 30 year mortgage on your first home is a joke. It's like an unspoken agreement that you won't be paying that first home off for the full 30 years. You'll trade up in a couple of years. You know it, the real estate agents know it, the banks know it, everyone. It's common sense. It's worked for years.
So if everyone doesn't intend to pay off that mortgage... uh oh.

One new property.

Foreign Buyer, weird post, so you are blaming yourself for the high cost of houses in NZ?

Just reading a piece from CNBC - Bill Gates saying the earliest the US could reopen is the end of May and he expects the vaccine could take up to 18 months to be made available. This from a man who has spent a lot of time and $$ studying/funding this field.

Yes he is a smart man - but does not have the presidents ear? Expect Trump to re-open USA same time as NZ - or sooner probably. A few deaths but the economy must come first.

They just can't afford to stay closed longer than that.

Forget about any vaccine for COVID-19 within 18 months. There are only 26 virus vaccines in the world and decades later they still don’t have one for HIV/AIDS.

In which case we need to live with this don’t we?

Good point

And even if there is a viable vaccine in 18 months, it might very well be temporary in its efficacy and there will be a constant race to keep on top of the mutations while herd immunity is slowly achieved the old fashioned way.

And over the next 18 months there is absolutely no reason at all, to assume that there will not be multiple waves of infection (as there very often are) and that subsequent waves won't be more veracious or deadly (as we have seen in previous pandemics).

So what do we do?
Shut the borders permanently, save for limited movement of kiwi nationals and officials? (All of whom must be quarantined on arrival)
The new normal?


Fritz, I think i've said this in comments already but I would like to see a lot of money thrown at antibody tests and verification (wrist bands that can be scanned by a phone app for instance). Money thrown at assessing the mortality correlations. My own intuition is that there seems to be an endocrine system/inflammation connection to the cases that become more severe, so anyone with good insulin sensitivity, low inflammation and uncompromised immunity probably has a very low risk of virus mortality (certainly the risks of being isolated or in lockdown for prolonged periods would far outweigh the likelihood of death via SARS-Cov-2). And just for clarification, death rates are higher in populations who smoke, have diabetes, heart disease, obesity/visceral fat and older males... all of which are directly related to insulin resistance and related inflammation.

If we could get on that ASAP, hypothetically the vulnerable demographics would need varying degrees of protections (not just home isolation) and they can be supported by those with antibodies. Then those at low risk of mortality and complications could go back to work whilst building herd immunity. The vast majority of people are likely to be very, very low risk and if those people could get back to work, paying taxes and building herd immunity that might be the best compromise.

I know the herd immunity theory is wildly unpopular, but if it can be approached in a clinically risk assessed and science led way, it need not have to lead to increased deaths in vulnerable populations. And personally, I believe something like this would be more psycho/socially sustainable over the longer term and less likely to lead to civil unrest. Civil unrest is a very real threat in a mega recession/pandemic scenario.

As I have said previously, IMO once the virus pandemic was unleashed, I believe that immediate and extreme lockdown was the first, best step to protect health services from being overwhelmed (not just for those with the virus, but for all the other health issues that occur on a day to day basis across all demographics). Then once the curve is flattened and we have bought ourselves enough time to increase care capacity (additional ICU beds, diagnostic facilities etc) then we can start moving towards other models.

I think there is a strong possibility of subsequent waves of the virus, so we may not have time to wait for the vaccine. But we also need close scrutiny on possible viral mutations and to cease with all the global squabbling and agree a global scientific strategy for reporting on the virus.

Thanks, great thoughts.

HIV is a bit different, in that once you have it no-one ever seems to fight it off themselves, there is something about it that the human body can't seem to beat. Plenty of people are recovering from Covid19, so our bodies are able to mount an effective immune response, we just need to figure out how to train our immune system to do it.

I'm confident there will eventually be a vaccine for cv19

Ironically, it looks like we could all be revisiting the hippies life-style model with their living off the land in communes. A lot of ageing hippies would be having the last laugh.

And the mask, burkha and hijab wearers!!

Keen as mustard. Let the ones who know how to live off the land prosper. Enough of the gouging of profits of those who sit behind computers that add 'value' when that value could be returned to the producer.


Forget about Landlords , the dramatic fall in consumer spending , rumoured to have fallen by 70%, will do huge long -term damage.

Landlords have had it way too good for way too long , even though I jointly own a small office suite which is fully let , I concede that Auckland commercial property owners have had it way too good for too long . Auckland commercial rents are way too high compared to Aussie cities , and a big shakedown is needed.

From a personal view point , this work-from-home experiment is going pretty well for me ., I have found that working from home is great , I am disciplined to actually get things done , I have not needed the car , and could in fact move my office home permanently , just using a communal office space hiring it when I need it .

That will save me about $30,000 a year in rents and parking costs , and save commuting . We have moved all our document storage onto the cloud , so our account with Crown document storage can be closed .

From a NZ perspective , our border will stay closed , and tourism is dead , hotels , motels and restaurants, tour busses , helicopters and airliners will be worthless assets................ possibly sitting on Bank balance sheets as assets-in -possession

To think we are all going to rush back to restaurants and pubs and clubs in 2 weeks is foolhardy . I wont be , thats for sure .

Due to high ticket prices and parking hassles , we stopped going to live rugby and cricket matches years ago , and watch the games on TV , but many will do this in future .

Things have changed for good , and that may be good for us

The fall in consumer spending is likely to be sustained and this could be deflationary as businesses drop prices to compete for the consumers Dollar

Are you sure that your documents in the cloud are safe from prying Chinese eyes?

Client-side encryption still prevents that pretty well.

Excellent post. Agree 100%


Looking on the bright side I'm hoping we see a variety of societal benefits, a four day working week blended with flexible remote working. White collar work venues can downscale to an occasional hive of hot desking and meeting rooms. The end to the modern satire of traffic rush hours, the pure inanity and wastage of private car usage for urban commuting, the associated reduction in household costs and air pollution and the improvements to mental and physical health. Well worth cracking a few eggs to make this omelette.


It would be a shame to not use this opportunity for constructive change. Let's re-establish a new Zealand culture. I was growing tired of more shopping malls and more tourists. It was all just so fake and wasteful.


Central Otago became a pleasant please to be again even before the lockdown, there was hardly a tourist in sight!
And everyone I'm speaking to up here agree.

Numbers of tourists like that should never be allowed to happen again.

Ahhh the good old days. A beer at the Eichardt's pub with "that" view out the windows. To walk back in the balmy summer heat to the tent in the camping ground in the evening...

Yeah… except that Eichardt's prices are very firmly aimed at the wealthy tourist


I reckon that's about to change very soon.

I was talking about 30 yrs ago when it was a public bar on the lower level.... And there were almost no international tourists and certainly zero freedom international campers except for NZers doing that.

Totally agree , sadly the whole world is over run with tourists. We looked at taking our older teenage kids on a cruise so they could experience Europe. Having watched a lot of videos uploaded onto Youtube we decided against it. Simply too many people..... hopefully there will be more balance once the world is open for business.

We went to Milford a few years ago. Pretty but horribly crowded with buses rolling in one after the other, which took much of the joy out of the visit.

In some ways it feels like a big reboot to the 1990s. The Boomers will own the next decade. We are used to living at a different pace, own our homes outright and never really liked risk after the ‘87 crash so have the cash with no significant leverage.

You might, but you may have noticed there are lots of boomer investors of all sort with significant leverage that post on here. And then there is that whole employability factor..

I don't know if the world can survive another decade of boomer influence. Some fresh ideas required. Get rid of them from the boards, management positions. Start fresh. Mortgage free boomers should enjoy their homes and tend to their gardens, play some golf perhaps,

Totally agree. Lots of pros, we need them given the carnage.

I notice that gents by MSD and also food parcels in Manukau, have risen dramatically.
This is predictable outcome when accommodation supplement has a ceiling beyond which it does not increase
Hence, when incomes fall, and rent does not, people have less money left for food once the rent is paid.
This startlingly obvious scenario seems to be ignored by government and media alike

And there's also the occasional c**t landlord who will find a way to extract the $25 pw benefit increase out of their tenants. Already heard of someone telling the tenants to do the lawn mowing as he's no longer willing to pay for it since they got extra dole...


It's been an absolute golden run for the debt stackers, but the lesson on leverage working in reverse is about to unfold. Only option is to cut and run, or find some equity and be very ready to inject it.

Popcorn is good.

Popcorn is good for watching but not good for doing

Timing as always is everything. Now is the time to wait...with popcorn.

That's your opinion, Averageman, I strongly believe now is not the time to kick back, now is the time to get busy, I have certainly worked harder since the lockdown than in a long time before.


Yep, many leveraged property speculators that believed in the get rich quick hype could really struggle through the next few months. Many could be forced to sell as could many homeowners who find themselves in a previously unthinkable situation. Many may well look back at this time the same way as those who got burnt in the 1987 share market crash and those who lost their shirts when the Finance Companies collapsed. Professional full time property investors may fare a bit better but only if they are not highly leveraged and there remains demand for their product. I fully expect to see downward pressure on rents especially once airbnb properties become available for long term rentals.

cooked my popcorn the old fashioned way in a pan the other day and burnt it!

But seriously, I've found the best oil to use is coconut oil for popcorn. High smoke point and great flavour

The landlords sitting on tax free capital gains of 1 - 2 - 3 - 4 hundred thousand dollars who owned property before 2012 will of course be fine.


Tax free capital gains can vanish , just like that ( clicks fingers).
The trick is ...not to have debt underlying those gains.
The true value of any asset is the amount realised at sale. Anything other than that, is just an educated guess.

Exactly, bw. The Envy Crew can point all they like to the 'massive CG' accrued by their target sections of humanity, but until a sale crystallizes that CG into cold hard cash (credit Asset, debit Bank), it's just a non-cash double entry: Debit Asset, Credit Revaluation Reserve in the accounts.

Exactly x2. Just like all the kiwisaver stress.

2012. Um. I think the second wave of general NZ price increase occurred after that. The coming drop may blow that one out the window.
Maybe a better more realistic figure should be yr 2000. ie Before the earlier huge price increase in Ak.

Yes I think we may have a bubble on the bubble. We didn't deflate ours like other countries during GFC. Perhaps CAN and AUS the same? I've been thinking for quite some time that we could see a 50% fall in prices across the country.

Many house prices have gone up 100% + in the last 10 years. 50% off is easy. Probably more once interest rates move up...which they will !!!

Shocking! Still, couldn't help but notice the cars in drive through. Like they're all paid for right?

Far out , i use to work with paramedics is Western Australia, by the time we would arrive for a heart attack ,there was nothing we could do ,coz we were too late,we understood that most ambos interstate had the same problem .although i volunteered part time ,i seldom had those type of calls ;but,to have 13 cases in 16 hours ,that is insane.

In order for the business to be profitable at a level, you feel appropriate. You cannot afford to pay your workers the amount they need to live. So in order to live the workers must access transfer payments and subsidies from the government to top up their insufficient income to continue to meet their living costs.
Because your business cost of operation is subsidised by the state you can afford to pay the rent that a commercial landlord asks. You compete against other synthetically profitable businesses for available commercial property. As your workers compete against other synthetically solvent people for available residential rental properties. Guess what happens to rents and values for both.
Then as a business owner, you use the profits that you earned to invest in both commercial and residential property as both a tax minimisation strategy and in order to get a share of the capital gains that occur as a result of the system.
It is heresy to suggest that you should ever be expected to actually take a loss.

OK, sounds good, you've got your costs sorted on the supply side........the business can pay all his overheads, but the business still has to make and/or sell goods or services on the demand side of the equation. The demand side is the big unknown; I mean many of the regular, or potential, customers will no longer have jobs (think travel industry, airlines, hospitality, etc, etc) who can't get other employment, no tourists, restaurateurs, those whose wages will be drastically cut in the weeks ahead despite government top ups (think Fletchers who employ 18,000), maybe Tiwai Point closes (employs 6ooo), a larger pool of permanently unemployed, the likes of tradesmen and professionals on reduced incomes. The snowball effect. Like the Great Depression (1929-1933), only government and local government employees, nurses, and teachers will have full employment and non-cut salaries. So, unless the business caters solely to these fortunate employees who retain their full pay, then your business will not be able to sell its product or services because very few will have the money to buy them.
Your business cannot run by just paying costs (some government subsidized) and not having an income from sales.

ok, sounds good, you've got your costs sorted on the supply side........the business can pay all his overheads, but the business still has to make and/or sell goods or services on the demand side of the equation. The demand side is the big unknown; I mean many of the regular, or potential, customers will no longer have jobs (think travel industry, airlines, hospitality, etc, etc) who can't get other employment, no tourists, restaurateurs, those whose wages will be drastically cut in the weeks ahead despite government top ups (think Fletchers who employ 18,000), maybe Tiwai Point closes (employs 6ooo), a larger pool of permanently unemployed, the likes of tradesmen and professionals on reduced incomes. The snowball effect. Like the Great Depression (1929-1933), only government and local government employees, nurses, and teachers will have full employment and non-cut salaries. so, unless the business caters solely to these fortunate employees who retain their full pay, then tour business will not be able to sell its product or services.

Commercial property was not to long ago selling at yields of6_8% when banks offering around 3% now banks offering around 1 % or less commercial property at a yield of 4% would be attractive especially with a long lease and stable tenant . Similar could be said for residential I think lower yield but same formula probably more like 2_3 % yield . At these figures rent could reduce by 30% and still have property at similar market values maybe drop by 10 _ 15%

" a long lease and stable tenant "
I walked down our local main street some months ago and was staggered at the number of "For Lease!" signs in shops and offices of all kinds.
Can you imagine what that same street is going to look like in a few months time?
ANY lease and ANY tenant at ANY rental stream is going to be the name of the game; not just 30% lower . Think 90%! "Impossible!". The residual 10% is going to be better than 0%...and what's coming.
What do we see in the Australian residential rental market at the moment? "50% Off for the first 6 months!" etc - just to get a tenant. And that's today; tomorrow it will be really challenging.

Convert to housing?

That's exactly what passed through my old and feeble mind as well. A lot of commercial floor plates are extremely easy to subdivide and fit out for apartments although from personal experience, re-balancing aspects like HVAC flows etc can be hard. But IIRC this was done on a small scale during the Christchurch Earthquakes, and then converted back into office space afterwards. There's certainly gonna be a lot of vacant plates as folks have discovered the beauties of businesses run from home or cheap shared space, goods drop-shipped to customers direct from manufacturers, zero inventory, and zero commuting. Doesn't augur well for public transport either: there will be a disinclination to enter a germ-tube for quite some time I imagine....

Yep and Ak Council and the govt are plowing ahead with the disastrous rail tunnel project. Goff still wants a 4.5% rates increase for residential properties....

Yes but if you drive around Auckland there appears to be quite a lot of high density residential apartments/housing being built already - but it appears to be empty. I guess you could add to the supply of that?

You're starting to get overly dramatic. I'd already noticed traditional shopping spaces being replaced with lifestyle orientated businesses. Rents can drop because the cost of servicing debt has dropped, totally orthodox reaction. More broadly, we will adapt to a new normal (face masks, temp checks) and life will return to normal.

One thing you can be sure on, the Govt is going to need tourism and foreign students to return, there is a lot of debt to be paid down.


And if there's a suitable high International Visitor Levy (in the thousands...) we will be able to exclude the freedom-camping crew who have excreted all over many beauty spots....

Its a tricky one. Some freedom campers are lovely. Others are just scum of the earth. How do we exclude these people?

With a levy

Surprisingly, some wealthy tourists are abject arseholes also.

For sure, quality over quantity. But I also think we need to lift our game on the accommodation and experiences side. So many opportunities to build more world class hiking and mountain biking trails (outside of Central Otago), particularly Coromandel and Northland.

Lots of debt to be paid down, yeah, that sounds like a return to normal.

"I walked down our local main street some months ago and was staggered at the number of "For Lease!" signs in shops and offices of all kinds.
Can you imagine what that same street is going to look like in a few months time?"

1% rates? You're kidding yourself. The lowest I can get right now is 3.09%.

Supermarket, house and hospital. All we need to survive. Way of the future, very sad.

....and Netflix, of course!

.....and chilling, of course!

Baby Boomer Gen 2.0 about to be born then

Just what the planet doesn't need..doubt there will be a baby boom - who would want to bring some kids into this lockdown world?

I had a registered valuation done on my commercial property last march and have a 20 year lease tenant I have already looked at likely scenario and my assumption stacks up in my case based on numbers quoted also have residential tenant in oz have also looked at that current net yield about 3% similar result is sensible allowing for 30% reduction in rent and 2%yield

How are you going to enforce your lease against a bankrupt tenant? (tricky things, these lawyers that structure leases!)
The last time I looked, if there are no assets for disbursal, you'll get nothing, but the outstanding term of the lease returned to your books? Future lease payments? $zero, until such time as you can re-let.
Maybe your tenant is "Bunnings' - safe as. Have a look at what the owners of "Masters" stores got before they went over to Bunnings in the liquidation - again - $zero.

You're a fun guy, bw, always looking on the bright side and ways to improve a situation, it must be awesome and uplifting to have you around in difficult times ; )


So which part of his comment was irrelevant to the discussion, or false?
I think when some serious money (someone's savings, income generator or retirement 'nest egg') is on the line, being realistic about risks is much more important than daydreaming about the most optimistic outcome.

Blind optimism, an almost zealous belief that property prices do not fall by much, & rising property prices gave buyers high confidence and was what drove property buyers to willingly take on higher levels of debt.

Now we're getting to the point where blind optimism meets reality.

An investment should be considered after weighing on both the investment merits and investment risks. There should always be at least 3 scenarios - base case, best case, and worst case. The property promoters never highlighted potential risks, they only highlighted the upside returns to persuade buyers to transact.

The risks were highlighted to readers by many commenters on

It's interesting how falling prices can erode many potential buyers confidence and willingness to buy. Many will stay on the sidelines for lower prices, and time constrained sellers will have to accept lower priced offers as the offers are no longer available at the sellers desired price.

Meanwhile there is still an underlying housing shortage, as the property promoters remind us.

................ but what would Bindi do?

Real Estate will still do well.......they will sell on the down just as they did on the up. They will of course change their listing strategy: they will now be greasing around liquidators and mortgagors (e.g.banks) instead of home-owners and investors.

When do you think the mantra "this is a great time to buy!" is going to change to "this is a great time to sell!"?

Well it will be a great time to buy for the minority of people who have highly secure jobs and low debt.

True , although I would still not buy a house as an investment

First thought is that commercial and residential will plummet but then where is all the freshly printed money going to find a home? Granted a lot of it is for unemployment but using the GFC as an example where did all the cash end up since 2009?
Counter argument of course is that you need a job to afford a rent or be a FHB. Govt assistance can only last so long.....

What freshly printed money? Public Debt is increased to replace others sources of income lost; net result less than $zero?

Exactly - increased taxes, reduced profitability of firms, lower employment, stagnant or lower incomes across the board. Not a great combo to pay off private debt.

The point of looking at 30% lease reduction is to not have a bankruptcy if it can be avoided intend to do all I can to avoid this. If bankruptcy occurs still have building to re let likely at around the 30% reduction offered .
Even if the worst happens the building is rentable to multiple tenants .

I'm sure you're right. I don't know your portfolio.
But, in general, business of all kinds are going to fail; tenants of all kinds are going to have FAR less to apply to accommodation. Incomes are going to be vastly reduced as people trade 'what they were earning' for the security of any income (ie: your 30% less). There are going to be far less firms looking for new/replacement premises.
The whole game has changed from even a month ago. And I don't see where it goes to other than a different, lower set of calculations.
That 30% will probably see you through. You're as prepared as you can be - but most are not. And the 'value' of your holdings will be infected by the prices of any other property in your area/industry that fails and has to be realised at sale. unfortunately must have the biggest collection of doomsday merchants in the country!
Everyone is a different situation and yes there could well be some blood on the floor with any so-called investment at the mo.
However, I sleep very well at night knowing that our financial situation having invested in good quality housing that we manage ourselves will continue to return to us an average of 10% per annum on purchase price.
Doubt overall our portfolio value will drop whatsoever in ChCh but doesn’t matter anyway, properties will still be there returning 10% And still gives a very good standard of living.
No overseas travel though!,

10% on Purchase Price. haven't leveraged any of the increase in 'equity' over time? Go on! You have, haven't you. You can tell us.
How many people do we collectively know that thought they could sell off that original purchase from 1973; that has gone up 1000%, only to find that any 'profit' is taken by the bank to payoff the debt accruing across the whole portfolio? Quite a few! And it's a shock to them when that happens.
It isn't historical "Purchase Prices' that matters is it?!

Of course I have leveraged it is what has enabled us to purchase property at under true market value and put us in a financial position that most people would want, if they told the truth!


Financially i'm not sure, ethically/morally most certainly not.


You do buy under true market value, so you are a savvy buyer. Just out of interest,

1) what are your LVR levels? (using current market value)
2) what are your interest coverage levels?

Let’s just say we own far more than what the Bank does.
Interest rate wise, our interest is less than two fifths of our gross turnover and dropping.

"Doubt overall our portfolio value will drop whatsoever" - that is very brave.

Not brave at all.
When your average return is far better than any other type of investment and the property is in an area that will not have any major drop then not brave stating that at all!
Rather than people going on about property dropping percentages etc. they would be far better spending the time thinking about what they are going to be doing once lockdown is over and how they are going to get by if they have lost their job!


Typical comment from The Boy. Look at me! Look at me! Look at how clever I am. In reality he says he owns some cheap shit boxes in poor old Christchurch. Anyone could do that. As usual he shows no empathy or concern for those less fortunate and younger than himself. Not well educated as evidenced by his ignorant comments over the years. The Prime Minister he has constantly ridiculed has shown incredible leadership and is keeping old buggers like him safe. He should be thanking her but that would be hard for him to do.

Gordon, irrespective of your content, could you please stop the name calling and being rude?

Gordon, often responds when I post!
I have challenged him heaps of times and offered him significant amounts but has never been prepared to take up the challenge, and yet he calls me “the Boy” lol
He calls my ChCh houses “shitboxes” and anyone can do it and that I am uneducated!
He is blurting out BS that he has no idea about, but if he gets satisfaction out of it then I am pleased for him.
Gordon, offer still stands!

I warned you The Boy. You should have sold down but instead you say you kept buying. We can smell the fear in your comments of late. This lock down is going to cause an economic downturn that will make the 2009 Great Recession look like a walk in the park. You are not diversified and what you say you hold is very average at best. Hold onto your wallet and hold hard as times are a changing. I expect to hear less from you as you will be too busy to comment on this site as you try to survive. Christchurch with all its existing problems will be struggling even more as the few tourists you were getting will be gone for a very long time.

Why are you so fascinated with TM2 Gordon

Sorry Yvil "are we still keeping you hostage to save our lives". Does that comment come back to haunt you over and over?

You could keep telling yourself that, or you could do whatever you can to consolidate and minimise losses. I’m predicting falls at the end of the year, once repayment holiday over and Auckland rates taken from banks if unpaid. This will drive up mortgage delinquencies substantially.

Yes exactly. The game has changed to ‘survival’ and loss minimisation as opposed to yield maximisation.

I think there will always be money chasing a yield especially when the banks are offering stuff all and not guaranteed anyway . The aussie banks are supposedly have depositors insurance but I doubt the government could back it up if push comes to shove just a big iou I reckon . The economy may be different but will adapt to new normal and life will go on maybe in a more sensitive environment

How 17,000 Australians plan to stop paying rent THIS MONTH - and there's nothing landlords can do about it

Thousands of tenants across the US threaten to go on 'rent strike' and say they will not pay landlords during the coronavirus pandemic as millions are left out of work. A total of $81 billion in monthly US rental payments comes due on Wednesday.

The Lockdown is certainly creating massive financial troubles for many, right across the board. How can we best respond? By panicking and looking at everything that is bad or by keeping calm, not eating popcorn but taking action to make our own life better?

Yes, in order to make an informed decision, we should look at everything bad and everything good as well. Only fools believe that always being extremely optimistic ("good vibrations") will attract positive outcomes. I didn't take you for a spiritual person.

Once the dust from Corona settles, expect NZ house prices to jump by 20% within 12 months, due to much overseas interest. JA and how NZ has handled Corona is the best PR for living in NZ and Americans among others will lead the purchases here, I am sure.


Even with the foreign buyers ban in place, and many of us that are going to be reminding our MPs that they got voted in on a policy or reducing immigration? Lots of NZers were already getting rather tired of the immigration levels.


You are dreaming


How are they going to get into the country? Will they have the income left to spend to (1) get here and (2) buy anything?
Yes. NZ is THE best place to be. But keeping it that way means - KEEPING OTHERS OUT!

I think you may be right. The RBNZ, government and trading banks will do ANYTHING and EVERYTHING to keep the property market afloat.

Keeping the market afloat, or at least only semi-submerged is a totally different thing to the stupid claim that prices could increase 20% in 12 months.
It's about damage limitation. I see a 10% drop on average followed by years of stagnation. We will achieve stagnation if we are lucky due to those actions you mention and NZ getting through this better than most.
Good bye to Mr Church's 'Double every 10 years' mythology.

If virus such as this does not change the property game nothing probably ever will.
Will housing NZ sign up landlords as their agents?

Smokey, is that you ttp?

Sorry, don't know who ttp is.

No one is coming here without verifiable immunity.......

He forgot to mention that's after a 50% fall.

Bw interesting articles hope these scenarios don't eventuate as the banks won't be impressed and civil unrest possibly the army in the streets will be required despite many people's dislike of landlords they require money for rates insurance and mortgages unless the tenants are going to pay rates etc this leading to a complete breakdown and some radical correction would be required

There won't be a breakdown. landlords and tenants need each other after all.
It's likely that landlords will be 'subsidised' for years to come - lower cost of finance; longer time to repay the loans etc.
But, with that will come the flip side of the support package - Government will have total say on who gets what debt ,and what they can spend it on ( the banks will have no choice, or, as you suggest, they will be in financial trouble as well)
Banks will lend to, say, dairy, manufacturing, tech etc. but not to tourism, travel and most importantly - not to property speculation in any of its many forms.
% rate will be lower; Mortgages will be for 50 years if needed and loans will only be for ONE permanent place of residence ( per IRD Number? Want more than on property? Buy it with your own funds . LVR of 0% in effect). Change is on the way, and Life, as you say, will go on.

Very good article Greg, with good understanding of the differences between commercial and residential issues

As a matter of interest. Do you know any business that's going to stick it through to the end of the work subsidies, and then call it quits? I do (SME; 5 employees of 50 years standing; second owner). I haven't asked "but what about your lease?" They have enough on their plate as it is.


Major pathology corporations are attempting to halve their rental payments to GP practices across the country in a move that threatens to financially cripple clinics at a time of critical need.

The lease.. covered by a common saying about getting blood from a stone.

No I don't

Maybe there needs to be a some conversions of commercial rentals into residential.

Too hard in many cases. One bathroom per floor, One kitchen nook etc. Divide that in to 6 apartments and the retrofit of utilities would be a nightmare.

Ok right. But better than the subpar residential developments that pass for housing which need on going work until they get scrapped.

I've done this. Never ever again. Costs as much as building a new house or apartment from scratch.

The rules around noise, ventilation and fire are especially expensive to meet.

Maybe this is where Government can step up and provide the incentives for the work to be done.

Wrong predicament !, in the land of FIRE economy, these industry are rife with vested interest, lobbyist.. more than 60% of the recent future tax payers loan borrowing are already swindle into paying the rental contractual obligations. Both Private & Commercial Landlords, are 'the silent Essential services' in NZ pandemic response. Their contributions shall go without notice, as we look further. This unsung sector heroes are currently will receive further assistance by RBNZ, the removal of LVR, the moratorium period of CGT reprieve, and other measures to nurture & protect the sectors from any future unruly economic distortions.
Any successive govt. shall award these brave industries for provide shelter to the essential workers.


For anyone down there still kidding yourselves, no, the rest of the world absolutely isn't desperate to beat a path to NZ and buy up all the property in order to escape the coronavirus.

The rest of the world has access to the same online resources as you and can see NZ is as much at risk as anywhere else.

Plus NZ houses are rubbish quality and grotesquely overpriced to an almost unbelievable degree, and there's still virtually nothing to do in NZ that doesn't involve rugby or open homes.


An expat living and working in/between Japan and the US.


Good post.
As you obviously know there are a lot of deluded people in little ole NZ!!!

We are diffrunt !!!