Bernie Cook

Mortgage Adviser


Accredited introducer for major NZ banks, lending institutions and private lenders

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smart thinking

It's a little bewildering and confusing say many people trying to get into their first home. Many complain that no matter that they are pre-approved at the bank for an amount they think is going to work, when they get to the auction they are simply outbid by second or third home buyers or investors who just have more resources. Not fair they cry and who can blame them? How do we get a start they ask? Another fair question. Here's a possible answer and one that has worked for some of my clients including my own family members: Buy what you can afford in a location where your resources are sufficient. You don't necessarily have to live there. You can rent it out to cover the mortgage and continue to rent for yourself in a location that suits you better. This way you are on the property ladder. Not necessarily where you want to be but that can come later. If values rise your house rises with them instead of you being left stranded trying to save an even bigger deposit. Your investment home will develop equity that will keep you up with housing inflation and allow you to get your dream home in your favoured location at a time in the future when you are truly ready.


In our consumer-driven society we are led to believe we must get our dream home immediately. It has to have everything we desire right now as a necessity. This attitude is keeping many young people from ever owning a home of their own as it's simply not possible. The road to financial success is built in layers patiently, bit by bit. So if you can't buy in your chosen location, buy an investment somewhere else! It really works!

An Easier  Way To Get Your First Home

Is It Time To Think Outside The Square?

January 2015

Typical QLD Investment Property


Ideas, Comment and Opinion

Unlike King Canute who demonstrated that it was impossible to stop the tide coming in by royal degree, the Reserve Bank is applying the brakes to the property market with new LVR rules. But will prices fall? Maybe a little for a short time. It’s all about supply versus demand. Until now demand has exceeded supply, driving up prices. Government announcements can affect the mood of buyers for a short time, reducing demand. But Auckland is short of houses and until supply catches up, demand will return when the mood changes and up will go prices again. Migration is a factor driving demand and that’s a political hot potato. The economy needs the money and resources migrants bring, so no Government will cut it to the bone at the risk of sending us spiralling into a recession and them into opposition next election. So, should you buy or wait? My advice: buy now if you can. The supply situation is not going to fix itself anytime soon and price drops will be resisted by those home owners selling who can afford to wait.

Got equity? If you own an Auckland home of course you do. You can still borrow up to 80% of your family home even for investment. Let’s say your home is worth $1.2m and you have a $350k mortgage. Subject to servicing rules, you could borrow $610,000 as a deposit on an investment property or two where the $610,000 becomes your 40% deposit on the investment and you borrow the rest against it. Get one where the rent pays the mortgage and you’re in clover. No brainer really.

King Canute should have built a big sand wall, it works for a short time. Just like the Reserve Bank rules.

Reserve Bank Efforts To Cool The Property Market - August 24, 2016

How lifelines can help buyers (and hurt owners)

(Reproduced from 18 December 2014)
















The true market price of a house is always what a buyer is prepared to pay to the owner for possession.


Council capital valuations (CVs), professional valuations and real estate agent estimations, normally based around set formula and recent local property sales, are simply guides.


As each property is unique, as are the requirements of both the buyer and seller, it is a wrong assumption to say that these price estimations are what should be paid, and that to pay anything higher is to pay ‘too much’.


Some economist and commentators say that Auckland housing is ‘over valued’ based on historical comparisons tied to the average wage or the percentage of a person’s monthly income required to pay the mortgage. While these comparisons are interesting, ultimately price is what a willing seller and willing buyer agree on.


The most effective hand brake to the two parties agreeing on a price that is out of hand is the lending practice of banks.


Through their mortgage lending practices banks determine whether they will lend sufficient money to a person to enable them to conclude the transaction. That decision is normally based on the applicant’s financial wealth, and ability to service repayments over the period of the loan.


Based on the low number of mortgagee sales in 2013 and this year the banks are keeping a tight grip on this.


So what might appear to be a high price to those without all the facts, to the buyer who wants the house, and the bank that lends the money, the settlement price can be a perfectly sound financial transaction.


Calls abound at present for more direct intervention by Government and regulators to control prices and among the proposals being advocated is barring non New Zealand residents from buying homes, and placing restrictions on property investors as to how many properties they can own.


In other words, they want to artificially depress prices by excluding some people from the market.


There will inevitably be unintended downsides associated with any form of intervention. For example, in introducing the 20% LVR ratio the Reserve Bank has created a situation where those not already in the housing market are being shut out of home ownership.


Personally, while in favour of LVRs, I believe the time is right to start easing the requirement, perhaps reducing it to 15 percent.


Perhaps the biggest unintended downsides of further intervention in the market will be to take away from the existing owners of Auckland’s 470,000 properties the opportunity to sell their property at the best market value possible.


By far the majority of existing property owners own only one home, and have diligently managed their financial affairs over many years to ensure they could meet their mortgage commitments.  They bought on the open market, had to meet what the market rate for their property was at the time of purchase, and over the years have paid a variety of interest rates, some extremely high.


For many, achieving a market value for their home represents their ability to better fund their retirement years.


In seeking to solve a problem being faced by one group, it does not seem reasonable to impose a penalty on another.


Economists and commentators have widely different views as to why property values continue to rise in Auckland. For me, the most compelling is the case made by the Ministry of Business Innovation and Employment.


It makes the point that since the start of the global financial crisis in 2007, a period of seven years, Auckland has grossly under invested in building sufficient new homes to meet its population growth. It estimates that currently the City is 18,000 dwellings short of what is needed for the City’s current population.


Building activity at present is around 10,000 to 12,000 new dwellings a year, so it would take some 18 months to build enough new homes for the City to catch up with its current needs.


Meanwhile the population will have continued to grow rapidly, and with forecasts predicting it will continue to do so for the next few decades, the chances of the City getting ahead of its housing challenges in the next few years is not looking good.


The Government, the City Council and private investors have numerous initiatives underway to address this problem over the medium term. These responses are far reaching and will over time ease the situation. However, in the next few years there will be more people seeking homes than available supply, and that can only lead to a continuation of prices increasing.


The current system is certainly not broken, and the handbrake in the form of our banks is keeping things in check. Trying to artificially reduce Auckland prices with intervention carries with it the potential to create far more negatives than positives.



Peter Thompson


Peter is the Managing Director of Barfoot & Thompson. He started out with the company over 30 years ago in the rental division at the Otahuhu branch and continued to move through a number of positions in the firm including sales, administration and management. Eventually he was made a Director in 1997.


Peter is the grandson of Maurice Thompson – the original Thompson in the Barfoot & Thompson team which started out in the early 1920s.


In 2011 Peter was awarded Life Membership of the Real Estate Institute of New Zealand (REINZ)

Yes. It's time for investors to look outside Auckland's overheated property market. I'm not talking about buying elsewhere in New Zealand where capital gains are low or non-existent and houses can be difficult to rent. It's Queensland where the opportunity now lies in my opinion. Consider the facts:

- the population growth and demographics of Queensland support a healthy demand for both rentals and sales. Click here for data.

- land prices are lower and material costs are less than in New Zealand meaning it's possible to buy a 3 bedroom, 2 bathroom, brick and tile home with a garage for $360,000 to $450,000 in good growth areas. With good rental returns and interest rates around 4.75% the numbers stack up better than anywhere in NZ right now. There are no requirements for a 20% deposit either. Banks are lending up to 95%.


It's also possible for New Zealanders to borrow for such homes. MortgageWise has arrangements with Australian counterparts to assist in the raising of funds and can introduce you to the right people to guide you through the process of buying. Should you decide to investigate further, call us.

Just How Unique is the NZ Property Market?



We are all too accustomed to articles stating that NZ house prices are “amongst the highest in the world” / “over-valued as compared to rents” / “driven up by tax advantages” / “being inflated by overseas buyers”


I read these articles and accept the often highly respected authors for their bullet-proof assertions. Clearly we must be unique in the world and standing by as we witness house prices spiral out of control as according to a recent Gareth Morgan article in the NZ Herald “New Zealand is unusual in the world in that it pretends housing isn't an asset like bank deposits or company shares”. Again I respect Gareth Morgan as a credible economist and a broad thinker, I may not always agree but I do respect his views.


So set against this backdrop of opinions and analysis I decided to seek out some data to compare NZ with other countries. The natural partner for comparison are the markets of Australia and the UK. I am grateful to the assistance of an excellent UK property commentator who helpfully pointed me in the right direction for UK data, thanks Henry Pryor.


The UK data provides a mix adjusted house price index which mirrors the REINZ Stratified House Price Index and fortunately the data extends back into the 1970’s whilst REINZ data goes back to 1992. Using the index of the 1st quarter of 1992 as the base the two markets track through the next 22 years in what is a surprisingly aligned growth path matching each other for the 22 year rise of 280% to both reach the index level of 383 in the 1st quarter of 2014.


It is worth remembering that the UK has capital gains tax, inheritance tax as well as stamp duty - none of which seem to have either depressed that market nor preferenced the NZ market by comparison.


If we add in Australian data which provides a valuable benchmark of a similar country albeit of greater scale closer to our trading partners of Asia and the US. Australian data is not accessible back 20 years but a comparable Property Price Index is available from 2002. Given the property bubble that all markets experienced in the mid 2000’s I decided to approach a comparable index for the three countries not on an aligned time period but rather indexed on the starting point being the peak of their respective property price index before the property crash caused by the GFC in 2008/9. For NZ property prices peaked in the 3rd quarter of 2007, the UK peaked in the final quarter of 2007 with Australia in the 1st quarter of 2008.


What transpired next is ably demonstrated in the chart below which shows the shallow fall experienced in Australia before a very strong recovery at a time when the UK and NZ markets continued to weaken. The UK market suffered the worst seeing the index fall 18% before rising whilst NZ fell 10%.


It took Australia just 5 quarters for prices to recover from the peak of the pre-GFC collapse compared to 4 years for the UK and close to 5 years for NZ. Subsequently all 3 markets have experienced resurgent price inflation that now sees the Australian market 26% up on the prior peak of 2008 as compared to 16% and 18% rises for the UK and NZ respectively.


Such clear alignment of pricing trends despite the very different tax policies designed to milk the property market or stimulate the property market would seem to point to the view from the analysis that the NZ property market is not that unique, if anything it is incredibly similar to these other markets and despite the best intentions of politicians the market would seem to move aligned to factors well outside of such policies.



How Much Should You Spend on Your Renovation?  

(reproduced from


New Zealanders love to renovate, and it’s easy to see why. Renovations can transform our homes and create massive profits. Spend wisely and you’ll reap the rewards; overcapitalise and you could end up with more mortgage than house.


How much should you spend on your renovation? You need to start by considering 3 important factors:



1. How much value will your renovation add?


For every dollar you spend on your house there will be a return on your investment. Some improvements have a high rate of return, like adding a room.


For every dollar you spend turning a three-bedroom home into a four-bedroom home, you’ll usually double your money, says Gary Caulfield, quantity surveyor and general manager of Construction Cost Consultants.


Kitchen and bathroom renovations are good earners, too, paying you back around $1.50 for every dollar you spend.


Other features can have a negative return, depending on how much you spend and the property values in your area. Swimming pools are a great example: some buyers don’t want to bother with the maintenance, or feel they are too dangerous for young children.


Pools only pay off in a warm climate where buyers are looking for that x-factor and are prepared to pay for it. A $150,000 swimming pool installation will almost never add $150,000 to the value of a house in Dunedin.


But it’s possible to overcapitalise on any part of your house if you push past the ceiling price for your area. Even in the most exclusive neighbourhoods it rarely makes financial sense to buy the ultimate top-of-line imported fittings.


“I recently priced a kitchen with a built-in espresso machine that cost a total of $12,000 to buy and fit,” says Caulfield. “That’s a huge amount of money for a coffee machine, and is that going to tip the balance for a buyer?


“I’ve seen gold-plated taps worth $6,000 each, or you can have the same water coming out of a perfectly nice-looking $60 tap. It’s easy to get carried away.”



2. Are you renovating for profit or comfort?


Sometimes it’s not about return on your money, it’s about turning your home into a more comfortable place to live. While you don’t want to go crazy, some people are happy to overcapitalise in the short term in order to get the house they want for the years to come.


With a third child on the way, Wellington resident Phoebe Hawkins spent $120,000 on the $510,000 family home, adding a room and a bathroom among other work. After the renovation it was revalued at $550,000 – not a great investment if she was planning to sell.


But she’s taking a long-term approach: “It was a calculated and well thought-through decision. A lot of the work was maintenance, like roofing and cladding, and it has made the house warmer, drier and more comfortable. We’re making the house we want to live in, and improving its efficiency so our running costs are lower, too.”


It’s something Caulfield sees often; he recently priced a job at $30,000 which merely widened an existing raised deck from 2.5 metres to four metres: “That’s not going to add $30,000 in value, but they don’t care. It’s a lifestyle choice.”



3. Where will the money come from?


You may be able to fund a small renovation from your savings, but most major renovations are funded with bank lending. In most cases homeowners will be able to borrow up to 80% of the house’s value, so how much you can borrow may depend on how much equity you have in your house.


Can you find the money to fund a major renovation? If not, can you break it down into more manageable stages or find a way to do the same work more cheaply?


And remember, you need to avoid the trap of thinking your project will squeeze itself to fit your budget: “We’ve all seen it on Grand Designs,” says Caulfield. “People say, ‘I’ve got a budget of 150,000, that’s all I can afford’. But that’s just a number. How much is it actually going to cost to do the work?”


You need to know how much the work will cost (as accurately as possible) and ensure you have access to sufficient funds, plus an extra contingency fund for those surprise expenses which seem to inevitably crop up.



4. How much do New Zealanders spend on renovations?


After analysing all the projects priced by his company, Caulfield says across a whole house the average price per square metre for a Kiwi renovation is $2,200, plus or minus 10%. (If this seems high, it’s worth bearing in mind that you would only call in a quantity surveyor for a fairly expensive project – they’re not pricing up single-tradesperson work like roofing, non-consented decks or new kitchen cupboards and benches.)


Kitchens and bathrooms may be the most expensive rooms to renovate, but they’re also the most popular, according to Tracey MacKenzie of, who found that these two rooms were the most commonly quoted on the site.


“Kitchen renovation costs vary widely depending on what it is that is needing to be done,” says MacKenzie, “but most renovation jobs seem to be for a full renovation, which starts from around $5,000.”


That price is for a small kitchen; larger kitchens fitted out to higher specifications will commonly cost $20,000 to $40,000.


Bathrooms are a little cheaper, with a full renovation on a small or medium bathroom priced at $4,000 to $5,000 on average. Top-quality bathrooms, even small ones, start at around $10,000 and go up to $20,000 or more.


The average house extension on costs $60,000; this covers a huge range of work from a simple conservatory extension ($6,000) up to a big 70m2 second-storey extension ($350,000).



5. Doing the sums


Before you embark on any renovation, you need to estimate your costs and work out how much value your renovation will add: provides a helpful cost estimator which gives you a starting point for the approximate cost of a wide range of renovations.

When you need to work out exactly how much your renovation will cost, you’ll need either fixed-price quotes from building companies, or if you already have a plan, a price from a quantity surveyor.

For an accurate estimation of how much value your renovation will add, talk to a local valuer.

Don’t forget, adds Caulfield, that your project may also incur additional consent and compliance fees, insurance and architect’s fees. You need to work these into your renovation budget and finance calculations.

Westpac also has a Building and Renovations section on their website featuring tips and tricks, things to consider, and how to organise.

Once you know how much money you’ll need, you can arrange finance with your bank if required. Being able to show the bank your calculations will go a long way to demonstrating that you genuinely understand what, and why, you’re spending on your house.


The opinions expressed on this page are not necessarily those of MortgageWise and MortgageWise does not endorse or approve any goods or services to which reference is made.  MortgageWise makes no representation as to the accuracy or currency of the materials, which are intended as a general guide only, without taking your personal financial situation or goals into account.  Westpac accepts no responsibility for the availability or content of any third party websites to which this page may link.



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