21 September 2009

New Zealand is experiencing an influx in migration numbers according to figures published today by Statistics New Zealand.  New Zealand has had its highest annual net migration gain in nearly five years during the 12 months to August 2009

Many view this gain in population as helping the recovery of New Zealand’s housing market.  New Zealand’s growing population means an increasing demand for housing and this has resulted in a boost for its property market over recent months.

Global financial turmoil was thought to have lifted the number of New Zealanders returning after living overseas, as well as reducing the numbers seeking to live elsewhere.

New Zealand’s net migration gain was 15,600 in the year to August, up from 4,900 in the August 2008 year.  This is the highest annual net gain since the November 2004 year, Statistics New Zealand said.

The 87,500 people arriving on a permanent and long term (PLT) basis was up 800 or 1 percent on a year earlier.  At the same time, the 71,900 PLT departures were down 9900 or 12 percent on a year earlier.

For just the month of August, PLT arrivals exceed departures by 1600,compared to 500 a year earlier.

The trend seen in recent years of many New Zealanders leaving to live in Australia has decreased markedly and can be noted in the 1800 fewer departures to Australia in August 2009 compared to August 2008.  Departures to Britain in August were 200 less than the same month last year with an overall decrease in PLT departures of 29 percent.

PLT arrivals in the month of August were down from August 2008, said Statistics New Zealand.  There were 1000 fewer arrivals of non-New Zealand citizens but this was partly offset by 200 more arrivals of New Zealand citizens.  PLT arrivals of non-New Zealand citizens had been declining since April.

Seasonally adjusted, PLT arrivals exceeded departures by 1600 in August, down from 2400 in July, but similar to the level in June.

Ref: 3news.co.nz

 19 September 2009

The views of Westpac Bank’s chief economist, Brendan O’Donovan, were recently aired at the Transtasman Credit Summit in Wellington.  His optimistic perspective was that a migration-driven housing construction boom would fuel New Zealand’s economic recovery, with Auckland leading the way.

O’Donovan’s point of view is unlikely to be welcomed by New Zealand’s Reserve Bank and Treasury, who are hoping for an export-led recovery complemented by housing market restraint.

Internationally, O’Donovan noted leading indicators were pointing to a strong recovery in global manufacturing activity in the next 9 months with uncertainty after that time.

However, he was more positive about New Zealand’s recovery where the “big story” was the ongoing migration turnaround.  Last year net inward migration was just 3500 but net migration in the year to July 2009 is 14,500 and it is expected to be headed for 25,000.  The average for the past 10 years has been 11,000.

This increase in net migration can be attributed to the sharp fall in numbers leaving New Zealand, particularly a reduction in the mass exodus of Kiwis to Australia seen in recent years.

This migration turnaround was a key factor in what O’Donovan saw as an impending housing shortage.  At present the housing build rate is a very sluggish 12,000 per year, “it should be running at about 20,000”.

“Given current build rate and migration, you’d actually need about 30,000 houses built to close the gap, it’s just not going to happen.

“The upside in terms of this construction cycle is huge.

“This migration and housing shortage story is certainly enough to sustain the New Zealand growth story for a good few years, three years or so.”

He said that this pick up in housing activity would translate into greater home equity withdrawal and actually spur consumer spending.  This is not what the RBNZ would like to happen as they want to see New Zealand’s recovery export-led, like it has been in most other recoveries.

However, Westpac is optimistic about a “permanent sustained lift in export receipts” driven by improved commodity prices.
O’Donovan also believed Auckland, which fell into recession earlier than the rest of the country last year due to its higher debt levels, was “leading the country out of recession”.

“Super high interest rates last year hurt Auckland more than any other part of the country, the lower interest rates this year are benefiting Auckland more than most.”

In respect of the rest of the country, prospects are also looking brighter.   When dairy prices fell they began to feel the pinch but thankfully a turnaround in dairy prices means that the worst is going to be averted.

O’Donovan anticipates that we will see all parts of the economy starting to lift by the beginning of next year.

Ref: NZ Herald

9 September 2009

In a recent World Bank report New Zealand ranked second as the easiest country in which to do business.

New Zealand maintained its position for the fourth year, with Singapore retaining its crown at the top.

The World Bank report ranks 183 countries based on ten indicators that measure the time and cost of government requirements in starting, operating and closing a business, trading across borders and paying taxes.

New Zealand ranked second after Singapore followed by Hong Kong and the United States.  The top 10 countries were unchanged from last year apart from the United Kingdom at five swapping places with Denmark, now at six.  Ireland, Canada, Australia and Norway rounded out the top ten.

Most large economies maintained their rankings from the previous year’s report.

These findings reinforce New Zealand as having an attractive business environment, with low barriers to entry, and policies that encourage strong investment relations with countries overseas.

ref: stuff.co.nz

7 September 2009

Data from one of New Zealand’s leading property valuation companies, QV Valuation, has shown positive results for the New Zealand property market during August.

Four consecutive months of value increases have pushed up nationwide property values 1.9 percent higher than they were back in April this year.

In August the national average sales price increased further to $385,426NZD from $382,758 in July.

QV Valuation Manager Glenda Whitehead commented that confidence appeared to be returning to the market with solid sales activity during August.  The number of sales is up from this time last year when they were at historical lows.

A continuing shortage of listings has sparked renewed interest in property.  The increased competition amongst buyers is resulting in quality properties selling quickly and prices being pushed up.

But Ms Whitehead warned that the recent rise in values was likely to be a temporary surge rather than the start of another boom.

“If more properties come on to the market in spring, as expected, then the imbalance of motivated buyers and the shortage of quality properties could be corrected and values stabilise.”

Property values in all of New Zealand’s main centres have increased in value over the past three months.

Auckland:
The average sales price for the Auckland region increased slightly from $500,315NZD to $502,022NZD.

Wellington:
The average sales price in Wellington rose from $429,571,NZD to $431,614NZD

Christchurch:
The average sales price for the city increased slightly from $342,993NZD to $344,401NZD

 3 September 2009

One of Auckland’s largest real estate agencies has reported that Auckland’s property market is showing good signs of movement with house sales in August up more than 65 percent on the same month last year.

Average prices were also up slightly from August last year, rising 1.5 percent to $520,023.  They also saw an improvement on their previous month’s sales, up 6.5 percent.

“Keen interest has returned to the Auckland market…” said Peter Thompson, company managing director.

“However, it’s not a case of the market taking off.  Rather, the mood is one of quiet confidence that the time has arrived to act.”

Buyers were still being “restrained and selective” said Thompson, but were committed to completing transactions, which had lifted activity across all areas.

Still of concern is the low number of properties for sale and this is a significant factor preventing the Auckland housing market returning to a “nice balance”.  At the start of September the number of properties on their books was their lowest for 19 months.

But given the improvement in the level of sales activity, it is anticipated that more sellers will now enter the market.

ref: NZ Herald

2 September 2009

Latest data showing a decrease in new property listings suggests that scarcity of new properties entering the market in New Zealand’s main centres will put pressure on property prices.

According to the latest monthly issue of the NZ Property Report, the level of available inventory nationally — the number of weeks it would take to sell the country’s entire available stock based on average sale times — was down 34 percent on a year ago in August.

The monthly NZ Property Report summarises changes in the property market based on new listings and movements in asking prices (as opposed to actual sales prices). The nature of these statistics provides a forward-looking perspective of where the property market is heading.

The Report for August reflects a stable position in New Zealand’s property market with little movement in asking prices, level of inventory and level of new listings.   However, new listings decreased slightly when usually an increase is seen just before the ‘traditional spring upturn’.  There is concern that new listings will not be sufficient to meet the anticipated increase in demand.

The NZ Property Report states that “Spring is one of the most active periods of the year and with constraint of new listings; the market may not be able to meet this demand without consequential impact on prices.”

This news supports findings in the recent report from Infometrics, which suggests that New Zealand house prices will rise.  The report forecasted price increases of up to 24% in New Zealand’s main centres due to a shortage of new housing and increasing demand from buyers driven by low interest rates and an increase in net migration.

However, with asking prices remaining steady throughout August, prices are not yet reflecting this anticipated pressure on property prices.  If potential sellers continue to hold off listing properties, the shortage of available stock could push prices up over the coming months.

August 2009

The average time it takes to sell a residential property in New Zealand fell sharply in July, compared to the corresponding month in 2008, acting as a further indicator that the New Zealand property market is on the mend.

Fresh data released by a leading New Zealand mortgage company shows that their property cycle indicator increased to an optimistic 5.95 last month, up from 3.98 in June.

The New Zealand house market gauge takes into account changes in the number of New Zealand homes sold, changes in New Zealand property prices and the time taken for New Zealand properties to sell. It runs from -10 for a strong decline to +10 for strong growth.

The average property in New Zealand took an average of 37 days to sell in July, a staggering 21 days lower than the same time last year, and the greatest year-on-year improvement since records began in 1991.

Around 6,000 homes in New Zealand were sold in July, a similar number to that recorded in June, but up 34% year-on-year.

The average price of a home in New Zealand also held steady at $340,000 (£142,300) in July, which is similar to that recorded during the same period last year.

The latest NatWest International Personal Banking (NatWest IPB)  Quality of Life Index undertaken in conjunction with think tank, Centre for Future Studies, surveyed UK expatriates now living across the world.

Here are the key findings:

• Of the countries surveyed, New Zealand was rated top of the table by expatriates surveyed.  Last year’s winner, Canada, was in second place.
• Expats in New Zealand rated it highly across almost all life experience factors, including income while simultaneously having the lowest cost of living out of all the countries surveyed.
• It also had one of the lowest property values - equivalent to just £111,000.
• Furthermore, the favourable tax regime means that expats’ money goes further in New Zealand, with the highest tax band at 39 per cent.

2009 Quality of Life Index

1. New Zealand
2. Canada
3. Australia
4. France
5. United Arab Emirates
6. Portugal
7. Spain
8. South Africa
9. USA
10. China
11. Singapore
12. Hong Kong

Auckland house prices will rise by almost 30 per cent in the next three years putting the city ahead of every other region in New Zealand, a study predicts.

The Infometrics study forecasts annual price growth of 9.8 per cent next year but 9.2 per cent annually overall between now and 2012.

Auckland’s coming rise would be fueled by the city being the largest in New Zealand, with a rising population and a limited supply of new housing.

Manukau house prices are up almost 5 per cent but Rodney’s are down 13 per cent on a year ago.

Not all areas have picked up yet.

Infometrics’ outlook for Auckland house prices shows prices will be up 9.8 per cent in the year to June 2010.

“Auckland house price growth is forecast to be the fastest in the country at 9.2 per cent per annum,” Infometrics said of the outlook until 2012.

“The persistently low level of residential construction activity in Auckland over the past few years has led to a shortage of property in the region.

“These under-supply issues are set to provide good support for property prices over the next 12 months.

“By 20011/12 housing supply issues are likely to be dominating price trends in the region,” Infometrics said.

“Having experienced a larger decline in sales activity than the national average over 2008, house sales growth in Auckland is now moving in line with the nationwide trend.”

House prices nationally could rise by as much as 24 per cent over the next three years.

Cheap mortgage money and a lack of new housing were combining to push up prices, and the downturn was over, said the study, commissioned by mortgage insurer QBE LMI.

But property author and commentator Kieran Trass said the downturn was far from over.

Prices in some Auckland suburbs were down by about 20 per cent and the slump had some time to run.

But Infometrics s predicted that low interest rates and the housing shortage would push house prices up by almost a quarter by 2012.

Statistics NZ figures show new housing consents plummeted from about 30,000 a year early this decade to 13,000 in the past year.

Infometrics said the median house price had climbed to $339,000 in the June quarter from a low of $330,000 in March.

The number of house sales had already had a strong lift.

Sales were up 41 per cent in the June quarter compared with a year earlier, it said.

“Residential property is also taking a significantly shorter amount of time to sell. Across the country, median time on the market has dropped from 58 days in July 2008 to 41 days in June 2009,” the insurer said.

QBE chief executive Ian Graham said housing affordability had improved throughout the country.

“Demand among buyers has increased,” he said.

“With improved credit conditions and record low interest rates, the motivation for first home buyers and investors to enter the housing market has never been more compelling.”

Steven Glucina, a Ponsonby real estate agent at LJ Hooker, said the market was very active.

“I sold a two-bedroom do-up villa at 61 Pine Street, Balmoral under the hammer on Saturday for $679,000, which was $109,000 over the council valuation.

“The market in this area is red hot at the moment. This is the fourth home that I have sold in the street in the past three months.”

GOING UP SOON

Infometrics’ predictions on Auckland median house prices
* 2009: $440,000
* 2010: $483,200
* 2011: $506,700
* 2012: $553,000

NZ median house prices
* 2009: $339,200
* 2010: $376,200
* 2011: $391,400
* 2012: $419,400

11 August 2009

Source: www.nzherald.co.nz

House prices in New Zealand will rise by 24 per cent over the next three years due to low interest rates and a shortage of new housing, Infometrics has predicted in a report prepared for mortgage insurer QBE LMI.

Prices could grow by as much as 11 per cent nationally in the year to June 2010, the report said.

“This positive growth is expected to moderate over the following two years as residential construction activity regains momentum,” QBE LMI chief executive Ian Graham said.

“On average, property is now also taking a shorter length of time to sell. The median length of time for sale has improved from an average of 58 days in July 2008 to 41 days in June this year. The level of competition among buyers has increased as financing costs have fallen and the number of properties on the market has dropped away,” he said.

“Although residential building activity has been at very low levels over recent months, residential consent numbers are forecast to climb back towards 1,500-1,600 per month by the end of this year, and hold in the 1,700-1,800 range throughout 2010. Further growth in building activity is expected in 2011/12,” he said.

“‘Housing affordability has improved on a national level and the level of demand amongst buyers has increased. With improved credit conditions and record low interest rates, the motivation for first home buyers and investors to enter the housing market have never been more compelling.”

“With a lack of available finance for developers, a significant shortage of new housing is arising in New Zealand and is expected to continue into 2010. The underlying demand for new houses is sitting at 21,000 per year which is strongly driven by an increase in net migration and a reduction in New Zealanders moving overseas. This undersupply of new dwellings, will contribute to an increase in property prices over the next three years,” Graham said.

The report said that although house prices were still lower than a year ago, some upward momentum looked to have appeared since the start of 2009 and that further improvement would be consistent with the trends in sales activity and the rate of turnover.

Infometrics based its forecast rises on the average median house price from the three months to June 2009. The national median is forecast to rise to NZ$419,400 by the end of June 2012 from NZ$339,200 this year.