26 July, 2011

Crockers research said the market is stronger than it has been for some time, compared with 2010. At 11,311, sales numbers for the first six months of the year are at their highest since 2007, and the June 11 figure is 27% higher than the 10,305 sales closed in the same month last year.

Similarly, the median sales price is up 3.6% on last June, the strongest house price inflation since 2007.

The movement is greater in Auckland than the rest of New Zealand, where the median sales price is up 2.1% on last year (to $360,000) and the number of sales closed is up 14% compared to last year (to 5229), Crockers said.

Rentals in the Auckland two-bedroom market have been stable for the past three months at about $365 per week, just over 20% higher than the average for the rest of New Zealand.

The three-bedroom market has also stayed steady over the past three months, following significant rises in the earlier part of the year off a January low. In June the average rental price was $486 per week, 30% higher than the national average of about $350 a week.

Crockers suggests that with the Auckland property market strengthening this year, “it’s worth taking another look at Auckland versus the other metropolitan centres, in terms of the relative returns rental properties offer.”

ref: nbr.co.nz

15 July 2011

With written sales 30% higher than June last year, Auckland is leading the real estate market recovery, according to Harcourts.

However, the company said the signs of a recovering market have been tempered somewhat by a potential housing shortage.

Harcourts chief executive Hayden Duncan said that while June figures had revealed increased activity in the lower end of the market, “the national average volume of new properties entering the market is down 13%.”

He said the elimination of more than 5,100 Christchurch homes had reduced the already scarce pool of choice for buyers.

“Given this, the time to sell really is now and buyers should act before a decrease in affordability arrives.”

For June Harcourts reported a 30% rise in sales in the Northern region, including Auckland, while the average price fell 2.1% from $490,964 in June 2010 to $480,609.

The capital saw one of the smallest decreases in its average sales price (down 2.1% from $343,874 to $336,788) compared to other regions, and a slight increase in sales, up 2.5%.

Central North Island saw a 6.2% rise in written sales and the average price fall 6.2% from $356,141 to $334,073, though the 30% fall in new listings prompted Harcourts to advise those thinking of selling to act now, “as this scarcity of homes is showing an upward pressure on prices.”

Christchurch figures have been impacted by zoning and further damage, with new listings down 26.7%, sales down 21.8% and the average price slipping 10.7% from $423,520 to $378,224.

Relocating Cantabrians have helped push written sales up 13.7% in the rest of the South Island, though the average price was down 6.4% from $327,266 to $306,450.

 Landlords.co.nz 

14 July 2011

The supply of rental housing grew only half as much as demand nationwide in the June quarter with the Auckland market showing a severe shortage of rentals, according to figures from the TradeMe Property.

While supply of rentals in Auckland City shrank 12% in the three months ended June, demand rose 7% while the average rent rose 9% compared with the June quarter last year. That follows the 13% drop in supply in Auckland in the March quarter when demand rose 18% and average rent rose 7%.

TradeMe’s figures are reinforced by those of Barfoot & Thompson which showed while average weekly rent in Auckland eased by $7 to $420 in June compared with May, it was the third highest weekly rent on record and up $17 from June last year.

“Average weekly rents are extremely volatile in a market where demand far exceeds supply,” says Barfoot managing director Peter Thompson.

“The low level of building activity in the past three years combined with the growing population of Auckland is creating pressures on the existing stock of rental properties,” Thompson says.

Brendon Skipper at TradeMe Property says Auckland “was once again a standout as a great place to be a landlord.”

Skipper attributes the increasing demand in Auckland to immigration with student demand adding pressure to the market.

Landlords.co.nz 

21 April, 2011

The Auckland economy is heading in the right direction as the region benefits from low interest rates and a low exchange rate with the Australian dollar, says a leading economist.

The recession hit Auckland earlier and harder than New Zealand as a whole, but it was already out-performing the rest of the country in terms of economic activity through the last three quarters of 2010, said Goldman Sachs economist Philip Borkin.

Auckland is especially sensitive to financial conditions, which are at their most stimulatory since July 2009.  Mr Borkin said the city’s economy should be growing by between 3 and 3.5 per cent by the end of the year.

Growth over the entire year could average around 2.5 per cent, compared with the 1.5 he expects for the country as a whole.

The out-performance is most notable in the housing market, with annual house price growth running at 1.8 per cent in Auckland currently.  Mr Borkin estimated that demand for housing in Auckland was growing by around 9000 homes a year while new supply, as reflected in dwelling consents issued, was just 3600.
“… It is quite possible house prices could be rising by around 5 per cent a year by the end of the year” said Mr Borkin.  That would make people feel more comfortable about their financial situations and boost consumer spending, Mr Borkin said.

When combined with a boost from the Rugby World Cup, he estimated that would underpin growth in retail sales in Auckland of 2.1 per cent over 2011 in real terms.

Mr Borkin also said the Reserve Bank would have to set monetary policy on a national basis, suggesting it would be the New Year before it raised interest rates.

Ref: NZHerald.co.nz

April 13, 2011

House sales in Auckland have added strength to a seasonal uplift in March, although price rises are still modest, the Real Estate Institute says.

Nationally unconditional sales rose 29 per cent to 5848 compared the previous month.

On a seasonally adjusted basis, and excluding the ”earthquake effect” of Canterbury and Westland’s figures, the monthly increase in volumes was 5.4 per cent and 1 per cent higher than March last year.

Prices were also positive but more subdued, with the national median up $15,000 to $365,000 from February, and up by $4500 on March last year.

REINZ chief executive Helen O’Sullivan said the growth in volumes ”while impressive compared with February” was in line with seasonal trends but underlined real growth in the Auckland market.

”Buyers are increasingly seeing price stability, which is giving them confidence to enter the market.”

Auckland recorded 53.2 per cent more sales in March than February, but on a seasonally adjusted, Canterbury-excluded basis, they were up 10.5 per cent, and 10.8 per cent compared to March last year.

O’Sullivan said the strong growth in Auckland had been driven by a number of factors including ”a persistent shortage of housing stock, continued weak building consents, resulting rental pressure and low interest rates”.

Pockets of house price and sales strength were also apparent in Tauranga, Mt Maunganui/Papamoa, Hutt Valley and Timaru.

Last week, Auckland’s biggest real estate firm Barfoot & Thompson said its March sales had picked up 11 per cent since February and 15 per cent from a year ago, on a seasonally adjusted basis.

Average prices had also increased substantially, from $521,887 in February to $581,190, an all-time March high, it said.

Ref: Stuff.co.nz

6 April, 2011

The Auckland housing market moved further ahead of the rest of the country in March, with real estate company Barfoot & Thompson reporting its sales in the city rose the highest monthly level in nearly four years.

The company recorded 1070 sales last month, up from 927 in March 2010, figures published today show.

Goldman Sachs economist Philip Borkin said it was becoming clearer the Auckland housing market was outperforming the rest of the country.

“While the recent reductions in mortgage rates will be supporting activity and sentiment, we believe the outperformance is more fundamental in nature,” Mr Borkin said.

With historically low levels of new building and net migration, while not at strong levels, likely to be more supportive of Auckland housing demand than other parts of the country, he suspected demographic pressures were slowly beginning to surface.

That was also shown by increases in average rents, which were at a new record high of $434 per week.

The Barfoot & Thompson sales figures for March were up 11 percent from February on a seasonally adjusted basis, and up 15 percent from a year earlier, to reach the highest seasonally adjusted monthly level since December 2009, Mr Borkin said.

It was the fifth consecutive monthly rise in sales turnover by the company and followed an 8.2 percent rise in February.

Given the housing market was a good leading indicator, and with the Auckland region an economic juggernaut, the rising sales may signal the start of an improvement in the consumer spending backdrop, Mr Borkin said.

“We think it is too early to make a call on this yet given that household behaviour remains one of caution and deleveraging, but we are watching closely.”

Barfoot & Thompson said its average selling price reached an all time high $581,190 in March, with buyers of properties above $500,000 appearing to have decided now was the right time to buy.

The average price was $59,000 higher than that in February and $36,000 higher than in March 2010.

Barfoot & Thompson managing director Peter Thompson said the sales activity confirmed the Auckland market was reacting differently to that in the rest of the country.

“The formation of the Auckland region into one city has brought home to people the dynamic growth projected for the region, and the looming shortage of dwellings to house a future population in excess of 2 million people,” Mr Thompson said.

Ad Feedback “Combined with buyers reaching the conclusion that values are at the bottom of the price cycle, the economy looking likely to rebound in the next 12 months and interest rates at historically low levels, and you have the perfect conditions for people to commit to buying.”

The $434 average weekly rent was the highest on record, and the $32 rise from February was the biggest one month rise on record.

Ref: stuff.co.nz - NZPA

4 April, 2011

Within 15 years Auckland will have no room left for new housing according to a property analyst.

It will be impossible to build new stand-alone houses on more than 400 square metres of land as early as 2023 says Lisa Phillips, a director of Auckland-based company Erskine+Owen.

After that many Aucklanders will be forced to live in terraced houses and apartments with shared common outdoor spaces.

“Prices will surge as more and more people compete for an ever dwindling supply of dwellings,” she says.

And it is not just room to build that may cause a shortage of housing in Auckland.

Ms Phillips says fact is that red tape and restrictive rules on land use means that growing in as-yet developed areas is not as simple as it sounds.

“There is a ring fence around Auckland called the Metropolitan Urban Limit that separates the urban from the rural.

“To bust into the other side of the limit could take up to five years of applications and consents. Then there are issues around who owns the land and then they might not want to sell it.”

She says Christchurch’s earthquake and required rebuild could also compound the problems for Auckland homeowners.

“Construction activity is already at historic lows along with a down-sized building industry.

“There simply may not be enough capacity to go around. This may further hinder the speed at which Auckland can respond to its burgeoning demand for housing.”

It appears Ms Phillips warning is being echoed by many.

Public meetings are currently underway discussing Auckland’s major planning document, the Auckland Plan, which is set to be released in December.

A discussion document on the plan reveals Auckland had “already fallen short by approximately 10,000 new homes - the equivalent of a town the size of Blenheim” over the past three years.

It says the Auckland Plan needs to be “framed in a way that can cope with change and uncertainty”.

This is because of the projected need in Auckland for 330,000 new dwellings by 2040, and the possibility of falling short of meeting this target, together with the “very real prospect” that we may become more attractive to migrants than projected.

Ref: 3News.co.nz

17 February, 2011

Auckland’s rental crisis is worsening, with prices rising 7 per cent in a year and desperate tenants going to extreme measures including offering to pay six months’ rent in advance.

New figures show rents in the most desirable suburbs have jumped an extraordinary 24 per cent.

A lack of new construction and increasing demand from a booming population unable to get on to the property ladder are among factors getting the blame.

Last week, the Herald reported how 200 would-be tenants looked through one Kingsland rental property in just 30 minutes.

Real Estate Institute chief Helen O’Sullivan yesterday blamed the rental shortage on “pure demand and supply”.

She said very little building had been done in the past 18 months as developers struggled to find finance for developments that were traditionally sought after by first-home buyers or people looking for investment units.

“You look around Auckland and you’re not seeing major housing developments in rental pockets under way anywhere. The supply hasn’t increased and demand has indeed grown,” Mrs O’Sullivan said.

Nationally, rental prices have risen 3 per cent, according to Crockers Property figures released yesterday.

But in Auckland, the rise is more than double that.

It has been driven by rental prices in the desirable city-fringe areas such as Grey Lynn and Westmere where median rents for a three-bedroom house reached $675 a week in January - an increase of 22 per cent on the same time last year.

The median price for a three-bedroom house in Epsom, Newmarket and Royal Oak increased 24 per cent to $585 a week.

However, the soaring rents are doing little to deter would-be tenants who are increasingly desperate to find a place to live.

Harcourts Ponsonby property manager Sharon Ryan said it was not unusual for applicants to offer more than the advertised rental price for homes in Ponsonby, Herne Bay, Freemans Bay and Parnell.

She said some tenants were even signing tenancy agreements without viewing the property first - and in one case someone offered to pay a six-month block of rent up-front.

“You always get a bit worried when they haven’t seen it. I always say it is better to look first, but I had a girl who had missed out on quite a few properties before and she already knew the complex,” said Mrs Ryan.

Other tenants were willing to pay double rent - shelling out for a new property while still paying rent on their current place - to ensure they did not miss out while they gave the required three weeks’ notice.

“Sometimes it is really hard to decide, because you will get six applicants and they are all good. Sometimes what it comes down to is first in/first served,” said Mrs Ryan.

Yesterday, an open home for a three-bedroom townhouse in Grey Lynn advertised at $680 a week - $5 above the average price - attracted 12 people in half an hour over a mid-week lunch time.

Barfoot & Thompson property manager Maureen Kan said the shortage meant landlords had started to ask for more rent.

But she warned that even in a tough market, a property could sit vacant for the sake of $20 or $30 more a week.

“Basically the market is the market. Tenants know what is out there and they have seen enough properties to know when something is overpriced,” said Mrs Kan.

In some areas of Auckland, however, there has been a slight drop in the median rental price.

In Devonport and Takapuna, rents were down 4 per cent last month when compared to the previous January.

Geri Martin, of Bayleys in Takapuna, said it seemed landlords in the area were trying to cater to “fussy tenants”.

“Tenants are really fussy - if they don’t like something in the house they won’t pay as much, or won’t rent.”

Ref: New Zealand Herald

7 February 2011

Demand for rental property in Auckland is at crisis point, with some houses now attracting as many as 200 would-be tenants.

Desperate tenants are often having to spend months searching for a place to live, and some even engage in bidding wars. Landlords are sitting pretty.

Rental agents say they are receiving hundreds of inquiries for listings, especially for stand-alone houses close to Auckland’s central business district.

An agent who listed a four-bedroom property in Balmoral said he received 200 inquiries on the property before letting it out last weekend.

A property in Ethel St, Kingsland, attracted more than 200 would-be renters during a half-hour open-home.

“It’s going to be very easy to rent it. Narrowing down the list of tenants is going to be the hard part, to be honest,” landlord Dave Smith told TV3.

Rental agent Darryl Goode said in the current market, it was not uncommon for hundreds of people to register their interest in a property.

“Give me another 10 or 20 three-bedroom houses and I could let them all out in a couple of days.”

Mr Goode said there was a “severe shortage” of stand-alone houses to let in the city-fringe areas, and the market was the tightest he had seen in his 12 years in the industry.

One Auckland real estate agency recently reported that the average weekly rent for a three-bedroom home in central Auckland was $580 in December, up 16 per cent in a year. For Takapuna/Milford it was $670 (up 26 per cent) and Remuera $690 (up 25).

The Herald on Sunday has reported that Auckland rental property listings on Trade Me in January were down 24 per cent on the same month last year.

Demand was also outstripping supply in Northland, Bay of Plenty and Canterbury, although nowhere near as badly as in Auckland.

Agents say the economic slowdown is the main contributor to the rental market being at crisis point.

More rental properties are being sold by investor landlords who want to cash up, and hard times are forcing homeowners to also sell and become renters themselves.

Landlord Lourdes Sudianto said he had to sell his two central Auckland rental properties after his trading business was hit by the global recession.

The slowdown has also forced many landlords to return from overseas to re-occupy their properties.

Rental manager Lesley Whiting said her Browns Bay office recently lost to returning landlords about 10 of the 300 properties it was managing, and was currently listing only two rental dwellings.

“It’s got nothing to do with landlords wanting to capitalise from the World Cup, but the economic crisis which is forcing more people to come home and stay home,” Ms Whiting said. “Who knows how long this is going to last, but it’s really reaching crisis point for people looking to rent today.”

Last year, net migration of 16,500 was the highest since 2003, driven mainly by fewer Kiwis heading to Australia to work.

“The economic recession has had a significant impact on the number of New Zealanders leaving for Australia, with a 27 per cent decrease in trans-Tasman departures over the last 12 months,” Immigration New Zealand said in its latest migration trends and outlook report.

A lack of new houses being built also meant supply was not keeping up with demand fuelled by population growth.

“It’s usually a seasonal thing, but the big drop in supply of rental homes in Auckland this year is somewhat unprecedented,” Mr King said.

“The situation is more pronounced in Auckland, felt more at this time of the year because it’s when people relocate, decide to move houses, and international students start coming back,” he said.

Mr King said the situation could change if rising rents resulted in better yields for landlords, and more people started investing in rental properties.

“It will help to meet the demand, but I do not see rents going anywhere but up.”

What’s causing the crisis?

• More investment homes are being sold by owners wanting to cash up.
• Hard times are forcing homeowners to sell and join the rental market.
• More overseas-based landlords are returning home.
• Fewer houses being built.

Source: NZHerald

27 January, 2011

Demand for tidy, central rental properties in Auckland is reaching crisis point, with supply unable to keep up.

Listings on a top real estate site for the start of January show a 24 per cent decrease compared with the same period last year, with demand up 8 per cent.

With up to 60 people turning up to viewings, renters are resorting to extreme measures to beat the competition. Many arrive early to open homes, while others turn to bidding wars, say real estate agents.

“In terms of year on year, certainly supply is down in Auckland and particularly Auckland city,” said one leading real estate website spokesman. Supply for January was also down in the Bay of Plenty, 22 per cent; Canterbury,1 per cent; and Northland 14 per cent.

Agents are reporting that often up 30 people are turning up to open homes.

In Mt Eden, crowds of young professionals were snapping up three and four-bedroom villas for $500-$600 a week.

Agents received 90 calls about a recent listing for a two-bedroom home in Mt Eden and up to 60 people turned up to open homes for popular properties. One Auckland agent says “For some of the properties we get 100 calls a week - there’s just not enough properties.”

Keen renters are also offering more than the asking price.

“For one in Mt Eden the rent was $430 and someone offered $450. For a two-bedroom apartment in town one person offered $10 or $20 more,” she said. High numbers of Kiwis returning from overseas and new immigrants were pushing up demand for rentals.

“I think it’s also people who previously would have bought but banks require 20 per cent [deposit] now - it’s out of people’s reach.”

Housing Minister Phil Heatley said a lack of building activity was another problem, with building not keeping up with population growth.

Ref: NZ Herald