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.

25 July 2009

Ref: NZ Herald

The New Zealand government has relaxed its foreign investment rules in a bid to show the world that “New Zealand is open for business”.  The recent changes effectively make it easier for overseas investors to buy New Zealand assets.

 

The changes are the first of a two-part review of New Zealand’s foreign investment policy.  The second part will focus on changes to the Overseas Investment Act itself.

 

Part of the rule changes is a delegation of greater power to the Overseas Investment Office in reviewing foreign investment applications.  It is expected that the Office will make the final decision on up to 40 percent more applications, as they will be able to decide all applications barring rural sensitive land or land adjoining waterways.

 

In addition, several types of transactions of a minor, technical or temporary nature have been exempted from the Act.  Finance Minister Bill English has said that approximately 98% of all applications were approved anyway and the changes would speed up approvals and cut red tape.

 

These changes take effect immediately.  And it is hoped by simplifying the foreign investment approval process; it will encourage greater foreign investment to further stimulate New Zealand’s economy.

 

As part of this move, the Government is dropping requirements preventing the sale of “strategically important assets” into foreign hands.  There is concern that this could see Auckland International Airport, which is considered strategically important, back on the sales block.

 

However, the Government will introduce a new right to veto on the grounds of “national Interest”- but Mr English expected this to be used so rarely that he could not think of a case in which it would be invoked as most of New Zealand’s vital assets have adequate protection through foreign ownership restrictions.

 

Mr English said the Government would continue to protect things New Zealanders had legitimate concerns about, such as land and large businesses. Overseas investors would be subject to higher conditions, especially around stewardship and public access rights.

 

The Government also intended to simplify the process of investing in sensitive land and will raise the $100 million (NZD) threshold above which foreign investments require approval.

 

The following summarises these changes to New Zealand’s foreign investment policy:

 

·        Removal of veto on sales of “strategically important assets”

·        Allow ministers to use “national interest” as a last resort measure to veto foreign ownership stakes in rare cases.

·        Lift the $100 million threshold above which Overseas Investment Commission screening of investments is needed.  New limit is not yet set but review aims to set it at a level where only genuinely sensitive assets are captured.

·        Narrow the range of land considered “sensitive” and trim down the 27 criteria for buying such land.

·        Provides greater certainty for investors, by removing the ability to substantially change overseas investment rules during applications.

8 July 2009

Auckland and Wellington represent value for money when it comes to the cost of living.  The two cities ranked 138th and 139th respectively out of 143 cities in the 2009 Mercer Worldwide Cost of Living Survey carried out in March.

Mercer’s Worldwide Cost of Living survey compares the cost of housing, transport, food and other goods, and is used an indicator for compensation for companies who send their employees abroad

Auckland’s ranking fell to 138th place from 78th a year earlier, with a cost of living index of 54 compared to 81 in March 2008.  The index is based on a figure of 100 for New York.

Wellington’s ranking also decreased notably to 139th from 93rd in 2008; with its index figure falling from 77.6 to 52.3.

Fluctuations in worldwide exchange markets during the economic downturn saw major reshuffles in the rankings.  According to Mercer spokesman Rob Knox New Zealand has become more affordable with the value of the NZD falling against the USD; in March its value had depreciated by more than 33 per cent from a year earlier.

“New Zealand cities were extremely cost competitive destinations for global workers compared to cities such as Beijing, Hong Kong, Tokyo and Osaka, which all climbed in the rankings this year.
“This helps makes New Zealand a very attractive hub for companies looking to grow their presence in the Asia Pacific region.”

Also in New Zealand’s favour is the quality of living of its two major cities which ranked highly in the 2009 Mercer Quality of Living Survey; with Auckland in 4th place and Wellington in 12th.

The affordability and standard of living in New Zealand are both positive for strengthening New Zealand’s business prospects.  With economic growth in the Asia-Pacific region outstripping most parts of the world, New Zealand presents an economically viable place for multinationals to establish themselves in this growing market.

6 July 2009

Stability in New Zealand house prices is improving according to latest data released by QV Valuations – New Zealand’s largest valuation and property information company.

June was the third consecutive month in which there has been an improvement in the annual change in property values and this reflects the continued stabilisation of New Zealand’s Property market.  Property values have risen in most of the main centers in the three months to June.

QV also reported an increase in median sales price with the median in June at $378,535, up from $371,555 in May.

QV Manager, Glenda Whitehead said “the volume of sales is approaching more normal levels, and the market is more stable.”

Increasing optimism in relation to New Zealand property was reflected in QV’s “State of the Market” survey.  The survey reported mixed perspectives in relation to the property market but there was a notable increase in the number who believed now was the time to buy before the market picked up.

The survey also highlighted the housing shortage issue with more people intending to buy in the next twelve months than those intending to sell.  This may to lead to further shortages of property for sale which will put pressure on property prices.

1 July 2009

Source: Business Day

OPINION: Nobody does an MBA and has the lecturer say to them the success of their business will depend upon the state of the economy.

Business outcomes are almost always going to reflect management decisions. But sometimes the state of the economy will have a clear impact on businesses either for the better or for the worse and that is where us economists come in.

We can provide insight into whether the broad external environment businesses are operating in will provide unusually good opportunities for profit growth or will contain an unusually large number of threats. We can also use our economic analysis to provide insight into risk management decisions such as regarding interest-rate exposure and sometimes exchange-rate flows.

With regard to the housing market, the insight we economists offer is hardly ever worth following by somebody contemplating buying or selling. Individual decisions about house purchases almost always reflect individual circumstances regarding job security, lifetime family plans, availability of finance, and so on. Only sometimes should people pay very close attention to what us economists say about the housing market and we have just come through such a period.

We have all seen stories of house prices falling sharply overseas and there have been strong concerns expressed by a few uninformed people that house prices would also plummet in New Zealand. Through last year and the early part of this year we were at pains to point out that the economic fundamentals affecting the housing market in New Zealand are completely different from those overseas and it would be unreasonable to expect anything remotely approaching 30% to 40% declines in prices happening in some other countries.

Now we have seen our expectations play out with average house prices in New Zealand down only 9% in the past year and monthly numbers showing a surge in turnover since March with renewed interest from investors and also some first home buyers coming back into the market. It looks like prices have stabilised.

Given the fact we can see some signs of life in the world economy and the New Zealand economy, and taking into account the upturn in the housing market, we have now passed the point where people need to pay a lot of attention to what us economists say about the housing market. The housing market has done its decline and now we are simply looking at an environment over the next few years where prices rise relatively gradually under pressure from above-average population growth, below average interest rates for the next 12 to 18 months, and a shortage of dwellings.

The opportunity for investors to pick up an absolute bargain has by and large passed although there will still be some opportunities as rising unemployment forces more of the inexperienced and undercapitalised small investors to quit the properties they purchased over the past three years hoping for a quick capital gain. Our recommendation for first home buyers to sit on their hands has also passed its use by date now that prices have stabilised.

Sad to say, from an analyst’s point of view, the interesting part of New Zealand’s housing cycle has now been and gone. Over the next 2 to 5 years our housing market commentary is going to be along the lines of how wonderful it is that New Zealand escaped the price crashes overseas, how house prices are still overvalued, how price gains will be present but limited, and one other thing which is soon likely to dominate housing policy.

We have a housing shortage in New Zealand which is getting worse and worse. As accelerating population growth bumps up against housing construction at its lowest levels in decades big concerns about housing affordability are going to reappear. How long before another select committee review of the problem?

*Tony Alexander is the BNZ’s chief economist.

1 July 2009

Source: NZ Herald

A June snapshot of the residential property market showed stability returning, says one of New Zealand’s leading property websites.

According to the website’s June report, released today, the number of new listings declined for the fourth consecutive month and was down 24 per cent compared to June 2008.

Reduced listings meant the available inventory of residential property - measured in terms of the number of weeks of average sales it would take to “clear” the market - fell to 31.5 weeks, a 37 per cent drop from the 50.2 weeks level of June 2008.

The combined drop in new listings and available inventory was a major turn-around from the stagnated market of six or nine months ago, said the websites chief executive Alistair Helm.

Property sales were then at record low levels and the lack of buying interest meant available inventory had built up to over 52 weeks of average sales .

With sales volumes on the rise but the stock of available properties reduced, it could mean that after the traditional quiet winter period the market could become very active in spring, Mr Helm said.

“It looks like by September this year we are likely to have a growing number of spring home buyers chasing a falling number of properties on the market.

“If the downward trend in inventory continues, at some point this could lead to price pressure creeping back into some pockets of the market. This has to be the eventual outcome.

“The long-held fears that we might see a fall of up to 30 per cent in house prices have proven to be unfounded. It is hard to predict, but I don’t see any immediate signs of prices dropping any further.”

22 June 2009

Source: NZ Herald

The upsurge in net immigration gathered pace last month, with the largest net inflow since July 2003.

The net gain of 2700, seasonally adjusted, pushed the annual increase to 11,200, which is in line with the average increase of 11,400 since 1990.

But that masks the rate at which the net inflow of migrants is accelerating. The net gain of the past three months was 6600, up from 2800 over the preceding three months and a net outflow of 200 in three months before that.

It largely reflects fewer New Zealanders leaving for Australia and Britain, down 1500 (38 per cent) and 500 (36 per cent) respectively on May last year.

On the incoming side a 200 (10 per cent) increase in returning expatriates offset a decline of 300 (6 per cent) in the number of immigrants.

Economists see the pick-up in net migration as underpinning consumer spending and the demand for housing. It also expands the potential workforce but they see the boost to the demand side of the economy as faster acting than the boost to the supply side.

“Net migration was one of the key drivers behind the 2003 to 2007 economic upswing and was particularly important for the construction sector,” said Goldman Sachs JB Were economist Bernard Doyle.

“The longer net migration persists around these levels the more optimistic we become on the prospects for the domestic economy.”

UBS economist Robin Clements said the migration gain was positive for housing demand, reinforcing the improvement in affordability from lower mortgage rates and house prices.

ASB economist Jane Turner said Australia’s unemployment rate had been rising at a similar pace to New Zealand’s and with a more challenging labour market, New Zealanders were playing it safe and staying put.

“Departures to the UK have also slowed considerably, suggesting the number of young Kiwis heading on their OE [has dropped markedly].”

A Treasury research paper in April illustrated the importance of immigration to the labour supply by pointing out that some 23 per cent of the population was born overseas.

At the same time 11 per cent of New Zealand-born people live in Australia.

Between 2005 and 2007 12 per cent of migrants came to study.

Many stay on; 9 per cent of permanent migrants (those here for at least a year) move on to resident status directly from a student visa.

18 June 2009

Source: NZ Herald

New Zealand has been described as a “paradise” by British expats who moved here for a warmer climate and cheaper cost of living.

A NatWest International bank survey of more than 2000 British immigrants living in 12 countries found that Britons in New Zealand rated the country highly in all areas.

In the quality-of-life index, New Zealand came ahead of Canada, which topped the poll last year.

Respondents said NZ had one of the lowest average property prices in the developed world, and many cited lower taxes than in Britain, a better quality of life and less stress as benefits.

A favourable tax regime meant that although average wages were lower, earnings went further.

NatWest International personal banking head Dave Isley said expats reported they were living healthier lifestyles while benefiting financially.

The average salary in New Zealand was $28,427, compared with $65,841 in Britain, but the average cost of a home was only $293,000, compared with $592,000 in Britain.

In both countries an average property cost the equivalent of roughly 10 years’ wages, but Britons who sell their houses find themselves with much more cash in hand when arriving in New Zealand.

Two years ago, Chris and Janice Gorman shifted from a three-bedroom house in Surrey to a four-bedroom house with a sprawling garden near the sea in Auckland.

“New Zealand and the UK are roughly the same size, but there are 56 million fewer people,” Mr Gorman said. “It makes a massive difference. Everyone has time for you.

“We find it much more sociable here. There is a huge emphasis on family life and relaxation time.”

The Gormans, who are two of more than 200,000 British-born Kiwis, said their only regret was not being able to visit family in the UK “on a whim”.

Of all the expatriates surveyed, 86 per cent believed their lives were better than before they emigrated and 92 per cent said they were happier.

Despite the global recession, 87 per cent were better off, including engineers, teachers, economists, accountants, IT professionals and those working in financial services and marketing.

“Despite the global slowdown affecting everyone, the potential to earn more money abroad is clearly one of the main benefits expats are experiencing,” said Mr Isley.

New Zealand and Canada were followed in the poll by Australia, France, the United Arab Emirates, Portugal, Spain, South Africa, the US and China. Singapore and Hong Kong came last.

- NZPA

10 June 2009

Source: The Daily Move Channel
New research has revealed that residential property prices in the Land of the Long White Cloud are continuing to stabilise and values improved by a considerable amount last month, giving hope that the New Zealand market is bouncing back from the brink…

With both volume and median sale price of houses changing, economists are saying the property market - a leading indicator of the whole New Zealand economy - is slowly improving.

The QV national residential property index for May highlighted a more positive future for the New Zealand property market.

After months of falls, prices now appear to be stabilising and the index shows a dramatic improvement in values.

Overall property prices fell by 8.1 per cent over the past year - an improvement on the 9.2 per cent decline reported for the year to April and was the second month in a row where the year-on-year change had improved.

The Real Estate Institute of New Zealand (REINZ) said that the number of houses sold was up nearly 40 percent on last April, though turnover fell seven per cent from March to 6210.

The national average sale price fell to $371,600NZD in May from $373,100NZD in April and was 4.1 per cent lower than the same time a year ago.

This drop in sale prices is being attributed to an increase in activity at the lower end of the market - of late, minimal activity has artificially inflated prices but now that is set to change.

New Zealand cities were also celebrating as the British Economist survey ranked two major NZ centres - Auckland and Wellington - as amongst the most liveable cities in the world.

Property values in all main cities increased slightly in recent months possibly due to the low interest rates on offer, causing people to return to the market.

QV’s Glenda Whitehead said, “It is clear that investors are now back in the market along with first time buyers and those looking to upgrade.

“This improvement is due to the continued stabilisation of property values in recent months and contrasts significantly to a market that was declining sharply 12 months ago.”

The median of 42 days to sell a house in April improved slightly on the 44 days it took in March and in April 2008, and significantly from February’s 55 days.

House sales continued to be strongest in the under $400,000NZD price bracket, accounting for nearly 4000 of the total April sales.

As New Zealand is now well into winter (whilst us Brits enjoy our baking hot barbecue summer?!) property transactions will begin to slow once more.

“This seasonal decline will provide a true test as to whether the recent property market revival will continue,” concluded Ms Whitehead.