25 June 2010

 Source: NZ Herald

About 10,000 new homes need to be built in New Zealand to keep pace with population growth and ease the current housing squeeze, a report released by Westpac shows.

The report says the number of houses built halved in the two years to 2009, while population grew 0.4 per cent as fewer Kiwis crossed the Tasman.

The resulting squeeze on housing - only the third since reliable data began in the 1960s - had boosted the average number of people per house in New Zealand from 2.52 to 2.55 during 2009.

A rapid growth in construction activity was needed to ease the squeeze, the report says.

“By our calculations the current rate of house building will be enough to keep the number of people per house constant through 2010, but will not be enough to bring it down,” the report says.

Westpac is picking a 23 per cent growth in residential construction for 2011, and even that would only just be enough to keep up with population growth.

Even more would be required during 2012 to make inroads into the shortage.

“Those forecasting lesser increases would have a job to explain exactly where people were going to live,” the report says.

Earlier this year the Salvation Army said the slowdown in the building sector had left Auckland short of at least 6000 homes, with the greatest pressure going on South Auckland households.

Population growth in Auckland had far outstripped residential construction, which had plunged to a 20-year low, forcing more than 20,000 Aucklanders to live in overcrowded conditions, the organisation’s 2010 State of the Nation report, A Road to Recovery said.

Westpac said one way to consider the current situation was to compare the number of people per house to its estimated trend.

“That suggests that New Zealand has a housing shortage of about 10,000 houses,” the report says.

Historically every time New Zealand has gotten into a housing shortage situation, the residential building industry had responded by ramping up production to restore balance, the report says.

“We expect this time will be no exception.”

Fears that difficulty obtaining finance will prevent a pick-up in residential construction, like it had following previous recessions, ignored the lessons of history and economics.

“Market economies tend to find ways of getting around obstacles, normally by throwing up new price signals.

“In this case developers who relied on cheap finance have been forced to sell land, pushing the price of undeveloped residential sections down by 15 per cent since 2008,” the report says.

Over the same period house prices have remained unchanged, therefore the margin on offer for successful property development was now much wider than it was during the boom.

“There is a juicy profit opportunity on offer for larger firms that are less reliant on finance to get involved in residential property development which is precisely what we think will happen,” the report says.

5 November 2009

A prominent New Zealand real estate firm has reported that Auckland’s average house prices have surged 5.8 percent in the past month, putting Auckland house prices at a 22-month high.

According to the firm’s figures, the average sales price across the Auckland region in October was $544,745.   Auckland has not seen average prices comparable to this since December 2007 (during the property market’s peak).

These latest figures are confirmation that the housing market is recovering from its slump last year.  The house prices achieved in October put average prices 4.8 percent ahead of where they were in the same month last year.

Buyers are being encouraged by low floating mortgage rates, while the big downturn in the construction industry that started in 2007 is leading to a shortage of new homes.  Strong population gains through migration are also contributing to upward pressure on house values.

The company’s property management division also reported strong rental activity.  Average rents achieved lifted 4.9 percent on rental levels only a month earlier.

Ref: stuff.co.nz

 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

6 May 2009

Source: NZ Herald

An upturn in the Auckland residential property market that started in February continued into April, figures show.

Agency Barfoot & Thompson said the average price for Auckland houses was $502,726 last month, up 2.2 per cent on the March figure.

The 809 Auckland sales in April was up 79 per cent on a year earlier, although down on the 924 reported for March.

Barfoot & Thompson managing director Peter Thompson said traditionally April sales volume and prices could fall away markedly compared with March because of seasonal factors.

“It demonstrates the housing market has found strength at its present level and with confidence returning, an increasing number of people are prepared to make buy and sell decisions.

“There is a catch up surge going through the market as people follow through on long-held intentions to upgrade, invest or free up equity.”

The biggest challenge facing the Auckland housing market was a scarcity of properties to sell, Mr Thompson said. At this time last year, the agency had nearly 1400 more homes on its books than it did now.

Rental demand continued to be strong, with the average at $399 a week, up 2.6 per cent from the start of the year.

5 May 2009

Source: NZ Herald

The fizz could be returning to Auckland’s property market.

The city’s largest real estate agency group, Barfoot & Thompson, has reported a relatively strong month for house sales and volumes in April and says the strength is another encouraging sign of market recovery.

Barfoot and Thompson reported 809 sales in April at an average price of NZ$502,726. The number of sales over the month were still below those in 2006 and 2007, which recorded 829 and 899, respectively. Barfoots recorded 453 sales in April 2008.

Sales were down from 924 in March, but this was due to the traditional seasonal downturn in April, Barfoots said. The average price over the month was up 2 per cent from March, but still down 3 per cent from April 2008 and 5.6 per cent from 2007.

“Traditionally April sales volume and prices can fall away markedly compared to March,” Managing Director Peter Thompson said.

“It is a seasonal factor, so to get an increase in price in April with only a modest fall in the number of homes sold compared to the previous month is heartening,” Thompson said.

“It demonstrates the housing market has found strength at its present level, and with confidence returning an increasing number of people are prepared to make buy and sell decisions. There is a catch up surge going through the market as people follow through on long held intentions to upgrade, invest in a property or free up equity,” he said.

“There is a widely held belief that the housing market is extremely quiet with prices dropping. That belief is wrong, and April’s average price is in line with the average price achieved for the first quarter of this year.”

8 April 2009

Source: Scoop Independent News

Confirmation of the Government’s decision to establish an Auckland ‘super-city’ council has been welcomed by Property Council.

Connal Townsend, Chief Executive of Property Council, said commercial property owners and investors pay a huge proportion of land rates, and those same people have been calling for significant changes to the way the Auckland region is governed.

“For too long Auckland has been governed in silos. Property Council congratulates the Government on its decision to back the establishment of a single unitary authority for Auckland. Finally the Auckland region has the opportunity to move forward with a sense of leadership and purpose.

“It is possible to make the necessary changes to abolish the eight current units of local government and establish the Auckland Council by October next year. It is now time for everyone to work with the Government to successfully implement these long overdue reforms,” Connal Townsend said.

While accepting the Commission’s proposal to amalgamate eight territorial authorities, the Government has agreed to between 20 and 30 community boards, as opposed to the six subsidiary ‘local councils’.

While the details of this decision have to be examined, the concept could protect local democracy and community input into the decision-making process.

“Property Council argued in favour of reform before the Commission, and we are pleased that it agreed with our call for amalgamation. We are also pleased that the Government has chosen an alternative to the six ‘local council’ options. It is important that residents and businesspeople have the opportunity to engage with their elected representatives at a grass-roots level, and today’s announcement will enable that to happen,” Connal Townsend said.

Auckland’s current representation arrangements provide for the election of seven mayors at large, 110 city, district and regional councillors, and 30 community boards. The Government’s decision announced today will enable more regional decisions to be made at a regional level, while preserving the role of community boards.

3 April 2009

Source: AAP

Barfoot & Thompson reported Auckland house sales at a 20-month high in March, with the agency saying home buyers returned to the market with a “vengeance”.

The agency sold a total of 924 homes last month, up 65.3 per cent on those for February and up 46.2 per cent on those for March 2008.

At the same time, the average price achieved for sales in March was $NZ491,780 ($A397,751), down 4.1 per cent on February’s average price and down 5.8 per cent on the average in March 2008.

“We sold close to 300 homes more in March than in any month in the whole of 2008,” Barfoot & Thompson managing director Peter Thompson said on Friday.

The size of the recovery was greater than any expectation.

“Buyers may be sensing that market prices are close to the bottom of the cycle and have made the decision to act,” Mr Thompson said.

“At the same time sellers are accepting that a price that is on average only 6 per cent below values being achieved 12 months ago is realistic in the current market, and are ready to accept.

“It means that the market is active, and the housing market is edging further back to normality.”

Goldman Sachs JBWere analyst Shamubeel Eaqub said the surprise and huge bounce in sales was consistent with mortgage approvals.

There were uncertainties around the durability of the surge, with job losses yet to fully flow through the economy, he said.

“The level of sales, while still historically low, shows the first encouraging signs of traction from lower interest rates.”

On a seasonally adjusted basis, the level of sales was the highest since November 2007.

Barfoot & Thompson’s Mr Thompson said another indicator of returning confidence was the level of interest shown at auctions.

Attendance numbers were the best in a year last month, and some 65 to 70 per cent of all the homes put to the market sold.

Factors affecting sales activity last month were the traditional March spike, further falls in the Reserve Bank’s official cash rate, bank mortgage rates reaching new lows and knowledge that tax cuts were about to kick in.

At the end of March the agency had 6416 listings, the lowest number in 13 months.

While new listings in March were a healthy 1398, the number of homes sold during the month meant the number of homes listed was the lowest for 14 months.

“Currently, there is an excellent window of opportunity for those keen to sell,” Mr Thompson said.

11 March 2009

Source: NZ Herald

4:00AM Wednesday Mar 11, 2009
By David Eames

It may not feel like it to recession-hit residents, but Auckland is becoming a cheaper city in which to live, according to a new international survey.

The Economist Magazine Worldwide Cost of Living Survey shows Auckland plummeted 29 places in the past five months, to claim 78th spot on the list of the world’s most expensive cities.

Wellington came in just behind at 80th-equal - down from its previous 55th spot, and tied with the Chinese city of Qingdao.

The latest figures were calculated by readjusting September cost of living results using February exchange rates - the weaker a currency, the lower a city’s ranking.

The New Zealand dollar, which was buying US66.8c on September 10, was yesterday afternoon buying just US49.5c - translating to big falls.

Across the Tasman, a weaker Australian dollar saw Sydney tumble from 17th to 35th most expensive city, while Melbourne fell from number 24 to number 39 in the rankings.

The cost of living survey compares prices and products in 140 cities, with the results providing guidelines for companies calculating allowances for staff and their families moving overseas.

While living costs appear to be getting cheaper across Australasia, residents in countries with comparatively strong currencies are looking at big cost increases. A resurgent greenback has seen the cost of living in American cities skyrocket, with Chicago, New York and Los Angeles all climbing from 39th to 23rd-equal on the list.

The cost of living in those cities is 28 per cent higher than in Auckland, the survey shows.

The list sees Tokyo and Osaka top the charts, claiming first and second place respectively.

The cost of living in both cities is more than twice that of Auckland.

Karachi, in Pakistan, came dead last in 132nd place, while Tehran, Mumbai, New Delhi and Kathmandu rounded out the bottom five. The cost of living in all five cities was less than half that of New York, the city against which the survey was indexed.

Shanghai, Hong Kong and Singapore joined Tokyo and Osaka in the top 30.

European centres have traditionally filled the top 10, and did so again, occupying all the spots from Geneva at nine, to Paris at three. Oslo, in Norway, lost its previous number one spot, falling to fifth place.

London was the only major European city to experience a big fall, with a weak pound blamed for the city’s drop from number eight to number 27.

Survey editor John Copestake said the cost of living was usually driven by two factors: local prices and exchange rates.

While the normal cost of living figures were “relatively stable”, the global financial crisis had created exchange rate fluctuations that had “significantly altered our assessment of the most and least expensive cities,” Mr Copestake said.

CITY LIVING

Brackets show Sept. 2008 rankings.
1 (6)Tokyo - pop: 28,025,000
2 (8)Osaka - pop: 10,609,000
3 (2)Paris - pop: 9,638,000
11 (28)Hong Kong - pop: 6,097,000
27 (8)London - pop: 7,640,000
35 (17)Sydney - pop: 3,665,000
78 (49)Auckland - pop: 1,400,000
80 (55)Wellington - pop: 410,320
131 (131)Tehran - pop: 7,380,000
132 (132)Karachi - pop: 11,774,000
Source: Economist / Worldatlas.com