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

18 June 2010

Auckland’s housing market is humming through the winter, with prices up in most suburban areas.

Data out yesterday from the Real Estate Institute showed increases.

The institute said the median house price was down $6000 nationally.

Wendy Alexander, Barfoot & Thompson chief executive, said the long summer meant people relaxed, stayed in their summer clothes longer, avoided shopping malls and traded their houses.

“Now we’re all going brrrrrr. Everyone is burrowing in. We’re having a very quiet June. But in April and May, there was tremendous demand,” she said. Barfoot’s wanted more listings to satisfy buyer demand.

Glorianne Campbell of the institute said a combination of more demand and more expensive houses selling probably pushed up Auckland prices.

North Shore’s median rose to $550,000 in May from April’s $540,000 and was a big jump on the May 2009 median of $505,500, the institute found.

Waitakere’s median increased to $400,500 from $394,000 in April and May 2009’s $357,500, although Papakura’s median dropped by $31,000 from April to May on the back of 54 sales last month.

Medians within Auckland City Council’s territorial limits increased to $520,000, from April’s $518,000 and May 2009’s $519,750.

Manukau’s median rose from $432,000 in April to $438,000 in May.

The institute said the market was still holding up well. Tax changes and rising mortgage interest rates could have taken a higher toll.

“It is good to see the market retain its strength and prices stay stable during a period when some buyers would have been concerned about potential tax and interest rate changes,” he said. Agents sold 5206 residential properties last month and 5207 in April.

“The May median is still 3.7 per cent up on the median price of $337,500 in the same month in 2009, so we are still not seeing any significant fall in property values. With tax changes and interest rates now settled, property investors are already talking about returning to the market to cater for the growing demand for domestic rentals.