27 October 2009

Vacancy rates in rental housing are falling, with demand putting pressure on stocks of three-bedroom properties, according to a new survey.

The quarterly property management survey conducted by First National Group, a New Zealand-wide property management company, showed that vacancy rates had fallen from an average of 6.3 percent to 4.9 percent in the past three months.

The survey found that 69 percent of offices reported an increase in occupancy rates for the three months to October 16, 7 percent no change and 24 percent a decrease.

Most areas surveyed showed rents either stable or rising.  58 percent of offices reported static rents, 32 percent reported increases in at least one sector of the market, with rises varying in amount between 1 percent and 20 percent.

Only 10 percent of offices reported rent reductions, ranging from 1 percent to 10 percent.

This data supports predictions by New Zealand economists that New Zealand’s increasing population will put pressure on demand for housing.

The number of people moving to New Zealand to stay reached a five-year high in September.   The net gain from permanent and long-term migration was 17,043 in the year to September, up from 15,642 in August and up 4,400 on the year to September 2008.  This was the highest annual net migration total since the September 2004 year.

Ref: National Business Review; Statistics New Zealand

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

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.

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.

22 May 2009

Source: The Dominion Post

The highest net migration inflow for five years is a positive indicator for the economy, particularly the faltering residential building sector, economists say.

Net inflow migration figures have accelerated in the past few months with permanent and long-term arrivals exceeding departures by 2200 during April.

Statistics New Zealand figures showed the inflow was the highest for five years, on a seasonally adjusted basis.

March and February figures show a net inflow of 1700 and 1600 respectively, making the average for the three months to April more than four times the monthly average inflow between since 2007.

ASB economist Jane Turner said the figures were led by a sharp drop in departures, particularly to Australia. “With the grass no longer greener across the Tasman, more New Zealanders are opting to stay home.”

She noted that returnees from the United Arab Emirates were also up, probably because of tough times in financial boomtown Dubai and the collapse of oil prices.

“Turnaround over the past few months has been swift, and we expect the trend will continue.

“Departures are likely to remain weak for some time, and today’s data also suggest some tentative signs of a pick-up in arrivals as a result of the global economic downturn.”

Goldman Sachs JBWere strategist Bernard Doyle said the boost in overall migration numbers was a positive influence for any future economic recovery.

“Net migration was one of the key drivers behind the 2003-2007 economic upswing, and was particularly important for the construction sector. The longer net migration persists around these levels, the more optimistic we become on prospects for the domestic economy.”

UBS economist Robin Clements said the turning indicators would boost support for housing, which had been a drag on growth.

That in turn provided a hint of stabilisation for the economy in the second half of the year, which would be “the first step towards recovery”, he said.

22 April 2009

Source: stuff.co.nz

New Zealand could be heading for a population blip as thousands of Kiwis stay home instead of trying their luck overseas.

Net migration numbers arriving in New Zealand compared with those leaving last month was the highest for 2 1/2 years at 1720.

The main factor in the increase was the lower number of New Zealanders leaving. One thousand fewer Kiwis departed for overseas than in the same month last year, with 800 fewer leaving for Australia.

At the same time, an increasing number of people are heading to New Zealand.

In the year to last month, 4000 more non-New Zealand citizens and 1400 more New Zealand citizens arrived in the country than in the year before.

The last time New Zealand had consistently high net migration figures was in 2003-2004, when a record number of migrants, including thousands of Chinese students, flowed into the country.

Statistics New Zealand demographic analyst Nick Thomson said that if the trend continued, New Zealand could have a net inflow of 20,000 for 2009 compared with about 4000 last year.

He said the biggest shift was due to the worsening economic situation in Australia, leading to a drop in the number of Kiwis moving across the Tasman, while the number of migrants entering New Zealand continued to rise.

Rob Marshall-Lee and wife Yvonne moved back to Christchurch with their three boys a month ago after eight years in Australia.

Marshall-Lee said being made redundant from his job as a senior software test analyst on the Gold Coast was a “blessing in disguise” as the family had always wanted to return to New Zealand.

He had had a few job interviews already and was confident of finding a role that suited his experience.

“I’m pleasantly surprised that Christchurch is more buoyant than I thought it would be,” he said.

“I’m very pleased that we came back. New Zealand is not as bad as people make it out to be. There’s depth in the employment market for people like me.”

James Sugrue returned to Christchurch with his wife in September after 20 months in Britain contracting as a software developer.

He said they had decided to come back at the end of 2008, but sped up their plans when he was offered a job.

“I could see the writing on the wall in the UK. Things really started to slow down,” he said.

Stuart Maxwell, general manager of Track Me Back, a website that connects Kiwi expats with New Zealand employers, said there had been a significant increase in activity on the site recently.

March attracted double the registrations compared with the same time last year, with many more high-calibre applicants in mid to senior-level positions.

31 March 2009

Source: Landlords.co.nz

A predicted surge in population growth will have a huge impact on the housing market, says BNZ chief economist Tony Alexander.
Statistics New Zealand released figures last week that showed this year’s gain is the strongest since February 2003.

This February, the number of people moving to New Zealand was up 4.80% on a year ago. Numbers leaving were down 5.80%. Departures were down 16.60% compared to the previous month.

The average gain for the past decade has been 2,125 and this year’s gain is the strongest for the month since 6,692 in February 2003.

Based on these figures, Alexander suggests the coming year could produce a migration gain of 15,000 to 30,000 people.

“What is important is that the numbers are turning even more strongly than we have been forecasting. The net migration numbers are positive and accelerating fast.”

The turnaround could even rival what happened in 2001, he says, when there was a hugely positive turnaround of 42,081 people.

Alexander believes, as a result of the worst recession in six decades, New Zealand will see a sizeable drop in the number of people leaving, a flood of ex-pats returning and more foreigners seeking our way of life.

“These flows will boost our housing market.”

If investors want to take advantage of the wide range of housing now on offer, Alexander advises the best bargains will be secured before the middle of the year.

He suggests home owners and investors take advantage of the low long-term interest rates, which are now unlikely to fall.

“I would want to pull finger, perhaps just in case we experience a migration boom.”

 17 March 2009

Source: NZ Herald

4:00AM Monday Mar 16, 2009
Charles Lowndes

New Zealand is facing a housing crisis, but it’s not about prices falling … It’s the lack of house supply for a growing population that is approaching crisis point.

Every market moves to the rhythm of supply and demand. When supply exceeds demand, prices will soften because fewer sales occur. Sellers chase a limited number of buyers and must drop prices to sell. This is what we have observed since the market peaked in mid 2007.

It will be many years before land and house supply recovers. Builders responded to market signals, resulting last month in a 17-year low for new house consents.

Developers preparing new sections for builders and developers of new houses have been at a standstill ever since the demise of the finance company industry and remain hamstrung by the credit crunch that followed from overseas. Simply, there is almost no funding for them to access.

Secondly, the fall in the New Zealand dollar has pushed up building material costs as house prices have fallen. That makes new construction uneconomic, at least while existing houses sell below replacement cost.

Supply-side shortage will be not be turned around this year, nor perhaps the next.

Now consider the demand side. Demand has already started to recover this year and sales volumes are beginning to recover.

As buyers start to exceed the number of houses for sale, eventually prices will rise. In the short term, prices will begin to stabilise.

For real estate agents, there is cautious confidence that those of us who have survived the 50 per cent reduction in turnover over the past 18 months have weathered the perfect storm. A Bank of New Zealand confidence survey of March 10 highlights this confidence.

So why will demand grow strongly this year? The deeper the recession gets overseas, the more New Zealand benefits!

While the jury is still out on whether measures taken by governments abroad will be enough to hold the slide at bay, we must wait to quantify the short-term benefits for New Zealand and their timing.

Population movements are the most important factor. Prolonged, deep recession will produce global population upheaval.

Fewer Kiwis are leaving for overseas, because they would rather hang on to the jobs they have than move to uncertain prospects.

Those who recently left for the “Big OE” are returning much sooner than expected.

Long-term ex-pats are returning as they lose jobs overseas, or retire cashed-up. In just one week this month, I met five separate groups of America-based ex-pat Kiwis house hunting “back home”. More in one week than I’ve seen in the past year!

Our ex-pat population is reckoned at about 1 million - more than 1 in every 5 of us. After Israel and Ireland, New Zealand has suffered the largest population ‘Diaspora’ (population dispersal) known in modern times. The effect of just one in every 20 ex-pats returning (escaping the extremes of international recession) would see our net immigration figures skyrocket to unknown levels and cause an extreme shortage of housing.

In January, the president of the European Bank said the likely depth of the recession (now looking worse than then) “will generate civil commotion in developed countries and worse in the undeveloped world”.

For professional couples looking for a secure lifestyle to raise families and enjoy the fruits of their work, Europe will look tougher and New Zealand rosier.

Expect a significant rise in the already constant flow of bright, young British migrants, many of them wealthy, and older ones following offspring who have settled here in the years since the 9/11 terrorist attacks.

Auckland has been getting some 50 per cent of migrants and has a severe land shortage.

Ex-pats returning and migrants alike are getting superb “bang for their buck”. Of the world’s most expensive cities to live in, London just dropped 19 places to 27th, but Auckland fell 29 places to 78th. Sydney ranks at 35th, not far behind London’s cost of living, the Economist reported last month.

Lastly, our own population is growing (births outnumber deaths).

From every angle, our population is set to increase quite markedly through this year and next. At the same time, our ability to house them is in severe, historic decline.

This is the true housing crisis facing us. And it is a recipe for stabilising house prices ahead of a firmer market.

* Charles Lowndes has been a professional real estate agent for 30 years, here and abroad.

15 Aug 2008

The New Zealand population is growing and has reached 4.27 million, Statistics New Zealand says.

The resident population has expanded by an extra 40,300 people in the year to June.

Government statistician Geoff Bascand said the main contribution to the growth was 35,000 babies born during the year — up by 2000 births from the year before.

However, population growth was lower in the June 2008 year compared with the previous year, because of a fall in net migration.

Mr Bascand said the median age for men was 35.4-years-old, and women was 37.2-years-old.