New Zealand Property Market

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.”

New Zealand Property Market

New Zealand Property Market

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.

New Zealand Property Market

New Zealand Property Market

27 May 2009

Source: NZ Herald

Confidence in the housing market has improved in ASB’s quarterly survey, with six out of 10 respondents considering it a good time to buy.

But the bank’s chief economist, Nick Tuffley, said that while the market was showing signs of bottoming out, that was a far cry from saying it was about to take off again.

Many of those surveyed expect house prices to continue to fall. But that view became less emphatic over the three months of the survey, Tuffley said.

Expectations about interest rates, like interest rates themselves, plummeted last year but in the three months to April that moderated and by April itself responses were evenly split between those expecting rates to rise and those expecting further falls.

“The sharp spike in long-term fixed mortgage rates in late March no doubt swayed respondents’ views,” he said.

“The surge in fixed rates may have prompted prospective buyers to get off the sideline and act. That rush may have contributed to the surprising strength of house sales in April.”

But since then Reserve Bank data on mortgage approvals had subsided, suggesting some of that heat would cool.

Other indicators suggested that while it was still a buyer’s market, the pendulum was starting to swing back, Tuffley said.

The median number of days it takes to sell a property has fallen in recent months and at 42 days is not far from the long-run average of 38.

Likewise, the number of listings in Auckland - and anecdotally elsewhere - had shown a decline from very high levels to slightly above-average levels.

Tuffley said the main positive factors the market had going for it were low interest rates and an emerging rise in net immigration.

The net gain in migrants last month was 2200, the highest since January 2004. The last three months annualised would translate into a gain of 22,000, about twice the long-run average but half the previous peak in 2003.

But although early signs of stabilisation in the housing market were appearing, they would not necessarily translate into a noticeable recovery.

“Although prices have fallen over the past 18 months, they remain high relative to both incomes and rents. In other words, houses are now merely expensive instead of being really expensive,” he said.

Unemployment is expected to climb and the number of mortgagee sales with it. ASB forecasts the unemployment rate to rise from 5 per cent now towards 8 per cent by the end of next year.

Compared with the start of the last housing boom, around 2002, households are collectively carrying much more debt and have less room to increase it.

The banks are demanding more equity from borrowers.

Tuffley said buyers should bear in mind that house prices might continue to fall in the short term and over the next cycle were likely to deliver “a shadow” of the growth seen in the 2002 to 2007 boom.

“For investors any price gains would be best viewed as a bonus rather than a given. Cashflow, not paper gains, is ultimately what services mortgages.”

As for owner occupiers, the Reserve Bank in its May financial stability report noted that the recent boom had pushed house prices to nearly six times incomes, when the long-run average is less than four, and mortgage payments as a share of income to 40 per cent, when the long-run average is 30 per cent.

The subsequent fall in the housing market, about 10 per cent since the start of last year, has reduced the multiple of house prices to incomes, but it is still above five and well above its long-run level.

“We do need to see some rebalancing occur,” Tuffley said.

It might be that the house price side of that adjustment had largely run its course. But that might mean a longer period when house prices went sideways and incomes, gradually, improved.

“In real terms we are expect virtually nil growth [in house prices] over the next few years.”

BUILDING CONFIDENCE

ASB’s housing confidence survey

Net per cent of respondents who:
* Consider it a good time to buy

April: 46 per cent
Jan: 38 per cent

Net per cent of respondents who:
* Expect house prices to fall

April: 45 per cent
Jan: 51 per cent

Net per cent of respondents who:
* Expect interest rates to fall

April: 30 per cent
Jan: 49 per cent

New Zealand Property Market

New Zealand housing market, New Zealand Property Market NZ Expatriates

12 April 2009

Source: NZ Herald

Home buyers - including expats with an eye for a bargain - have returned to the market in strength, hunting both high end and investment property.

International traffic to Trade Me Property surged 21 per cent last month. Brendon Skipper, head of Trade Me Property, says expats are “looking for a job, looking for a car and looking for a property” on the site.

Megan Jaffe, owner of the Ray White franchise in Auckland’s swanky Remuera, says with expats buying, sales have picked up on top-end houses.

Ray White’s March sales figures rebounded strongly, soaring 44.1 per cent. Chief executive Carey Smith says the hottest spots are Northland, Auckland, and the upper South Island; especially Christchurch, where investor activity is humming in the under $300,000 segment.

Babette Newman, Bayleys’ Wellington residential manager, says there’s a “huge increase” in attendees at open homes and multiple offers being made on properties in the capital too - particularly those over $800,000.

Typical responses in BNZ’s latest confidence survey, which compiles feedback from around the country, included: “Property investment is going crazy … Have had more than 100 people through most properties in the first weekend of open homes … Everything is booming under $400,000 with homes being snapped up in just a few days from listing and multi-offers across many properties.”

For the past four weeks, Barfoot & Thompson has averaged a 65-70 per cent auction clearance rate. Six months ago, this had reached an all-time low of 30-35 per cent.

Director Peter Thompson says: “The auction room in the city on Wednesdays has witnessed activity never seen before in these premises - standing room only spilling out into the foyer,” and only a small portion of these are mortgagee auctions.

Ray White’s Smith reports a 68 per cent auction clearance rate - again a doubling from last year.

Residential real estate is once more “so alive,” Jaffe says. “The investors are back; open homes are full, listings are short - and there’s buyer competition.” Alistair Helm, chief executive of realestate.co.nz, confirms new listings in March fell 19 per cent compared to a year earlier.

The local housing market is benefiting from tough economic conditions abroad, says John Wills of Custom Residential.

Broker Charlotte Lockhart of Mike Pero Mortgages, who’s arranging finance for expat buyers weekly - mostly those living in the UK - doesn’t think expats feel their money is safe there.

Looking for a place to put it, they’re settling for a bolthole back home while the exchange rate is favourable. Realestate.co.nz’s Helm reports an 11 per cent increase in website visitors from the UK viewing rental properties.

Wills says Custom Residential’s website has seen a “massive increase” in offshore inquiry about properties in the hotspot of greater Ponsonby. Total traffic volume more than doubled during February and March.

“Kiwi professionals are returning home and having to compete with existing local buyers for the best property,” he says, with the “executive” home buyer demographic being “incredibly active” on the greater Ponsonby house-hunting circuit.

Wills says of the surge in active buyers: “It feels a bit like going ‘back to the future’, with open home numbers and a buyer pool similar to what we saw in 2005 and 2006.”

Competition for good property is “one step away from being described as fierce,” he says - but heading in that direction. In the meantime, he says most properties listed with his agency become the subject of multi-offer negotiations. For one recently listed property, the first open homes were held on Saturday and Sunday of the same weekend, and four offers were made on the Monday.

An agreement was reached about 9.30pm that evening. “This is quite typical of what we are experiencing out there at the moment,” says Wills, reminiscent of the activity peak during the last boom.

The question is whether what he calls the market’s “serious momentum” will continue through winter.

Smith says it can’t be underestimated that “sales create sales”. The favoured two-year mortgage interest rate remains 2 per cent below its long-term average and the one-year rate almost 3 per cent below average.

The rate of new houses being built has hit a 65-year low, and market watchers agree if immigration remains solid and interest rates stay low the market will continue trading at more normal levels.

Offshore Kiwis quids in

Expat Kiwis Michelle Bradley, an accountant, and her builder fiance Greg Wdowikowski, both in their early 30s, were living and working in London when they decided to buy their first investment property in 2007.

“We saved our deposit and bought a rental property in Hamilton, and it has great rental return of $300 a week.”

Despite the fact they “bought off the internet” without viewing the property, they got a LIM and other property reports beforehand.

They enlisted help from Auckland-based broker Jodi Cottle of Sable Mortgages, who runs regular seminars in the UK for expat buyers looking for property in New Zealand. Seminar numbers are limited to 200 - and they’re always full. Interest in the seminars is so strong, Cottle doesn’t need to advertise them.

With the pound’s favourable exchange rate, Bradley says it was “so much easier for us to do this from Britain than if we were living at home”. A year ago, Bradley won a green card in the US ballot and the couple relocated to New York.

Searching New Zealand websites for new listings daily, they’re about to buy a more expensive “four-bedroom, executive-style home” on Auckland’s North Shore.

“What makes it so enticing is the quality of home that we can buy there on the US dollar, and the lifestyle we may eventually come home to.”

New Zealand housing market, New Zealand Property Market NZ Expatriates