Once again interest rates remain at historically low levels making investment in property more and more profitable and savings less and less attractive.
In my view low interest are here to stay and investors can buy in confidence safe in the knowledge that this is as good as it gets.
Constant threats to raise interest rates now ring hollow, and in this months RB statement raising rates isn’t even mentioned.
26 January 2012 (Bob Dey report)
The Reserve Bank left the official cashrate unchanged at 2.5% today.Bank governor Alan Bollard said: “Since the time of the Decembermonetary policy statement, financial market sentiment has improved slightly, with increased liquidity in European financial markets. However, the global economy remains fragile and risks to the outlook remain.
“World prices for New Zealand’s export commodities have remained elevated but the recent appreciation of the $NZ is reducing exporters’ returns. The European debt crisis has also increased the cost of international funding, which will likely pressure funding costs for New Zealand banks over the coming year.
“In the domestic economy, we continue to see modest growth. Over recent months there have been signs of a limited recovery in household spending and the housing market. Further ahead, repairs & reconstruction in Canterbury will also provide a significant boost for an extended period, though there may be further delays resulting from the aftershocks.
“Reassuringly, inflation pressures have remained well contained. Inflation has declined and now sits below 2%.
“Given ongoing uncertainty around global conditions and the moderate pace of domestic demand, it remains prudent to keep the cashrate on hold at 2.5%.”
As readers of my columns will recall I have repeatedly predicted that residential rents will rise dramatically starting form the main centres and moving out like ripples in a pond.
The following article shows that my predictions are coming true.
In the month a years to come, rents will likely double from the levels that prevailed for the last few years, as the housing shortage bites and the effects of punitive tax legislation eats into returns. The politicians, who have ultimate control, will do nothing so it is inevitable that sooner or later we will have a scandal on our hands centred around affordable rents .
Watch this space.
Rent hikes hit hard in Auckland, Wellington
BY GREG NINNESS
22/01/2012Rents in many parts of Auckland and Wellington have increased by more than three times the national average in the last year.
According to the Real Estate Institute of New Zealand, the national median rent charged for three-bedroom homes tenanted last month was $350 a week, compared with $340 in December 2010, an increase of 2.9 per cent.
But in major centres such as Auckland and Wellington, where demand for accommodation is greatest, the median rents in many suburbs increased by 10 per cent or more (see table). In the fashionable Auckland suburbs of Grey Lynn and Westmere, the median rent for a three-bedroom house increased from $580 to $660, a 14 per cent rise.
Properties in central Wellington suburbs also showed increases of about 10 per cent.
link:
http://www.stuff.co.nz/business/industries/6295358/Rent-hikes-hit-hard-in-Auckland-Wellington
“Just” 0.9% rise in a month equates to 12% per annum.
I would have thought that was a pretty solid result.
As things appear now we have have the makings of another boom - hard as it is to believe.
It is going to be an interesting year.
December house sales up 20 pct
JAZIAL CROSSLEY
Last updated 12:30 18/01/2012
Property sales nationwide were up 20 per cent in December compared with a year earlier but prices rose less than 1 per cent, the latest Real Estate Institute of New Zealand data shows.
With 5136 unconditional sales, there were 919 more houses sold nationwide in December 2011 than in the same month last year. This was the most transactions for the month of December for any year since the market last peaked in 2007.
All regions except Wellington and Hawke’s Bay saw significant improvements during the period.
However, in December nationwide prices rose just 0.9 per cent, or $3000, from a year earlier to a national average sale figure of $355,000.
Link
http://www.stuff.co.nz/business/money/6276193/December-house-sales-up-20-pct
Rental home demand set to push up rents
CATHERINE HARRIS
Last updated 10:16 18/01/2012
Rents may be flat but demand for rental homes increased around the country towards the end of last year, which pundits believe must eventually push rents up.
Enquiries on the Trade Me website rose 13 per cent for the December quarter on a year before.
Trade Me Property head Brendon Skipper said the trend was a continuation of strong demand in the previous quarter.
”In the September quarter, we saw the number of enquiries from tenants was up 10 per cent on 2010.
link:
http://www.stuff.co.nz/business/money/6275204/Rental-home-demand-set-to-push-up-rents
For those who want to invest in commercial property, but either have limited capital or limited time, then investing in a listed property company is another way of benefiting from the commercial property market. There are many arguments for and against this form of investment such as lack of control and liquidity, versus high returns and spread of risk .
Also where the property is, the strength of the tenant, and the quality of the management are important factors. Anyone needing advice about this form of investment can contact me for independent advice.
Listed property companies outperform
Conor O’Brien | Thursday January 12, 2012New Zealand’s listed property companies outperformed the NZX50 last year.
A Forsyth Barr report shows the NZX Property (Gross with Imputation) Index outperformed the NZX50 by over 11%. The listed property companies reported 11.8% growth compared to the NZX50′s 0.4% growth.
The listed property companies’ growth is attributed to 10.2% growth in the first half of the year and comes despite a 0.2% regression in the December quarter, Forsyth Barr analyst Jeremy Simpson says.
The Forsyth Barr report showed all the listed property companies had positive growth for the year with Kermadec and Argosy leading the way with respective gains of 30.6% and 17.6%.
link:
http://www.nbr.co.nz/article/listed-property-companies-reporting-strong-growth-co-107646
Published 11 January 2012
Home values in Auckland’s eastern suburbs kept charging upward in December and continued to rise at a more sedate pace nationally, according to Quotable Value Ltd’s latest index report, out yesterday.
The big rises in the Auckland region were again in the old Auckland City and also in the Onewa area of the North Shore.
In the old Auckland City’s eastern suburbs, the average sale price over the past 3 months was up $40,000 on the 3 months to November and the value growth for the latest period was a rise of 6.1%. The central area was also up 6.1% and southern suburbs up 6.2%. For the whole of the old Auckland City, the rise in values in the latest period was 5.8%. In the Onewa area, values gained 4.1% in the 3 months to November and 5.6% in the period one month on.
QV’s national residential index rose 2.4% from a year ago (on the rolling 3-month basis) to be 3.5% below the late 2007 peak.
In Auckland, however, values over the whole region increased by 4.3% during 2011 and ended the year 1.4% above the 2007 peak. QV research director Jonno Ingerson assessed the rise this way: “The Auckland market in 2011 was generally characterised by a lack of new listings & quality stock. This led to increased demand for the good quality properties that did come to the market. The central suburbs performed particularly well and, consequently, the old Auckland City area increased 5.8% during the year and values are now 3.3% above the previous market peak.”
On the national scene, he said: “For the first few months of 2011 values across New Zealand were stable, with rising values in Auckland & Christchurch being balanced by falling values in many other areas. From April onwards, national values began to increase as most of the main centres, apart from Wellington, began to stabilise. By September, values were increasing in all the main centres, including Wellington, as well as in many of the provincial & rural towns, suggesting a nationwide improvement in the property market.
“The year ended with the first signs that this apparently nationwide recovery may be faltering. National values increased from November to December, as they continued to do in Auckland, Wellington, Christchurch & Dunedin. However, values flattened in Hamilton & Tauranga and dropped in several provincial towns that previously had been recovering, notably Gisborne & Rotorua.
“Despite national values moving upwards during the year, the property market continued to be characterised by lower than normal sales volumes. Sales numbers in 2011 were more than 20% below the long-term average and, while up a few percent on the sales volumes of 2008 & 2010, both of those years were the lowest since the early 1980s, so outside of those 2 years 2011 is the lowest for 20 years.”
Around the Auckland region (still using old council boundaries), growth in the 3 months to December compared to the same period last year, the annual change to November in brackets, and average sale price in the 3 months to December (and to November in brackets):
Rodney, 1.7% (0.6%), $508,107 ($486,238)
Rodney North, 3.9% (2.4%), $524,749 ($488,703)
Hibiscus Coast, 0.5% (-0.8%), $494,026 ($484,271)
North Shore, 3.8% (3.3%), $583,684 ($589,601)
Coastal, 3.0% (3.0%), $644,469 ($665,224)
Onewa, 5.6% (4.1%), $467,908 ($466,434)
North Harbour, 3.5% (3.5%), $647,208 ($640,074)
Waitakere, 3.2% (2.4%), $403,206 ($406,183)
Auckland, 5.8% (4.7%), $597,023 ($577,774)
Central, 6.1% (4.8%), $531,502 ($502,480)
East, 6.1% (4.6%), $745,691 ($705,354)
South, 6.2% (5.3%), $536,569 ($532,520)
Islands (low volume), -6.4% (-1.5%), $521,500 ($565,446)
Manukau, 2.5% (2.1%), $456,553 ($451,827)
East, 4.4% (4.2%), $557,979 ($556,189)
Central, 1.8% (1.0%), $354,472 ($353,303)
North-west, 0.5% (0.1%), $411,608 ($405,316)
Papakura, 2.1% (0.0%), $359,394 ($351,092)
Franklin, 2.1% (1.8%), $381,229 ($384,270).
Bob Dey Report
Barfoot and Thompson says December Auckland house sales volumes strongest in 5 years; Average price up 1% from November to NZ $573,071
Barfoot & Thompson, Auckland’s biggest real estate agent, says it sold more houses in December than it has in the final month of a year for five years.
The company said it made 714 sales in December, up 190, or 36%, from 524 in December 2010. It’s Barfoot & Thompson’s highest volume of December sales since it sold 781 properties in December 2006.
Its average December selling price was NZ$573,071, up 1%, or about NZ$5,500, from November. That was topped last year only by March’s NZ$581,190, and is up NZ$43,389, or 8%, from NZ$529,682 in December 2010.
“December was extremely active, and it has given early momentum to January’s market,” said Peter Thompson, Barfoot & Thompson’s managing director.
Read the rest here:
If more evidence was needed that the property market is recovering we have it here. What a difference from the past years when the gloom and doom merchants predicted a mega- crash and a flood of unsaleable houses.
As have been saying for months now a housing crisis is building up and the likelihood of further price rises is becoming more certain by the day.
Big drop in houses for sale in centres
01/01/2012
Big cities may be heading for a shortage of homes for sale.
Just 8732 new listings came on the property market in December, down by a third on the previous month, according to Realestate.co.nz.
The drop in listings was greatest in Auckland, Wellington and Christchurch.
In the Wellington region there were just 571 new listings in December, down 52 per cent on November.
December is usually a quieter period for new listings.
http://www.stuff.co.nz/business/money/6206391/Big-drop-in-houses-for-sale-in-centres
To all my clients and to those of you who read this website, I wish you all the best for the coming year. Hopefully it will be better than the last few years. Also let us not forget those so badly affected in Christchurch (again) and all those who lost so much in the finance company debacle.
At least the signs are very good for the property market in the coming year, with continuing low interest rates and a build up of the housing shortage in the main centres.
To those of you who want to learn all about property investment or who have investments already and want to grow, down size or need general advice please note that I am available during the holiday period and can be contacted any time by phone or email. ( see the contact form on this site).
A word of caution. The heating up of the property market will bring back the con- artists and get-rich-quick merchants promising instant wealth and “all you need to know” in just one evening for $36 plus tea and biscuits. All of them are just fronts to sell you properties that they have an interest in one way or the other. You will never get bargains that way, but you will get a lot of headaches.
Also don’t be fooled by those who want to sell you “huge deals” in other countries, especially Queensland and the USA. If these deals were really so good why aren’t the locals buying them?
Ponzi schemes are alive and well and in a recent case in the USA
Read the story:
NORFOLK USA
A federal jury on Friday found Troy A. Titus guilty of 33 felony counts of mail and wire fraud, money laundering and conspiracy in what prosecutors said was a $7 million real estate Ponzi scam.
Titus, 43, of Virginia Beach, faces a maximum of 20 years in prison on each of the most serious mail and wire fraud charges. His total prison time could add up to hundreds of years. U.S. District Judge Raymond A. Jackson set sentencing for April 15.
After a one-month trial and four days of deliberations, the jury returned around 11:30 a.m. Friday, finding Titus guilty of 33 of the 49 counts he faced. The jury found him not guilty of eight related charges and could not reach a verdict on six counts. The government had earlier dropped two counts.
Read the rest here:
http://hamptonroads.com/2009/12/jury-finds-titus-guilty-33-counts-ponzi-scheme
And back home we had this article appear and
if this is true ( and I stress IF true) then it is a disgrace:
Fine Print Oversight Cost women Her Home
An Invercargill woman’s Christmas has been ruined: her home of 22 years is to be auctioned from under her today after a finance company lifted a $22,000 loan to $71,000 for missed payments.
Jeanette Brandon borrowed $22,000 in three instalments between August 2007 and March 2008 without realising the implications of a 29 per cent default, which would be imposed if she did not meet her payments on time.
However, the information was written in the contract she had signed it.
read the full article here:
http://www.stuff.co.nz/national/6182035/Fine-print-oversight-has-cost-woman-home
The finance company involved is Askufinance Ltd and the directors ( according to the company office website) are Justin & Vaughan Hyde of Stevens Ave Woolston Christchurch.
I you ever need a better loan company I can recommend a few.
Happy new year to you all and all the best in health and happiness for 2012.
Olly Newland
24.12.11
Another report on the chronc state of housing has been produced, no doubt at huge cost to the tax payer.
Full of good intentions, I doubt if a single idea it suggests will ever be implemented.
The chronic and worsening shortage of affordable houses will continue to lurch from one crisis to another until some real issues are addressed such I suggested in my interview with Interest.co. ( see below) .
One good thing the report said was that a capital gain tax would be of little use to which I would add that any such tax would be the final nail in the coffin of ever getting affordable houses.
It can also be noted that on “Trademe” at present there are over 800 houses for sale for under $300,000. Is there an affordability crisis or are buyers wanting to live beyond their means ? Goodness knows how many more are available in this price bracket throughout the country.
Urgent changes’ needed for housing
CATHERINE HARRIS AND DANYA LEVY
16/12/2011
The Productivity Commission has urged the Government to free up more land for affordable housing, especially in urban areas.
The commission, who has just released a draft report on housing affordability, noted that sections were now on average about 40 to 60 per cent of the cost of a house, particularly in Auckland.
“That means new homes tend to be at the top-end of the market. No one is going to put a $150,000 home on a $300,000 section,” said commission chair Murray Sherwin.
He said it was “abundantly clear” that there was a missing step on the property ladder for younger people and those on lower incomes.
“The chances of them ever purchasing their first home are decreasing.”
However, the Greens say the Commission lost an opportunity by not advocating for a capital gains tax on property which excludes the family home.
Read the rest here:
http://www.stuff.co.nz/business/money/6151210/Urgent-changes-needed-for-housing
