Pressure on Auckland property bubble
2 MARCH 2015


A Property Investment Adviser says it will need a major outside event to reduce the property bubble pushing Auckland house prices ever higher.
Listen to Olly Newland on Morning Report:

<http://www.radionz.co.nz/national/programmes/morningreport/audio/20169182/slow-down-in-housing-prices-could-be-coming>  ( 2 min 54 sec )

The latest monthly data from realestate.co.nz shows the average asking price in Auckland continued to break records <http://www.radionz.co.nz/news/national/267414/average-house-price-passes-%24500k>  for the second consecutive month.

The average in New Zealand’s biggest city reached a new high of $764,424 – a 1.9 percent increase on the $750,023 benchmark set in January.

A year ago, the average asking price in Auckland was at a high of $677,370, which indicated that asking prices across the city have grown by an average of 13 percent, or $87,000, over the last year.

Property analyst Olly Newland said while there was no limit for how high prices could go, in practice he did not think they could much higher.

But he said the pressure on the market was getting greater.

Link:

http://www.radionz.co.nz/news/regional/267475/pressure-on-property-bubble

Latest Apartment Sales

Rapid bidding secures 3 apartment sales
Friday 27 February 2015

Quickfire bidding resulted in all 3 units taken to auction at Ray White City Apartments yesterday being sold under the hammer, without the pause frequently seen in auction rooms to ascertain whether the property was on the market.

CBD
Forte, 37 Symonds St, unit 504:
Features:
39m², furnished 2 bedrooms
Outgoings: rates $1040/year including gst; body corp levy $3307/year
Income assessment: $420-460/week
Outcome: sold for $323,000

Volt, 430 Queen St, unit 316:
Features:
38m², furnished, 3m² balcony, parking available to rent at $50-60/week
Outgoings: rates $921/year including gst; body corp levy $3751/year
Income assessment: $390/week furnished
Outcome: sold for $241,000

Aura, 53 Cook St, unit 315:
Features:
53m², furnished 2 bedrooms, parking available to rent at $50/week
Outgoings: rates $911/year including gst; body corp levy $3514/year
Income assessment: $420/week from April
Outcome: sold for $258,000

 

PRESSURE ON HOUSING STOCK INCREASING

Record NZ migration keeps heat on housing
JAMES WEIR
February 26 2015


The migration boom continued in January with a gain of 5500 people, a new monthly peak, continuing to help stoke demand for housing.

A slowdown in migrant numbers in December may have just been a “blip” economists said.
The gain in the year to the end of January hit a new record high of 53,800, more than double a year earlier.

More migrants are coming in, especially on work visas, and fewer New Zealanders are leaving for Australia.

Arrivals outnumber those leaving New Zealand by two to one, reflecting the strong job economy here, especially compared with Australia, ANZ economists said.

The annual migration gain was expected to hit a new peak of 60,000 by the middle of the year, ANZ said, 50 per cent higher than the previous peak more than a decade ago.

Link:

http://www.stuff.co.nz/business/industries/66679614/record-nz-migration-keeps-heat-on-housing

Are We In For Another Wave Of House Price Rises?

What do you think rising development costs will do to house prices in the property market? Will they go higher or lower? No prizes for the right answer

“Rising construction costs making it ‘impossible’ to build affordable homes – property developer. February 24, 2015

Property developers are sounding a warning that the Government’s plan to enable more affordable housing to be built is being undermined by skyrocketing construction costs.

They say the cost of building a house is up almost 50% in just two years and combined with rising land prices they say this makes building an affordable house almost impossible.

“Last year these houses were $1420 a square metre, unfortunately our builder has gone into receivership so we’re contracting to get the same house built over here at about $1800 a metre, so that’s a 27% increase in a year on construction costs,” says Property Developer Kerry Knight.

http://tvnz.co.nz/national-news/construction-costs-making-impossible-build-affordable-homes-developer-6241175

RENTS ROCKET

20 February 2015

New Year kicks off with big jump in rents

Weekly rents leapt 9 per cent in January compared to a year ago and the national median rent rose to $420 per week, according to the Trade Me Property Rental Price Index out today.

Head of Trade Me Property Nigel Jeffries said the rental market was “stable and relatively quiet” throughout 2014 but looked to be sparking into action. “The 9 per cent year-on-year increase in January is the largest single-month rise we’ve recorded over the past five years. Median weekly rents clicked up $20 per week between December and January to a record high of $420 per week. That’s grim news for tenants.”

Mr Jeffries said the rental market was responding to pressure from landlords chasing better yields for investment property as a function of relentless growth in property prices. “It was more a question of when, not if, landlords were going to start recovering some level of yield. It looks like that signal has flowed into the market this month and started to sting tenants in the pocket.”

Looking at the long-term trend, the differential between median rents and property price expectations over the past five years has narrowed significantly as a result of this January rise in rents. The Trade Me Property Price Index for January reported a 25 per cent increase in asking price since 2010, with median rents rising by 24 per cent over the same period.

 

As predicted by me:

 

http://www.interest.co.nz/property/66656/property-investor-olly-newland-says-if-lvr-speed-limits-bite-then-house-rents-could-r

Keen Market Except For Leasehold

There was keen bidding for a 1940s-era home unit in Huntly but the owners of a leasehold unit in Auckland’s CBD take a haircut
February 18, 2015 Greg Ninness

This two bedroom unit in Huntly was passed in at $97,000.
There were plenty of potential buyers at at City Sales’ auction room this week for their regular apartment auction, including a contingent from Huntly who had come up for the sale of one half of a duplex which was one of the star’s of the show, however the Dunedin-based owners of a downtown leasehold unit that sold for well below half of its original purchase price were left with an expensive haircut.

The 1940s-era, two bedroom Huntly unit was typical for its type, with brick and tile construction, solid timber joinery, a separate garage and sitting on an almost 600 square metre section.

They don’t build them like that any more and with a floor area of 80 square metres it was more than twice as big as many of the modern two bedroom apartments in Auckland’s CBD.

According to QV.co.nz it had an interesting recent price history, selling for $55,000 in 2010, then for $82,000 in 2012.

Link:

http://www.interest.co.nz/property/74107/there-was-keen-bidding-1940s-era-home-unit-huntly-owners-leasehold-unit-aucklands-cbdThere was keen bidding for a 1940s-era home unit in Huntly but the owners of a leasehold unit in Auckland’s CBD take a haircut

Will This Make The RB Hesitate To Bring In More Controls?

REINZ says national median house price dropped 5.3% in January to $426,000; Auckland median down 2.7%; national sales volumes up 2.6% on January 2014

 

The housing market slipped into more of a usual summer pattern in January, with sales volumes falling sharply from the previous month and median prices slipping.
According to the Real Estate Institute there were 4841 dwelling sales nationally in January. While this is up 2.6% on the number sold for the same month a year ago, it represents a thumping 31.5% decline on the 7064 sales recorded in December. The December figures had been the highest for that month since 2006.

link:

http://www.interest.co.nz/property/73985/reinz-says-national-median-house-price-dropped-53-january-426000-auckland-median-down

Home Ownership Fades (or how to fill a page on a slow news week)

 

It doesn’t seem to occur to this researcher than many people prefer to rent to have a freer life style and less ties. This is now quite common overseas as the advance of technology and ease of travel make home ownership burdensome for many.

Saturday Jan 24, 2015
Dream fading for many as ownership in some regions tipped to fall below 50%
Future home ownership rates are looking sombre.

Many of today’s middle-aged and young people face the prospect of never owning a house, as a study warns that home ownership rates could drop below half in some parts of New Zealand within 20 years.

The research – the first long-term regional analysis by age using 2013 census data – shows home ownership rates in some regional household types have plunged by more than 40 percentage points since ownership peaked at 73.8 per cent in 1991.

It traces ownership rates by age group, showing for example that the home ownership rate for Aucklanders born in 1961-66 peaked at 65.3 per cent in 2006, when they were aged 40 to 44, and slipped back slightly to 64.6 per cent by 2013, when they were aged 45 to 49.

SEE THE STUDY RESULTS IN OUR INTERACTIVE BELOW

link:

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11391028

The Day The Bubble Bursts – Episode Six (continued)

The New Zealand property market could be due for a correction in coming years, meaning prices could fall, experts warn.

One of New Zealands leading KiwiSaver managers is warning there could be a correction in the property market.
link:
More hog wash from “experts” who know the price of everything and the value of nothing.
There is no chance whatsoever of a crash in the present climate unless there is some major catastrophic event ( another GFC i.e.) . The market will level off and stablise some time for sure,  but good money will still be made even in a flat market.  If ever the market did crash as predicted – then the building industry will be wiped out (together with most of the whizz kid money managers) as the country sinks into the biggest depression since 1929.
I’ve been through several booms and busts and can tell when the market is on the edge -  and it isn’t even close.
I should know. I wrote the book. (2004)