Olly Newland returns to the interest.co.nz studio for another interview on factors affecting the property market — this time canvassing a range of issues, starting with the just-announced ‘Productivity Commission’ investigation into housing affordability, then residential and commercial property influences …
Recorded 31 March 2011
The latest building consent data drive home the dismal flow-on effects of a flat recession plagued market encouraged by Government moves to hike GST and discourage investment.
It confirms my oft repeated view that we are heading for a major shortfall in housing stock which will be exacerbated by the losses from the Christchurch earthquake, leaky homes etc. On the flip side it must eventually mean rising prices and rising rents in the not to distant future . Investors take note.
- Olly
see interest.co.nz article: Building consents for houses, apartments fall 9.7% in Feb to 2 year low, Stats NZ figures show
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10715659
I had a call from the NZ Herald regarding the flow-on effects of the Christchurch earthquake. In making my comments I recalled Shakespeare’s famous phrase: ‘Winter of Discontent’ … and they used it as a headline!
by CATHERINE HARRIS stuff.co.nz 24/03/11
Home affordability has improved to its best level in seven years but buyers are still wary of returning to the market.
Falling or flat house prices and a large cut in floating mortgage rates as a result of the February 22 earthquake had given home buyers’ buying power a real boost, the Roost Home Loan Affordability report said.
“The ongoing benefits of last year’s income tax cuts for those on higher incomes boosted affordability to its best levels since March 2004, which was just before house prices surged,” Roost’s Rhonda Maxwell said.
The report said that in February, it took 54 per cent of a single median income to pay the mortgage on a median-priced house with an 80 per cent mortgage.
It revised that figure to 51.7 per cent after the Reserve Bank cut the official cash rate by half a percentage point on March 10.
Those in the first-home-buyers market, usually young couples with a double income and no children, enjoyed an affordability rate of 21.6 per cent of their income in February – a level not seen since the middle of the decade, Ms Maxwell said.
Despite this, buyers were not leaping to buy, said John Ross, owner of Wellington real estate firm Oxygen.
“I think it’s just that people don’t have confidence in the wider economy.” ….
Read on at stuff.co.nz
Olly Newland’s Column, March 2011
THE EVENTS OF THE PAST THREE YEARS (and especially the events of the past three weeks) have changed the economic environment to a new place for a long time to come.
The changes have meant severe financial stress for many, and it is now increasingly difficult to predict with ANY certainty the direction of the property market (or any market) so as to make rational decisions on the future.
The main ‘Game Changers’, in my view, are listed below. As more changes arise it will require a continuing nimbleness of mind and decision-making to keep ahead of the game.
In this article I will attempt to pull together a view of ‘Where To From Here?’ for the property and investment market and see if some order and sense of direction can be deduced from the realities that we now face.
Each ‘Game Changer’ as I see it is either positive or negative (sometimes neutral) for property investors when the medium and long term view is taken i.e. over the next one to three years. I have rated each one accordingly.
With some notable exceptions, most of the consequences have arisen from unfortunate events and tragic circumstances. No professional investor with an ounce of humanity should derive pleasure from that — but we are where we are. To pretend otherwise is to fudge the facts.
by Anne Gibson Wednesday Mar 9, 2011
Auckland faces a rent shock as the Christchurch earthquake diaspora, rising insurance premiums and the loss of a landlords’ tax break all affect demand on already scarce stock.
David Whitburn, president of the Auckland Property Investors’ Association, and Andrew King, vice-president of the NZ Property Investors Federation, predict Auckland rents will spiral by $100 to $150 a week in the next year.
That will put many three-bedroom eastern suburbs homes and city-fringe properties in the $700 to $800-a-week bracket – about $38,000 a year. The average wage is just under $1000 a week.
The two men said the earthquake and demand for rental housing would propel prices upwards. Severe under-building in the past decade would exacerbate the shortage. Big insurance rises after the quakes and the loss of depreciation tax breaks from the start of next month are other factors cited for the rent shock. …
Read the full article at nzherald.co.nz
courtesy of City Sales via Bob Dey… Published 2 March 2011 Bob Dey Report
City Sales sold 3 apartments before today’s auction, then followed that up with 3 sales under the hammer.
2 identical units in The Quadrant, beside the Hyatt Auckland (now Pullman) Hotel, were sold – one prior and the other under the hammer for $11,000 more.
The sales included one leasehold unit, in the Hudson Brown block beside the old railway station at Quay Park. Auction & pre-auction sales:
Learning Quarter
Empire, 21-23 Whitaker Place, 52m², units 1425-26 in serviced student hostel on long lease, 2 bedrooms, 2 bathrooms, 2010 net income $11,500, sold for $116,000 (Andrew Bond)
Metro, 82 Wakefield St, studio, sold prior for $121,000 (Wendy Feng)
The Quadrant, 10 Waterloo Quadrant, unit 1801, 22m² studio, deck, rent $320/week fixed to February 2012, sold for $146,000 (May Ma & Mark Li)
The Quadrant, 10 Waterloo Quadrant, unit 1901, 22m² studio, deck, rental assessment $320/week ,sold prior for $135,000 (May Ma & Mark Li)
Isthmus east
Parnell, Arena – Quest Parnell, 6 Heather St, unit 504, 63m² 2 bedrooms, deck, 2 parking spaces, rental assessment $550-600/week, passed in at $405,000 (Steve Kirk)
Quay Park
Hudson Brown, 57 Mahuhu St, 70m² leasehold unit 114, 2-bedroom corner unit near Vector Arena, deck, parking space, fully furnished, rental assessment $450/week, sold for $190,000 (James Mairs)
Waterfront
Lighter Quay, Viaduct, 75 Halsey St, unit 503, one bedroom, sold prior for $150,000 (James Graydon & David Parker)
courtesy of Bayleys via Bob Dey… Published 2 March 2011 Bob Dey Report
Bayleys Real Estate has started the year with a string of industrial & warehouse sales in the key industrial areas of the former Auckland City, and around South Auckland. The new Auckland Council has also bought the Papakura Library building.
Sales:
Isthmus east:
Onehunga, 15 Captain Springs Rd, 706m2 industrial building (540m2 of warehouse, 166m2 office) on 893m2, sold vacant for $700,000; purchase price reflected new $50,000 roller door to be installed by purchaser (James Hill)Otahuhu, 157-159 Great South Rd, 2421m2 building (1365m2 warehouse, 594m2 office, 462m2 showroom) on 5937m2 of mixed freehold & leasehold land with 50 parking spaces, occupied by a tyre servicing business until 2013; sold for $850,000 at a 14% yield (Ash Bolton, John Bolton & Shane Snijder)
Penrose, 343 Church St, 993m2 warehouse & office building (697m2 of warehouse, 296m2 of office) with some deferred maintenance, 28 parking spaces, sold vacant for $1.075 million (James Hill)
South:
East Tamaki, 35-37 Greenmount Drive, a third receivership auction of vacant warehouse units in a recently completed 30-unit industrial complex resulted in 6 further sales at prices ranging from $105,000 for a 56m2 unit to $265,000 for a 172m2 unit; also selling were an 84m2 unit for $122,500, 2 63m2 units for $120,000 & $118,000 and a 130m2 unit for $215,500; 21 of the 22 units put up for auction have sold (John Bolton, Ash Bolton & Katie Wu)
East Tamaki, 16 Polaris Place, 1238m2 vacant industrial building (952m2 warehouse, 131m2 office space, 155m2mezzanine showroom) on 2481m2, sold for $1.315 million (Katie Wu & John Bolton)
Mangere, 66-68 Tidal Rd, older industrial complex made up of 5 warehouse & office buildings totalling 2621m², on 5 titles totalling 5823m²; sold vacant for $1.54 million (Lisa Nielson)
Pakuranga, 38 Ben Lomond Crescent, 2630m2 building (2012m2 warehouse, 346m2 office & amenities) constructed in the early 1990s on 4074m2; sold vacant for $1.75 million (Katie Wu & Rob Farmer)
Wiri, 139 Kerrs Rd, 926m2 warehouse plus 78m2 office on 1888m2 with 11 parking spaces, 6-year-lease from mid-2010;sold for $825,000 at a 9.5% yield (Ash & John Bolton)
Papakura, 28-34 East St, 3600m2 commercial building which houses the Papakura Library & Museum sold for $6.9 million; a unit title is to be issued for the building, which also has frontage to Great South Rd and 2 levels of parking for 155 cars; the property was sold to the Auckland Council at an 8.3% yield with a 10-year lease from September 2010, with 2×10-year right of renewal (Dave Stanley, Vivienne Lee & Marty Roestenburg).
