Those of you who have followed my articles will know that I have predicting for some time that rents will rise and maybe double in the main centres in the next year or two. The earthquake, and other factors, both economical and political, are steadily increasing the pressure on good rental stock. If you want to invest in residential, the sooner the better while bargains are still to be had, and interest rates remain the lowest in 40 years. Remember: good rentals are to be found in the leafy established suburbs- not the ticky- tacky boxes in the poorer areas or country hamlets.
Quake related population dispersal filling rental vacancies across North and South Islands, reports First National Group
April 19, 2011 – 02:48pm, Amanda MorrallChristchurch earthquake refugees are filling rentals across North and South Islands, says First National. What are you seeing?
Christchurch residents fleeing their city are snapping up available rental properties across the country in a trend that is also pushing up rents, according to First National Group.
http://www.interest.co.nz/property/53109/quake-related-population-dispersal-filling-rental-vacancies-across-north-and-south-is
Having been an Aussie watcher for years, as well as having bought and sold residential and commercial property there, I can see the coming of the bubble bursting across the ditch. Anyone contemplating moving to Aussie should note that the grass is not always greener in the other paddock. Sooner or later all bubbles burst and Aussie will be no exception. Melbourne house prices went through the roof over the last few years and the early signs of the inevitable correction are here.
Melbourne home property prices drop $400 a week in two-year record plunge
By Karen Collier
April 16, 2011 12:00AMAfter peaking at $601,000 late last year, the median price has fallen to $565,000 – down $36,000. Picture: Ellen Smith Source: Herald Sun
MELBOURNE’S property bubble is bursting, with $400 a day wiped off the average house price in the past three months.
After peaking at $601,000 late last year, the median price has fallen to $565,000 – down $36,000.
The 6 per cent slump is the biggest quarterly drop in more than two years and one of the biggest the Real Estate Intitute of Victoria has recorded since the height of the global financial crisis.
Read it here:
You read it here first month ago, and now the media are finally catching up. In a series of my previous my articles e. g “Rents Sure to Rise, I predicted this problem. Rising rents are a logical outcome from a tighter market. A tighter market is a logical result from disincentives to invest such as changing tax depreciation rules. And here’s something else to think about. If it’s bad now it’s going to be much worse ( or better depending on your point of view) 12 months from now. Rents have to double in the main centres before any sort of balance is achieved. Sunny days for investors are about to return.
Tough times for Auckland renters
JENNI MCMANUS
Last updated 08:29 14/04/2011
Tenants looking for properties to rent are in the box seat, with Trade Me figures for the past quarter showing supply outstripped demand by 11 per cent – unless you’re in Auckland.
The Auckland rental market is ”incredibly tight”and demand from prospective tenants had ”gone nuts” and spiked up by 18 per cent, says Brendan Skipper, the head of Trade Me Properties.
Exacerbating the situation, Auckland supply, excluding apartments, was down 13 per cent for the quarter.
”Anyone who has been reading media coverage in recent months knows Auckland is tough if you’re looking for a place to rent at the moment,” he says.
”Average weekly rent across the city is up 7 per cent on a year ago and it’s inevitable that will continue to rise if demand stays crazy and supply stays low.”
Skipper says tenants could consider areas outside the inner city – such as Manukau and the North Shore, where the number of properties available for rent is up 10 per cent and 6 per cent respectively.
http://www.stuff.co.nz/business/money/4886107/Tough-times-for-Auckland-renters
The cheap apartment market has got a lot of bad press over the years and deservedly so. When they first became the “rage” they were hopelessly overpriced. Now, because of over supply, shoddy building in some, and the horrors of the BueChip fiasco , they are hopelessly under priced. For those of you brave enough to give it a go, buying a bunch of cheap, but well made shoe box apartments, may not be such a bad thing. It appears others think along the same lines if these recent sales are anything to go by. They do look cheap don’t they? ( but I still have my doubts over leasehold)
Published 14 April 2011
Bob Dey ReportCity Sales sold 7 city apartments under the hammer yesterday out of 7 offered at auction, including 3 in The Quadrant and 2 leasehold units.
One of the leasehold units is at Quay Park, where Ngati Whatua’s ground lease is due to start being charged from 1 August after being free in the early years of the precinct’s development.
The other leasehold unit is at the Sebel on the Viaduct, where net income from the hotel through to January didn’t quite match outgoings on rates, the body corp levy & ground rent. However, rents around the central city have been rising as the full-house signs go
Auction results:Learning Quarter
The Quadrant, 10 Waterloo Quadrant, unit 1412, 32m² west-facing one-bedroom unit, deck, rates & body corp levy $5634/year, in hotel pool, sold for $166,000 (May Ma & Mark Li)
The Quadrant, 10 Waterloo Quadrant, unit 907, 32m² west-facing one-bedroom unit, deck, rates & body corp levy $5344/year, in hotel pool, sold for $155,000 (Maryanne Wong)
The Quadrant, 10 Waterloo Quadrant, unit 1816, 22m² studio, deck, rates & body corp levy $4581/year, in hotel pool, sold for $128,000 (May Ma & Mark Li)
Quay Park
The Landings, 10 Ronayne St, unit 518, leasehold, 114m² 3-bedroom unit, 2 bathrooms, deck, tandem parking, rental assessment $600/week; rates & body corp levy $5237/year, the first charge under the ground lease will be made from 1 August, which may be in the range of $8-14,000/year; sold for $265,000 (Hilary Seagrave & Tony Kelly)
Victoria Quarter
Imperial Gardens, 135 Hobson St, unit 415, 71m², 3 bedrooms, 2 bathrooms, deck, parking space, rates & body corp levy $6284/year, rent not stated, sold for $300,000 (Wendy Feng)
Kingsbridge, 72 Wellesley St West, unit 1P, 67m² one-bedroom unit, parking space, across road from St Matthews-in-the-City and the back end of the SkyCity casino, rates & body corp levy $4752/year, rental assessment $360/week, sold for $230,500 (Wendy Feng)
Sebel, 85 Customs St West, unit 415, leasehold, 50m² one bedroom with study, 2 decks, parking space, rates & body corp levy $15,316/year (plus gst on city rates) all paid by hotel, net income $13,716 plus gst/year to January 2011, sold for $196,000 (Georgia Featherstone)
My last article rightly criticised the nonsense pumped out by some journalists who are more interested in headlines than fact. Today, the Real Estate Institute, put another set of (more plausible?) facts on the table. You can almost hear the gnashing of teeth as some frustrated journalists find that their sensationalist headlines and leftist opinions have been so completely thwarted already – in fact within 24 hours.
Auckland boom helps house sales
CATHERINE HARRIS
Last updated 11:08 13/04/2011
House sales in Auckland have added strength to a seasonal uplift in March, although price rises are still modest, the Real Estate Institute says.
Nationally unconditional sales rose 29 per cent to 5848 compared the previous month.
On a seasonally adjusted basis, and excluding the ”earthquake effect” of Canterbury and Westland’s figures, the monthly increase in volumes was 5.4 per cent and 1 per cent higher than March last year.Prices were also positive but more subdued, with the national median up $15,000 to $365,000 from February, and up by $4500 on March last year.
Read it here:
http://www.stuff.co.nz/business/money/4881653/Auckland-boom-helps-house-sales
Nothing like a “shock horror” headline to grab the attention.
It never ceases to amaze me that people take one month as the whole picture. All that matters is the trend over 6-12 months and the trend depends which area you are in. All the signs show so far that Auckland is trending up and over all the price change over 12 months is 2%. down- big deal. Other areas are worse off but so they should be.
Many such areas were stupidly over priced as newbie investors were whipped into a frenzy by the same journalists ( not to mention spruikers) that wrote this latest codswobble. And to compare prices with the “07 peak” is also gross over simplification. It’s the same old story. Some journalists will never let the facts get in way of a good story.
Mr Van den Bergh should be beaten mercilessly across the soles of his feet and made to repeat 1000 times: ”I must not exaggerate”
House prices plummet
ROELAND VAN DEN BERGHSigns of a possible recovery in property values were short lived as Auckland and Wellington slid back again in March.
House prices fell by nearly $12,000 in the three months to March as market volatility continued, according to the latest figures from valuation firm QV
Read the rest here:House-prices-plummet
The NBR reports the same story today far more accurately:
“House values stable
New QV figures show national residential property values remained relatively stable in March, while signs of increasing activity were noted in Auckland and Wellington etc”
What are you seeing? Write to me and tell me what’s going on in your neighbourhood.
The comments in the article below mirror my thoughts on the subject. I have suggested in previous articles that it is time to think about fixing a rate on any mortgages you may have because of the threat of inflation.
Interest rates at 7.5% may look cheap in the years to come. You can always part fix and part float a mortgage and hedge your bets that way. This may be the best option of all.
With regard to the infamous “break fees” that were all the rage a few years ago, I cannot believe that this would again be a problem. A bank is hardly likely to quibble accepting early repayment when it can re-lend at a higher rate.
Now’s the time to fix mortgage rates: Tower
by ROMY UDANGA stuff.co.nzHomeowners should be fixing their mortgages at long-term rates to avoid quick and severe interest rate rises, chief executive of Tower Investments says.
At Tower’s quarterly investment briefing to day, Sam Stubbs said interest rates were likely to rise sooner than the market was pricing, to help take the steam of inflation.
Even though floating interest rates – averaging 5.75% – would look attr active to home owners, they should move to lock in at fixed rates now because the rate rises would be fast and severe.
Fixed, five-year mortgage rates with the country’s five major banks range from range from between 7.6% to 7..5%.
“This makes five-year, fixed terms look attractive,” he said….
read the rest of the article at stuff.co.nz
Time and again I am approached by clients who are convinced that property in the USA the the path to instant wealth. Breathlessly they tell me of examples (always second hand) of people who have been taken on tours of various USA states where houses are virtually given away, are cash flow positive, loans are easy, rents are great and so on and so forth. Yet when you get up close and analyse the facts it’s always the same.
There are no free lunches. Buying nasty cheap properties anywhere in the USA is a shortcut to financial oblivion. If you stand back and take a deep breath the answer is patently obvious. If these are such good deals why aren’t the locals buying them up furiously? Why is it that “foreigners” can see these bargains but the people who live there cannot?
Regrettably there are con-artists in Australia (either with or through their contacts in NZ) who do not hesitate to try convince Kiwis that it’s far more glamorous to invest in the USA and untold riches are there just for the taking.
It’s timely to read again what Neil Jenman, an Australian property expert and critic of all things unethical has to say… and apply it
AMERICAN WARNING
A deadly trap for Aussie investors.
by Neil JenmanHere’s a confident prediction: Hundreds (probably thousands) of Australian investors are going to lose millions of dollars in the American property market.
Right now, it seems to be all the rage, the latest fad. Buy real estate in the United States. It’s easy. Prices for American homes are so low and our dollar is so high that an investment in ‘the home of the brave and the land of the free’ seems like a really good idea. …
Read on at www.jenman.com.au …
The news just keeps tumbling out. Barfoot & Thompson, the biggest agents in Auckland, have recorded an extraordinary month both for house prices and rents.
As I have been saying for some time, we are likely heading into the “perfect storm” with low interest rates, very low new building, a shortage of rentals, a wipe out of stock from the leaky homes fiasco and the Christchurch earthquake tragedy, immigration increases, and government disincentives for investors.
This is what Barfoots had to say:
Property Market Bounces, Lifting Turnover and Selling Prices
Weekly Rentals Increase To All Time HighThe Auckland residential property market ‘bounced into life’ in March, with sales volume reaching their highest level in a month for nearly four years, and the average selling price achieving an all time high of $581,190.
“It was a month’s trading that came out of the blue, and exceeded anything we have ever experienced,” said Peter Thompson, Managing Director of Barfoot & Thompson.
“Buyers in the over $500,000 category appear to have simultaneously reached the decision that now was the right time to buy, pushing up sales numbers for the month to 1070, 75.7 percent higher than in February and 15.4 percent higher than in March 2010.
“This focus on higher value properties also saw the average selling price for the month exceeding that for February by more than $59,000 and that for March last year by more than $36,000.
Read more: at Barfoot.co.nz
Following my last post, here is more evidence that inflation is a real risk. My advice to those of you who are contemplating getting into the property market, you should start to take some serious- but prudent steps in that direction. If we do have an “inflation bomb” it will be likely to be fast and furious- much like the GFC which took everyone by surprise. If you are enjoying a low interest rate on any mortgages, this may be the time to fix the rates long term. In other words- be prepared.
Gold price hits record high as inflation fears rise
The price of gold hit an all-time high today, rising above $US1450 an ounce on fears of global inflation and further sovereign debt problems in Europe.Spot gold reached a record high of $US1455.06 an ounce before easing back slightly during today’s trading.
US gold futures for June delivery settled up 1.4% at US$1452.50.
read it here at nbr.co.nz
