Archive | November 2011

RESIDENTIAL UPDATE

Cherry Picking the best properties

Same old, same old! While sales volumes are up from the short ‘stall’ during the Rugby World Cup, they are really just a continuation of the better parts of 2011. Well priced, very well presented, [and I mean that] homes are selling quickly no matter what sector of the market they sit.

 

And those same homes are being fought over with multi-offers almost expected now. What’s also the same is that the ‘losing’ buyers are then sitting back and waiting for another top property…in other words they are not being panicked into buying second best.

 

This scenario appears right across the entire market and the country, first homes, family homes and opulent properties;  ‘cherry picking’ some call it.  In a bid to get a measure on this, we are suggesting owners of homes  that are sticking in the market check out other homes in their sector but which have sold recently, just to get a market perspective.

STATS, STATS, STATS!

Immigration focus

 Hmmm. Media was all over the immigration stats earlier this week, focusing on the bare numbers that said slightly more people left the country this past month than  came in…yep, a first. So….time to get knickers in knots?

Hell no!

The reality? Right at the end of the piece, the journo added that more Brits [no doubt led by the Irish I mentioned last week], came in than any other group…as has been the case for the past 10 years, but guess what? More of them than have come in for 18 months and the trend us upward!

Now, same stats finished with the comment that  Indian and South African immigrants were next behind the Brits and hey, they too were incoming a close to record levels.

So yes, there a lots of Kiwis heading across the ditch. Sad but true and mostly young or blue collar.  Now think long and hard about  this.  It’s not blue collar workers that get into NZ.  Average age 37. Married. Two children. Upper quartile income from home nation. Professional or business leader. Definitely food for though…..

TOUGH TIMES IN EURO WORLD…SO WHERE IS NZ?

Euro zone challenges

It’s pretty sure that the 17 or so nations tied in some way to the Euro are going to have a fairly rough ride…so what does that mean for us?

We know that presently the migration figures are pretty much even…in and out…we know the Irish are arriving in larger numbers, that expat Kiwis want to bring money back here even if they are staying away, and that it likely won’t be long before people across Europe start deciding to take their investment money, and themselves maybe, somewhere else.

 

Here are some thoughts on the actual economic position NZ might attain, retain:

http://i.stuff.co.nz/business/market-data/5941106/European-crisis-worsens-New-Zealand-outlook

MORTGAGE APPROVALS – LATEST AVAILABLE (EARLY-NOVEMBER)

big tick on mortgages

Weekly mortgage approvals have remained at a range of between 5,200-5,600 for the past three months (except for the Labour Day holiday). After a flat path since August, the value of mortgage approvals has ticked up in two of the past three weeks.

NOTE: A number of the banks are now promoting lower and lowering Fixed Rate loans and we hear that although, as ANZ note, more applications are being applied for at the moment, a huge number of approved loans these part couple of quarters have not been uplifted. They’re thinking but either are not showing up or the vendors just are not putting the right places on the market to drag those approved loans out of the buyers.

THE MONTH IN REVIEW FROM ANZ

Mixed signals continue to come from housing-related statistics, a reflection of monthly noise and complicated structural and cyclical forces. While Auckland is performing better most regions and average days to sell is declining, weak credit growth, a net migration outflow, low levels of building consents and slowly drifting house prices are indicative of a cautious market.

 Looking forward we expect to see the housing market continue to oscillate, lacking clear trend direction.

What will happen to house prices?

Nationwide house sales fell 2.5 percent, following a 3.9 percent  fall in September. Now that the distractions posed by the Rugby World Cup have ended, we expect a lift in sales over November and December. Prices were roughly flat, with the REINZ House Price Index falling 0.5 percent after a 1.0 percent increase in September (seasonally adjusted). Prices are slowly edging higher, with prices in the 3 months to October up 1.5 percent on the previous 3 months.

Fewer new listings (5 percent lower than 12 months earlier) and a lower inventory of properties on offer is also supporting prices, with buyers competing for the smaller number of properties available. Consistent with this was flat seasonally adjusted median days to sell at 39 days, below the 40+ range apparent at the start of the year, but well above the sub-35 range apparent when the market was at full steam back in 2007, levels that would be consistent with more robust price increases.

NATIONAL HOUSING SHORTAGE PREDICTED

Possible Housing Shortage

It’s plain to see that right across the country the number of homes being built just isn’t matching population growth. Of course, some areas are more adversely affected than others and recently the media carried many stories on the 10 – 15,000 housing shortage in Auckland.

As the building industry commences what will be a many-year focus on Christchurch, this lack of activity in the provinces and other major centres is likely to have a telling effect.

What will that mean for us? Remains to be seen in this area but in the short to medium term there is no doubt that well presented property will more readily sell or be rented than perhaps has been the case in the past.

EXTENSION OF RETIREMENT AGE WILL HAVE ITS EFFECTS

Oz realty guru, John McGrath makes some predictions of the effect on real estate of delaying the retirement age, mainly the short term shortage of good sized family homes.  Baby boomers not retiring, empty-nesters not down sizing, retirees holding on to their houses for longer – this all has a flow on effect to the real estate market worldwide.

Check out his full story here:

http://www.switzerbroker.com.au/the-experts/john-mcgrath/how-delayed-retirement-affects-property/

India to overtake China?

I read a very interesting treatise last evening where the economies of China and India were compared and some predictions offered. No need to rabbit on; put simply, everything the Chinese make they export. Almost all that the Indians manufacture is consumed at home.

China and India compared

So? Well, Chine relies on other nations’ consumption and as 60% of what they make goes to USA and they’ve stopped spending, as has Europe, their economy is rushing sideways and in some sectors, backwards. Not good news for the Aussies and other selling raw materials to them. Still good for NZ though, as the huge demand for food in China has outstripped their ability to produce.

India though is different; what they make they consume internally. In fact, demand for almost everything you might imagine is such that import pressure is constant. Again, some NZ food products and byproducts.

The author of the article conjetcured that the Indian manufacturing and IT sectors could well become world dominant within three years while China would slow and stagger. NZ, he felt, and this was an Aussie writing, would do just fine. Nice.

ARE WE BEING WARNED?

So what’s really going on with the market?

We certainly hear good stories from some areas and of struggles still from others. Encouragement comes from stable interest rates and yes, even further drops in some fixed rates [HSBC top end again], with several now showing two year money at or about variable loan rates and three or five year choices well below the 10 year average. Tempting? Encouraging? Not to enough, it seems.

So, out come the excuses; I note new car sales were down Sept-Oct and the industry leaders comment that the RWC was probably to blame.  And the election? Then Christmas?

Food for Thought

But why then, are some markets moving ahead strongly and others not? Is there a trend?

Sadly, it seems to me that there are a couple of trends and they reflect historic  trends in those regions during the 1988 – 2002 period and again for even longer in the 1965 – 80 era.

The first, resulting from business closure in most cases, is population stagnation or outflow…no work, so inhabitants depart for places where there seems to be more regular work. In those bad days of yore, places like Gisborne, Whangarei, Wanganui [Marton] , Rotorua, Napier-Hastings,  Oamaru, Dunedin, Balclutha, Gore all suffered this way…many others too.  For long periods these towns and cities suffered horrendously as unemployment bit and values dropped.   Realistically, are we looking at similar work situations again in some of this nation’s towns?

Of course, much has changed now, and many on that list are ‘safe as houses’ this time around, due to industry stability etc. However, if the concept holds some truths and  being responsible, maybe we need to be planning accordingly

Into the same boat seem to have gone the areas reliant upon ‘discretionary spending’ aka holiday and recreation homes. They too are hurting presently.

Of course the opposite is true for those areas where there is population growth and little building going on! O yes, there is already a battle royal going on over the better presented and priced properties.  Check out those active areas and yes, it seems to hold water as a theory.

History is often a portent of what’s to come….or more precisely, what caused history to occur the way it did does have a habit of repeating. What needs to be different is preparedness and reaction. The results of the Christchurch quake has been positive for regional towns in Canterbury but also Timaru, Oamaru and further afield into Otago and top of the South…that economic pressure will come sailing home in the city itself as will the demand for goods and services, and will affect almost every manufacturer and supplier to building and construction across the country. A saviour? For some, yes.

BANKS LOWERING FIXED RATES

Banks lowering fixed rates

Good to see that as we commented a month or two back, the banks, loaded with funds as they are and just out of announcing huge and record profits, need to get that money out there!

So, check out the lowered fixed rate mortgages – three and five year fixed rates are looking very tempting compared with what the floating rates might just climb to over that period.

Speak with your local banking or financial advisor to find out what the best option is for you!