More houses selling - and faster

16th April 2012

Houses are selling at a rate which hasn't been seen since 2007, latest figures show.

The number of houses sold around the country last month was up by 25.3 per cent when compared with the same time last year, and was the best monthly result seen since November 2007, according to the Real Estate Institute of New Zealand (Reinz) figures released today.

Houses are flying off the market quicker, with the median days to sell down 23 per cent - from 46 to 35 days - when compared with February.

Over the past five years, the median days to sell has averaged 41 days across New Zealand, Reinz chief executive Helen O'Sullivan said.

"If I look at just March, the average days to sell over the last 10 years is 34... but I've got to go back to before 2007/06 to get a figure which starts with three."

Source: NZ Herald

Homes in Auckland, Canterbury and Westland are selling the fastest, at 31 days, while Northland homes are spending the longest on the market, at an average of 72 days.

Auckland in particular was selling very quickly, but the main problem now was the lack of homes for sale, she said.

In the past three years few new homes had been built, and the industry was not seeing a supply change in the short term.

"[So] if you've been holding off selling because you don't think you'll get the price you want, price levels now should give you confidence if you bring it to the market you will get what you're looking for.

"However, people aren't just selling for the sake of selling, so if you're living in a house already and you need to buy another one, this might get worse because you're thinking 'if things are selling that quickly I better find something to buy before I sell'."

In the past three years building consents have been at 65 per cent of long-term levels.

Just last week QV statistics showed house prices were also on the up, soaring past the 2007 peak.

The average house value in Auckland is $529,508 - 2.2 per cent above 2007. The Reinz figures mirrored these results, and found the national median house price reached a record high, of $370,000, up 1.4 per cent on March last year.

Auckland also recorded a record median price of $495,200, up 5.4 per cent on March last year, "reflecting the rising demand for housing in the city and the continuing shortage of available stock".

The figures showed the market was moving at an increasing pace, O'Sullivan said.

"Price is only one measure when it comes to looking at the overall state of the real estate market. Volumes are actually a really big indicator, and so is... days to sell."

"It's a big move from February that actually surprised me. I was sort of taking a bit of comfort with the figure being what it was in February that things were still relatively under control. It suggests the pace at which things are happening is really increasing."

O'Sullivan is quick to point out that the housing market is hugely seasonal, and March is traditionally a strong month with higher statistics.

"Because you've not got the distractions of December and January, summer holidays out of the way, weather's still good, no school holidays, there's no Easter, so it is generally a bigger month."

But she says across the country the total value of residential sales, including sections, was $3.35 billion in March, compared with $2.66 billion in February of this year, and $2.62 billion in March last year.

Of the 7330 properties to sell in March, 310 sold for more than $1 million, while 4085 sold for less than $400,000.

The March figures were "a significant milestone in terms of seeing confidence come back to the market and levels of transactions", she said.

ASB chief economist Nick Tuffley said the gradual increase in housing turnover in recent months was particularly evident in Auckland, while there was also some recovery in Canterbury.

"Underbuilding over recent years, combined with the housing shortage created by the earthquakes, have resulted in a very tight housing market in Auckland and Christchurch," he said. The tighter supply meant house price increases had outpaced those of the rest of New Zealand.

"We expect house prices will continue to lift over 2012 on a nationwide basis at a modest annual rate of around 5 per cent, with the increases likely to remain stronger in Auckland and Christchurch."

Tuffley said there had been a tentative recovery in residential building activity, with a pick-up in post-quake building activity from late this year likely to provide a further boost.

Kiwi to soar as economy picks up

16th April 2012

Source: Stuff Business Day

The New Zealand dollar will hit a peak of about US90 cents by next March, as the global economy improves and interest rate rises loom, according to ASB Bank forecasts.

The currency traded around US83c on Friday, and hit a peak of US88c last August, making life tough for some exporters and making New Zealand less attractive for foreign tourists.

A higher currency should also make imports and overseas travel cheaper for New Zealanders.

ASB expected an "easing" in export growth this year, reflecting falling commodity export prices and the higher New Zealand dollar, while imports would pick up as domestic demand recovered.

With the high New Zealand dollar a headache for the Reserve Bank, and a gradual economic recovery, official interest rates are expected to remain at low levels for much if not all of this year, ASB says in its latest quarterly economic forecast.

The Reserve Bank was expected to hold rates till December before lifting them, according to ASB, though some expect the first rise to be the middle of next year.

But inflation pressures would rise over time and prompt higher interest rates, especially once rebuilding work picks up in Canterbury.

Interest rate rises are likely to be gradual and the official cash rate, now at 2.5 per cent, would hit a peak of just 4 per cent by early 2014.

"We now expect the New Zealand dollar to remain very elevated over the coming year," ASB's forecast says.

The New Zealand dollar would stay high because the global economic outlook had improved in recent months, with the eurozone debt crisis no longer a significant risk.

Growth in Asia and the US had held up better than expected.

"We expect that global growth forecasts will soon be revised up, which tends to support the commodity currencies including the New Zealand dollar," ASB said.

As well there would be a widening gap between New Zealand and US interest rates. New Zealand wholesale interest rates were expected to rise in the coming year while US interest rates would remain unchanged, which should support the Kiwi dollar.

The currency should also remain high because of still relatively high export commodity prices, though they have come down from their peaks.

The New Zealand dollar was likely to stay up against the US dollar, the British pound, the euro and the Japanese yen, but remain weak against the Australia dollar, trading just under A80c on Friday, given its stronger economic performance and higher interest rates.

Meanwhile, ASB said that while the global environment still carried risks, the chance of a "severe debt crisis meltdown" had receded in recent months.

New Zealand's trading partners were likely to see average growth, while there should be recovering domestic demand in the country, which would provide New Zealand with a foundation for continued gradual economic recovery.

Despite the reduced global risks, this year would see New Zealand export earnings take more of a backseat role to domestic demand driving New Zealand growth.

"Key export commodity prices are moderating," ASB said.

Earlier this month, export commodity prices fell 0.7 per cent in a week, led by lower dairy and beef prices. In New Zealand dollar terms, export commodity prices are down almost 18 per cent on a year ago.

In contrast to easing commodity markets, households in New Zealand are showing greater signs of life, with spending growth edging up.

The housing market is gaining ground, led by Auckland and Canterbury.

Canterbury could expect years of house building, likely to get under way in the second half of the year.

Southland property values up 6.1pc

13th April 2012

Source: The Southland Times

Property values rose in the Southland and Gore districts last month, but they remained relatively stable in other parts of the region, according to the latest QV property trends.

The index shows property values were 6.1 per cent higher in the Southland district last month compared with March last year, with an average sale price of $201,317.

Queenstown Lakes was down 1.1 per cent from last March, with the average sale price for a property at $508,438.

Values in Invercargill were within 1 per cent of last year, with a 0.7 per cent increase. The average property sale price was $213,812.

The index showed property values for Gore, Central Otago and Clutha might not be statistically accurate because the values were based on a low volume of sales.

Nationally, values are 3.0 per cent above the same time last year, with the average sale price $402,317.

Project aims to breathe life into south city

11th April 2012

Source: The Southland Times

A public meeting on Sunday will be critical to the success of a project aimed at rejuvenating south Invercargill, a city councillor says.

Cr Neil Boniface, whose council portfolio is urban renewal, said south Invercargill residents in the past had called on the council to "get off its butt and do something in south Invercargill".

However, he did not believe that was the best solution, saying the council's strengths were the likes of footpaths and roading, while the best results for community development invariably came from within the community.

The council has paid for Janette Malcolm to co-ordinate the south Invercargill rejuvenation project called South Alive, with about 40 community groups, schools, businesses and iwi already pledging their support.

The public is invited to a meeting at the St Andrew's Community Centre in Elles Rd from 1pm to 4pm on Sunday. A group of people will be elected to drive the project and it was critical the meeting attendees gave the project a mandate to proceed, Mr Boniface said.

"I would hope for a good turnout. This is an exciting opportunity that is going to change the face of south Invercargill, I believe, because it's being driven by the people and it's not a council initiative."

The Southland Times yesterday visited the south Invercargill shopping centre to ask residents and business owners their thoughts on how to improve south Invercargill, with more parking, upgrading existing facilities and cleaning up the neighbourhood being at the top of their wish list.

Glasines Cafe owner Matthew Smellie said south Invercargill was on the Southern Scenic Route and improved parking, better signs and enhancing existing facilities would allow the area to tap into the tourist dollar.

Classic Clothing shop assistant Gloria Ryland said a recently constructed median strip in Elles Rd needed to be removed because it made the street narrow, limited access for potential customers and could be dangerous.

Mrs Ryland also said better cleaning services were needed in south Invercargill.

United Video manager Linda Bruce said more rubbish bins were needed and it would be good to see the South City Mall get an upgrade, with its toilets being "disgusting".

Long-time south Invercargill residents Frank and Althea Ruzsa said it would be good to see more improvements made to south Invercargill, but the people in charge would need to find a way to stop vandals from destroying any improvements after they were complete, as had happened in the past.

Damian Mair said an instillation of pride was needed before long-lasting changes would take hold.

Young south Invercargill residents Dale, 13, and Jamie, 11, Parrant said they would like to see another skate park with a bowl built to help with overcrowding, and more playgrounds for the little children."I think south Invercargill has all the facilities and if money and effort is put into cleaning up the area, people, especially the young people, will have a bit more pride in where they live," Mr Mair said.

NZ's cheapest - and most expensive - suburbs

10th April 2012

Source: Stuff Business Day

House hunters on a tight budget will want to stay clear of Auckland’s Herne Bay, but might take comfort in knowing the average house in Patea, Taranaki, costs little more than what most people spend on a deposit.

Fourteen of the 15 most expensive suburbs to live in New Zealand are in Auckland, which for most will come as no surprise.

The 15 cheapest suburbs are more diverse as they are spread throughout the country – but none of the most populated cities make the list.

The country’s and Auckland’s most expensive suburbs include Parnell, Remuera, Takapuna and Mission Bay, according to recent data from Quotable Value (www.qv.co.nz).

The only suburb to make the list that wasn’t in Auckland was Lowry Bay in Wellington.

The country’s most expensive suburb Herne Bay has an average house price of $1.85 million, 25 times more expensive than the average house price in the country’s cheapest suburb Patea.

The average house price in Patea is just $75,000.

Joining Patea on the list of the country’s cheapest areas are Taumarunui in Ruapehu, Mataura near Gore and Kawerau.

The lists aren’t definite because if there are no sales or very little sales in an area then it is too difficult to come up with an average price using an evaluation model, Research Director for Property IQ Jonno Ingerson said.

Ingerson said it was no surprise that 14 of the most expensive suburbs were in Auckland as the country’s largest city continues to dominate the property market.

“Values have been rising in Auckland, particularly central Auckland more than anywhere else,” Ingerson said, while adding that the average price of a house in Christchurch’s outer suburbs such as Rolleston and Rangiora had steadily increased since the February 2011 quake.

Demand drives Auckland’s property market, with many immigrants and migrants within New Zealand choosing to settle in the city.

The most expensive house to sell last year was a beach-front mansion in Herne Bay which sold for $8.3m, which was 800 times more expensive than the Ohai, Southland property which sold for the lowest price – just $10,000.

View New Zealand's cheapest and most expensive suburbs in a larger map

March sunnier but cooler than usual

10th April 2012

Source: The Southland Times

Sunshine hours in Invercargill were much higher than normal for March, with 181 hours this year compared with 141 the previous March.

And the first week of April has continued the trend.

Last month was the coolest March in Invercargill since 2006, weather statistics released last week show.

Data supplied by Niwa and compiled by 45S Weather Services Ltd shows March was slightly wetter and much cooler than average. The data shows weather patterns remained fairly unsettled as weather systems moved through the Tasman Sea, bringing regular rainfall.

45S Weather Services manager Andy Fraser said although it was cooler, it was not exceptionally cold. Lots of clear nights, with more frost, were part of the reason, he said.

The mean temperature for the month was 11.3 degrees Celsius.

The lowest afternoon maximum temperature was 10.9C on March 24.

The month was full of weather contradictions, with an extreme maximum temperature of 23.1C recorded on March 17 but an extreme minimum of 0.6C recorded three days later on March 20, he said.

"Most people would say March was a good month but the figures show otherwise; it was quite sunny, with less wind but there was more rain and it was cooler."

Snow fell on the ranges on March 25, during a brief cold, showery westerly flow.

Rain was often fairly heavy but not prolonged and followed by good spells of sunny weather with light winds, Mr Fraser said.

The rainfall total was 104.5 millimetres – slightly higher than the March average of 93mm.

A high settled in near New Zealand late in the month with fine calm weather from the 27th.

Despite the unsettled weather patterns, there were no prolonged periods with strong winds. The highest gust was only 69kmh on March 12, Mr Fraser said.

Although the figures were for Invercargill, Mr Fraser said they also reflected the wider area.

City firm starts work on floating wharves

10th April 2012

Source: The Southland Times

An Invercargill company has started working on the $6 million upgrade of Milford Sound harbour at Fresh Water Basin.

E-Type Engineering is building new floating wharves, which will be re-aligned to replace existing wharves.

General manager Phil McDowell said the floating wharves were more robust and would absorb berthing impact.

They weighed 45 tonnes each, which made it a challenging project that the company enjoyed being part of, he said.

"The complexity of the work is quite rewarding.'

Four of the six companies involved with the Milford Sound Development Authority project are based in Southland.

The upgrade will provide a larger harbour to improve boat manoeuvreability and improve waterway safety within Freshwater Basin and will involve moving the existing breakwater and dredging to enlarge the harbour.

Work has started on extending the harbour promenade and dredging to enlarge the existing harbour.

Demolition of the existing breakwater and construction of the new breakwater, 65 metres southward, has begun.

Rock and gravel from the existing breakwater will be used to build the new breakwater along with dredged material and extra rock armour.

Another 5500 cubic metres of rock armour is being produced by Te Anau company Downer EDI in the Conservation Department borrow pit at Milford Sound.

Development authority board chairman Jeff Grant said the programme was timed to cause minimal disruption to operators and visitors at Milford Sound, and was the authority's most significant investment.

Work is expected to be completed by August 31.

Fiordland: NZ's newest theme park?

4th April 2012

Source: New Zealand Herald

Fiordland National Park is at risk of being turned into a theme park if a proposed monorail through the Snowdon Forest goes ahead, a hearing in Invercargill was told yesterday.

Riverstone Holding Ltd wants to build the $150 million, 43km monorail from the Kiwi Burn entrance near Mavora Lakes to Te Anau Downs.

The Department of Conservation has indicated it will approve the concession, subject to public submissions.

All 19 submitters at the hearing, chaired by Graeme Ayres, opposed it.

Reasons for the opposition were destruction of ecological values, natural remoteness and solitude and the adverse effects on recreational use of the area.

Hunter Glen Dean said the monorail would destroy pristine natural areas which were easily accessible but still felt completely remote.

"This is a wilderness area that's accessible to, in particular, locals, and this monorail concept is not something we want. I despise turning our conservation land into a theme park like Disneyland."

Venture Southland group manager enterprise and strategic projects Steve Canny said the monorail could damage New Zealand's good reputation for tourism, because Fiordland's World Heritage status could be lost.

A large amount of infrastructure in a relatively unmodified area would reduce the significance of the area, he said.

"The national park is held for specific purposes. Building monorail type facilities and infrastructure through this area is not at the core of why the land was held and protected."

Fish and Game Southland and Otago representative Jacob Smyth said the recreational use in the conservation area, such as hunting and fishing would be significantly affected by potential restrictions around the area of the monorail.

A lack of information in the application was raised by many submitters, who said without sufficient information, significant effects on the ecology in the area would remain unknown..

Outdoor education teacher Paul King said there would be no way to mitigate destroying hectares of vegetation and destroying the values of the land.

The Southland District Council senior policy analyst Wayne Heerdegen said the council was also concerned about the lack of information in the application.

"The Department of Conservation has allowed a rather skewed assessment of the application, with lower levels of information being given to both the public and the department itself."

Of the 315 submissions, 27 support the proposal.

NZ Property Report – March 2012

3rd April 2012

The March 2012 NZ Property Report published byRealestate.co.nz provides an insight into the state of the New Zealand property market as measured by the supply side of the property market over the month of March. The key measures of the market analysed in the report are the number of new listings, the asking price expectation for those new listings and the level of inventory of unsold houses on the market at this time. The report is compiled from data captured by the website and represents close to 96% of all property movements in the NZ market as managed by licensed real estate agents.

A full print version of the NZ Property Report – March 2012 is published below and is available for download (1.2MB) and distribution.

Summary of the market – March 2012

The message coming from the property market is that buyers are out and about and keen to get into the market, whether they are first-time buyers, mid-life stage buyers or even investors. Their eagerness to buy matched to availability of attractive financial support is however not being met with a consistent and sufficient supply of new listings. This scenario continues to drive this sellers’ market, where it is clear those homeowners who are putting their property on the market are expecting to see a higher sale price as flagged by this new record level of asking price in March.

Property sales are strong – 6,168 properties sold in February up 37% on a year ago (exclude the unique circumstances of the Christchurch earthquake and sales are still up 30%), and yet listings flow is not matching with just a 8% year-on-year growth, this is why the inventory supply of property on the market as measured by rate of sale has fallen 31% in the past year.

The next 3 months will be crucial as property sales traditionally remain strong through the Autumn, and without the ability of the market to be re-supplied with new listings the outcome could be further rises in asking price and sale price or more significantly a stalling of the market as buyers become wary of a market getting out of reach of the majority of buyers.

Asking Price

The seasonally adjusted truncated mean asking price for listings in March rose again to a new record level of $429,865 up $3,300 from February. This pushes the asking price up to another new high. The trend as seen in the chart covering the last 3 years very clearly shows an accelerating growth in asking price over the recent 12 months as compared to 2010/2011.

New Listings

The level of new listings coming onto the market in March fell slightly with a total of 13,265. This represents a seasonally adjusted fall of just less than 1% from February and is up just 8% as compared to March last year.

On a 12 month moving average basis a total of 128,072 new listings have come onto the market since April 2011 as compared to 131,722 in the prior 12 month period, a fall of 2.8%. This compares to sales up 15% on the same 12 month comparable basis

Inventory

The level of unsold houses on the market at the end of March (46,411) was down as compared to February (47,030) as measured on a seasonally adjusted basis. This total includes houses, apartments and lifestyle properties on the market. With the rising rate of property sales the inventory on the market has seen a significant drop off over the past 6 months pushing it well below the long term average of 41 weeks of equivalent sales.

Regional Summary – Asking price expectations

The national (seasonally adjusted) truncated mean asking price expectation among sellers rose again in March to set a new high of $429,865.

Around the country the regions of Waikato and Canterbury recorded new record highs; in the case of Waikato the previous high was in December 2007, whilst Canterbury only posted it high last month. Across the country overall, 12 regions recorded asking prices up on prior month on a seasonally adjusted basis with big rises in Northland, Wairarapa and Nelson.

There were however, despite the record national asking price level some significant falls; most noticeable of which was Wellington, posting a 5.9% month-on-month seasonally adjusted fall to $423,554. This also represents a 5% fall on a year-on-year basis showing some weakness in the Capital city. The other notable regions recording falls were Gisborne and Central North Island.

Regional Summary – Listings

The general perspective of new listings coming onto the market as seen in the adjacent chart is that the majority of regions (15 of 19) are seeing a greater supply than a year ago. This is the case when seen in isolation, but the fact is that the rate of increase in the supply side of the market is not keeping pace with the sales side and this is resulting in the low level of inventory of properties on the market.

Strong levels of new listings in the Marlborough, West Coast, Central Otago / Queenstown are failing to arrest what are very low levels of inventory in these regions whilst the most at-risk regions (those experiencing low existing inventory and low listings growth) are Waikato and Canterbury, the former of which actually saw a fall in new listings despite the low inventory.

Regional Summary – Inventory

The inventory of unsold homes on the market tightened significantly again in March falling to 32.4 weeks of equivalent sales from 36.0 weeks on a seasonally adjusted basis.

Whilst the trend over the first 2 months of the new year has been to see some balance of inventory-to-demand the current picture as represented in the adjacent chart shows a market facing tightness in availability of listings with 7 of the 19 regions (dark blue) so low in inventory that they are very clearly providing sellers with the ultimate power. Coupled with these 7 regions, are a further 6 (light blue) where inventories are below long term average and show strong signs of a sellers’ market.

By contrast there are only 3 regions (Gisborne, Wairarapa and Otago) where the inventory levels are above long term average providing buyers with the advantage. Contrast this with the same view of the market 12 months ago and there was not one region where inventory was at or below the long term average.

Lifestyle

Lifestyle property listings rose sharply in March reflecting the general property market. A total of 1,048 Lifestyle property listings rose again in March after a strong rise in February. A total of 1,154 listings came onto the market, up 5% year-on-year and up 10% as compared to February. The truncated mean asking price for these listings rose 7% as compared to the recent 3 month average to $644,860 – taking the level to another record high in asking price, surpassing the peak attained last month.

Across the country, strong growth in listings were seen in Southland, Taranaki, Bay of Plenty, Marlborough and the Manawatu all posting rises of over 20% year-on-year.

Apartments

Listings for apartments slipped slightly between February and March with 527 being brought to the market, on a year-on-year basis listings were down 2%. The truncated mean asking price of new listings fell from $402,278 in February to $366,288 in March, representing a 3% year-on-year decrease and down 4% on the recent 3 month average.

The Auckland apartment market followed the national trend with 314 new listings coming onto the market, down 5% from February and also down 5% from March last year. The truncated mean asking price of new listings also fell to $338,046 from $390,021 in February representing a 5% decrease on the prior 3 months.

2011's priciest house sells for $8.3m

29th March 2012

Source: Stuff.co.nz

The house which sold for the highest price in New Zealand last year was 800 times more expensive than the house which sold for the lowest.

And it is 1600 times more expensive than the cheapest apartment, which sold for just $5000.

A Herne Bay, Auckland house took out the highest price at $8.3 million, while a Southland house was the lowest at $10,000, according to figures from Quotable Value (www.qv.co.nz).

There were several apartments which were cheaper than the Southland house, including one which sold for $5000 in Hamilton and one for $7000 in Auckland, according to the Real Estate Institute of New Zealand.

When combined, the top 10 most expensive houses which sold last year totalled $59,150,000, while the bottom 10 totalled just $203,000, according to QV figures.

Nine of the 10 most expensive homes were in Auckland and one was in the Bay of Plenty.

At 727 square metres, the Auckland house has 10 times the floor size of the Southland house. The Marine Parade property sold in July.

The other most expensive homes which sold in Auckland were in the affluent suburbs of Remuera, Kohimarama, Parnell and Takapuna.

The 10 least expensive homes sold for less than what most people expect to pay for a deposit.

The houses which sold for the lowest prices were in Waikato, West Coast, Otago and Southland, where six of the 10 lowest were sold, four of which were in Ohai.

It appears that buying a house in New Zealand is becoming more affordable, a Massey University study released yesterday found.

The national affordability measure improved by 4.9 per cent for the three months ending February, compared to the prior quarter, the university's Real Estate Analysis Unit study found.

House prices have fallen with the national median house now selling for $355,000.

Auckland had the highest median price in 2011 at $510,000, whereas Southland houses were the most affordable, with a median price of $198,250, according to QV.

Ten most expensive houses sold in 2011

Auckland - Herne Bay $8.3m

Auckland - Remuera $7m

Mount Maunganui - Bay of Plenty $6.1m

Auckland - Remuera $6m

Auckland - Remuera $5.95m

Auckland - Takapuna $5.675m

Auckland - Kohimarama $5.25m

Auckland - Takapuna $5.15m

Auckland - Parnell $4.9m

Auckland - Remuera $4.825m

Ten least expensive houses sold in 2011

 Southland - Ohai $10,000

Waikato - Benneydale $12,500

Southland - Mataura $17,500

Southland - Ohai $18,000

West Coast - Ikamatua $20,000

Waikato - Benneydale $23,000

Southland - Ohai $23,000

Southland - Orawia $25,000

Otago - Tapanui $27,000

Southland - Ohai $27,000

Median house price in 2011

Auckland - $510,000

Wellington - $405,000

Tasman/Nelson/Marlborough - $355,000

Canterbury - $350,000

Bay of Plenty - $335,000

Waikato - $330,000

Northland - $315,000

Hawke's Bay - $310,000

Taranaki - $285,000

Otago - $258,250

Gisborne - $235,000

Manawatu-Whanganui - $230,000

West Coast - $210,000

Southland - $198,250

- Figures from QV

Property values poised to rise: valuer

28th March 2012

Source: The Southland Times

An Invercargill property valuer says the Invercargill property market has shown encouraging signs during recent months, with an increase in the volume of sales in February and so far this month.

Chadderton Valuation principal Tony Chadderton said although prices remained steady, banks were actively encouraging lenders to borrow with increased mortgage and property value ratios, competitive interest rates and other incentives.

These included a contribution towards purchase costs and free iPads, he said.

"Banks are now flush with funds and need to lend to make money and this could lead to property value inflation, as the supply of mortgage finance is a main driver of property value," Mr Chadderton said.

He saw a high demand in north and northeast residential suburbs of Invercargill.

"Houses in Richmond, Windsor and Gladstone are turning over quite quickly," he said.

He said now that Christchurch insurance settlements were starting to be paid, some families were relocating to Invercargill and this increased demand for medium-priced property.

Commercial property owners were eagerly awaiting Invercargill City Council policy on older buildings and earthquake requirements, he said.

"This could have a drastic effect on property values and the ability to lease some of the older buildings in the future," he said.

Mr Chadderton was elected the Southland branch chairman of the New Zealand Property Institute this month.

He has held the position at least three times in his career.

Meanwhile, the Roost Home Loan Affordability index, released last week, shows Southland as one of the most affordable regions to buy a home.

It took 28.3 per cent of an average weekly take home wage to pay off a 25-year mortgage on a median priced house in February 2012, compared with 29.6 per cent in February last year and 35.1 per cent in February 2010, the report says.

On average in New Zealand it took 51.8 per cent of one median income to pay such a mortgage on a median priced house in February.

The typical buyer was assumed to be in the age 30-34 age bracket.

Property price pressure in Auck and Chch

21st March 2012

Property price pressure is clearly evident in Auckland and Christchurch

The media has certainly been alert to discussions around the possibility of a housing boom starting to emerge – even seeing the Prime Minister weigh into the debate on TVNZ’s breakfast show yesterday.

Certainly the property market has come alive in the past 6 months with a significant increase in sales with some localised price increases, most significantly in Auckland and Christchurch. In these two markets when viewed on the basis of the more accurate Stratified median house price index as published jointly by the Reserve Bank and the Real Estate Institute (REINZ) you can see new peaks being achieved as detailed in the following 2 charts:

In Auckland the Stratified median price in February was $513,612 which is up $3,500 from the peak of the market before the crash of 2007  – a period of over four and a half years, although the last 14 months has seen a steady and progressive rise and in December the market price peaked at a new level of $516,625.

In Christchurch the Stratified median price in February was $355,725 which is still down from the peak of the market before the crash of 2007  – a period of over four and a half years, although the prices have been steadily rising for about two and a half years and in November the market price peaked at a new level of $367,025, up $4,500 from the 2007 peak.

These are the two most active regions in today’s market and yet neither are showing any real price appreciation when you factor in inflation over the past 5 years.

When you consider the national picture on house prices the chart below shows that the stratified median house price at $369,550 in February is still 3% below the peak of the market of November 2007, although the recent 14 months has seen a steady increase from a low of $351,450 in January 2011.

Looking at the Wellington market shows a very different picture. In this region stratified median price in February was $405,250, down 4.6% from the peak of Oct 2009 / Sep 2007 which saw prices of $424,615 and $423,955 respectively.

Rural property sales growth strong

20th March 2012

Source: Otago Daily Times

Strong sales volume growth is continuing in the rural property sector, figures released by the Real Estate Institute of New Zealand show.

There were 351 farm sales in the three months to the end of February, up 72.1% from 204 sales in the three months to February 2011.

The number of sales fell by three in the three months to February, compared to the three months ended January. In the year to February 2012, 1295 farms were sold , the highest number on an annual basis since May 2009.

All regions, apart from Taranaki, recorded increases in sales volumes for the three months ended February, compared with the corresponding time last year, with Canterbury (up 35 sales) recording the largest increase.

In Otago, there were 26 sales, up five from the corresponding time last year and up 13 from 2010. The majority were finishing and grazing properties.

The median price per hectare for all farms sold in the three months to February was $21,641, a 6% increase on the $20,299 recorded for the three months ended January and up $375 per hectare on the $21,266 recorded for the three months to February 2011.

While there had been a marginal easing in the number of sales for the three months ended February, the underlying trend was still improving, REINZ rural market spokesman Brian Peacocke said.

Buyers remained focused on grazing, fattening and dairy properties with indications of a shortage of listings coming through due to the number of transactions that had occurred over the past few months.

Of note were sales in February of a large dairy farm in Southland, incorporating a grazing unit, for $29 million, and a kiwifruit orchard in the Bay of Plenty for $170,000 per canopy hectare, which suggested reviving interest for quality properties in the kiwifruit sector, Mr Peacocke said.

Morale in the rural sector remained high, with the impact of lower product prices being offset by the increase in production from one of the best growing seasons experienced for many years.

The lifestyle property market saw a 33.6% increase in sales in the three months to February, compared to the corresponding period last year.

Sales volume in the lifestyle sector continued to increase, although rising vendor price expectations in some areas were creating obstacles for some purchasers, he said.

Queens Dr upgrade reaches milestone

19th March 2012

Source: The Southland Times

An upgrade to part of Queens Dr in Invercargill, between Newcastle and Herbert streets, reached a milestone at the weekend with the chip sealing on the newly built east side of the road.

Invercargill City Council engineering services manager Russell Pearson said the east side had been chip sealed and vehicles would be diverted on to the newly built road while the west side was also rebuilt. Once the west side was rebuilt, a smooth asphalt layer would then be placed over both sides to complete the new surface, he said.

"Motorists will also notice a pedestrian crossing, with traffic signals, is being installed at George St to ensure cyclists and pedestrians can cross the busy four lanes once the work is complete. The new pedestrian-cycle crossing point is a much safer crossing location and also links directly into the footpaths through Queens Park."

The upgrade of this part of Queens Dr was due for completion late next month, and involved a significant upgrade of the infrastructure, with complete reconstruction of the road and footpaths, he said. It also included replacement of sewer and stormwater pipes, major power cables and the installation of fibre ducts as part of the fibre-to-the-door network.

Developers could face fee for new properties

16th March 2012

Source: The Southland Times

Developers in Invercargill may be required to pay a $5848 fee for each residential property on a new lot, according to the city council's draft long-term community plan.

The council has included a development contribution proposal in the plan.

The plan is with auditors and is expected to be adopted on Tuesday and released for public submissions on March 31.

A detailed table in the plan indicates commercial properties on new lots would face similar fees – for example, $8566 for a 400sqm development, although any in the inner-city "golden triangle" rejuvenation area would be considered for remission.

The table also indicates rural dwellings not connected to wastewater, stormwater or water-supply services would pay $2247.

If implemented, this new source of income could be spent only on infrastructure to provide for growth. Some councillors at the finance and policy committee meeting last week challenged the need for the fee and the wisdom of potentially hindering development. Others point to an estimated 0.8 per cent reduction in the reliance on rates and a fairer sharing of the costs of development.

Councillors Ian Pottinger and Neil Boniface asked whether there should be incentives for development in south Invercargill.

Mayor Tim Shadbolt questioned the need for more houses, pointed to legal challenges other councils with development policies had often lost, and warned of the risk of financial dependency.

"So we say `Oh, great, we're going to save 0.8 per cent on our rates', but what if there is no development? And Queenstown, of course, is facing that exact problem. They became dependent on development levies and now suddenly, they're virtually facing huge debt for a small base population."

Councillor Carolyn Dean said the burden from new developments should be taken off ratepayers – an ageing population – and placed on the developer, who would be reaping a financial benefit.

Committee chairman Jackie Kruger said the development contribution was based on a forecast population increase to 56,000.

The development fees would put growth cost, proportionately, on any new growth. The fees were also relatively small: "They don't bankrupt anyone."

Otago real estate trend 'improving'

14th March 2012

Source: Otago Daily Times

Otago's February real estate sales figures - sale prices and the number of homes sold - seesawed across the province, according to Real Estate Institute of New Zealand figures.

ASB economist Jane Turner said nationally, February housing turnover was up 37% on a year ago, but "overall activity remains relatively subdued".

"Housing turnover continues to gradually recover, with an 8% lift during February, building on small increases over the previous three months," Ms Turner said in a statement.

Nationally, the volume of house sales was up by 37%, or 1666 sales, compared with the corresponding time last year, and it is the best February result the market has recorded since 2008, the REINZ said.

The national median house price remained steady for the third consecutive month at $355,000 and is up $5000, or 1.4%, compared with February 2011.

" While the volume increase is significant, it is worth noting that the February 2012 result is just 65.9% of the 9357 sales recorded in February 2007," the REINZ said.

Westpac chief economist Dominick Stephens said the housing market maintained its strong upward trend in February helped by improving household incomes, low mortgage rates, and constrained supply.

"House price inflation remains relatively modest, and is dominated by Auckland and Canterbury, the two regions with the most obvious supply constraints, but is still on track for our forecast of an overall 3.5% increase this year," he said in a statement yesterday.

REINZ data on the separate Central Otago and Queenstown regions, when combined, revealed the highest number of sales since December 2007, but median sales prices were down around $41,000 on February last year.

Queenstown's median price was down to $517,500, from almost $570,000 a year earlier but sales were up from 38 a year ago to 60. Central Otago's median jumped from $315,000 to $362,500 and sales were also up, from 45 to 61.

Conversely the separate, wider, Otago region recorded the lowest increase in sales volumes, increasing from 218 in February last year to 232, at a median price of $239,750, up slightly on $235,500 a year earlier.

Dunedin sales fell from 177 a year ago to 170, but median prices rose from $245,000 to $258,500.

Otago region spokeswoman Liz Nidd it was "significant" that median days to sell had fallen from 49 last year to 34, helped by a "trickle" of former Christchurch people to the region.

"Some people have missed out on [buying] homes and they're now making decisions more quickly," she said.

REINZ analysis of the Central Otago and Queenstown regions showed while the median price was down $41,000 on a year ago, sales numbers were up noticeably.

"The overall trend in prices across the region is flat, with the February data pulling the trend line down again", the analysis said.

For the Otago region, REINZ said "overall, the trend for Otago in improving".

Quotable Value (QV) also released its February data yesterday, saying nationwide residential property values had continued to gradually increase.

Values are up 1.1% over the past three months, 2.9% up during the past year, and were now 2.9% below the previous market peak of late 2007.

However, QV research director Jonno Ingerson said although national values were up 2.9% during the past year, that had to be compared with previous periods of value growth.

In 2003 alone, values had increased by a "staggering" 25%.

"In comparison, the current rate of value increase is very modest and in inflation-adjusted terms is only just above level," Mr Ingerson said in a statement.

House sales up, Christchurch recovers

13th March 2012

Source: Stuff Business Day

Two sets of house sale figures out today show property prices have risen in the last year and sales activity increased last month.

Real Estate Institute of New Zealand data showed house sales shot up 37 per cent last month nationwide, making it the best February for the residential property market since 2008.

There were 1666 more houses sold last month than at the same time a year earlier, but prices were flat for the third month in a row, the REINZ said.

Nationally the median house price was $355,000, unchanged since November but up 1.4 per cent, or $5000, from February last year.

Sales were up more than 50 per cent from January, which is typical as the first month of the year is always slow because of the holiday season.

The Canterbury region was suffering the immediate impacts of the earthquake in February last year, so figures for that area this year were up dramatically in comparison. Prices rose 14 per cent.

Nationally, the typical price rise last month from a year earlier was 2.7 per cent. In the Waikato/Bay of Plenty area prices lifted 1.9 per cent to $315,000 while Otago houses sold for 1.8 per cent more at $239,750.

In Wellington, prices fell 5 per cent from February 2011 to $388,000, but that was up 0.8 per cent from January. Auckland prices were up 0.6 per cent from a year earlier to $468,000.

REINZ chief executive Helen O'Sullivan said the real estate market last month built on the strong sales volume results from December and January.

"While agents are seeing more activity and more positive sentiment from buyers in most places this is not translating into significant price increases," O'Sullivan said.

"Agents in a number of areas continue to report listing shortages. Despite the increased number of transactions, buyers are remaining cautious with the days to sell measure down by just one day, and still above the long term average."

QV FIGURES

Figures from property valuer QV also show a rise in property values over the last year, up 3 per cent but still down on the late 2007 market peak.

Nationwide property values increased 1.1 per cent in the past three months and 2.9 per cent over the past 12 months, QV.co.nz said.

They are now 2.9 per cent below the most recent market peak of November 2007.

QV.co.nz research director, Jonno Ingerson said the past year's increase needed to be put in perspective against previous periods of growth.

Between 1993 and 1997, values increased by 8 to 14 per cent a year. In the 2002 to 2007 boom, values rose by 10 to 15 per cent a year.''In comparison the current rate of value increase is very modest and in inflation adjusted terms is only just above level,'' Ingerson said.

There had been a noticeable increase in activity in the market over the past month, but the level of activity was still below the long term average.

''There is still a shortage of properties for sale in some areas, and in general buyers are acting cautiously and carefully.''

QV said Auckland remained the fastest growing of the main centres, with values up 1.7 per cent over the past three months and 4.8 per cent up over the year.

Values in the city are now above the previous market peak by 2.3 per cent. This increase across Auckland is being led by the old Auckland City which has increased in value by 6.5 per cent over the past year and is 5.1 per cent above the 2007 market peak.

Values in Hamilton remained relatively stable, rising 0.9 per cent over the past year, but are currently 11.1 per cent below the 2007 peak.

Values in the Wellington area are the same as they were a year ago, having dropped two per cent for the first six months, then steadily increasing for the last six months.

Apart from Auckland City, values in Christchurch have grown faster over the past year than any of the other main centres, rising 4 per cent and are now level with the 2007 market peak.

Bank blows bubble

12th March 2012

Source: Bernard Hickey, NZ Herald

OPINION: Back in 2003, the Reserve Bank missed the biggest shift in the underlying economy in recent history. House prices took off and fuelled a debt-funded spending spree that undermined our export sector and loaded more than $100 billion on to our national debt.

House prices almost doubled from 2003 to 2007, enriching a generation of property owners and ensuring the generations to follow will struggle to afford houses in the big cities.

Missing that shift and failing to raise interest rates early enough and fast enough eventually forced the Reserve Bank to hike the Official Cash Rate (OCR) sharply through 2007 to cool down the economy.

In his first year in the job in 2003, Governor Alan Bollard cut the OCR three times through April, June and July from 5.75 per cent to 5 per cent. He then held it at 5 per cent through late 2003 despite growing signs of the housing boom.

He justified holding the OCR at 5 per cent because a high currency was then keeping inflation pressures under control. It was the beginning of a slide in the relative performance of the export sector that New Zealand has not managed to turn around.

Fast-forward almost 10 years and Bollard is again arguing he doesn't need to put up interest rates because of the high New Zealand dollar. He even went so far this week as to argue he could cut the OCR if the NZ dollar continued to rise.

But are we seeing the same mistake being made all over again? Is Bollard's insistence on low rates about to fuel another housing boom?

There are some worrying early signs in recent weeks that the fizz is coming back into some parts of the market, in particular Auckland.

Banks are out again aggressively lending to people with deposits as low as 5 per cent. First-home buyers are raiding their KiwiSaver funds and topping them up with up to $10,000 per couple in subsidies from Housing NZ.

They are doing so confident that the Reserve Bank is reassuring them about lower interest rates for longer.

In the three weeks to March 2, $3.251 billion worth of mortgages was approved and $3.206 billion was approved in the three weeks to December 16.

The last time we saw that same sequence of heavy late-summer, early-autumn house lending was in December 2007 and March 2008, just as the housing boom was peaking.

ASB's 80 per cent-plus lending grew $667 million in the December quarter alone to 19.5 per cent of its book. Westpac, ASB and BNZ are all aggressively lending at 95 per cent again, so much so that ANZ's CEO warned of the potential problems of such lending here.

To top it off, Wellington apartment owner Donald Stott and his (unnamed) bank advertised 100 per cent finance to first-home buyers this week.

"With rising values comes the consequence of rising equity levels by property owners," Stott said. "This display of confidence by one of the country's major banks is exactly the sort of positive indication the wider property market is looking for."

If 100 per cent lending on apartments is not enough of a warning signal, I don't know

what is.

The slightly scary thing is the Reserve Bank could do exactly what it did in late 2003 - rely on a strong currency to leave rates low, or even allow it to cut rates. Have we learned anything?

Rising house prices 'a good thing' - Bollard

12th March 2012

Source: TVNZ

The head of New Zealand's Reserve Bank thinks it is "a good thing" that house prices are climbing. Dr Alan Bollard told TV ONE's Breakfast programme that the housing market is not "fired up" but instead is picking up from a very low level and is being driven by sound demand. "We're starting to see a bit of turnover, some building consents (and) some building starts but we are not really seeing, or expecting to see, a lot of price growth," he told Nadine Chalmers-Ross today.

Recent data showed supply is tight, particularly in Auckland, and the average asking price nationally was over $425,000 in February, a 3% increase on the same time last year. Despite this, the Governor said he is hearing that people are not getting into property for the capital gains - which can trigger a housing boom - but are instead making sound investment decisions. "We think we are in a much more normal and more desirable sort of world so we are not concerned. We think it is generally a good thing so far".

Bollard told Parliament's finance and expenditure committee yesterday that property values are still about 13% below their 2007 peak in real-terms. He also said he was comfortable with his arsenal to stamp out another boom should one arise, telling the committee "were we to see what looked like a resurgence of the mid-00s in housing, we'd also be more inclined to pull out some macro-prudential tools." Those include requiring banks to hold more capital on their balance sheets, or even introduce short-term loan-to-value ratios, he said.

The central bank held the official cash rate at 2.5% and lowered the track of the 90-day bank bill rate - often seen as a proxy for the OCR - stripping out gradual increases this year. The Bank sees the bill rate at 3.3% by the end of 2013, having previously forecast it to be 4%. At the same time Bollard lowered the track of inflation, with the consumer price index now expected to be 1.4% in the third quarter, down from 2.3% in his previous forecast.

Westpac Banking chief economist Dominick Stephens said some of the Reserve Bank's projections were surprising. "We were expecting a dovish statement despite signs of a strengthening economy, and the Reserve Bank took that far further than I was expecting," Stephens said. "Their forecast for inflation is a little bit on the light side in the short-run" given the looming stimulus for the reconstruction effort," he said. That could leave the central bank in the same situation it was in 2003 when it tried to take the wind out of a surging currency in the face of an emerging housing boom.

In response, the Reserve Bank hiked the OCR to a record high 8.25% in 2007, near the height of the boom.

Reserve Bank leaves interest rates on hold

8th March 2012

Source: Stuff Business Day

The Reserve Bank is leaving the official cash rate (OCR) steady again at 2.5 per cent, but says the high value of the New Zealand dollar is hurting exporters.

Reserve Bank governor Dr Alan Bollard said this morning that sustained strength in the New Zealand dollar would keep inflation down and reduce the need for future OCR increases.

The New Zealand dollar had risen almost 7 per cent since December, measured against a basket of our trading partner currencies, while export commodity prices had tracked sideways, the Reserve Bank said.

"Given the medium term outlook for inflation, it remains prudent to hold the official cash rate at 2.5 per cent," Bollard said.

The cash rate has been at 2.5 per cent for the past year. The central bank's projections for 90-day interest rates is on a much more gradual path than in expected in December, rising from 2.8 per cent to 3 per cent by the end of this year and just 3.3 per cent by the end of next year.

Inflation had settled near the middle of the central bank's target range and inflation expectations had fallen, Bollard said.

The domestic economy was showing signs of recovery.

Household spending appeared to be picking up in the past few months and there seemed to be a recovery in building activity. The building recovery would gain strength later this year as work picked up in Canterbury after last year's quakes.

High export prices were also helping support a recovery in domestic activity.

Global confidence had improved and while that was "encouraging", Bollard said financial market sentiment was still fragile and there were still risks for the global outlook.

The easing in global monetary policy and a rising appetite for risk had seen a "marked appreciation" in the New Zealand dollar.

"While helping contain inflation, the high dollar is detrimental to the tradeable sector, undermines GDP growth and inhibits rebalancing in the economy," Bollard said.

"Sustained strength in the New Zealand dollar would reduce the need for future increases in the OCR," he said.

The Reserve Bank says the risk of a significant worsening in the global economy had eased since the December Monetary Policy statement.

Earlier fears that the European sovereign debt crisis would badly affect the New Zealand economy had eased after action by central banks in Europe.

The Reserve Bank's projections show quarterly economic growth of 0.6 for both the December 2011 and March 2012 quarters, picking up gradually to 1 per cent in the December quarter this year.

The projections also show annual inflation tracking well under 2 per cent this year and at 1.5 per cent by March 2013.

The projections also assume a modest fall in the New Zealand dollar over the next few years. If that did not happen the bank would see less need to raise the official cash rate through that time. The trade-weighted index is projected to fall from 72.5 now to 71.2 by March next year
 

Mortgage applications at 7-year high

7th March 2012

Source: Stuff Business Day

New Zealanders are applying for mortgages in greater numbers than at any time in the last seven years.

Latest statistics from credit reporting bureau Veda show more applications for mortgages were made in the hot property buying period of December, January and February than at any time since 2005.

Applications for this three-month period reached their lowest in 2009 in the wake of the Global Finance Crisis.

That trend has now reversed and new records are being set, Veda says.

''We know the Auckland property market is heating up and the rest of the country will follow, but these statistics tell us what is coming down the track - there is a lot more heat in the market and interest is well above pre-GFC levels," managing director John Roberts said.

As part of the mortgage application process, lenders obtain a credit report, and Veda data shows a 23 per cent increase in applications for the December to February period compared with the same period the previous year.

When the month of February is compared with February 2011, applications are up 29.1 per cent.

Generation Y is leading the increase in applicants with a rise of 36.6 per cent, but off low numbers, Veda said. Applications from Generation Xers are up 34.6 per cent February-on-February, while Baby Boomer applications increased by 22.0 per cent.

Veda statistics show a cooling in interest for hire purchase and personal loans while applications for credit cards are up slightly.

"A home is still king for Kiwis and we can see this in the statistics,'' Roberts said. ''New Zealanders will still borrow to get into a home, but they are exercising caution in terms of other borrowing tools."

Reserve Bank tipped to leave rates alone

5th March 2012

Source: Stuff Business Day

Interest rates are likely to remain on hold this week, and for most of the year, despite signs of an improving outlook both here and around the world.

Reserve Bank governor Alan Bollard is widely expected to leave the official cash rate (OCR) at 2.5 per cent, where is has been for almost 12 months, and give signals that it may not be changed this year.

Economists will pay close attention to the wording of the statement to predict the Reserve Bank's next move.

In January there was speculation that interest rates would be cut from the current record low, amid fears of a renewed financial crisis which would send bank funding rates soaring.

While the economic outlook has generally improved in the six weeks since the bank's last statement, reducing the chance of rate cuts, most market watchers expect the rate to remain on hold until December, and possibly into 2013.

"The inflation picture looks much friendlier than it did a few months ago, and an unexpected surge in the exchange rate has further mitigated the need for policy tightening any time soon," Westpac chief economist Dominick Stephens said, predicting that the Reserve bank's Monetary Policy Statement would signal that interest rates would begin increasing in December.

In late January Bollard, who is set to stand down in September, made comments that he was comfortable with market pricing which suggested interest rates would stay on hold until next year, as he acknowledged the Canterbury Earthquake rebuild was likely to be delayed.

In recent weeks credit markets have been raising the prospect of an interest rate increase in December, as the outlook improved.

ASB chief economist Nick Tuffley said there had been some signs of a pickup in domestic confidence, while the risk of a global financial meltdown were easing.

Cameron Bagrie, chief economist at ANZ, said the European situation appeared to be improving, but key issues remained.

"Let's not confuse an improving outlook with saying the global economy is on a firm footing, because across the European financial system you've fixed the liquidity concerns, but you haven't addressed the fundamental issue of solvency."

Bagrie said in the six weeks since the last OCR review any suggestion that interest rates would be cut further appeared to have been shelved. But while interest rates were almost certain to increase eventually, there was no clear signal whether that would be at the end of this year or some time in early 2013.

"Officially our call is December, but that's basically just an indication that it's a while away and we don't really want to talk about it right now, and I expect the Reserve Bank to say something similar."

Your dream home: Buying vs building

5th March 2012

Source: Stuff.co.nz

As New Zealanders sleep, sordid visions flit through their fevered dreams.

Sturdy, strong walls that go all the way down. Mysterious recesses, hidden deep within vaulted ceilings. Luscious parquet flooring, firmly reassuring beneath the feet.

Home ownership has long been the New Zealand dream, and many of us are turning that fantasy into reality.

According to Reserve Bank stats, the number of home loan approvals in the past year was almost 5 per cent higher than the previous year, and almost 7000 made new applications in one week recently.

Although residential housing construction has been subdued in both New Zealand and Australia since the global financial crisis, housing consents here rose 8.3 per cent in January.

Assuming you can elbow your way through the crowded property market, what price is worth paying for the perfect house of your dreams?

To build, or not to build – that is the question.

Buy an existing home and the choices range from scungy "DIY dream" do-ups to pricey modern houses that just fall short of the dream.

Build, and you can have an architect-designed house customised to your life, or settle for a bog-standard piece of brick'n'tile suburbia.

Each choice has its own unique pros and cons. But before getting too caught up with the nitty-gritty, let's get the most important question out of the way:

IS THE PRICE RIGHT?

Buying old stuff is almost always cheaper than buying new stuff. But plenty of people are happy to pay a premium for the house of their dreams, so let's see how big the gap really is.

Comparing apples with apples gets a little tricky here, so for the sake of simplicity we'll stick to three-bedroom houses.

About half the cost of starting from scratch is the bare land.

That's out of your control to some extent, but building costs – which vary by at least $100,000 – aren't.

According to the Department of Building and Housing's handy calculator, a standard 150-square-metre three-bedroom house costs an average $268,050 to build in Auckland, as of July 2011.

The cost efficiencies and pre-planned convenience of cheap and cheerful "group homes", as advertised by a plethora of catchy TV jingles, knock a whopping 21 per cent margin off that price.

That estimate is supported by real quotes from the likes of Jennian and Signature Homes, which offer some new three-bedroom homes as cheap as $210,000.

On the other side of the coin, an architecturally designed dream house is likely to add 20 per cent onto the building bill, pushing the price up into the $300,000s.

"That's where most people's first associations are formed," Pamela Bell says ruefully.Somewhere in between the two lies the road less travelled: prefabricated housing. For many, this conjures memories of cheap, uncomfortable classrooms perched atop wooden piles on the school rugby field.

As chief executive of the industry organisation Prefab NZ, Bell is on a mission to change people's perception.

"It's not the cheap flimsy mass-standardisation of last century," she says. The term actually covers anything from small pre-nailed panels to fully assembled transportable houses, all of which are built indoors.

But enough prelude – what's the price like? A larger three-bedroom transportable costs between $250,000 and $300,000, though that varies hugely.

Bulk production creates some economies of scale, Bell says, but the real advantage is quality, not cost effectiveness.

To recap – buying an existing house is generally cheapest, followed by group built homes, prefabs and finally bespoke designs.

But that's not the end of the debate.

LOCATION, LOCATION, LOCATION

Want to choose exactly where to live, or be destined to a sad existence in the wop-wops, far from the realms of polite civilisation?

The advantage of buying is that you can usually get a property in a better location, says Andrew King, president of the New Zealand Property Investors' Federation.

"You can get closer to the city, where there aren't a lot of sections."

If you're building, you'd need to be pretty jammy to get a prime inner-city block, or even into a desirable suburb. You're more likely to find a subdivision or somewhere further from the city limits – which may suit some people.

But the obvious problem with building in a new area is that you don't know what the neighbourhood will be like.

You also don't know how ugly your neighbours' houses might be, or whether they are going to plonk them down right in front of your million-dollar view.

Buying wins this round.

PERSONALISATION

Everyone is a unique and individual snowflake. These days, most buyers turn their noses up at standardised floorplans, and even the budget house companies are offering some ability to tweak the designs.

That's the benefit of building, says ANZ's head of mortgages Sarah Berry – you can decide on every little detail without having to compromise, other than on price.

Yes, that means you get to direct the feng shui of the living spaces for optimal energy flow, and select the perfect shade of puce to stucco the walls with.

"You don't have to worry about any historical problems a house may have, and there's no need for renovations", Berry says.

But if you buy, it's going to take a fair bit of hunting to find your dream home, and even then it may well need some fine-tuning to get it perfect, which invariably adds up to more than you planned to spend.

MAINTENANCE

As a seasoned property investor, King knows all too well about the time and money spent on maintenance and repairs. One of the main advantages with building, he says, is you don't have to actually do anything to the house for ages.

All the fittings, paint jobs and assorted accoutrements are brand spanking new, and theoretically won't require replacing for a good while.

But an existing house – depending on its state of disrepair – might take a little more loving and dollars to keep things running smoothly.

PEACE OF MIND

Transitioning to home ownership can be stressful, but no-one wants premature grey hairs, rising blood pressure and stomach ulcers.

Berry reckons buying a home is probably the easier path to start with.

"It's usually a much faster process between finding a property and moving in", she says.

During a build, you'll have to deal with other stresses such as "managing contractors", as Berry tactfully puts it. Or as others might say, bloody hopeless builders.

New houses are renowned for blowing out past budget and past time frame.

If you want a degree of certainty, Berry suggests fixed-price contracts, which have a set price for labour and materials.

But the protracted and often painful building process is where prefabs start to come into their own.

"The thing that I believe the group builders and the prefabricated home businesses can offer is that certainty", Prefab NZ's Bell says. "Known cost, known time frame, known design."

She reckons Lockwood Homes, which is one of New Zealand's oldest prefab builders, slashes build times in two by using prefab techniques.

Another Kiwi prefab company, Habode, boasts 30 to 60 per cent faster build times.

And the final factor that can add to the stress of building is landscaping.

Buy an existing house, and you get an assortment of trees and shrubbery for free. Build on a bare block, and it's going to be years before you get the privacy or shade you might need.

CHOOSING YOUR CHIPPY

To avoid such drama, your company or builder has to be trustworthy, and the best way to determine that is on past form. If you're looking at group housing or prefab, which use standard designs, visiting a showhome is a must. Do your due diligence, and make sure there are no horror stories.

If you're hiring an independent builder, be even more thorough. Consumer Build, a collaboration between Consumer NZ and the DBH, suggests inviting at least three builders to tender. Make sure they are licensed on the DBH website, and be sure to talk to past customers or ask to see examples of their work.

And always be wary of going straight for the lowball quote – you get what you pay for.

DIY DREAMIN'

Back in 1986, King jumped head first into home ownership and property investment.

He bought a couple of one-bedroom do-ups, and after applying a fair bit of elbow grease, boosted their rental income from $90 to $140.

King is of the mind that for first-home buyers, getting a slightly shabbier home and adding value to it isn't a bad way to start out.

"It means you can get into an area or type of property which you perhaps couldn't afford if it was completely done up or brand new," he says.

Look out for a house that has good bones and a good layout, but perhaps has an ugly garden, needs a lick of paint or some fresh carpet.

"Those are the kind of things that can add a lot of value."

Put your own "sweat equity" in rather than hiring contractors, and you increase the value even further.

There's no clear winner in the buy vs build debate. If you're keen to keep the mortgage to a minimum and willing to put in some hard work, buying is for you.

But for those determined to build the home of their dreams, bespoke homes aren't the only option – building doesn't have to cost a bomb.

Plan to save city's historic buildings

2nd March 2012

Source: The Southland Times

Invercargill City Council has a masterplan to select a handful of the most historical buildings in the city and have them brought up to new building code standards, with the First Church on top of the list, Mayor Tim Shadbolt says.

However, it is unclear if the water tower will be among them.

Invercargill's well-known water tower was closed to the public last month because of quake-safety concerns, with speculation rife in recent weeks that it will never be reopened to the public again.

Mr Shadbolt said it was too early to tell.

"It will never be opened again in its present condition, but I can't say it will never be opened again."

The Government will announce in coming months the standards old buildings will have to be raised to. When that happened, the city council would liaise with community groups to identify about five or six of the most "iconic" heritage buildings in the city, Mr Shadbolt said.

"We will probably start with the First Church and work our way down, try and pick out the best, and maybe there will be some community funding to protect those icons. We will concentrate our efforts on restoring them [to the new building standards]."

It was possible the water tower could be one of those buildings, he said.

The future of the historical buildings in Invercargill that were not selected for the building upgrade work would depend largely on cost. If the Government decided all buildings had to be brought up to 66 per cent of the current building code, or higher, the costs could be great.

Council water services manager Alister Murray reiterated yesterday that it was too early to say what the future of the water tower was.

The 113-year-old water tower was a "great example" of those buildings considered to be at risk if an earthquake struck because it was an unreinforced masonry structure.

A preliminary engineering assessment would be carried out on the tower in several weeks and a full engineering report would follow in several months, Mr Murray said. It was likely the tower would need a "considerable amount of work" before consideration was given to opening it to the public again.

Built in 1889, the New Zealand Historic Places Trust-listed tower is a noted city landmark and features in many postcards and images of Invercargill.

City couple Noel and Hilary Atley spent a night in the "tower of love" in 2010 after winning a Trade Me auction for a Venture Southland promotion.

Mrs Atley said yesterday she had felt safe in thetower and hoped money could be found to have it strengthened.

It would be a shame if the public were not allowed back in because it was a fabulous view from the top of the 40-metre tower, she said.

NZ Property Report

2nd March 2012

Source: realestate.co.nz 

NZ Property Report – February 2012

Farm, lifestyle property sales up

29th February 2012

Source: Otago Daily Times

Farm sales for the three months ended January were 61.6% higher than those in the corresponding period last year, figures released by the Real Estate Institute of New Zealand (REINZ) show.

There were 354 farm sales in the three-month-period, compared with 219 sales in the three months to January 2011. A total of 1231 farms were sold in the year to January 2012, the highest number on an annual basis since June 2009.

There was an increasing shortage of quality properties for sale as demand continued to rise on the back of very good farming conditions and improving farmer confidence, REINZ rural market spokesman Brian Peacocke said.

Even though demand was rising, buyers remained cautious and conservative in their price expectations and were unwilling to overpay.

"Because of the very good farming conditions, sellers of lesser-quality properties are becoming unwilling to meet the market on price and are content to sit tight in the expectation that farm prices will eventually rise to meet their price point rather than the other way around," Mr Peacocke said.

The median price per hectare for all farms sold in the three months to January was $20,299, a slight fall from $20,445 for the three moths ended December 2011 and down $918 per hectare on the $21,217 recorded for the three months to January 2011.

In Otago, there were 29 sales in the three months to January this year, up from 16 in the corresponding period last year and 12 the previous year.

The lifestyle property market also saw a 25% increase nationally in sales in the three months to January 2012, compared with January 2011.

There was a "solid" increase in the number of lifestyle property sales, particularly compared with the corresponding time last year. However, rising seller expectations on price and an emerging shortage in good-quality properties were likely to constrain the market in the near term, he said.

Interest in properties up slightly

29th February 2012

Source: Otago Daily Times

The year has got off to a "positive start" in terms of properties, the latest Queenstown Real Estate sales report shows. 

Real Estate Institute of New Zealand Queenstown spokesman Kelvin Collins said a 950sq m property at Queenstown Hill sold for $5.25 million, the highest price for a house in the resort for four years. 

Two new houses on a lakefront section on Frankton Rd also sold for more than $2 million each. One of those contracts was negotiated early in the year but only recently went unconditional. 

Mr Collins said the sales were a reflection of buyer inquiry "at the top end of the market" from both offshore and northern New Zealand residents. 

January had also shown an increase in sales and value compared with the corresponding month last year. 

"Real estate agents are reporting good buyer inquiry, although it is harder to get offers together with seller expectations above current buyer interest levels. 

"The most active sector is still first home buyers and most banks have relaxed lending criteria making it easier for people renting to consider home ownership," he said.

Aussie online commercial property traffic diverted to NZ

27th February 2012

Source: NZ Herald

Realestate.co.nz has negotiated a partnership deal with Australian online real estate portal REA Group, which will see Australian investors interested in New Zealand commercial property directed to the New Zealand company's website.

Effective from the end of this month, REA Group, operator of the Australian sites Realestate.com.au and Realcommercial.com.au, will cease to operate the specialist New Zealand version of its website, Realcommercial.co.nz

Australians will now be directed to the new Realestate.co.nz website, Primecommercial.co.nz

Alistair Helm, CEO of Realestate.co.nz, says the partnership is a natural alignment with the Australian site of Realcommercial.com.au, which regularly receives more than 700,000 visitors per month. "All these visitors will now be exposed to the link to New Zealand listings on Primecommercial.co.nz," he says.

"The number one overseas market for visitors to the Primecommercial.co.nz site is Australia, with Australian visitors representing one in 12 of all traffic over the past year, and we expect that interest to grow significantly in the next year."

Primecommercial.co.nz was launched two years ago as a dedicated commercial property website, featuring more than 26,000 listings of property for sale or lease.

Kiwis back in market for homes, say agents

27th February 2012

Source: NZ Herald

A surge in the number of people applying for mortgages last month is further evidence New Zealanders are back buying property, say real estate experts.

Credit bureau Veda has released figures which show a 25 per cent jump in the number of mortgage applications last month compared to January 2011.

Banks and other lenders obtain a credit report and data from Veda as part of the mortgage application process.

The figures come after January statistics from the Real Estate Institute of New Zealand (REINZ) which showed residential house sales grew by 25 per cent compared to the same time last year.

Veda managing director John Roberts said there was a sense that people had accepted a still-struggling economy as the "new normal".

"They just have to get on with their lives ... this is good for New Zealanders and it is good for the economy."

When broken into generational bands, the Veda data shows younger and first-time house buyers are back entering the property market.

January saw a 39 per cent increase in Gen Y (under 28) mortgage applications, and Gen X (28-43) applicants were up by 29 per cent.

Applications by Baby Boomers grew by 18 per cent.

BNZ chief economist Tony Alexander said he would expect house sales to continue to grow this year given low interest rates were set to continue.

New Zealanders - particularly the young - were "getting on with their lives", he said.

"A lot of people have put their lives on hold as quite naturally, they've looked at what's been happening around the world and gone, 'I'm just a bit uncertain, we'll see what happens'."

REINZ chief executive Helen O'Sullivan said prices were relatively stable, broadly speaking.

However, she said longer-term prices could only go up without more properties being built, a shortage that would be felt particularly in Auckland.

"We would love to see some more product being built.

"If you look at the consent figures for the last three years, I think it's around 60 per cent of the long-run average."

Barfoot & Thompson managing director Peter Thompson said prices in Auckland could see a slight increase of around 2-5 per cent over the next 12 months.

"I think people have finally accepted you've got to move on ... there were a lot of tough years. And it is still tough, let's be realistic, but there is movement."

Veda's data also showed that while applications for hire purchase and personal loans continue to fall, credit card applications increased by 13.95 per cent in January.

House hunting
* 25 per cent increase in mortgage applications last month compared to January 2011.
* 39 per cent increase in applications by those in Gen Y.
* 29 per cent jump in applications by those in Gen X. 

Proposed rates rise cut to 4.71pc

23rd February 2012

Source: The Southland Times

The Invercargill City Council's initial prediction of a 7.19 per cent rates increase for the next financial year has been slashed to 4.71 per cent through cost-cutting measures.

The news will be welcomed by ratepayers struggling to pay their mortgages.

It comes just weeks after a 950-signature petition was handed to the council by residents objecting to continual rates rises being imposed despite falling property values.

The council last month signalled a 7.19 per cent rates rise in its draft budget for 2012-13, but asked senior council staff to try to cut the figure to 5 per cent.

Staff slashed more than $1 million off the draft budget to cut the rates rise to 4.75 per cent, and city councillors yesterday shaved more off to get an end figure of 4.71 per cent.

A report by the council's finance director, Dean Johnston, at yesterday's extraordinary finance and policy committee meeting, showed the cost-cutting came in many forms. It included the council slashing its parks budget by about $400,000, including ditching plans for another $130,000 Exeloo toilet in Queens Park.

The council would also spend $300,000 less than anticipated in interest repayments on borrowed money, thanks to interest rates being lower than expected.

Another $250,000 was being saved in council salary payments, in part through the council not replacing leaving staff, while an error in the library budget, in which spending of $240,000 was included twice, had been corrected, meaning a $240,000 saving in that area.

Though the revised budget resulted in an overall reduction in council spending of more than $1m, there was increased spending in other areas, including $100,000 to appoint a health and safety officer.

The council also agreed to a Regional Heritage Committee request for an extra $12 per ratepayer to help in redevelopment of the Southland Museum and Art Gallery, adding nearly $292,000 to the rates draw. However, this payment would be imposed on city ratepayers only if the Gore and Southland district councils did the same.

Deputy Mayor Jackie Kruger said the public would in April be invited to make submissions on the draft rates increase, with a public hearing scheduled for May before the final figure was decided.

To fix or to float? That is the question

21st February 2012

Source: Stuff Business Day

OPINION: Home owners with mortgages may have noticed that over the past month, bank fixed lending rates have come down to the point where out to three years the interest rates are not too much above current floating mortgage rates, writes Tony Alexander this week.

For instance, at the BNZ our floating rate is 5.74 per cent (Total Money product) whereas the three-year fixed rate is 6.15 per cent. That gap of just 0.41 per cent compares with a gap of 1.4 per cent in November and is the smallest since March 2009.

Between floating and fixing for two years at 5.79 per cent, the gap is almost nothing – 0.05 per cent. In November this difference was 0.86 per cent and the latest gap is the smallest since May 2009.

So is now the time to fix? To answer that we must consider a few things. First, is it likely that floating interest rates will fall soon? No. Bank floating rate funding costs have risen in recent months because of tightness in European banking markets – to the point that in Australia, banks have just increased their floating mortgage rates without the Reserve Bank of Australia having changed its cash rate.

New Zealand economic growth is weak, but acceleration is likely later this year. So the chances that our central bank will feel they need to ease again are low.

Are floating rates likely to jump soon? No. Growth prospects for New Zealand are still fairly muted and risks abound overseas. But floating rises are likely early next year and could easily occur to a small extent before the year is out.

Are fixed interest rates likely to fall further? One cannot rule out some competitive actions by lenders, but internationally, investors are starting to take a glass-half-full view of things. The United States economic data have been reasonable recently, the Australian central bank failed to cut interest rates last week as expected and few analysts now expect any further easing; things are looking less dire in Europe, and there is increasing questioning of the US Federal Reserve's forecast that it won't raise its cash rate until 2015.

The chances are that fixed interest rates have bottomed.

Then there is the comment I was making about a year ago with regard to what would drag me away from sitting on floating. I wrote that I would fix if presented with a two-year fixed rate at 6 per cent or a three-year fixed rate at 6.25 per cent. I can now get both.

Personally I like a bit of certainty in my life so I would opt for the three-year rate in expectation of the floating rate rising above it within about one year. At a minimum, however, I would take the two-year rate as I get rate certainty for two years in an environment where floating rates are highly unlikely to fall. It's a gimme.Therefore, if I were a borrower what would I do at the moment? I would switch from floating into either a two-year or three-year fixed rate.

But it pays to remember that we have been in this situation before and suddenly things have gone bad in Europe and worries about global growth have sent wholesale interest rates plummeting. Could that happen again? Not to the same degree given that compared with June last year, when this last happened, wholesale interest rates are much lower. So scope for declines is less.

As well, we are three years down the track from the global recession ending and while big problems remain, there are more positive signs than before.

Will we see a repeat of March 2009 when my call to fix helped propel the three-year fixed rate up almost 1 per cent in a fortnight? No, because most people seem happy floating and are not fearful of interest rates jumping up.

The rise of Arrowtown

16th February 2012

Source: Mountain Scene

Arrowtown real estate is now dearer than Queens­­­town due to a dwindling supply of sections. 

Local agent Richard Newman, who’s witnessed Arrowtown’s phenomenal growth during the past 20 years, is concerned it’s now at the crossroads. 

In 1992, he notes sections were selling for $40,000. 

Their value has increased sevenfold, Newman says. 

Nowadays, hardly any bare sections are left and those ones are very dear, he says. 

Six sold last year, for an average $352,000, and three the year before. 

“Back in the late ’90s, early 2000s, we were selling 15 to 20 sections a month.” 

Three subdivisions were then on the go – Dawsonvale, Dennison Estate and Adamson. 

Arrowtown was touted as New Zealand’s fastest growing town – the 2006 census recorded a 27.1 per cent population rise in the previous five years. 

During the past 10 years, however, there’s only been Jim Boult’s Butel Park, David Broomfield’s Chartres Green and the exclusive Advance Terrace extension to the long-running Adamson subdivision, where a section recently sold for $680,000. 

Newman is adamant that the controversial Arrowtown South subdivision, which is in the hands of the Environment Court, has to go ahead. 

It would provide 200-plus affordable sections during the next 10 years, Newman says. 

“Young families can’t move into the town because it’s unaffordable. If this NIMBY [‘not in my back­­yard’] element stops growth and development, the town will die. 

“There won’t be a school in 15 years’ time. 

“Arrowtown’s going to become another Aspen because if you lock it up, the prices go up.” 

If Arrowtown South doesn’t proceed, Newman predicts there’ll be pressure to allow infill housing – compromising the size of sections – in the town’s historic zone. 

“The very thing that these people are trying to preserve – the heritage of the town – will backfire on them because you’re going to get infill. 

“Already there is the precedent set of people cutting sections when they shouldn’t have been able to.” 

As an alternative, Newman says some out-of-towners, for whom money’s no object, are buying existing houses, knocking them down and building new ones. 

This will only further inflate prices, Newman comments. 

Property prices up in January

14th February 2012

Source: Stuff Business Day

Residential property prices continued to climb in the year to January, with houses selling last month for 2.7 per cent more nationally than a year earlier, according to the latest sales data from property company QV.

House prices in Auckland were up 5.1 per cent on the same time last year and 1.9 per cent above the market peak. QV research director Jonno Ingerson said this was likely to be due to a lack of supply, and a shortage of desirable and well presented properties for sale.

The average sale price in Auckland City over the past three months was $610,760, with an average of $579,246 on the North Shore, $403,632 in Waitakere and $454,749 in Manukau.

In Wellington, property prices were up just 0.3 per cent from a year earlier at $500,063 on average.

In Christchurch, properties in good condition after the earthquakes remained in demand. On average prices were up 3.7 per cent from a year earlier to $377,040.

Hamilton prices were almost stable last month, up only half a per cent from January 2011 at $343,442. Tauranga property prices rose 1.1 per cent in the year to $392,814, but remain 10.9 per cent below the 2007 market peak. Dunedin prices lifted 3.4 per cent in the year to January, at $272,657 on average.

"There appears to be a little more market activity since the New Year, with signs that decisions made over the holiday break are now being put into action. However potential buyers remain cautious and calculated and are often unwilling to commit quickly," Ingerson said.

Some provincial areas saw prices slide, with Rotorua houses selling at 3.4 per cent less than a year earlier at an average of $259,838. Gisborne prices fell 2.6 per cent to an average of $249,638. In Wanganui, house prices fell 5.6 per cent in the year to January to an average of $205,490.

Palmerston North property prices were flat, declining 0.1 per cent to $286,709 on average.

Building consents granted for 13,662 new dwellings in 2011, lowest level in 46 year series history, Stats NZ figures show

10th February 2012

Source: interest.co.nz

There were fewer building consents granted for new dwellings in 2011 than in any calendar year in 46 years, figures released by Statistics New Zealand show.

There were building consents granted for 13,662 new dwellings in the 12 months to December 31, down 12.4% on the the year to December 2010, and the lowest for a December year since the series began in 1965, Stats NZ said.

That included 1,156 consents for apartment units, which was up 23% from 2010. Excluding apartments there were 12,506 building consents granted for dwellings through 2011, down 14.7% from the year before.

Stats NZ said there was NZ$4.925 billion worth of residential building work in 2011, down 12% from 2010 to its lowest level for a calendar year in 10 years.

Up in December

Figures showed building consents issued in the December 2011 month were up 13% to 1,127.

"However, the number remains at a low level. Figures for December 2010 were the lowest recorded for a December month in the 46-year history of the series," Stats NZ said.

"After seasonal fluctuations are removed, the number of approved new dwellings, including apartments, shows a rise of 2.1 percent in December 2011. Excluding apartments, there was a small decrease of 0.2 percent. These movements follow several months of volatility," Stats NZ said.

"Trend numbers for dwelling approvals, both including and excluding apartments, show a rise for the nine months to December 2011, but the rate of increase is easing. Trend figures, particularly for the latest months, may be revised whenever an additional month is added to the series," it said.

The 13 percent national increase in dwelling approval numbers, for the December 2011 month compared with December 2010, was concentrated in Auckland, Wellington, and Canterbury, Stats NZ said. Numbers fell in most of the other 13 regions. The main changes in regional dwelling approval numbers, compared with December 2010, were:

• Auckland, up 99 (51 percent) to 292
• Wellington, up 58 (45 percent) to 188
• Canterbury, up 32 (19 percent) to 199
• Bay of Plenty, down 15 (25 percent) to 44
• Manawatu-Wanganui, down 14 (29 percent) to 34.

Auckland and Wellington had the largest regional increases, and Canterbury is yet to begin the bulk of its earthquake-related rebuild. As a result, the North Island contributed most to the increase in national dwelling approvals, Stats NZ said:

• North Island, up 105 (15 percent) to 786

• South Island, up 28 (9 percent) to 341.

Year ended December 2011

For 2011 compared with 2010, nationally, there was an overall decrease of 1,940 new dwelling approvals. Canterbury had the largest regional decrease, down 426 new dwellings to 2,395, while Auckland had the largest regional increase, up 169 new dwellings to 3,772, Stats NZ said.

Remains weak

ASB economist Jane Turner said residential building consent issuance remained weak, with seasonally-adjusted dwelling consents lifting just 2.1% over December, failing to recover the previous month’s 6.2% decline.

"It remains too soon to see an increase in consents on the back of earthquake reconstruction activity. We currently expect to see this lift come through around the second half of 2012, although continued seismic activity inCanterbury could further delay rebuilding," Turner said.

"Meanwhile, we expect underlying demand for construction throughout the rest of the country to increase as the housing market remains tight, particularly inAuckland.  Over the third quarter of 2011, we had started to see tentative signs of improving construction demand.  However, the weakness in consent issuance over the past two months suggests this momentum may be fading," she said.

Non-residential consents

There continued to be a gradual pick-up in private non-residential investment. Encouragingly, consent issuance for office buildings continued to improve in December, Turner said.

"While consent issuance for retail outlets and restaurants declined, this followed a strong result over the previous month. Nonetheless, the waning in commercial construction intentions in recent business confidence surveys suggests a degree of caution remains amongst businesses," she said.

"The majority of earthquake-related consents in December were for non-residential buildings, which totalled NZ$23 million. Of the remaining earthquake-related consents, NZ$5 million was for residential work and NZ$1 million was for non-building construction."

OCR on hold to end of 2012 at least

"Consent issuance remains weak and continues to point to a very weak construction outlook.  The RBNZ now expects that earthquake reconstruction activity will not pick up in earnest until 2013.  Given the ongoing delays to the reconstruction process, continued uncertainty from offshore and very subdued inflation pressures there is very little urgency to increase the OCR," Turner said.

"We continue to expect the RBNZ will leave the OCR on hold until at least the end of this year," she said.

Deep south beats rest of nation in jobless

10th February 2012

Source: The Southland Times

Southland and Otago's unemployment remains well below the national average.

Statistics New Zealand's (SNZ) December quarter figures released yesterday shows the nationaljobless rate was 6.3 per cent. In Southland, the rate is 5.1 per cent.

SNZ's household labour force survey also shows Southland's employment has more than kept pace with population growth.

The number of people in the region's estimated labour force grew 2500 in the quarter to 59,000. The region's estimated working-age population was 79,800.

The population in work rose from 69.2 per cent in 2010's December quarter to 71 per cent in 2011's final quarter, with 20,100 people not in the labour force. Those unemployed rose 300, or 0.3 per cent, to 3000, on the previous quarter.

Otago's unemployment rate was even lower, at 4.8 per cent. There were 6400 unemployed and the employment rate was 72.5 per cent of the working age population.

Nationally, the unemployment rate fell from 6.6 per cent to 6.3 per cent. There are 3000 more employed people in New Zealand, than in the previous quarter.

The number of employed people kept pace with the growth of the available labour force, SNZ said. But the employment rate – the percentage of the population in work – remained static at 63.9 per cent for the third consecutive quarter.

The Government's minister for employment, Stephen Joyce, lauded the steady progress shown.

Labour's employment spokesman, Su'a William Sio, said the employment rate was only just keeping up with the working age population's growth. He attacked the Government, saying it had failed to provide jobs for the young.

The survey calculated the figures through a representative sample of 15,000 households.

Houses for sale hit four-year low

1st February 2012

Source: Stuff Business Day

The number of homes for sale in New Zealand's three largest cities has fallen to a four-year low, data released today shows.

Realestate.co.nz's monthly NZ Property Report revealed that just 8542 new listings came on to the market across the country this January.

The number was up 3 per cent on the same time last year, but was not keeping up with buyer demand.

Realestate.co.nz chief executive, Alistair Helm, said that while January was always a slower month for new listings, strong sales in the main centres have pushed demand far ahead of supply, leading to the record low levels in inventory.

"The last three months has seen just over 30,000 new listings come on the market, which is equal to the same time period last year, yet sales are up 22 per cent.

"With three major cities leading the trend, the market has tightened even further in most regions across the country."

In January, Auckland's inventory would take 23.6 weeks to sell, below the long-term average. Wellington's inventory fell to 21.6 weeks and Christchurch to 21.7 weeks.

Nationally, overall inventory dropped to 36.4 weeks, which was down 25 per cent on the same month last year, and was well below the long-term average of 41 weeks.

The average asking price for homes again remained steady, down just 1 per cent at $417,740, which Helm said shows sellers were not stretching the price expectations of buyers yet.

"As has been the trend for months now, sellers continue to have the upper hand in the market, but the market is still setting the price," he said.

Surge in house building looming, say builders

1st February 2012

Source: The Southland Times

People are sick of waiting and are finally going ahead with house-building plans, builders say, as consents start to rise after the worst year for the industry since records began in 1965.

One building company, Lockwood, warns there could even be a "massive upturn" in home building in the next few years, after a slump since the global financial crisis hit in 2008, though it was too soon to say there was a sustainable recovery.

Nationally, home building consents jumped 13 per cent in December, compared with the dire figures for same month in 2010, but 2011 was still the worst year for the building sector for 46 years.

Economists said seasonally adjusted house-building consents rose only slightly between November and December, but building companies say the level of interest has been improving recently.

The Wellington region enjoyed a strong bounce in building consents in December after an extremely poor year.

Statistics New Zealand figures showed 188 consents were granted for the region in the month, up 45 per cent on the same month in 2010.

Wellington City Council noted a pre-Christmas rush for approvals for new homes, schools, supermarkets and some earthquake strengthening work. In total consents were worth $70 million for the month, compared with about $36m for the same month in 2010 a council spokesman said.

December home approvals included the planned apartment complex at Wellington's Overseas Passenger Terminal, with 76 luxury flats.

Simon Barber, of Wellington building company Barber Construction, said the housing market had become "a bit more positive" since the middle of December, with inquiry levels picking up.

"More people that have been kicking around with contracts parked up for six to 12 months are getting a bit more active," Barber said. "Personally, I'm seeing a bit more of a lift ... though it is a bit patchy."

There had been a lot of negativity in the past year about the global economic picture, but home buyers had decided that life goes on in New Zealand, they had not lost their jobs and interest rates were lower than ever.

"And it is time to get on with it. There is no point in delaying it," he said.

There had been a "remarkable amount of inquiry" from potential buyers in the first couple of weeks back from the Christmas holidays.

Bryce Heard, head of Rotorua-based Lockwood Homes, said it was "very hard to tell" if the housing market was improving but the company's forward projections were the best in three years.

"We are getting a bit of light out of places like Christchurch and Tauranga," Heard said.

"There are signs of recovery but it is far too early to cry success," Heard said.

Buyers had become sick of waiting because of the ongoing global financial worries and had recently come off the fence after keeping building plans on hold.

There were plenty of drivers to suggest a building boom in the next three to four years, he said.

There was a looming shortage of new homes, with many older homes needing to be bulldozed.

"There are large areas in rural and urban areas that are becoming slums."   

Lone submission opposes retirement village

31st January 2012

Source: The Southland Times

Only one opposing submission has come in so far for the proposed Bupa Care Services rest home for Invercargill.

The proposed $23 million retirement home, hospital and associated facilities in Racecourse Rd was publicly notified as a lodged consent with the Invercargill City Council on January 4, following two days of public meetings late last year.

The proposed village consists of 62 single-level retirement units, 100 beds within an aged care facility, a village community centre and 148 onsite carparks on four lots of land off the Ascot Park Racecourse.

A hairdresser, physio, whanau rooms and indoor recreation spaces have been included in the plan, with a maximum of 40 staff on site at one time.

Three access points from Racecourse Rd and one from Findlay Rd have been included in the proposal, which is closed to submissions on February 14.

The opposing submission from two residents in Racecourse Rd stated that noise and traffic safety were a concern and questioned whether the Council Traffic Management Plan addressed the issue sufficiently.

Their submission suggested a traffic island – similar to those outside Splash Palace and the Tweed and Leven streets intersections – preventing right hand turns at Racecourse Rd, which would deal with issues that could arise when people entered and exited the complex.

The submission also asked that any construction activity done outside ordinary work hours should be in consultation with neighbours. The residents who signed the submission stated that they would be speaking in support of their application at the public hearing on the retirement village later this year.

Invercargill City Council resource management officer Judith Christie said that she would be writing a report on the Bupa application and the public submissions after the closure date.

A hearing was expected to be scheduled for March, she said.

Property sales have clearly turned a corner

27th January 2012

Source: realestate.co.nz

The property market in NZ starts 2012 in better shape than it has for the past 5 years. It would not be too optimistic to say that the industry, certainly in terms of volume sales has turned a corner. Some parts turned that corner 6 months ago (notably Auckland) whilst some will take a few more months before witnessing this change.

In the 12 months of 2011 a total of 61, 269 properties were sold across the country as reported by the Real Estate Institute. This represented a modest 9% growth as compared to 2010. The word modest is most appropriate when the volume of sales is viewed against the perspective of the past 20 years.

20011 was much improved from both 2008 and 2010 which represented the lowest sales volumes of the past 20 years, barely struggling to reach half the sales volumes of the peak years of 2002 to 2007.

As ever 20/20 hindsight is a powerful tool and applying it now applies a clearer view on those heady days and reflect that this period was a bubble – one unlikely to be repeated for many years, if ever again.

What drove that bubble and created that frenetic pace of market activity?

A number of factors were conspicuous: the rise in investor market activity as the NZ economy grew through global growth and strong immigration, the banks were certainly relaxed about deposit requirements and other investment options showed far less appeal or tax or leverage advantage. That convergence of events lead to a virtuous cycle (depending on your perspective as many would argue a fateful and perilous cycle), whereby those on the treadmill of property ownership felt richer as asset values as a surrogate of property prices grew at a heady 10+% a year rate.

The important thing to see is that if this heady period is ignored as an aberration, the current sales levels still sits well below the levels of the market through the 1990′s. This is the validation to the proposition that the industry has turned a corner. Average annual sales through 1993 to 2001 was 78,000 a year – that means the current year up 9% vs 2010 is still down 22% from the average of the 90’s.

This perspective is seen even clearer when property sales are matched to the growing population of NZ and the number of houses. It makes logical sense that as the population grows, the housing stock must grow and thereby so must sales as people always need to relocate for the logical need of jobs, lifestyle, financial, schools, family etc.

Over the period from 1993 to 2001 the number of houses in NZ grew from just under 1.2 million to 1.37 million and has continued to grow (even allowing for the depressed construction market of the last 4 years) to around 1.55 million today – that is around 350,000 more houses in NZ today than there were at the beginning of the 90’s. Yet the volume of property sales are 22% less!

This conundrum is best visualised in the chart below which tracks the % of property sales on a moving annual total basis against the total number of properties in NZ.

The chart provides a further validation to the belief that property sales are likely to see growth in the coming years. The current rate of sale is 4% of all properties sold per year. The long term average for the past 20 years is 6%, during the 90’s the rate was 6.2%.

If the rate of sale were to return to the 90’s levels we would see a 56% rise in sales to 95,000. If we only saw a rise to the lowest point of the 90’s at 4.7% we would still see a rise in sales of 73,000 a rise of 19%.

Bollard hints low rate more long term

27th January 2012

Source: Stuff Business Day

Homeowners could enjoy low borrowing costs for months, with the Reserve Bank hinting the current low benchmark rate could be left in place indefinitely.

While most bank economists predict interest rates will eventually rise, and the move might still come as early as September, yesterday's statement indicated the bank is feeling no pressure to increase in the current conditions.

Reserve Bank Governor Alan Bollard warned banks could face higher borrowing costs this year, but yesterday's statement appears good news for mortgage holders. Average floating mortgage rates were 5.9 per cent in December, according to the Reserve Bank, while the average cost paid by borrowers is falling as thousands of Kiwi households move from fixed to floating rates.

The rates being offered are also falling, with ASB cutting its fixed rate mortgages by up to 0.2 per cent today, following a similar move by ANZ last week.

The fall reflects the belief that the current benchmark – previously viewed as too low to be sustained long term because it could stoke inflation – is increasingly being viewed as normal.

The official cash rate was slashed from 8.25 per cent to 2.5 per cent in 2008 and 2009, when New Zealand was in recession, the lowest level since it was introduced in 1999.

A proposed increase to 3 per cent in mid-2010 was reversed as an "insurance" measure following the Christchurch earthquake.

Since then, Bollard has signalled rate hikes were coming. However, yesterday's statement dropped reference to rates being held "for now" with the Reserve Bank comfortable about inflation.

The statement came hours after the United States Federal Reserve signalled it would keep its benchmark rate at the ultra low 0.25 per cent until 2014.

Several economists pushed out their predictions for when rates will increase, saying Bollard's wording suggested the bank believed the current rate was neutral rather than stimulatory.

ANZ, which had predicted interest rates increases "some time in the second half of 2012", yesterday forecast a December increase "at the earliest", and chief economist Cameron Bagrie said it could potentially come much later.

"I'm not ruling anything out at the moment," Bagrie said of the possibility of the current rate remaining in place until next year.

He predicted European Union governments would continue to "kick the can down the road" rather than confront the eurozone's continuing sovereign debt crisis, prolonging the global uncertainty which has made financial markets extremely volatile. "That being the case, interest rates [at current levels] could be here for a very long time".

BNZ senior economist Craig Ebert said that while he still expected interest rates would start to increase in September as inflation began to rise, "clearly the risks are shifting for something later and the backdrop is the huge uncertainty out there" in international funding markets.Yesterday's short statement from the Reserve Bank gave a generally upbeat assessment of the economy, noting that in the six weeks since its last statement international markets had stabilised slightly, commodity prices remained strong, and there was a gradual pickup in household spending and the housing market.

Westpac chief economist Dominick Stephens said Bollard's statement was a fairly explicit signal the increases would come later than June but Stephens believed gradually increasing house prices would prompt an increase in the official cash rate in September.

"They're rising rapidly in Auckland and they've recently begun rising elsewhere in New Zealand. The market is being stimulated by the current level of interest rates."

OCR unchanged at 2.5 percent

26th January 2012

Source: Reserve Bank of New Zealand

The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 2.5 percent.

Reserve Bank Governor Alan Bollard said: “Since the time of the DecemberStatement, 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 New Zealand dollar 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 and 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 percent.

“Given ongoing uncertainty around global conditions and the moderate pace of domestic demand, it remains prudent to keep the OCR on hold at 2.5 percent.”

NZ house sales climb 20pc

25th January 2012

OCR signals act as 'stimulus'

23rd January 2012

Source: Stuff Business Day

Signals that interest rates will not be raised for much of this year will continue to stimulate the economy, as homeowners roll off fixed-rate mortgages in droves, New Zealand's largest bank says.

The Reserve Bank is widely expected to leave the benchmark Official Cash Rate (OCR) unchanged at 2.5 per cent at its six-weekly review on Thursday, despite last week's shock fall in inflation bringing some calls for a cut.

Last Thursday, Statistics New Zealand revealed that the Consumer Price Index fell 0.3 per cent to 1.8 per cent in 2011, well below the 2.5 per cent the market was expecting, and in the lower half of the 1 to 3 per cent target band.

Cameron Bagrie, chief economist at ANZ, said the inflation figures gave the Reserve Bank more flexibility to reduce interest rates, but this tool should be held back in case the European financial crisis escalated.

Instead, a statement from the central bank this week could provide further passive stimulus.

The proportion of New Zealand mortgages on floating rates – which move almost exactly in line with changes in the OCR – had increased from 15 per cent to 60 per cent in four years.

ANZ estimates that around $48 billion in fixed-rate mortgages expire in 2012, much of which is likely to move on to lower floating-rate mortgages or short-term fixed rates if the bank signalled hikes were some time away.

"If the OCR is kept on hold for this year, then they're actually delivering monetary policy stimulus by doing nothing," Bagrie said.

The average floating rate mortgage carries an interest rate of 5.9 per cent, says the Reserve Bank, and the outlook for future increases is falling. Based on trading on iPredict, the Victoria University prediction exchange, there is a less than 25 per cent chance floating rates will hit 6.5 per cent this year, down from more than 50 per cent a fortnight ago.

While most mortgages due to come off fixed rates this year had been on terms of less than one year, Bagrie said some homeowners were still on five-year rates from before the global financial crisis with interest of more than 9 per cent.

ANZ estimates that in 2011, customers moving from fixed to floating-rate mortgages lowered the effective servicing costs of residential mortgages by $800 million, although much of this would have gone on to further principal repayments rather than additional spending.

"Monetary policy isn't just about tweaking the OCR every six weeks. It's about flagging what's happening in the future, and the fact the Reserve Bank's flagging that interest rates aren't going anywhere for some time is still loosening monetary policy."Bagrie said OCR cuts should be held in reserve for a "custard scenario" of European sovereign debt problems spilling into funding costs globally.

Westpac chief economist Dominick Stephens said an expected rise in construction costs meant pressure on inflation again later this year, although there was increased scope for a cut if needed.

"The European situation is desperately uncertain. If we get a bad outcome and it becomes obvious inflation was headed lower in New Zealand, there's now more comfort room to cut if needed."

Property buyers unsure: REINZ

20th January 2012

Source: Otago Daily Times

Overall demand for property in Queenstown has strengthened, but this has not yet translated into improved sales, with many prospective buyers still lacking the confidence to make decisions, the Real Estate Institute of New Zealand (REINZ) says.

The Wakatipu real estate sales report for December 2011 and the year prepared by REINZ spokesman Kelvin Collins said a two-tier market had evolved, with desirable property generally receiving multiple offers, reflecting increased values.

However, buyers are being hard on standard property, where there is a surplus of listings.

Mr Collins said a feature for the year was 66 properties selling for over $1 million, compared with 44 the previous year.

"December 2011 recorded 34 dwelling sales, compared with 39 dwelling sales for November 2011 and 40 for December 2010.

"December 2011 recorded seven section sales, compared with seven section sales for November 2011 and 12 for December 2010.

"The combined value of dwellings plus section sales for December 2011 was $24,516,000 and very similar to the value of sales in November 2011.

"The median sale price of dwellings for December 2011 was $565,000. This is an anomaly and reflects the limited sales activity of standard houses."

Last year, 455 residential properties sold, up 4% from 2010 sales of 436. The median price for 2011 was $520,000, up 5% on $496,000 in 2010.

Total sales value in 2011 was $285,930,000, compared with $260,064,000 in 2010.

Section sales for 2011 came to 127 at a median price of $265,000, similar to 2010's 121 sales at a median price of $271,000.

RBNZ hikes set to remain on hold after inflation slows

19th January 2012

Source: Stuff Business Day

Mortgage interest rates are likely to remain at near record lows for longer after inflation unexpectedly fell in the last three months of 2011.

Prices were a surprising 0.3 per cent lower in the December quarter - way below market expectations - largely due to a one-off fall in vegetable prices.

The result dragged annual inflation down to 1.8 per cent, well below economists' expectations of an increase between 2.2 and 2.4 per cent, and could further delay any hikes to interest rates to as far off as next year.

The current rate is comfortably within the Reserve Bank's inflation target band of 1 per cent to 3 per cent.

The fall in inflation is the first quarterly fall in the Consumers Price Index (CPI) since the December 2009 quarter and the largest fall since the December 2008 quarter.

Economists - already sceptical about the Reserve Bank's intentions to start raising interest rates from the middle of the year - are now pushing out their expectations for an interest rate increase further and perhaps into next year.

The Reserve Bank indicated in December that would start increase the official cash rate (OCR) in June from its emergency setting of 2.5 per cent.

The OCR is closely linked to the floating mortgage rate which ranged between 5.74 per cent and 6.99 per cent.

ASB still expects the Reserve Bank to leave the interest rates unchanged for the rest of the year, but that it may delay the first move till next year if the start of the Christchurch rebuild was not underway by June.

ANZ economists said the low rate of inflation afforded the Reserve Bank the option of cutting interest rates "should the global outlook worsen", though the hurdle to do so was high even amid signs that the New Zealand economic recovery was losing momentum.

Statistics said food prices were down 2.2 per cent, on the back of lower vegetable prices.

Prices manager Chris Pike said vegetable prices fell 25 per cent in the quarter, following a supply shortage the previous quarter.

"Basically, vegetable prices were higher than normal last winter, then fell to normal levels towards the end of the year. If vegetable prices had remained constant in the December 2011 quarter, the CPI would have risen 0.1 per cent."

Communication prices fell 3.5 per cent, reflecting lower internet charges and international phone calling rates.

Pike said prices in the household contents and services group dropped 1.5 per cent, due lower prices for furniture, kitchenware and appliances.

"There was more discounting in the December 2011 quarter than in the previous three months or in the final quarter of 2010," Pike said.Transport prices lifted 1.4 per cent, reflecting seasonally higher prices for international air transport.

Economists said inflation of prices was being kept down by the lingering strong dollar and a lack of consumer spending.

ASB economist Christina Leung said the high kiwi dollar over the second half of last year had allowed retailers to discount big-ticket items such as television and furniture, but the extent of the price drops in the lead up to Christmas was greater than changes in the exchange rate.

Package holidays and accommodation were also cheaper late last year at a time that they would normally be higher, Leung said.

With generally muted price increases there appeared to be little reason for the Reserve Bank to start worrying about inflation rising. In particular, "the bow wave of earthquake rebuild inflation has yet to appear".

ANZ said there was little evidence of traders charging premiums during the Rugby World Cup, with international airfares and accommodation costs not much higher than the usual seasonal increase, ANZ said.

Economic activity and the near-term inflation outlook appeared to be weaker than assumed by the Reserve Bank at its December update,.

But much of the downward pressure on prices may not persist and a number of costs increases could push inflation higher in the first quarter of this year than the 0.4 per cent forecast, ANZ said.

Economists at ANZ and ASB had tipped a 0.2 per cent increase in prices in the December quarter, while Westpac predicted a flat result.

The CPI rose 0.4 per cent in the September quarter, the lowest increase in inflation in five quarters and half the jump the market was expecting.

Annual inflation increased 4.6 per cent for the year to September, but this included the one off increase in the rate of GST in October 2010, which had now washed out of the annual figure.

December house sales up 20 pct

18th January 2012

Source: Stuff Business Day

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.

A fall in activity is typical in December due to the Christmas holiday period, and compared with November prices dropped $12,500 or 3.4 per cent.

''December has been a strong month for real estate sales in New Zealand, with this being the strongest level of transaction figures in December since 2007, and Auckland having its strongest December since 2006,'' Real Estate Institute chief executive Helen O'Sullivan said.

''While the number of transactions is rising, prices have eased back from last month's record highs, with some exceptions in parts of Auckland and the Canterbury/Westland region.''

The Manawatu/Wanganui region saw the biggest increase from December 2010 to December 2011 with sales up 45.8 per cent to 258 properties transacted, compared with 177 last year.

Prices only lifted in that period from $220,000 to $220,750. However, December's sales had slipped in both price and volume from November, when there were 275 sales at an average of $230,000.

Auckland sales were up 28 per cent from a year earlier to the highest number of sales seen since 2006. There were 1826 houses sold in Auckland last month compared with 1428 a year earlier, but this was down from 2266 sales in November.

Prices were up from December 2010, rising to $484,375 on average from $455,000. This was lighter than November's $490,000 average Auckland sale price.

In Wellington, property prices were down to $387,000 in December from $400,000 a year earlier, with slightly fewer sales as well at 577 transactions compared with 586 in December 2010.

''The Wellington region's sales volumes for December are something of a mixed bag with sizeable falls relative to both November 2011 and December 2010 in some parts of the region offset by noticeable increases in others,'' the institute commented in its report.

Hawke's Bay sales also slipped, falling to $271,750 with 164 sales in December from 169 sales at an average of $285,000 a year earlier.

In Taranaki, there were 148 houses sold in December, up from 104 in December 2010 yet down from 161 in November 2011. Prices were up last month to $285,000 on average from $272,500 in November and $268,000 in December 2010.In the Waikato/Bay of Plenty region, the number of sales was at 783 in December, up from 620 in December 201 but down slightly from 804 in November. Prices were down in December from a year earlier, at $305,000 from $315,000.

The Nelson/Malborough region saw a 28.3 per cent rise in sales for December to 204 properties at $331,500 on average from 159 sales at $327,000 a year earlier.

There were 787 houses sold in the Canterbury/Westland region in December, at an average of $325,000 compared to 637 at $305,000 in December 2010.

Central Otago Lakes district was the only region to see prices lift in December from November, up to $435,000 with 87 sales last month from 85 sales at an average of $405,000 in November. In December 2010 only 67 houses sold in the area, at an average price of $400,000.

Drop in real estate company numbers - except hoamz!

16th January 2012

Source: Otago Daily Times

The flat housing market which has gripped much of the country for the past two years has taken its toll on real estate companies in the southern region.

Figures from the New Zealand Real Estate Agents Authority showed in the year to November 16, 2011, eight real estate companies in Otago and Southland suspended their licences, and 88 companies nationwide had suspended their licences as of November 30, 2011.

There are 65 active company licences in Otago and Southland at present - 836 nationwide.

The licences allow companies to operate as a real estate agency, and at least one officer of the company must hold an agent's licence as an individual.

Real Estate Institute of New Zealand southern area spokeswoman Liz Nidd said the suspensions were mainly due to mergers and company director retirements.

In Wanaka alone, Mrs Nidd said she was aware of five real estate companies merging into two, and a smaller-scale merger had taken place in Dunedin.

"The market has had an effect on real estate companies.

"They've seen an opportunity to reduce overheads in what has been a difficult market."

Former REINZ Otago branch president Stephen Johnston said real estate licences were expensive to keep current, and many with licences who were not working in the industry at present were suspending them to keep costs down.

As of January 1, 2011, levies for licence holders were set at nearly $700 per annum. The annual fee for a suspended licence is $109.25.

Despite some real estate companies merging to cut costs, one Otago company is expanding.

Hoamz Otago Ltd has applied to the REAA registrar for an agent's licence to operate in Mosgiel.

Hoamz director Stephen Hebbend, of Invercargill, believed there had been a lot of growth in the Mosgiel market recently, and predicted a lot of future growth.

"We are testing the water, you could say. We will start quietly and build from there."

Twister clouds hail, snow and rain hit south

16th January 2012

 

DOUG FIELD/Fairfax NZ

TWIST AND SHOUT: A series of twister clouds that formed near Teretonga yesterday.

 

Twister clouds, snow, hail, heavy rain and chilly winds battered the south at the weekend in a reverse of last week's "big dry".

Source: The Southland Times

MetService forecaster Mads Naeraa said unstable weather conditions dominated the south yesterday but the cold air, snow and showers were expected to move away last night, with the warm, sunny weather the south had been experiencing for several weeks making a return.

Spectators watching the car racing at Teretonga were impressed by two funnel clouds that formed about noon yesterday.

A funnel cloud turned into a tornado if it touched the ground, Mr Naeraa said.

While the funnel clouds caused no problems, heavy rain in some parts of Southland had farmers on flood watch for parts of the weekend.

Environment Southland issued flood warnings for the Waikaia River on Friday night but by yesterday the water had receded.

A council spokeswoman said while further rain was forecast, it was not expected to cause any problems with Southland rivers.

Federated Farmers adverse events spokesman David Rose said he had not heard of any flood-related problems but the downpour had been "amazing" for farmers.

Mr Rose said while fine weather was on its way, the decent downpour had put moisture into the ground, which was great for grass growth.

He hoped the coming weeks would return to normal weather patterns – rain mixed with warm weather would be ideal.

"Farmers are very happy with the rain. A return to a more normal weather pattern I think everyone would enjoy," he said.

While the rain had farmers rejoicing, for others the cold snap had them questioning which season they were in, with much of Southland, Central Otago and the Queenstown Lakes District forced to rug up against the cold.

The mercury reached 11 degrees Celsius in Invercargill, and 13C in Gore and Queenstown yesterday.

Caltex Te Anau staff member Gill Sannazzaro said there was a dusting of snow on the lower mountains and thicker snow higher up. There was a light drizzle and it was windy and cold, she said.

"There's been so many people coming in in shorts and now they're all wrapped up in scarves and long jerseys," she said.

Environment Southland communications co-ordinator Michele Poole, on holiday in Arrowtown, said there was a little snow on the hills around Arrowtown and on the back of the Remarkables.

A BP Connect Queenstown staff member said there was a little snow around the mountains and while sunny it was also cloudy.

Constable Alan Johnston, of Te Anau, said the inclement weather had been well advertised and there had been no reports of trampers caught out by the snow in Fiordland.

Other emergency services also reported no weather-related problems.

MetService forecaster Nic Bonnette said showers would ease across Southland today, becoming fine tomorrow.

Temperatures were still expected to be low, with Invercargill predicted to hit 16C today, before climbing again to 19C tomorrow and 21C on Wednesday, she said.

Showers were also expected to clear in Central Otago last night with fine weather today and tomorrow, after heavy rain hit on Friday and Saturday.

Queenstown residents could expect 19C today, 21C tomorrow and 24C on Wednesday.Alexandra could expect a return to summer temperatures on Wednesday, when the mercury was expected to reach 29C, Ms Bonnette said.

 

Auckland home to NZ's least affordable houses

12th January 2012

Source: Stuff Business Day

Auckland is the least affordable region of New Zealand to buy a house, according to the latest home affordability report by Massey University.

Auckland homes stretched a further 5.8 per cent out of the reach of house hunters in the quarter to November 2011, while affordability improved in Central Otago Lakes, bumping it off the top spot.

On a national level, affordability dropped 1.9 per cent in the past quarter, and the national median house price went up by 3 per cent.

Report compiler Professor Bob Hargreaves from Massey University's School of Economics and Finance said in light of financial turmoil in Europe, it was surprising that house prices were increasing.

''However, very low mortgage interest rates combined with more relaxed lending criteria are combining to bring more buyers into the market and new construction is still at a very low ebb,'' he said.

He also noted that the New Zealand economy was insulated from the Europe crisis somewhat by its links with Australia and China.

''Our Aussie banks are pretty solid compared to some of those European ones.''

Despite the dip from the last quarter, homes were still more affordable across the board than in the same quarter in the previous year.

All 12 regions showed annual improvements, led by Wellington with 15 per cent, Waikato/Bay of Plenty with 13.7 per cent and Southland with 11.8 per cent.

But over the past quarter, just four of the 12 regions showed improvements; Otago/Lakes at 9.9 per cent, Waikato/Bay of Plenty at 4.0 per cent, Northland at 2.4 per cent, and Southland at 0.9 per cent.

Affordability deteriorated most dramatically in Hawke's Bay by 11.4 per cent, in Auckland by 5.8 per cent, in Manawatu/Wanganui by 4.8 per cent and in Wellington by 3.3 per cent.

The home affordability index, which is released each quarter, is calculated using the key drivers of interest rates, wages and house prices.

Hargreaves said the annual increase in affordability was explained by rising wages, dropping interest rates and softening house prices.

''That's probably why you got more first home buyers ... particularly with the low interest rates, they figure now is a good time to jump in.''

But he said the outlook for affordability was probably not going to improve, as interest rates would rise again in the long term.

''The economists are saying New Zealand house prices are overvalued, but the evidence is they're going up - and certainly in places like Auckland.''

Hopes rain will ease Southland drought

12th January 2012

Source: Southland Times

Environment Southland staff are gambling with mother nature and waiting on forecast rain before they declare an official water shortage in Southland.

Scientists and staff met yesterday to discuss if the council would override existing water consents and impose temporary water restrictions within the region.

Senior environmental technical officer Karl Erikson said predicted rainfall in coming days meant a water shortage response group was not needed yet. Staff would see what weather eventuated.

MetService forecaster Melissa Roux said parts of Southland had rain late yesterday. There would be a few early showers in coastal areas this morning, spreading inland in the afternoon, turning heavy with thunder and lightning.

"The heavy rain will continue into Friday and it will rain much of Saturday and Sunday, with showers clearing on Monday."

Mr Erikson said: "We could expect a maximum of 40 millimetres of rain and a minimum of 15mm."

The rain would offer brief respite to people who had water tanks for domestic supply and would possibly lift river levels, he said.

Council chief executive Ciaran Keogh said staff would monitor the situation as a priority because the region had yet to reach its historically dry months and, without enough rain, the worst could be ahead. A meeting with the Rural Support Trust today would examine its drought plans, he said. Another drought meeting with staff is planned for tomorrow and a further meeting on Monday.

"The predicted rain is at best a breather for Southland, but a prolonged period of sustained rainfall is needed," Mr Keogh said.

As the region faced some of its lowest rainfall totals on record, river levels remain low and staff were monitoring discharges, which would have a magnified impact at low flows, Mr Keogh said.

"We will be looking at the affects of discharges at industrial sites and of the sewage treatment at the Oreti River at Winton."

TOTAL FIRE BAN

A total fire ban is in place for Southland and parts of the Clutha District. The ban applies to all townships within the Southland District, Gore District and Invercargill City and also prohibits people in these towns from burning rubbish, using incinerators, or cooking outdoors with open braziers or hangi.

All fires are banned in the Central Otago District Council area, on Conservation Department land and in the Naseby Forest. Fires are not allowed in any urban or rural areas. Fire permits will not be issued.

'Modest' increase in rents on the cards

11th January 2012

Source: Stuff Business Day

The group representing landlords has predicted that rents around the country may increase modestly this year.

Average national rents increased about 3 per cent last year, and the Property Investors Federation is forecasting another rise of around 4 per cent this year to help landlords offset rising insurance and other costs.

Federation president Andrew King said migration, while currently flat, had been increasing, and house building had dropped off, ''so you would have to think there's a bit of pent-up demand going on in there''.

''It'll hit pretty soon. We're just starting now into the busy period for rents so for the next two months, that's when there's going to be a lot of demand.''

However, he acknowledged that this would not be true for all parts of the country, particularly Wellington, where the local economy was flat.

King said low interest rates had sheltered many landlords from rising costs but many would only realise the impact of recent tax changes on rental properties when they put their tax returns in this year.

He estimated the removal of depreciation tax credits would add 5 per cent to the average weekly rent of $338.

''Given that that's 5 per cent and rents only went up by 3.1 per cent and general inflation was 4 - I don't think enough people have realised how it's going to cost them.''

While some landlords are expected to pull out of the rental market because of slim margins, King said experienced investors were going against the tide and snapping up new properties.

New investors tended to avoid the property market when capital gain was non-existent.

''But I think most experienced investors are realising that right now is a good time to buy. So a lot of our members are actually buying at the moment because cashflow is good and there's not a lot of competition, really.''

NZ Property Report - Dec 2011

4th January 2012

NZ Property Report – December 2011

Big drop in houses for sale in centres

4th January 2012

Source: Stuff Business Day

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.

Nationally, the inventory of unsold homes slipped to 36.7 weeks, if present sales rates continued. That remained well under the average of 42 weeks of stock on the market.

The national average asking price for a home was $420,109 in December, down 1 per cent on November.

The average asking price in Wellington was $422,690 in November, down 6 per cent from November.

The inventory of housing stock in Wellington was equal to 22.5 weeks, compared with 23.4 weeks in November.

Nationally, new listings for apartments fell to their lowest levels for 4 years, with just 346 flats coming on the market, down a third on November.

At just under $397,000 asking prices for apartments are down 14 per cent on a year ago.

Real estate year in review

28th December 2011

Source: Stuff Business Day

2011 was at times a tumultuous year for New Zealand.

There were dizzying highs when the All Blacks won the Rugby World Cup we hosted and tragic lows when earthquake disasters struck Canterbury, flooding hit Nelson and oil leaked into the Bay of Plenty when cargo ship Rena grounded.

These factors combined with a pervading underlying economic uncertainty in the lead up to November's general election and negative news of Europe's ongoing debt dilemmas.

Despite all this drama impacting the economy, the property market continued to improve throughout the year, with Auckland leading the pack.

From January to November, the median average house price based on nationwide sales lifted from $340,000 to $367,500.

Auckland property prices hit record levels, rising above the peak levels last seen in 2007 before the recession hit. The region's average house price was $513,792 in November, up 3.4 per cent from a year earlier and 0.6 per cent above the 2007 market peak.

The time it took to sell a property nationwide also improved in 2011, from an average of 51 days at the start of the year to only 35 in November. Sales volumes nearly doubled throughout the year, from only 3252 sales in January to 6008 houses transacted last month.

However, the overall feeling in the industry was that the property spike has resulted from a shortage of listings, a rising population and lower interest rates rather than any speculative bubble.

Instead, real estate market insiders agree it's only the beginning of an industry upturn that will see even more active property trading in 2012.

Real Estate Institute of New Zealand chief executive Helen O'Sullivan said 2011 was characterised by tight listings, a relatively steady lift in values, and weak sale numbers which started improving towards the end of the year.

''Auckland really has taken pace away from the rest of the country and what you might call the discretionary or recreational sector (baches, coastal properties) has remained pretty slow,'' O'Sullivan said.

Even within Auckland, some areas are doing better than others. CBD suburbs such as Parnell and Ponsonby were up 4.7 per cent on the same time last year to $577,774 on average - some $210,000 or so above the national average.

Real estate agency Harcourts chief executive Hayden Duncan said Auckland's inner city suburbs had stood out over the couple of years compared to the rest of the market. ''Locations like Mt Eden, Epsom, Parnell, Ponsonby, Remuera, Orakei - family homes in those locations have performed exceptionally well in comparison to other sections of the market,'' Duncan said.

''The apartment market has continued to remain relatively soft, partly due to investor reluctance and some borrowing and lending constraints not really kicking that market to its potential. Given the strong rentals achieved and low cost of borrowing it's probably an area I'm surprised at the lack of increase in confidence in.''

Lack of choice and tightness in supply was also a feature of this year's market. O'Sullivan said this had been a problem for buyers who were being ''very logical'' about what they wanted to buy and pay.

''I think back in 2007 we saw people settling because they wanted to buy something, anything, before the prices went up but we don't have that dynamic now. People are prepared to wait.''

Mike Bayley, head of real estate agency Bayleys, said forecasting residential property markets had been difficult in 2011 due to the instability from financial markets.

''The classic scenario being in August for example, when in the space of 48 hours Kiwi trading banks hiked mortgage rates to reflect a 'speeding up' of the economic recovery, then when the US economy began rapidly imploding and the Reserve Bank of New Zealand responded accordingly, the mortgage rates underwent a complete U-turn,'' Bayley said.

''Yet despite everything that went on in New Zealand throughout 2011, property transactions continued to be made. It just shows that no matter what life throws up at the property markets, deals will always be successfully concluded, albeit at somewhat subdued volumes somewhere in the vicinity of 5000 homes sold per month.''

A large number of the transactions seen in 2011 were mortgagee or receivership sales as financial institutions and banks worked to reduce their debt-laden stock.

THE OUTLOOK

The large lift in prices in central Auckland suburbs could indicate where markets nationwide will move next, Bayley said.

''We have found that early signs of recovery have, several times now over the past two years, been seen in these suburbs first. A wider geographic recovery would then see activity and price firmness ripple out to the Greater Auckland suburbs, then regionally spreading to provincial cities in an ever-widening circle,'' Bayley said.

But he cautions against any 'quick fix' cycle happening as such as sustained national recovery, whenever it does start, could happen gradually over the next year, he said.

On the other hand, the consensus among the industry commentators is that prices are unlikely to pull back in 2012, so any bargain hunters might miss out on the house of their dreams if they're waiting for a cheaper deal.

In the year ahead, listings are expected to stay tight at the start of the year with prices improving slowly in the main cities and throughout the regions.

''I think through the regions what we'll see is volumes increase without seeing major moves in any house prices,'' Duncan said. ''We're just starting to see volumes pick up now, I think it may be 2013 or 2014 before we see any dramatic or noticeable rise in house prices through the regions.''

O'Sullivan also expected prices to keep climbing next year.

''It's a cautious, pragmatic, risk-averse market in most places. Still we're seeing some really good results being achieved in some places, particularly Auckland, and particularly at auction,'' O'Sullivan said.

''For 2012 I think the big unknown is still what happens with the international picture and that's always got the potential to have a big impact on the market, so there's still that shadow. But broadly, there should be steady growth in volumes - nothing like 2006, but values holding, then creeping upwards.''

Bayley also thinks it's hard to forecast what the residential property market will do next year. He's picking a slow and gradual return to listing levels seen in 2006, with prices returning to somewhere around 2007 comparisons.

''I'm forecasting there will most likely be a continuing oscillation in the market data, as the residential property sector seeks clearer guidance from the wider economy. While low mortgage interest rates are on offer - underpinned by the Reserve Bank of New Zealand's latest announcement in December - there is a comparatively low inventory of property listings. This will provide support to pricing levels.''

So there you have it - relatively low prices but rising steadily, sales volumes picking up, short supply in sought-after locations, and low interest rates likely to continue throughout next year due to the economic uncertainty nationwide. No boom, but a definite boost, particularly in central Auckland.

All in all, a good time to buy.

Auctions provide a bellwether for the the property market

23rd December 2011

Source: realestate.co.nz

The state of the property market can be assessed by keeping a close eye on the number of properties being marketed for Auction. When you spot more and more of the For Sale street signs emblazened with “Auction” you can safely bet that the property market is heating up.

This view is certainly articulated in the article today titled “Auckland house auctions hit high“. Based on sales data supplied by the Real Estate Institute (REINZ) the number of properties sold in November across the country as Auctions was the highest ever at more than 25%. Looking specifically at the Auckland market Barfoot & Thompson November reported that around 40% of it’s current listings are being for sale by auction.

These reported statistics got me interested as we have in the past reported on the number of listings coming onto the market and specifically on the market across our comprehensive database. Back in August we reported that Auctions across the whole country had risen to a peak in June as representing 13% of all new listings, in Auckland that figure was even higher with over 20% of all new listings being for Auction properties for sale. These figures though are lower than the respective REINZ or Barfoot & Thompson figures.

Looking at the latest data for the month of November we saw 1,206 new listings of Auctions of properties come onto the market across NZ, this represented 9% of all new listings. In Auckland the number was 790 which represented over 17% – a new record, so the data is consistent.

In tracking the data over the past 4 years what is very interesting is that Auctions as a form of marketing rises as available inventory falls (as it does when the market picks up) and similarly falls as inventory rises. This is represented in the chart below, tracking new listings of Auctions per month as a % of all listings (blue bars) against the available stock on the market as measured as equivalent weeks sales as we track for the NZ Property Report.

In Auckland the same trend is evident, and more pronounced.

So it is clear that Auction marketing is a bellwether of the state of the market, which is not that surprising as vendors are more keen to pitch their property to a more active market when there is more demand from active buyers and see the open auction environment ensure that transparency works for them to maximise property demand lead pricing.

Wind-farm backers test turbine

19th December 2011

Source: The Southland Times

The proposed Flat Hill wind farm project near Bluff forged ahead at the weekend with the company behind it putting up a test turbine at the site.

The wind farm, in the consents phase with the Invercargill City Council, plans to have eight turbines erected on Flat Hill, near Bluff, producing about 6.8 megawatts of electricity.

Canterbury company Energy3 applied for consent to build the wind farm last month.

The land where it would be built is owned by Greenpoint farmer Graham Laidlaw.

Mr Laidlaw is an avid supporter of the wind farm, despite opposition from the Bluff Community Board, which submitted against it.

"I'm more than happy with it," he said. "It's met all New Zealand rules and regulations."

He admitted he would be paid to have the turbines on his land, but said he could back up his support with facts and figures in the consent application, something opponents could not do.

The Bluff Community Board had raised concerns about the noise from the turbines, shadow flicker from the blades disrupting traffic, its visual impact and disturbance to the tranquility of Greenpoint Cemetery.

"Some of it I don't know what it's based on," Mr Laidlaw said. "How much noise will the wind farm put into the cemetery compared to the trucks going past (on State Highway 1)?"

The wind farm was more than 1.5 kilometres away from the cemetery, he said, while shadow flicker might be seen 500 metres from the turbines, but not on the road. He also said he enjoyed the appearance of wind farms.

"I like them," he said.

"It's either yes or no – it's clean cut – either you like them or you don't."

Energy3 commissioned reports for its consent application which suggested the noise from the turbines would meet national standards at the nearest house under worst-case conditions.

The Invercargill City Council received 72 submissions on the project. Nine were against it. A decision is expected in the new year.

Mobile usage for finding property reaches a new milestone

15th December 2011

Source: realestate.co.nz

All of us here at Realestate.co.nz are delighted to see the mobile apps for both iPhone and Android blast through the 50,000 download mark this week.

It was just over a year ago when we launched the iPhone app – the first in NZ and the only app with GPS location based property search. A year later and we continue to be surprised and delighted by the uptake and usage which now approaches 14% of all visitor traffic to our listings from the mobile platform.

The appeal of this method of property discovery has been turbocharged in the past couple of months as the summer peak property season has arrived. The month of October saw the highest ever level of downloads with over 6,000 in the month, greatly assisted by the new Android version of the app (another first) in late September. The level of downloads continues with over 200 new downloads per day providing the users with the experience of discovering the convenience and addictive appeal of this app.

Not only are people downloading the app in ever increasing numbers but they are engaging with it more often. Over 2,000 visitors a day check out property for sale and rent whilst on the go – at the cafe, in front of the TV, at open homes.

The app is so comprehensive and so appealing. With the largest selection of listings by licensed agents, usage appeals to the serious property hunter keen to be better informed and in control of the property searching process. Over 90% of users are returning users and unlike the web which is very heavily focused to casual image based browsing the mobile app is all about property information and insight in the palm of your hand.

We have been interested to see just how keen kiwi’s are relative to other countries in regard to uptake and usage of property apps on the the smartphone. Instead of comparing downloads by country (which is tricky as not many other websites publish their data) we chose to use the ranking of the various apps in their respective iTunes app store. Clearly this just seeks to identify the iPhone platform, but this has been the consistent largest platform across all international markets for property apps.

We chose six countries to compare against NZ from Australia and the US / Canada as well as Europe. What we found was very interesting. The Realestate.co.nz property app is the 16th most popular free lifestyle app in NZ, and the 209th most popular free app. Out of interest if you exclude the free “gaming” apps from the rankings the Realestate.co.nz property app jumps up to be the 41st most popular free iPhone app in NZ.

By comparison to NZ; Sweden appears to have the most popular iPhone property app from Hemnet coming in as the 8th most popular free lifestyle app in Sweden, and the 104th most popular free app overall.

Next comes Australia where the Realestate.com.au app comes in as the 11th most popular free lifestyle app and the 127th most popular free app. That then places NZ in third slot amongst these 7 countries. Next comes Canada almost equal to NZ with their Realtor app ranked as the 16th most popular free lifestyle apps and 239th place overall for free apps in Canada. After these four come the the French app from Seloger, the US app from Zillow, and the UK app from Rightmove.

Inner-city revamp plan available for feedback

15th December 2011

Source: The Southland Times

An inner-city working group tasked with revamping the rundown Invercargill CBD has released more detail of its plans, and they include a proposal for a city centre market space and the introduction of a public space in Esk St in the heart of the city.

Working group boss Norman Elder, also a city councillor, said at yesterday's council meeting the 56-page city centre discussion document was the result of about 10 months' consultation with two working groups, consultants and the public.

The inner-city upgrade plans include introducing a public space in Esk St, improving Wachner Place, investigating proposals for a city centre market space and reviewing the relocation of the Visitor Information Centre and Southland Museum and Art Gallery to the city centre.

Other projects include up grading footpaths, upgrading furniture and lighting in Esk St, developing a promotion and events strategy, identifying and promoting business precincts, developing a business attraction strategy and protecting and enhancing heritage buildings.

Parking options would also be considered, while other projects are to provide weather protection for pedestrians at traffic lights at the Tay and Dee street state highways and investigate putting a right turn into Esk St for northbound traffic.

An investigation into reducing traffic lanes in Tay St in favour of centre parking and planting areas would also be carried out; while an arts centre in the city centre would be investigated, as would the merits of an arts precinct.

The document would now go out to the public for feedback before the final draft was done.

Riverstone will 'sell' Te Anau

12th December 2011

Source: Otago Daily Times

The proposed catamaran, ATV and monorail route linking Queenstown and Te Anau. Graphic from 'ODT'.

The proponent of the proposed $250 millon monorail project linking Queenstown and Te Anau is vowing the company will become Te Anau's biggest promoter.

Riverstone Holdings chief executive Bob Robertson, of Wanaka, believed the monorail, 16 years in the planning, would lift local tourism and the area's economy.

"I think Te Anau locals will probably think it might be negative for them because people are currently travelling through Te Anau."

One of the biggest criticisms of the Milford Dart Tunnel proposed last month was Te Anau would miss out on potential visitors, but Mr Robertson said his company would spend about $5 million a year promoting Te Anau and the "new visitors" would be stopping there for more than "just a coffee".

"We will spend more than anyone has before on selling the destination. We will be an investor locally. We would become the biggest sponsor."

He said the company had put more than $1 million into Wanaka's economy and he would like to do the same for Te Anau.

The monorail was part of Riverstone Holdings' visitor transport package, The Fiordland Link Experience, which would include a catamaran across Lake Wakatipu, an all-terrain ride on back-country roads and the 80kmh monorail trip.

The company had a project budget of $175 million to $200 million, with another $50 million for "long-term upgrades" such as transport facilities running into Te Anau.

If consent was granted, he expected a completion timeframe of within two years.

Mr Robertson hoped to establish a fund to help finance the project, with four domestic investors already expressing an interest in contributing.

"I know if I've got the right economic model... funding is not an issue."

It was not about shortening the trip from Queenstown to Te Anau, he said.

"We're not in a hurry. We're not promoting hurry. We are promoting [an] experience while still delivering a benefit of speed.

"We will get them there quicker and they will stay longer."

The initial idea came from Malaysia, which was where most of the rolling stock and electronics would be built, he said.

However, Te Anau's gain could be Kingston's loss, as travellers choosing the monorail would bypass State Highway 6.

Kingston Community Association chairwoman Annetta Dalziel said local businesses had already shown some concern.

"To me, it seems a terrible way [to travel]. Just whipping people here and there and not giving them the time to meet New Zealanders.

Te Anau Community Board chairman Alistair Jukes, opposed to the Milford Dart Tunnel, said yesterday the monorail was "not as bad".

"It's certainly got its merits. I'm not really in opposition to it."

Southland District Council mayor Frana Cardno said both the monorail and Milford Dart Tunnel were "all about getting to Milford faster".

"New Zealand tourism talks about quality tourism. Is this what we call quality tourism? "

The Department of Conservation had yesterday received 61 submissions for the the Milford Dart Tunnel with submissions closing in January.

Mr Jukes said the Te Anau Community Board would be submitting against the Milford Dart Tunnel.

Public submissions on the monorail will close in February.

Real estate recovery not boom: REINZ

12th December 2011

Source: Stuff Business Day

The number of houses sold nationwide in November was up 16.9 per cent on the same time last year, according to the latest Real Estate Institute of New Zealand data, with Auckland sales prices reaching new highs.

But despite the strong lift in sale prices, the real estate market improvement is still seen as being in recovery mode due to the number of houses sold tracking far below the levels seen in 2007.

In November, the Auckland median house price shot up to $490,000, a new high comapred to the previous highest figure of $479,500 reached in April this year.

The median house nationwide also hit a new record, rising 2.1 per cent in November from a year earlier, to a $367,500.

Real Estate Institute chief executive Helen O'Sullivan said while the data coming from the housing market was generally positive, the volume figures say recovery, not boom as some commentators have suggested.

''In 2007 the market reported just over 92,000 transactions in the 12 months to December; the 2011 year to date total is just under 56,000 transactions with the month of December yet to come, demonstrating that the level of activity is still well below 'boom' levels,'' O'Sullivan said.

''The lift in volumes for November is positive following the somewhat muted sales numbers for September and October.

''While there may be some element of 'catch up' from these slightly quieter than expected months, there is a sense of buyers and sellers being ready to commit and clear the decks post Rugby World Cup before the end of the year. ''

Residential real estate sales lifted 20 per cent in November from the month prior, a difference of 1001 more houses sold than in October.

All regions recorded an increase in the number of sales.

Hawke's Bay house sales had the biggest hike in price during November compared to October, up 11.3 per cent to $290,000 on average.

Properties in the Otago region were selling for 5.6 per cent more in November than October, at $311,000.

House values to 'slowly' increase

9th December 2011

Source: Stuff Business Day

Despite a widely held belief in the marketplace that residential property prices may drop further, BNZ chief economist Tony Alexander predicts a continuation of the slow, steady increase in house values.

A recent article in the Economist listed New Zealand as one of nine countries worldwide with the most overpriced property markets in the world, with a housing bubble that could be set to burst.

While Alexander agreed with The Economist's view that New Zealand houses were over-valued by about 25 per cent, he expected prices to rise rather than plummet.  

"Using the measures that they have looked at we are overvalued, but the question is will we see a correction in the overvaluation? No, I don't think so at all," Alexander said.

"When I look at the population long term growth in New Zealand, very weak level of construction we have got here, the lifestyle we choose - we live in New Zealand because we want our own house etc - but I think we will stay, by their measures, overvalued forever and a day."

According to the November BNZ-REINZ Residential market survey released yesterday, 25.4 per cent of prospective house buyers are holding back from purchasing because they still believe prices will decline further.

"I don't think the perception out there as yet is that it is inevitable house prices will go up. I think there are still many people who find that the prices are relatively high," Alexander said.

"Those who keep waiting for the house prices to decline already missed out on the cheaper prices back in 2009 and I think the longer they wait they more they'll find house prices have gone up even higher - but slowly, nothing aggressive, just a slow appreciation of the prices."

The real threats to the New Zealand housing market, said Alexander, are that property will only become more unaffordable because of the shortage of new construction.

While the number of building consents issued rose 11 per cent in October from a year earlier, there could be a shortage of builders once the rebuilding of Christchurch kicks in in the second half of next year.  

"In the second half of next year with the rebuilding of Christchurch and extra catch up construction in Auckland, I think we're going to run out of builders. They will either already be across in Australia or continuing to go there, there will be fewer young people coming through to be builders - we've already seen a 40 per cent decline in the number of construction apprenticeships," Alexander said.

"We're going to hit a builder shortage in late 2012 which I think will limit the construction of new houses. Prices will go up and affordability will worsen."

Floating rate is 'sweet spot'

9th December 2011

Source: Stuff Business Day

Floating home-loan rates look like the best option for borrowers, with the official cash rate likely to remain on hold until late next year, economists suggest.

While the Reserve Bank left the OCR unchanged yesterday at 2.5 per cent, borrowers coming off high fixed rates will be able to move to floating mortgages at much cheaper rates in coming months.

ANZ Bank estimates that the effective average mortgage interest rate, now about 6.15 per cent, will fall to 5.9 per cent by the end of next year, equal to a reduced interest bill of about $400 million, on $170 billion of debt.

So, while the Reserve Bank is holding the OCR and will keep it low for perhaps another year, there is still a hidden boost coming into the economy.

ANZ chief economist Cameron Bagrie said the Reserve Bank had "kicked for touch any notions that interest rates are going up". Floating rates were the "sweet spot" for borrowers and would remain so for some time.

But, as borrowers came off fixed-term rates, there would be a "passive stimulus" for the economy in the next six to nine months equal to cutting rates by 25 basis points.

The hurdle to the Reserve Bank actually cutting the OCR was high and would need to see a repeat of 2008's global financial crisis.

"While the outlook is grim, I don't think it is that grim," Bagrie said. But he suggested it was also unrealistic to expect the global economy to be stable in the first half of next year.

It was, he said, hard to see a decent performance in the global economy which would be a precursor to interest rates moving up at a solid clip. "We are so far away from that scenario it is ridiculous."

The New Zealand economy was scratchy, with "grumpy growth".

"But in a relative sense, we are a beacon of opportunity [compared with others]."

The Government retained the confidence of investors when parts of Europe did not. Business confidence was holding up, commodity prices had fallen but remained relatively high, and the kiwi had fallen to act as a buffer.

The economy's report card rated a B to B-minus overall, he said.

Australia cut its official cash rate this week, but that was to 4.25 per cent – still much higher than New Zealand's rate.

Bank of New Zealand chief economist Tony Alexander said it would be best to stay on a floating rate, with the Reserve Bank indicating it would not change rates "for quite some time".

The central bank pointed out the risks of a slowdown in Europe, with the prospect of prolonged recession and a possible slowdown in Asia. "I don't see fixed interest rates jumping up much in the near future, so I'd sit floating," he said.And, unless the eurozone fell over, Alexander expected house prices to rise in New Zealand next year, on average about 5 per cent, led by Auckland, where prices have risen about 6 per cent in the past year.

House-building rates were "exceedingly weak", with an undersupply of homes, so that would push up prices. He also expected a lot of young first-home buyers to move into the market in the next year or so.

When people wanted to build new homes, the country would quickly run out of builders, especially with the rebuild of Christchurch looming.

But Alexander said it was an uncertain global picture, with massive shifts in interest-rate forecasts in the past year. "Much as I'd be happy sitting on a floating rate, a lot of people may find two-year fixed rates about 5.89 per cent attractive," he said.

"That certainty might suit first-home buyers, for the first couple of years of a loan."

Rate hold likely for 12 months

5th December 2011

Source: Stuff Business Day

The Reserve Bank is set to signal interest rates will stay on hold for the foreseeable future this week, as the economy slows as the threat of crisis in Europe grows.

Governor Allan Bollard will on Thursday morning announce its review of the official cash rate, which will almost certainly remain unchanged at 2.5 per cent.

The accompanying monetary policy statement, which lays out detailed forecasts for the economy, is expected to signal weakening growth compared with three months ago and economists now expect interest rates to stay on hold until at least late 2012.

All of New Zealand's four major banks expect the official cash rate, which directly influences floating mortgage rates, to remain unchanged for at least six months.

Bank of New Zealand's official prediction is for an interest rate increase in June but head of research Stephen Toplis said there was "absolutely no conviction" behind the date.

"It's just saying that hikes are coming and it's later rather than sooner," Toplis said, adding that international conditions could push the first interest rate increase out to December.

In September, the Reserve Bank signalled it was likely to begin raising interest rates in March, based on the assumption global influences would have only a mild impact on New Zealand's recovery.

Since then economists have been trimming forecasts, with the Institute of Economic Research slashing its prediction for growth in 2012 to 1.5 per cent.

Cameron Bagrie, chief economist at ANZ, said that since the last Reserve Bank forecasts, global conditions had worsened and while the impact on New Zealand had been limited, this might not continue.

"The global scene is getting worse; we've got our fingers crossed that the impact remains mild [in New Zealand] but there is a little bit of wishful thinking in that," Bagrie said.

There were signs of a sharp slow-down in investment in China and, while the world's most populous nation would likely maintain demand for food commodities, New Zealand could suffer indirectly from a downturn in mining-focused Australia, our largest trading partner.

Meanwhile there was a growing chance of a deep financial crisis in Europe, where much of New Zealand's bank funding is sources.

"The euro is at risk of breaking up. I wouldn't put it as the central scenario but it's a non-trivial risk at the moment."

Until late November financial market pricing suggested the official cash rate would be cut by March, and last week the Manufacturers and Exporters Association called for a 0.25 per cent cut on Thursday to take pressure off a strong New Zealand dollar.

"For a small, open, heavily indebted economy, I think that sends the wrong economic signals," Bagrie said, adding however that if Europe's financial crisis deepened "it's game on".Bagrie said that with inflation running at about 2 per cent, excluding last year's hike in GST, an official cash rate cut would mean New Zealand, a small country dependent on foreign investment, would effectively have negative interest rates.

NZ Property Report – November 2011

2nd December 2011

Source: realestate.co.nz

The November 2011 NZ Property Report published byRealestate.co.nz provides an insight into the state of the New Zealand property market as measured by the supply side of the property market over the month of November. The key measures of the market analysed in the report are the number of new listings, the asking price expectation for those new listings and the level of inventory of unsold houses on the market at this time. The report is compiled from data captured by the website and represents close to 95% of all property movements in the NZ market as managed by licensed real estate agents.

A full print version of the NZ Property Report – November 2011 is published below and is available for download (1.5MB) and distribution.

Summary of the market – November 2011

The property market is now firmly in the active Summer season with a strong surge of new listings coming onto the market to provide variety for the prospective buyers who have certainly been more active over the winter and spring period of this year. This current level of activity is likely to result in full calendar year sales in excess of 60,000. This would be up 7% on the prior year; however this level of sales is far below the peak of the property market (now a somewhat distant memory) of 2004 when in excess of 120,000 properties were sold in that year.

The slightly lower level of listings in October are now judged to have been influenced by the Rugby World Cup with sellers possibly hesitant to list at that time preferring to wait until the event was over before marketing their properties. It is still though noticeable the extent to which this year has seen a much lower level of new listings than 2010, so far this year 116,016 new listings have been brought to market 11% lower than last year.

With this new flow of listings has come what can be considered to be a confident position by sellers on asking price; which whilst slipping slightly in the month continues to show a slow but steady increase over the past few years. This confidence on the part of sellers is certainly supported by the rate of sale of property which is being shared by real estate agents in their daily contact with the public, and can also be seen in traffic to online listing sites which has seen an aggregated increase this year of 6% with over 187,000 daily visitor sessions across all sites (Nielsen Online).

Asking Price

The truncated mean asking price of $425,956 for all new listings in November eased slightly from the peak in October of $434,161. On a seasonally adjusted basis the asking price fell 2% indicating that whilst expectations are rising the rate of increase is not as high as seasonal factors would expect.

The long term trend as seen in the chart has been a steady increase in asking price over the past 3 years – the seasonal trend each year tends to see asking prices rise through from mid winter to October before falling back.

New Listings

The level of new listings coming onto the market in November rose on a seasonally adjusted basis by 17%. A total of 13,369 new listings came onto the market representing a 3% year-on-year rise.

On a 12 month moving total basis the number of new listings in the past year totals 124,412 as compared 140,214 for the same period a year ago – a fall of 11%.

Inventory

The level of unsold houses on the market at the end of November turned down slightly in what was a somewhat unexpected trend. At the end of the month there were 48,647 houses, apartments and lifestyle properties on the market barely up from 46,597 in October and down from 54,365 a year ago. This current level of inventory represents 38.1 weeks of equivalent sales.

Regional Summary – Asking price expectations

The national truncated mean asking price expectation among sellers eased slightly in November to $425,956. This price trend has been seen for each of the past 4 years as rising asking prices begin to ease as the summer approaches.

Across the 19 regions the view is generally of increasing prices with 12 regions reporting increases as measured against the recent 3 month average. There were 3 regions with rises of over 5% – Hawkes Bay, Nelson and the West Coast, the latter of these reporting a new record high up 25% over the prior year to $315,993.

Amongst the 7 regions showing a fall in asking price there were 4 regions where the fall was over 5% – Northland, Gisborne, Manawatu / Wanganui and Southland. The largest of these falls was in Gisborne which saw asking price fall by 29% vs. November last year, this level at $260,189 is approaching a record low last seen in early 2009.

Regional Summary – Listings

New listings rose across most of the country in November with just 5 of the 19 regions seeing falls in listings of greater than 5%. The biggest fall was in the Coromandel which was down 29% with just 247 new listings, this compares with levels of over 400 in prior years.

Contrasting these regions were Nelson reporting 24% increase, Northland with a 46% increase and the Central North Island with an enormous 120% increase – this latter region has seen a consistently low level of new listings this year. In the first 10 months of this year only 1,284 listings came onto the market, whilst 296 new listing hit the market in the single month of November.

The remainder of the country seems to reflect a balance with 6 regions reporting barely changed levels of new listings which would indicate a balance between buyers and sellers.

Regional Summary – Inventory

The inventory of unsold homes on the market eased slightly this month having seen a slight upturn in October; given the rise in new listings this would indicate a strong rate of sale.

Across the country there were a total of 8 regions where the advantage is to sellers. Of these the 5 regions of Auckland, Manawatu/Wanganui, Canterbury, West Coast and the Waikato remain very much in strong sellers markets. If anything the past month has seen a degree of rebalancing of the market overall in all but these extreme market-condition-affected regions.

There are however still 5 regions (Marlborough, Wairarapa, Southland, Taranaki and Gisborne) were the market is certainly favouring buyers with high levels of inventory set against long term average.

The market is now firmly in the peak summer season and with the more balanced market in terms of inventory of unsold properties on the market the options seem more open for both active buyers and sellers.

Lifestyle

Lifestyle property listings shot up in November with 1,133 listings in the month, this represented a 15% seasonally adjusted increase but was down 5% on the same month last year. The truncated mean asking price at $574,507 was up 3% from last year but down 3% down on the recent 3 month average.

Across the country strength in new listings was seen in Northland (125, up 67% Yr. on Yr.) and the Waikato (120, up 13% Yr. on Yr.). Whilst the Bay of Plenty, Hawkes Bay and Wellington all saw year on year falls of over 25%.

Apartments

New listings for apartments picked up in November with 535 apartments coming onto the market up 20% from October but 10% down on last year. The truncated mean asking price of $370,532 was up 2% from prior month and in line with last year.

The Auckland market which dominates the apartment market saw a stronger performance with 350 new listings which was 25% up on prior month and just 1.4% down on last year. The asking price was $352,407 which was up nearly 15% on last year and 2% up from October.

November property listings surge

2nd December 2011

Source: Stuff Business Day

The number of new homes being put on the market surged in November, as sellers rushed to list their properties now that the disruption of the Rugby World Cup is out of the way, according to realestate.co.nz.

The online property portal reported an 18 per cent leap in the number of new listings in the month to 13,369 compared to October, its highest level in 18 months.

The charge was again led by Auckland, the most active property market in the country, with 4459 new listings in November.

Alistair Helm, chief executive of realestate.co.nz, said the data appeared to show that property sellers saw the Rugby World Cup as a distraction and thought ''it was best to wait until all the excitement had died down''.

However, the company said that overall listing numbers were still well down on 2010, with 116,016 properties brought to market so far this year, down 11 per cent on the equivalent period last year.

The listings surge in the month saw the average asking price dip 2 per cent to $425,965 - reversing gains seen in October, but remaining stable on a three-month basis.

Of the country's 19 regions, 12 saw price increases on a three-month comparison, led by Nelson, Hawke's Bay and the West Coast. Decliners were paced by Northland, Manawatu/Wanganui, Southland and Gisborne.

Inventory levels, as measured by the time to take for a property to go from listing to unconditional, fell 1 per cent on October to 38.1 weeks, which the property website said was an ''unexpected'' trend, suggesting a ''strong rate of sale''.

Stadium backbone bolted into place

30th November 2011

Robyn Edie/FAIRFAX NZ

PRECISION PLACEMENT: Stadium Southland's massive central roof truss was installed with the help of a giant crane yesterday.

 

Source: The Southland Times

The new Stadium Southland has a backbone, signalling a landmark in the construction phase.

A massive 60-metre, 50-tonne roof truss was lifted by a giant crane and bolted into place by workmen yesterday morning.

Acton Smith, chairman of the Southland Indoor Leisure Centre Charitable Trust which owns Stadium Southland, said the truss was the "central spine" of the roof structure.

It runs east to west across the entire building, with smaller roof trusses feeding into it from north and south directions.

The giant crane that lifted the central roof truss into place was transported from Christchurch to Invercargill on a 62-wheel truck-trailer unit especially for the job, Mr Smith said.

When the crane driver positioned the central truss so the workmen could bolt it into place there was just 1 millimetre of tolerance, he said.

"Over 60 metres there was no room for error ... that's the benefit of good computer design and engineering done properly."

The installation of the central truss was a landmark in the construction phase of the new stadium, which is being built after the original stadium collapsed under a heavy dumping of snow 14 months ago.

The public could now expect to see real progress, with the remainder of the smaller trusses expected to be up by the end of next week, at which time work on the roof would begin, Mr Smith said.

It was expected the new stadium's seven community courts would be ready for the public to use next July, he said.

"We have got the South Island netball secondary schools tournament in the stadium in September and we are definitely going to host them."

In the meantime, the issue of finding an extra $2.6 million to complete the $32m stadium is still being grappled with.

New earthquake standards resulted in the additional funds being required.

Mr Smith said a meeting of the stadium's funders was scheduled for next Wednesday.

Submitters oppose bid to boost section size

29th November 2011

Source: The Southland Times

A proposal to introduce new rules around the size of residential lots in some parts of Otatara has come under fire at an Invercargill City Council hearing.

The council is considering several plan changes for Otatara, with 80 public submissions received.

One of the proposed plan changes is to increase the minimum section size with a house in Otatara from one hectare to two hectares, but only in those areas that are not connected to the reticulated sewerage system.

Planner Keith Hovell's report says this will "mitigate the adverse effects of residential activity on the surrounding environment and enhance the amenity appreciated by the community in the Otatara sub area".

The proposal was not greeted with favour by a number of public submitters.

They cited several reasons for their displeasure, including that a 2ha section was too big to maintain and having minimum 2ha sections would devalue properties that had the potential to subdivide.

Don Moir, representing the Southland branch of the New Zealand Institute of Surveyors, said about 80 per cent of the people the council asked about the issue said the existing allotment sizes were acceptable, and just 10 per cent said they wanted to see an increase in lot sizes. "Why has the council ignored this?"

The plan change also proposes to move the boundary between the Otatara and rural areas to the south; while it makes no provision for commercial development in Otatara, despite several submitters requesting that the council identify areas suitable for commercial development and zone them as such.

Mr Hovell's report says it would be more appropriate for a developer with a firm proposal to seek a change to the district plan to facilitate commercial development.

The hearing, at council headquarters in Esk St, continues at 9.30am today, with Mr Hovell set to respond to the concerns raised by the yesterday's submitters.

Southland Property report

29th November 2011

Southland Property Pulse factsheet – October 2011

Meet the lords of the dance...

29th November 2011

 

Source: Otago Daily Times

Members of the 2011 Remarkable Men's Ballet Troupe are (back from left) Graeme Jackson, Rowan McDonald, Craig Ferguson, Andrew Bisset, "Tall Paul", Henry Youngman, Chris Dagg, JD Marrable and Irik Anderson. Middle left is Tony Moore, right Darren Craig and front Otago Daily Times and Queenstown Times reporter James Beech. Absent from the photo are Clark Scott, Simon Thew, Allan Gerard and Brendan Quill. Photo by Tracey Roxburgh.

If the good people of Queenstown feel the earth shaking over the next few weeks, they need not dive under the nearest table. Chances are it will be a dozen sturdy blokes performing an especially energetic grand jeté in unison.

Ballet is a beautiful, graceful and precise form of physical and artistic expression which has enthralled the world for five centuries. However, Wakatipu residents will get to witness the dance in its purest and most dazzling interpretation when the Remarkable Mens' Ballet Troupe takes the stage as part of the 2011 Shotover Jet Christmas Spectacular on December 11.

A gleeful Tracey Roxburgh, a ballerina for 10 years, "volunteered" this reporter for the comical highlight of the spectacular when compere without compare Simon Green was short of bodies.

We lords of the dance gathered for our first and second rehearsals in the Queenstown Primary School Hall last week.

(Out of class hours - the children will be traumatised enough during the show.)Some members make their encore this year, but I was among the newcomers who threw themselves on the mercy of Queenstown School of Dance co-founder Anna Stuart, back for a second year.

Shoes and socks off, the spirit of fun and a feeling of ridiculousness ran as rampant as we did while our teacher instructed us on the delicate techniques we will perform, in full costume and make-up, to the waltzing strains from The Nutcracker.

Respect for real ballet dancers has increased 10-fold, given the multitude of moves and timings we have to remember while running, jumping and flouncing around with our imaginary harps and bouquets.

Yet no-one wants to let the side down and everyone wants to nail the sequence to deliver the best and funniest performance.

House prices up while activity remains flat

28th November 2011

Gales batter south, stop beach racing

28th November 2011

Source: The Southland Times

Power lines came crashing down sparking grassfires, roofs lifted, wheelie bins flew, a bike race was cancelled, and even the fit struggled to remain on their feet as 115kmh winds lashed the region yesterday.

But Southerners can rest easy – experts predict the wind will leave the region today.

Strong winds have ripped through much of the region since Thursday and in Invercargill people could be seen struggling to walk around yesterday, with reports of the elderly being almost toppled while walking down Esk St.

Southland Times reporter Nicci McDougall, who almost lost her footing on Esk St, said she was caught out as a forceful gust pushed her on to the road while she waited for cars to pass.

The wind did not knock her directly into traffic, but "it was terrifying", she said.

Stewart Island Flights were postponed from Invercargill Airport because of wind and visibility, while an airport spokesman said domestic flights were delayed by up to half an hour.

Traffic was also blocked from going down Motu Rimu Rd after lunch because of power lines down on the road, while the Burt Munro beach racing was cancelled because of the high tide and strong winds.

Southland Motorcycle Club president Craig Hyde said rally organisers were at the mercy of the weather and had made the decision to axe the beach racing for safety.

Boat owners were warned to check their moorings after unconfirmed reports of several moving at Bluff Harbour.

Environment Southland harbourmaster and maritime manager, Kevin O'Sullivan, said he did not have time to check the reports, but urged boaties to check their own moorings to make sure they were safe.

MetService meteorologist Marylin Avery said wind speeds in Southland had started to pick up on Thursday morning and had reached their expected peak yesterday with gusts of up to 115kmh. The average wind speed was about 81kmh in Invercargill.

However, winds were expected to have eased by this morning, with a few showers and some cloud due before rough weather settled down later in the day, Ms Avery said.

"It will be much better than what you've had so far ... It (was) a pretty blustery day but it should clear up," she said.

A fire communications spokesman said firefighters were called to a handful of weather-related incidents, including torn branches and tin lifting from homes, while the Kingswell station was called after a member of the public saw a trampoline being tossed through neighbouring properties just after noon.Police communications spokesman Bret Watkins said at 3.22pm they were told of an overturned truck and trailer on Leonard Rd outside of Wyndham that had taken out a power line. The driver was uninjured.

Fire Service Invercargill senior station officer Alan Goldsworthy said they had been called to several small grassfires during the day because of downed power lines. All had been contained within an hour.

Invercargill City Council waste minimisation officer Donna Peterson said fewer than 10 reports of wind-related rubbish came to the council, but she expected some people would begin to realise their bins were missing.

People who could not find their bins should check with neighbours , especially those "down wind", and if they could not be located to contact the council next week.

PowerNet network operations general manager Gary Pritchard said about 1000 customers across lower Southland had been affected by power cuts, with the worst-affected areas Waikiwi, West Plains, Tisbury and Otatara. Power was cut to all of Bluff for a few minutes at 7.02pm. Southland Hospital was affected at the same time, but the power system immediately switched to a generator.

Contractors would be working through the night to restore power to customers, he said. In Central Otago, it was business as usual at Queenstown Airport.

Southland's economic future 'looking good'

16th November 2011

Source: stuff.co.nz

Southland is poised for a strong future because of its low unemployment and high confidence in the future of the farming sector, the head of ASB Bank says.

ASB chief executive Barbara Chapman was in Invercargill yesterday and said the Southland economy was in good shape.

Despite problems in Europe – with the potential collapse of major economies such as Italy – the Southland region was not expected to be hit by lending restrictions because there was still access to funds, Ms Chapman said.

The global demand for agricultural products, such as meat and dairy, meant the region was poised for a strong future.

"We are not seeing this [the global volatility] as a difficulty. It is not causing a lack of ability to get funds."

However, retail spending was not high in the region, despite the high confidence, but it was expected to pick up soon as farm spending began to trickle through the economy.

"It takes time to come into the retail sector – I think this is an area of New Zealand that is doing well and is poised to do really well – the areas where there is more confidence are the ones that will do better in the long term."

Farmers were looking at their farms with a long-term perspective, so they were investing more wisely than in the past, she said. "Things are looking good."

Ms Chapman was in Invercargill as part of a four-day tour of the lower South Island to meet customers and visit ASB branches. Her comments follow a survey published in August that says Southland was the fastest growing region in the country for the June quarter.

The National Bank's quarterly regional trends survey found Southland had a 2.1 per cent rise in economic activity in the quarter, the first time the region led the country since 2003 when the province had enjoyed New Zealand's fastest growth for three years from 2000.

At the time, National Bank chief economist Cameron Bagrie said the Southland results outstripped the remainder of the country because of confidence returning to the rural sector, buoyed by good autumn weather.

"Southland depends on the rural chequebook and mother nature," Mr Bagrie said.

Farm sales were stronger than at any time during the past three years, while tractor registrations were up to their highest levels since 2002, during Southland's boom.

Meanwhile, the region's unemployment rate was about 4.4 per cent for the year to September, compared to the 6.6 per cent national rate, according to a Labour Department report.

Substation move on the cards

15th November 2011

Source: The Southland Times

PowerNet has asked the Invercargill City Council if it can move Electricity Invercargill Ltd's Doon St substation to Queens Park.

The substation is currently located beside the water tower on Doon St, but PowerNet wants its new site to be beside the Blind Foundation premises at Queens Park so it will be more secure from a disaster, such as an earthquake causing waterspill from the reservoir.

The substation was critical in supplying electricity to Invercargill. After the Christchurch earthquake PowerNet was concerned a disaster close to the city could damage its ability to supply power to the central city.

The council's parks manager Robin Pagan, speaking at yesterday's infrastructure and services committee meeting, said the new substation would be in a "normal building".

The council will consult the Blind Foundation before deciding whether to put the proposal out for public consultation.

First-timers drive housing market

14th November 2011

Source: NZ Herald

Young professionals who stayed at home with their parents during the recession were now driving competition in the market for first homes.

Chief economist Tony Alexander said the need to spread wings, low interest rates, talk of housing shortages, rising rents and an improving labour market had first-home buyers out in force.

A Bank of New Zealand and Real Estate Institute of New Zealand (REINZ) survey found investor buying had dropped while first-home buyers had dominated sales.

"In contrast to investor activity, first-home buyer activity continues to rise very strongly and is perhaps the most notable feature of our survey in recent months," Alexander said.

He also noted people selling and buying again were much more likely to be downsizing rather than trading up.

The survey - of 10,000 licensed real estate agents - also found that the third-biggest motivation for selling, behind "needing the money" and "leaving town", was the break-down of a relationship.

Latest figures from REINZ showed 58.6 per cent of properties sold in October were in the under-$400,000 price bracket.

Peter Thompson of Barfoot & Thompson agreed the first- home market was busy but said the $1m to $2 million market also showed great growth. The first-home buyer's bracket was competitive but he warned buyers not to over-extend as interest rates would only rise.

Savings with second hand

First home owner Greg Skinner researched for five years before choosing to relocate rather than build on his family's dream site.

The Muriwai man found he could get more for his dollar with a second-hand home than a new build.

"Our house is nearly 200sqm and for the same money we would have only got a 100sqm of new house," Skinner said.

"With this option we got a big place with character and we think it is going to be worth more in a few years than a smaller modern house."

The four bedroom bungalow has plenty of space for his partner and two daughters.

The couple had to have it delivered, re-wired, re-plumbed, insulated, plastered and the interior painted - paying half of what a new build would have cost.

A new home based on between $1500 and $2000 a square metre would cost up to $400,000.

NZ property values continue slow climb

10th November 2011

Source: tvnz

New Zealand property values have continued their slow grind upwards, underpinned by gains in Auckland and in post-earthquake Christchurch.

Property values were 1.2% higher in October than a year earlier and are 4.4% off the peak in late 2007, according to government agency Quotable Value. Auckland region's values are just 0.1% from the previous market peak, and have driven national gains in an unequal manner.

"While initially the upward movement in values was being driven by Auckland and post-quake Christchurch, many other areas of the country are now increasing," said research director Jonno Ingerson.

"While there has been a slight increase in new listings in many areas, this has yet to translate into an increase in the number of sales."

New Zealand's property sector has been struggling to come out of the doldrums this year amid a lack of demand for new housing as people used record-low interest rates to repay debt rather than adding new borrowing.

Auckland property values were 2.7% higher than the same period last year with an average sale price of $526,861 over a rolling three month period, down from $529,028 in September.

Wellington area property values were 0.9% lower than in October 2010, with the average three-month sale price at $432,894, down from $433,714 a month ago.

Christchurch property values were 3.4 percent above the same month a year ago, with the average sale price at $379,462, down from $380,374, and Dunedin property values were 2.4% lower than in 2010, with the average sale price at $262,472 in October, down from $266,073.

KiwiSaver boost for first-time home buyers

7th November 2011

Source: Stuff Business Day

Buying a first home has been made a little bit easier for close to 2000 KiwiSaver members who have received government subsidies of between $3000 and $4000 each.

But others are missing out because they or their agents do not fully understand the process.

People who have been in KiwiSaver for three years can apply for a first home subsidy of $1000 for every year they have been contributing, up to a maximum of $5000.

The first KiwiSavers became eligible just over a year ago.

Since then, Housing New Zealand has received more than 3000 applications.

Figures as at the end of September show 1623 applications have been approved. Another 417 were pre-approved for people who were not yet buying a property but wanted to know if they were eligible. Of the pre-approvals, 197 expired before the applicants used them. (Pre-approvals last for 90 days.)

Most of the successful applicants – approximately 90 per cent – received $3000, while the rest received $4000.

As well as subsidies, KiwiSaver allows first-home buyers who have been in the scheme three years to apply to their scheme providers to withdraw their contributions, and their employer's contributions.

Government contributions cannot be touched.

Workplace Savings New Zealand executive director Bruce Kerr said some people had been missing out because they did not know they had to apply before settlement.

The group, which represents KiwiSaver providers, is working on a free guide to help people work out if they are eligible and how to apply.

Kerr said it was important everyone involved in the house buying process, including real estate agents, bankers and lawyers, was fully up to speed.

To be eligible for a subsidy you must have contributed at least 2 per cent of your income to a KiwiSaver scheme for at least three years, and plan to live in the house for at least six months.

A couple buying a house together can both qualify for a subsidy and receive up to $10,000 between them.

If one or two buyers are purchasing a home, they must earn $100,000 or less between them. The house must cost no more than $300,000, or $400,000 in Auckland city, Wellington city and Queenstown Lakes.

People can apply to withdraw money even if they don't qualify for a subsidy, as long as they have been in the scheme three years.

And people in a similar position as a first-home buyer (known as second-chance buyers) can also qualify.

NZ Property Report - Oct 11

2nd November 2011

House building figures hit new low

1st November 2011

Source: Otago Daily Times

House building in New Zealand has slumped to a new record low.

Statistics NZ said consents for just 13,533 new houses were issued in the year to September 2011, down from 16,292 consents issued in the year to September 2010.

Louise Holmes-Oliver of Statistics NZ said yesterday the big drop in seasonally adjusted figures for new home approvals in September partly reflected the strength of the increases in the previous two months.

Darren Gibbs of Deutsche Bank noted the extremely soft numbers and predicted Christchurch could help eventually.

"Following two months of solid improvement the number of dwelling consents issued fell sharply in September. Together with another soft reading in the non-residential sector, the near-term outlook for the construction sector appears likely to remain depressed despite widespread expectations that earthquake-related repairs in Canterbury will help boost the industry sharply from next year," he said.

Philip Borkin of Goldman Sachs & Partners NZ said the data was inherently volatile and the underlying trend was still rising, albeit at a more gradual pace.

Non-residential consent issuance was valued at $320 million in the month, broadly in line with the past 24-month average.

Statistics NZ said earthquake-related building consents were issued in Canterbury worth $29 million in September of which $26 million was for non-residential consents. Overall, residential consent values totalled $398 million in September, down 12 per cent compared with the same month last year, while non-residential consents totalled $320 million, down 13 per cent. Helen O'Sullivan, chief executive of the Real Estate Institute, said the number of new-house builds had reached critical lows and was a factor stopping people from listing their older houses.

Real Estate Institute warns buyers against unlicensed inspectors

The Real Estate Institute is warning against low-quality pre-purchase building reports and told consumers only to use inspectors who are members of two professional industry bodies.

Helen O'Sullivan, REINZ chief executive, said members of the Institute of Building Surveyors and the Royal Institution of Chartered Surveyors were qualified to do the work.

People should not buy a house without a professional written report, she said. Agents cannot recommend any provider in particular, but membership of the two bodies indicated inspectors were properly qualified and held professional indemnity insurance, she said.

A desperate shortage of houses for sale and poor inspection reports were two of the biggest problems dogging the real estate sector, she said.

The critical shortage of houses meant some people were being forced to buy before they sold, she said. The shortage was caused by the construction downturn and general economic uncertainty which meant people were reluctant to list their house for sale or move.

From around 2004 when about 11,000 houses sold monthly to now when only about 5500 places are selling, buyers were left with little stock to chose from, she said. The sector turns over real estate worth about $23 billion a year with about 66,000 residential properties selling for a median $350,000.

From about 22,000 agents at the peak of last decade's boom, only about 13,000 were licensed now, of whom about 10,500 were working.

The institute has rebranded and had a new focus, after the new act came in and the Real Estate Agents Authority and Real Estate Agents Disciplinary Tribunal were created, removing all the institute's disciplinary work.

O'Sullivan, who started last November, is a chartered accountant formerly of Korda Mentha and Crockers and said unregulated property managers were another huge problem for the sector. The recent failures of Wellington's Jericho Residential Property Management and Auckland's Trump Assets Management and City Gardens Management were of great concern to the industry, she said.

The institute wants managers to be regulated but the law change removed that, O'Sullivan said, as well as exposing vendors to a double commission nightmare where they might have to pay once to a selling agent and again to a listing agent.

Reduced values fare better than Qtown's

31st October 2011

Source: The Southland Times

Invercargill's land and capital values are down but are doing better than Queenstown's.

Valuations by QV (Quotable Value NZ) showed the city's overall capital value had dropped 4.2 per cent since 2008, while its land value dropped 6.6 per cent.

The average capital value of residential property in Invercargill fell by 4.3 per cent.

The average capital value of residential properties in Queenstown was down 11 per cent.

QV spokesman Brendon Bodger said Invercargill's property market had performed reasonably well over the past three years, but the market was still operating on low sales volumes, in comparison with the peak of the market in late 2007. "Invercargill performed reasonably well in the last three years, taking the recession into account," Mr Bodger said.

"The hardest hit areas are the central city and south Invercargill, while the higher valued areas of the city remained relatively unchanged from the last revaluation that was at 2008."

Invercargill real estate agent Sean Bellew said it was still a buyers' market, but he believed that would change soon. "Invercargill is doing well for coming off the back of a recession."

He predicted better times for real estate by early next year.

Real Estate Institute of New Zealand Southland president Murray Halstead was more cautious about the market and said that just because the capital value was down, this would not mean lower rates for homeowners.

The ratings from QV were not particularly relevant to real estate agents as they were usually a few months behind housing trends, Mr Halstead said.

"These are done purely for rating values and they don't necessarily reflect the market."

The market in Invercargill was "steady as she goes", with good assets selling well and poorer properties not selling well.

Mr Halstead said he had just sold a lifestyle block at 25 per cent below its 2008 rating.

This week's valuations showed an 11.2 per cent reduction in rural values, with all sectors showing a decline in value – the highest being the pastoral sector at 13.5 per cent.

There are 455 rural properties within the city or 4 per cent of the total value of the city.

Invercargill City Council environmental and planning services director Pamela Gare said the decrease in valuations did not necessarily mean a reduction in rates next year.

The QV values would be used for rating purposes from July 1 next year, she said.

OCR left unchanged

27th October 2011

Source: Reserve Bank of New Zealand

The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 2.5 percent.

Reserve Bank Governor Alan Bollard said: “Domestic activity has continued to expand at only a modest pace despite relatively strong commodity prices. More recently, domestic business confidence has fallen back somewhat. Further ahead, earthquake repairs and reconstruction in Canterbury are still expected to provide significant impetus for demand.

“As foreshadowed at the time of the September Monetary Policy Statement, there is a real risk that the European sovereign debt crisis could cause a further slowing in global activity, putting downward pressure on New Zealand’s commodity export prices.  The difficult international market conditions could also result in increased New Zealand bank funding costs over the coming year.

“Annual headline CPI inflation continues to be above the Bank’s 1 to 3 percent target band. That largely reflects the one-off effect of last year’s increase in the rate of GST. September quarter inflation data suggest that, once GST and other one-off influences have passed, underlying inflation is settling near 2 percent.

“Given the ongoing global economic and financial risks, it remains prudent to continue to keep the OCR on hold at 2.5 percent for now. However, if global developments have only a mild impact on the New Zealand economy, it is likely that gradually increasing pressure on domestic resources will require future OCR increases.”

Few firms big enough to consider Tiwai

25th October 2011

Source: NZ Herald

The future sale of Tiwai Point aluminium smelter near Bluff - one of seven separate assets being bundled into a new company by mining giant Rio Tinto - could become the focus of Chinese investment or stock-exchange listing.

The Tiwai smelter is one of the country's largest single exporters by value and has provided hundreds of jobs in Southland during the past 40 years, manufacturing some of the highest-purity aluminium available in the world.

Bids worth billions of dollars will be sought by Rio Tinto for the assets of the new company, Pacific Aluminium, which will encompass, with Tiwai Point, the Gove bauxite mine and alumina refinery; Boyne Smelters and its associated Gladstone Power Station; the Tomago smelter; and the Bell Bay smelter, all in Australia.

Research by Craigs Investment Partners indicates Tiwai has a value of around $1.4 billion while all seven assets under the new Pacific Aluminium umbrella are valued at almost US$7 billion ($8.7 billion).

Other Rio aluminium assets for sale separately - refineries in France and Germany and two smelters in Britain and the United States - are collectively valued at US$1.44 billion.The sales are expected to improve the performance of Rio's aluminium operation, which has struggled since Rio made the ill-fated Alcan acquisition for US$38 billion in 2007, the Australian reported last week.

Craigs broker Peter McIntyre said, because of the size and scale of each individual operation, just a few companies would have the ability to bid.

Of the top 10 aluminium producers, bidders could include Alcoa in the United States, Alumina in Australia, Chinese state-owned Chalco or mining giant BHP Billiton.

Alcoa and Alumina also have respectively a 60 per cent and 40 per cent share in joint-venture company Alcoa World Alumina and Chemicals, the world's largest aluminium business.

A foreign purchase of Rio's majority 79 per cent stake would require Overseas Investment Office approval, he said.

McIntyre did not rule out the possibility of Tiwai Point being floated on the stock exchange, given the value of each asset had been identified individually, alongside after-tax profit forecasts for 2011.

Rio has only signalled the possibility of selling the assets in the Pacific Aluminium bundle, but several analysts believe Rio could also float a new company.

McIntyre said Rio's preference appeared to be a separate sale, but a floated entity could be more attractive to some buyers.

He said in recent years, China's automotive industry alone had seen annual growth rates in aluminium use increase by 7 per cent to 14 per cent.

"Aluminium is the second-largest metal market in the world.

"There's likely to be interest from China because of demand, but it's important to New Zealand that the buyer takes a long-term view of ownership," McIntyre said.

Rio Tinto released few details on the proposed sale of Pacific Aluminium, other than saying a strong balance sheet meant it could choose the timing and method for selling the assets, cautioning that may not proceed until the global economic climate improved.

McIntyre said while the assets being bundled together were profitable for Rio, there remained suggestions of high costs being attached to aluminium production in general. Rio Tinto had indicated it wanted to rationalise those divisions and instead concentrate its efforts on increasing cash flow, he said.

Last week Rio Tinto said it had committed an additional US$1.3 billion to the development of the huge Simandou iron-ore field project in Guinea.

"Rio Tinto is accelerating the development of the Simandou iron ore project in Guinea with the approval of a further US$211 million for continued studies and US$1.11 billion of funding for commitments for early works and procurement," the mining giant said, AFP reported.

The announcement brings the amount spent or committed to the project to US$3 billion, including US$700 million paid to the Guinean Government to secure the right to mine in two sections of the huge deposit.

The smelter

* Commissioned 1971.
* Valued at about $1.4 billion.
* Forecast after-tax profit 2011, $114 million.
* Rio Tinto Alcan - 79.36 per cent.
* Sumitomo Chemical Company - 20.64 per cent.
* Staff 750, plus associated contract workers.

Home loans at most affordable levels in 8 years

25th October 2011

Source: Stuff Business Day

Lower average house prices and downward pressure on interest rates meant home loans hit their most affordable levels in September that New Zealand had been seen in eight years.

According to the latest Roost Home Loan Affordability report, last month offered the best levels of loan affordability since 2004 with 20.6 per cent of the average income of a couple on the median wage needed to meet payments on a floating 80 per cent mortgage for a median priced house.

This was down from 20.7 per cent in August this year. For singles on the median wage, it would take 50.7 per cent of a salary to meet mortgage payments, down from 82.2 per cent in September 2007.

However home ownership is still priced high for most people earning the median take home pay a week - almost $800, the report says. "Essentially the median income for the typical buyer is not high enough to buy a median priced house, even with a 20 per cent deposit," the report said.

The median house price eased off by $5000 to $350,000 last month and economists are picking the Official Cash Rate will be kept at 2.5 per cent into 2012, so floating mortgage rates are expected to stay low.

Floating interest rate were 5.73 per cent on average at most banks in September, unchanged since August but down 51 basis points from a year earlier. More than half of all mortgage holders nationwide are currently on floating options.

Rhonda Maxwell, spokeswoman for mortgage broker Roost Home Loans that produced the report, said banks were eager to lend.

"First home buyers are seeing low interest rates and a stable outlook into early next year, which is improving confidence," Maxwell said.

"Banks are also competing hard to boost their lending to property investors and first home buyers, who are increasingly withdrawing their KiwiSaver funds to use for deposits."

Airport quake worries raise the stakes

25th October 2011

Source: The Southland Times

An upgrade or rebuild of the Invercargill Airport terminal building is expected to cost about $8 million, with a decision set to be made in about two months.

Airport general manager Chloe Scala said there were two options for the airport terminal, which was built in 1963 and is considered old and tired.

One option was to upgrade the existing terminal and the other was to build a new one. Either way, the cost was expected to be about $8m.

The reason for the similar cost was the amount of work required to bring it up to building code requirements.

"It's possible it will make better financial sense to rebuild rather than upgrade, because of the work required."

If a new terminal was built its approximate location would be in the area of the covered walkway into the airport carpark, she said.

The airport, which is on reclaimed land, is one of several strategic Southland assets that could be at the mercy of liquefaction if a big quake hits. This is understood to have upped the stakes for the terminal building construction requirements.

Ms Scala said the investigations were still in the business case planning stage and no decision would be made for a couple of months.

A public survey of more than 500 people who used the terminal revealed what was already known: it was old and tired, but Ms Scala said there was positive feedback about the airport staff, the airlines and the cafeteria.

Suggestions for a new terminal included a children's play area and internet cafe, she said.

She had collated the suggestions and they would be considered when the terminal business plan was put together.

When the business plan was finalised, it would be put before the two airport shareholders – the Invercargill City Council's holding company Holdco and the Government – for a decision.

Holdco chairman Norman Elder said the Invercargill Airport terminal was one of the more deteriorated regional terminals.

"You compare ours with similar regions like Nelson and Rotorua and ours would almost be an embarrassment," Mr Elder said.

Several options existed to fund a new or upgraded terminal, but they had yet to be decided on.

Twelve cellphone towers to be built

21st October 2011

Source: The Southland Times

A mobile phone company spreading its tentacles into Southland plans to construct 12 cellphone towers in Invercargill and Bluff, and there is little residents can do to stop it.

2degrees Mobile spokesman Michael Bouliane said yesterday it had 12 sites planned for the Invercargill and Bluff areas, but not all were confirmed.

Work had begun on six of the towers in Invercargill and the remainder were in the planning stage. Once chosen, nearby residents would be informed, he said.

He hoped most of the towers would be built by the end of this year. Six of the towers would be in commercial/industrial areas, one would be in a rural area, and four or five smaller towers would be attached on to street lights in residential areas.

The heights of the towers would depend on their locations, he said.

Six of the tower sites were either on or beside the existing cellphone towers of rival telecommunications companies.

2degrees Mobile had committed more than $350 million to building New Zealand's third mobile phone network and had more than 580,000 customers throughout New Zealand, Mr Bouliane said.

The cell towers in Invercargill, complete with control boxes, would allow 2degrees Mobile to provide more competition in the mobile market, he said.

When asked about residents' concerns that the towers posed potential health risks, he said 2degrees made sure all its mobile phone sites met national standards and guidelines.

Under law, if the cellphone towers met Resource Management Act standards, national environmental standards and district plan requirements, the firm was not required to get formal consent from the council or consult residents before putting up the towers.

But Mr Bouliane said 2degrees always told residents and the councils of its plans.

Invercargill City Council planning and environmental services director Pamela Gare confirmed that if cellphone towers met district plan requirements, they were a permitted activity. On Tuesday night, Invercargill man Michael Wong presented the Invercargill City Council a 684-signature petition after learning 2degrees Mobile planned to put up a cellphone tower on council land outside his home. Rosedale residents at the council meeting to support Mr Wong, later said they were concerned at 2degrees Mobile's lack of consultation with them, the potential health risks of the tower and possible property devaluations.

Mr Bouliane said 2degrees Mobile had not yet decided whether to put a cellphone tower outside Mr Wong's house, on the corner of Layard and Wilton streets.

Tim Shadbolt defends World Cup costs

20th October 2011

Source: The Southland Times

Hosting Rugby World Cup events has cost the Invercargill City Council $700,000 in cash and staff time, but Mayor Tim Shadbolt said he believed the effort had been worth it.

Mr Shadbolt revealed the cost in a report tabled at Tuesday's city council meeting.

In the report he says "I believe it was well worth the commitment".

Yesterday he confirmed his belief the events had paid off for Southland.

"I think the feedback generally is that it was a well-run event down here, well organised. No problems, no issues, got the job done, no complaints, and the Scottish team sang our praises ... it was a great promotional event, how you value that I just don't know," he said.

Invercargill City Council finances and corporate services director Dean Johnston said the $700,000 included the $100,000 monetary contribution set aside by the council "three or four years ago" when World Cup planning started. The rest of the figure came from the reallocation of staff time to World Cup-related roles, Mr Johnston said.

Staff got busy about two months before the World Cup and at times there were 40 to 50 Invercargill City Council staff working on the World Cup, he said.

A value could not be put on the "warm, fuzzy feeling" and the joy and pleasure the cup gave people, he said. "The whole World Cup has gone off really well throughout the country," he said.

Southland Chamber of Commerce chief executive Richard Hay said the return on the council's investment was difficult to equate in the short term but in the bigger picture it was worth it.

"The money that has been spent was for the betterment of the region as a whole. It was imperative that we were part of the World Cup event and we would have been the bigger loser in the long term had we not have invested that money," Mr Hay said.

The Southland Chamber of Commerce had received positive feedback from businesses but just as much negative ones, he said.

Some accommodation and restaurant businesses said they were busy as a result and had a good turnover, while others had lost business because their regular clientele had blocked out coming to the area because of the Rugby World Cup, he said.

Some retailers selling products that would interest people coming for the World Cup did extremely well but those who did not have that sort of product, in some cases, lost revenue because residents kept away until the World Cup was over, Mr Hay said.

Report highlights boom-bust construction cycle

18th October 2011

Source: TVNZ

The boom-bust cycles that drive the New Zealand construction industry are adding to its low productivity, says accounting firm PwC in a report for the Construction Strategy Group.

The sector lobby group had Minister for Building and Construction Maurice Williamson launch the report in Auckland, as part of an effort to focus government attention on the skills shortages likely because of the Christchurch rebuild and the potential for an industry bust after that surge of activity concludes.

The earthquake restoration work, combined with nationwide leaky homes action and upgrades to seismic strengthening offer "the prospect of the largest construction-led boom" in New Zealand's history.

"Do we currently have enough skilled people to do the work?" the report asks. "How do we ensure the greatest building boom ever is not followed by the greatest bust?"

Among proposed answers to that prospect are greater planning of capital spending by local and central government, encouragement for public-private partnerships to accelerate public infrastructure projects, tax changes to discourage property speculation, and adding employment targeting to the Reserve Bank's sole focus on inflation.

The argument to curb residential housing boom-bust cycles is based on research showing this part of the construction sector is the "major driver of volatility."

The report shows how the building industry boomed through early to mid-2000's on the back of the residential property speculation boom, adding 60,000 jobs between 2000 and 2007, "almost 50 percent more than any other sector in New Zealand."

In the recession that followed, the sector then experienced "by far the largest decline in employment since the peaks of the boom years."

These trends, in turn, are encouraging low investment in relevant skills and allowing large numbers of construction sector workers to deal with downturns by simply leaving the country, possibly never to return.

This high volatility compared to other parts of the New Zealand economy was almost certainly contributing to the construction sector's poor record of labour productivity, which is the subject of one of the first investigations by the newly formed Productivity Commission.

The sector was also the fourth lowest paid, which also reflected its tendency to pick up large numbers of relatively unskilled workers.

"Volatile cycles in the construction sector do not allow it to build and maintain capacity, or to plan more than a few years out because there is no certainty over any length of time," the PwC report says.

Yet even a 1% improvement in the productivity of the sector would be worth $300 million a year to the New Zealand economy, PwC says.

While government spending could help smooth out cycles in the construction sector, its current contribution to construction spending was about a quarter of the annual total, meaning it could only partially offset big changes in private sector activity.

Better planning of capital and infrastructure spending, along with more use of PPP's, would both be ways to increase the government's capacity to dampen volatility in the sector.

The report also suggests that employment targeting, which is common in other countries' monetary policy settings, could be added to the Reserve Bank's single-minded focus on low inflation.

The New Zealand Institute, a think-tank, last month also called for the government to consider changes to monetary policy, including using quantitative easing - otherwise known as printing money - to help float the economy through recessions.

Optimism Bluff smelter to stay open

18th October 2011

Source: The Southland Times

New Zealand's biggest power user, the $1.2-billion-a-year aluminium smelter at Bluff, has been put up for sale by Australian miner Rio Tinto, with a second-tier aluminium operator or private equity firm seen as possible buyers.

The Tiwai Point smelter in Southland consumes about 15 per cent of the electricity produced in New Zealand and is supplied on a take-or-pay basis by state-owned Meridian. The smelter could be worth hundreds of millions of dollars.

Rio Tinto will sell 13 aluminium units worldwide, including refineries and smelters in Australia, as it seeks to streamline its Alcan aluminium business.

The new unit, to be called Pacific Aluminium, will be managed separately from Rio Tinto until it is sold off.

Tiwai general manager Ryan Cavanagh could not comment yesterday but he and his management team met with staff to discuss the announcement.

Business leaders in the south contacted about the pending sale of one of the largest employers said they were unfazed by the news.

Southland Chamber of Commerce chief executive Richard Hay did not see the changes having any impact on Southland in the short term.

If the smelter was sold, it could be an advantage depending on the investor, Mr Hay said.

"There is no reason to suggest that this move will in any way impact negatively on Southland."

Bill Walker, chief executive of Tiwai contractor Walker Group Ltd, was not worried about the announcement either. About 50 per cent of turnover at E-Type Engineering, a Walker Group company, was linked to Tiwai, he said.

Any future effect on the company would depend on who bought the smelter, he said.

Meridian Energy, which has a contract to supply power to the smelter, said it has supply contracts in place and a possible sale of the smelter was unlikely to impact on those.

Rio Tinto Alcan chief executive Jacynthe Cote told a press conference yesterday the changes would allow the company to focus on core business and grow the value of its high-quality, tier-one assets.

The 13 assets to be sold did not align with the company's strategy to focus on top-tier, low-cost, long-life assets, she said.

Ms Cote said all 13 companies were sound businesses that were well-managed and had productive workforces. There was no rush to sell, and Rio Tinto could wait to get the right price.

"We think they will have a solid future under new ownership."

The cutbacks are the latest in a series of moves following Rio's badly timed $49b acquisition of Alcan four years ago.

The asset sales include operations in Australia, such as the Gove bauxite venture and Tasmania's Bell Bay smelter. It will also offload assets in New Zealand and plants in France, Germany, the United States and Britain.

It is understood Rio Tinto's partner in the New Zealand smelter, Japanese firm Sumitomo, which holds just over 20 per cent, would have right of first refusal to buy the balance.

In the late 1990s, the then-Comalco New Zealand business seriously considered, then ditched, a public sharemarket float of the smelter. A float was still seen as a possibility, a source said.

But there would also be a benefit from a big company buying all the businesses for sale.

The source said it would be surprising if the Bluff smelter closed, given its valuable long-term "take-or-pay" power supply deal. But, if sold, the plant's long-term outlook could change significantly.

"That doesn't mean it will close, but you may end up with a second-tier operator who is less committed to the long-term performance of the business."

Fletcher Building has ruled out any interest in the smelter. Fletcher has a relatively modest aluminium windows and doors business, but was not interested in the production of raw aluminium, a spokesman said.

The smelter produced about 343,000 tonnes of aluminium last year, up 25 per cent on the previous year, which was affected by a transformer failure that cut a large part of the plant's production.

Most of the metal is exported to Asia with little downstream processing of the aluminium within New Zealand.

The smelter employs almost 800 staff and paid about $86 million in wages and benefits last year. The plant spent more than $340m on electricity last year.

The plant has a reputation for high-purity metal from a well-performing smelter and a highly skilled workforce, despite a plant that is about 40 years old.

The smelter had remained competitive internationally because of a programme of continuous improvement, an industry source said.

"It is easy to categorise it as an ageing asset." It was not unusual for older plants to be sold by a top-tier operator to second-level players, the source said.

Interest was expected from a range of industry operators and possibly private equity buyers.

But a key factor in the sale will be the power supply agreement with Meridian and how the plant will fare under the Emissions Trading Scheme.

Companies Office files show that Rio Tinto Alcan New Zealand made a $27.3 million loss in 2010, compared with a $15m loss in the previous year.

World aluminium prices are about $2750 a tonne, down from a recent peak of almost $35 a tonne earlier this year but still above the lows of about $2250 a tonne seen in the middle of 2010.

Take or pay

At present, the Bluff aluminium smelter contract to buy power is at a fixed price from state-owned Meridian under a take-or-pay agreement for about 543 megawatts of power.

The deal means the smelter pays for the power whether it is used or not and Meridian is obliged to provide the power. The final 10per cent of the power for the smelter is bought on the spot or wholesale market, and that volatile market has been an issue for industrial power buyers for many years.

The smelter has a new power contract from 2013, for 18 years, for 572MW. The price in the new contract is adjusted to reflect factors including the price of aluminium and the inflation rate. The amount the smelter pays for power rises or falls according to the rise and fall of aluminium prices.

Tiwai aluminium smelter up for sale

17th October 2011

Source: The Southland Times

The Tiwai aluminium smelter in Southland is being sold.

Rio Tinto, the majority owner of New Zealand Aluminium Smelters Tiwai-based smelter, announced this morning its interests in six Australian and New Zealand assets will transfer into a new business until called Pacific Aluminium, which will be sold off.

In a release Rio Tinto chief executive Tom Albanese says the assets identified in Pacific Aluminium are sound businesses with productive work forces, but they ''are no longer aligned with our strategy and we believe they have a bright future under new ownership''.

The move would allow Rio to concentrate on its strategy to grow the value of its high quality, tier one assets and to improve financial performance, the release says.

The assets included in Pacific Aluminium include: Australia  Gove bauxite mine and alumina refinery, Boyne Smelters and the associated Gladstone Power Station, the Tomago smelter and the Bell Bay smelter. New Zealand:  New Zealand Aluminium Smelters

The Pacific Aluminium group will be managed separately from Rio Tinto until it is sold.

The plant employs 740 permanent workers and 170 contractors. 

Farm sales for quarter rise 56.7%

17th October 2011

Source: Otago Daily Times

Farm sales for the three months ended September have increased 56.7% on the corresponding time last year, figures released by the Real Estate Institute of New Zealand show.

There were 257 farm sales in the three-month period, compared with 164 in the corresponding period in 2010.

Excellent early spring conditions and, for many, the best growing conditions in years combined with strong income levels was generating "cautious optimism" in the rural sector. That was being reflected by the banks' increased appetite for lending to farmers, REINZ rural market spokesman Brian Peacocke said.

Sales volumes reflected the early spring period, with many marketing programmes just commencing.

Early signs indicated higher expectations for volumes and prices as market momentum increased.

Supply of listings in some areas was becoming short, although the volume of properties available was higher than at the corresponding time last year.

The median price per hectare for all farms sold in the three months to September was $17,694, compared with $15,148 in the three months to August, and $17,447 for the three months to September last year.

Sales for the 12 months to September totalled 1053, the highest in more than two years.

Eight regions recorded increased sales volume for the three months ended September, with Wellington recording the largest increase (up seven sales).

Six regions recorded fewer sales, with Southland recording the largest fall (down 11), followed by Otago (down nine) and West Coast (down 6).

Included in sales for the month of September were four dairy farms at an average sale value of $32,334 per hectare.

The lifestyle property market remained "patchy and variable" from region to region, Mr Peacocke said.

The level of activity was indicative of the economic mood, but there was a sense of people holding back waiting to see how the market developed.

What's your house really worth?

17th October 2011

Source: Stuff Business Day

It's hard to know how much the bricks and mortar you inhabit or you've rented out is really worth, with property prices changing, councils updating their valuations and the neighbours selling their three bedroom bungalow for a lot less than you were hoping your own similar-sized house could fetch.

The prices residential properties sell for are now returned to almost the same levels seen in the market peak in 2007, before values crashed along with the worldwide economy in the global financial crisis.

Just last month, the national average prices houses sold for were more than 20 per cent higher than a year earlier - but that doesn't necessarily mean the cosy cottage that you call home has gone up 20 per cent in value since last Spring.

In Auckland, homeowners city-wide are nervously eyeing their letterboxes for notifications from local council about the new property valuations it recently carried out, to discover whether they'll be forced to fork out more for rates or not.

For many, the new council valuations are also a chance to get an idea of what their home is worth.

However many people say that you should only take the council valuations with a grain of salt, because they're just indicative of the amount of rates that should be paid and not really advice on what the house might sell for if potential buyers were to start a bidding war for it at auction this afternoon.

After all, how accurate could the valuation be if the person who created it hasn't been inside your house and taken stock of the fact that you upgraded the old kitset bathroom installed fifteen years ago with a swanky new shower and spa bath complete with Italian fittings or the lovely landscaping out the back?

Not very, most people would say.

Property Investors Association president Andrew King rubbishes council valuations.

"I put very little weight on CV's, they are very inaccurate. They're done in bulk and they don't specifically look at individual properties, just what the area has done since the last time it was valued. They may do a drive by but they're not going to be remarkably accurate," King says.

"I think all homeowners should look at what valuation is and if it doesn't appear right, investigate it and if necessary put in an objection."  

The Auckland council itself says that "a rating valuation is a reflection of a property's market value as at the date of the valuation, and that day only"

So what are your options if you don't want to rely on the rating valuation?

1. Go independent

There's always the option of seeking a professional property valuation before you look at selling.

President of the New Zealand Institute of Valuers Nicki Bilbrough says valuers give an independent and objective assessment of the current market value on the day the property was inspected.

"What a valuer does is come along and fully inspect the property inside and out, taking note of construction, age, condition, style. They measure up the gross floor area, look at the size of the site, its aspect, garaging and other improvements like  swimming pools and suchlike. They take note of the location, the condition of surrounding properties and they compare the subject property to sales that have occurred in that area," Bilbrough said.

"It's quite an involved process. People should look for a valuer who is an expert in the locality of the property they want valued."

Because valuers don't get any benefit from the price a property sells at - unlike real estate agents who are usually paid on a commission based on the amount the house sold for - their report is completely independent.

The period professional valuations stay current for depends on what the wider property market is up to. If it's in a boom period when prices are tracking up quite quickly, it might only last two months, Bilbrough says.

But in more stable environment it could be current for a longer period such as 4-6 months. If prices are falling it's a good idea to update a professional valuation after three months for a more up to date view.

2. Go online

There are several services that give people an approximate idea of what a house is worth almost instantly, like website Zoodle where anybody can buy a report on a property online.

The Home Valuer reports detail an estimate market value by compiling information such as comparable local sales and the rateable or council value.

Terranet is another website that provides details on property value, but instead of making an estimate it just shows the council value, similar recent sales nearby and aerial photographs.

3. DIY street slog

There are also other ways to get a good idea about what kind of price your house might sell for without putting yourself out of pocket even one penny.

Take some time to see what's happening in the area you're looking to buy in if it's a new home you're after or in your own neighbourhood if you're wanting to sell can create a reasonably clear picture of what a property is likely to be worth.

You could pop along to open homes in the area you're curious about to get a feel for what else is available in that market with your own eyes.

It might mean spending several Saturdays racing around between open home appointments but it's a great way to get a feel for an area.

King says that this might be a time consuming idea, but it's usually very effective.

"Going out and actually viewing homes that are for sale, talking to real estate agents, does require a lot of legwork but it means you become an expert in that area and get the know the good streets, bad streets and what's happening in the area."

He recommends being meticulous about the properties you're staking out the prices of by keeping all the promotional marketing material given out at the open homes, writing down the date you saw the house on that promotional blurb, and then following up with the real estate agent to ask what it ended up selling for.

4. The agents' view

The best part about this time-consuming and studious approach to approximating the value of property is that it won't cost you any money.

Building up a bank of opinions can give an idea of what a house might sell for. King suggests calling real estate agents from several different companies to talk about potentially selling your home.

The agents are usually happy to come over, look through the house and give what one would hope is an honest opinion about what a property will sell for.

They're more likely to be honest if not directly involved in the sales process at that point, even if they hope to be! 

If you are looking to sell your house, speaking to several agents before making a decision is always recommended in any case.

And don't forget if you do make the call to sell, make your house look as presentable as possible to potential buyers before you list it. That's one sure way of lifting its value.

Tenants face stiff competition for rentals

14th October 2011

Source: Stuff Business Day

The rental market is tightening, with advertisements falling 7 per cent in the September quarter, according to online website Trade Me Property.

Brendon Skipper, head of Trade Me Property, said the decline in listings had been led by Auckland (down 13 per cent), Wellington (down 30 per cent) and Christchurch (down 27 per cent), compared to the same period a year ago.

As a result, landlords were asking for a relatively modest 6 per cent more in rent.

"As the rental market tightens, tenants can expect to be competing against plenty of other prospective tenants for rental homes," Skipper said.

"We've already seen this start to occur, with the number of enquiries sent to landlords via the site up 10 per cent nationwide on a year ago, and spiking more than 20 per cent in Manukau, Wellington and Christchurch."

He noted the trend had been accompanied by a 14 per cent rise in homes listed for sale. "It's a bit early to get carried away so we will be watching to see if a trend develops, but we could be seeing the impact of Government tax changes or confidence in the `for sale' market starting to return."

At 30 per cent, Wellington had the largest drop in rental property listings, but enquiries from prospective tenants, or "demand", leapt 23 per cent.

Rents had been relatively flat in the Capital but Skipper believed they were set to come under pressure over coming months.

He thought Auckland's rental shortage was likely to ease as World Cup fever subsided. Rental asking prices in the inner city jumped 10 per cent and demand was up 9 per cent.

Demand in Christchurch soared 27 per cent as it become harder to find a home.

September property sales up 21 per cent

13th October 2011

Source: Stuff Business Day

The property market rebounded strongly in September from a year ago, but the usual spring lift failed to materialise with just 43 more houses sold than in August.

The number of properties sold across New Zealand last month was up 21.1 per cent from September 2010, with the latest figures from the Real Estate Institute of New Zealand showing 5,235 unconditional sales were written in September.

The median house price of $350,000 weakened 1.4 per cent, or $5,000, from August.

However, house prices were increasing from the low levels they sank to during the recession, with fresh data from QV showing property values were back to only 4.6 per cent below the 2007 market peak.

There were 869 houses sold in August, and 912 sold in September. Typically there is a larger leap seen in September with more houses sold as the weather improves.

"The volume data indicates that the New Zealand real estate market is in better shape when compared with this time last year with volumes up and a continued reduction in the number of days to sell," Real Estate Institute chief executive Helen O'Sullivan.

"That improvement is flattening out with a weaker than usual seasonal lift from August volumes. There is clear evidence from across the country that buyers are very focused on value and are well informed about what they can afford and are prepared to pay."

The number of sales in Auckland was up 1.5 per cent from August, with a 12.7 per cent increase in Otago and a 12.4 per cent lift in the Wanganui and Manawatu.

Wellington sales suffered, with volumes falling 9.3 per cent in September from the previous month and a 6.5 drop in Waikato and Bay of Plenty, with a 7.9 per cent fall seen in Taranaki

"We're seeing is an interesting market with listings improving though still reported as tight, plenty of buyer interest but only on a very rational basis - there is no appetite on the part of buyers to overpay or rush to purchase," O'Sullivan said.

QV data, which is calculated from sales data for three months leading up to when it is reported, showed Auckland had the biggest lift in property values, with a 3.7 per cent increase since January and a 3.4 per cent lift from this time last year.

QV research director Jonno Ingerson said there were signs the market may also be turning in other areas.

"Values in Hamilton edged up very slightly over the past month after being flat for several months and are now only 1.2 per cent below last year.''In Tauranga, values have been gradually rising for several months now and as a result values are only 0.1 per cent below last year. Both Hamilton and Tauranga are still nearly 12 per cent below the market peak," Ingerson said.

"Dunedin continues to be volatile, but rises in the last month mean that values are now only 2.0 per cent below last year.''

Values in the Wellington area appeared to have levelled off in recent months and were now 1.1 per cent below the same time last year, he said. Wellington was 7.6 per cent below the 2007 market peak.

''In Christchurch values continue to steadily increase, they are now 2.1 per cent above the same time last year."

Of September house sales, REINZ showed 184, or 3.5 per cent, were above the $1 million price mark. Nearly 12 per cent, or 617, were between $600,000 and $999,999.

The majority - 60.3 per cent or 3,158 - were in the under $400,000 price bracket, with the remaining 1276 properties, or 24.4 per cent, sold for between $400,000 and $600,000.

Prices increased the most in September from August in the Hawke's Bay, with a lift of 8.3 per cent, while Auckland houses sold for 4.9 per cent more in September. Wellington sales were up 4.1 per cent in price.

Real estate mobile search comes to the Android smartphone

12th October 2011

Source: realestate.co.nz

The success of theRealestate.co.nz app for the iPhone has transformed the NZ real estate search experience. Every day thousands of eager property seekers fire up the iPhone app to checkout what property is for sale or rent right around where they are at that time. It’s the only property app in NZ for a smartphone that utilises the GPS capability to help you discover your favourite new home, from the most comprehensive database of listings for properties on the market.

All of these benefits has made the Realestate.co.nz app for the iPhone the mobile app of choice and is why over 40,000 downloads have been made through the iTunes app store in the past 11 months – with still over 100 new downloads every day.

The iPhone is unquestionably an innovative and highly appealing device, but globally the Android operating system is proving the leader with over 500,000 activations a day globally. In NZ the Android platform offers a wide range of smartphone options and this why it is so important for all these Android smartphone owners to have a mobile app for house hunting. To meet this need Realestate.co.nz is delighted to release an Android app to complement the iPhone app .

The functionality is very similar – again offering the only GPS enabled property search app in NZ for the comprehensive selection of property on the market. The app for both iPhone and Android draws on the enormous property database of Realestate.co.nz hosting as it does over 95% of all listed properties by licensed real estate agents.

The Android app is free and can be downloaded through the Android marketplace. Simple and easy to use and sure to swell the numbers of property seekers turning to their smartphone as well as their web browser to search for their next home.

Concerns over planned wind farm

12th October 2011

Source: The Southland Times

A proposed wind farm near Bluff would be able to be seen from Invercargill and Riverton, a resident said yesterday.

Bluff Community Board member Charles Te Au said he was undecided on the project.

"I'm not keen on looking at them but then again I understand where they are coming from with sustainability ... you'll be able to see it everywhere from Invercargill through to Riverton."

Bluff is known as an industrial town, but Mr Te Au said its demographic was changing.

"There's a high older population and though it's a port for Southland, it also needs to be a destination, rather than dumping everything here saying it's only Bluff."

Energy3 held a public open day in Bluff for residents to come and view plans and discuss the wind farm idea yesterday.

Another long-time resident of Flat Hill, near Bluff, says she is concerned the community has not been able to talk about the wind farm planned on the hill, despite the open day being held.

Louise Fowler said Bluff residents did not know much about Energy3's plan for an eight-turbine wind farm.

"It's going under the radar, so to speak," she said.

However, she said the open day meant people would come in dribs and drabs rather than all being present at a public meeting.

"They are the community that is going to be looking at this thing on the hill," she said.Energy3 director Warren McNabb said some residents were concerned about the noise. However, there were strict noise standards covering wind farms in New Zealand.

"If you breach you have to turn your turbines off."

Energy3 specialised in small wind farms, but it was fair to say the Bluff project was the largest it had taken on, he said.

Dairy farm rates soar 58pc

6th October 2011

Source: The Southland Times

Environment Southland has increased rates for dairy farmers by 58 per cent as part of a bid to save the Waituna Lagoon, but the move has angered some in the industry.

The regional council unanimously confirmed the rates levels set out in its 2011-12 annual plan yesterday. The dairy differential rate would rise to $451,435, about $200 extra per farmer this year according to the council.

The extra cost would cover the employment of a planner to help save the Waituna Lagoon. The cost would fall on all dairy farmers, not just those in the Waituna catchment.

Federated Farmers Southland dairy chairman Russell MacPherson was angered the dairy sector was being asked to pick up the bill.

"It's a Robin Hood – robbing from the rich to give to the poor," he said. "If the community is demanding a change [in] status of the Waituna everybody has got to pay for it, not just one sector."

Farmers were trying hard to reduce the impact of the industry, but Environment Southland was still putting the boot in, he said.

"Once again they are getting stuck in to dairy farmers thinking we are the cause of the problem, but I don't think that's quite correct."

Environment Southland director of environmental management Warren Tuckey said dairy farmers would fund the new position because the Waituna issue was caused by land-use intensification for dairying. "The council decided it was the most appropriate place for the funding to come from," Mr Tuckey said.

The money would buy a senior planner's time for three days a week, plus two days a week from another staff member, he said.

The council had decided all dairy farms would be charged because the work done on the Waituna would eventually benefit the whole region, he said.

$138,258 of the money raised would fund the planner, $144,000 would go towards land sustainability support, $105,400 for a discharge plan review and $5000 on maintenance.

In addition to the rates rise for dairy farms, 86 per cent of ratepayers would see a rise up to $50, Environment Southland said.

The owner of an Invercargill house with a capital value of $285,000 and land value of $195,000 would pay $7.64 more next year.

In Winton, a house with a capital value of $235,000 and land value of $94,000 would see its owner pay $2.86 more.

A Gore house owner with a property worth $250,000 and a land value of $57,000 would pay $4.34 extra.

Exports key to surviving 'storm'

5th October 2011

Source: The Southland Times

Exports will continue to fuel Southland's way out of the global economic crisis.

That was the message from business leaders at last night's Chamber of Commerce Out of the Storm event.

Meeting at the Kelvin Hotel in Invercargill, major players in key sectors of the economy talked about what lies ahead for Southland on the way out of recession.

The health of dairy exports would continue to drive the economy for the foreseeable future but, while strong growth would continue, there were dangers, the audience of about 100 was told.

Environment Southland chief executive Ciaran Keogh said Dairy New Zealand's prediction the Southland industry would double in a decade was achievable but it would have to overcome new challenges.

One would be coping with a dry spell in Southland's climate.

The region appeared to suffer long wet and dry periods, and the wet spell of 1980-2005 was coming to an end.

"Rainfall keeps us going," he said.

Farming techniques would have to change to continue to be profitable and sustainable in the future, he said.

"Doubling can be achieved but it's got to be done differently."

Brendon Harrax, of business consultants Harrax Group, said debt also posed a problem for dairy farming's future.

While dairying was bringing in record incomes, the funds were used to pay off debt on existing farms. The sector would rely on money from overseas, such as the investment from Germany's Aquila Group, to fund new projects.

Other sectors seemed positive about the future and appeared to be over the worst of the recession.

The New Zealand Aluminium Smelters' carbon division manager Stew Hamilton said the Tiwai smelter was a hostage to the global aluminium price, which was recovering from a significant drop during the global financial crisis. However, it had focused on maximising productivity and quality and had the lowest production costs in the entire Rio Tinto Alcan group.

Venture Southland's Steve Canny ran through the projects being pursued in the region, such as lignite development, growth in the forestry sector, silica production and others, which could bring in a capital expenditure of $15.9 billion and hundreds of new jobs. "Not all of those will come off but many will," he said.

Mitre 10 Mega Invercargill general manager Jason Smith said many companies in the retail sector had suffered in the recession, but had emerged with priorities sorted and hoped to reap the benefit from some of the projects.

While his family business, H&J Smith, had to shed its flooring and appliance operations, it had come through the tough times and seen a growth in its customer count, he said. The retail sector was the end benefactor of money produced by export and development in the region: its strength was key, he said.The benefits of "dropping another two or three Tiwais into the region" would be huge, he said.

South Port chief executive Mark O'Connor said his company had recorded 43 per cent growth in its traffic in the past two years despite the recession, off the back of the Tiwai Point aluminium smelter and the forestry sector.

One new development was the export of eucalyptus wood chips from trees planted in the 1990s, which are used to make high-grade paper in Japan, he said.

Reserve Bank 2011-2012 report

3rd October 2011

Source: The Reserve Bank

During a year of shocks and volatility, the Reserve Bank has focused on the resilience of the New Zealand economy and financial system, while staying on top of inflationary pressures, Reserve Bank Governor Alan Bollard said today.

Releasing the Bank’s 2010-2011 Annual Report, Dr Bollard said the developed world is struggling to cope with the aftermath of the global financial crisis and the very large accumulation of public and private debt in the last decade.

“It is now clear that we have a slow grind ahead, with surprises and disappointments that we cannot necessarily foresee. The Bank has been seeking to increase the resilience of the financial system, which will help reduce its vulnerability to external shocks.”

The Annual Report chronicles a year marked by market volatility due to unsteady recovery in the US and ongoing sovereign debt crises in Europe, while the Canterbury earthquakes have caused significant disruption, destruction and economic uncertainty.

Offsetting this, domestic activity has been stronger than expected, and farm earnings have benefited from strong commodity prices, driven by growth in China, East Asia and Australia.

However, future inflation expectations have risen as tax changes contributed to a hefty rise in headline inflation. A very strong kiwi dollar has offset the inflationary impact to some extent.

“Overall, the Bank will need to monitor the situation carefully especially as there is now a real risk that global economic activity could slow sharply,” Dr Bollard said.

The Bank reported a net profit of $144 million for the year to 30 June 2011, and paid a dividend of $210 million to the Crown.

The Annual Report notes that the Bank has continued its investigations into macro-prudential tools that may help bolster financial system resilience and moderate credit cycles, though Dr Bollard cautioned that expectations need to be realistic about what can be achieved.

Also featured in the Annual Report is the Bank’s work on tighter prudential standards. These include Basel III and the implementation of capital models for housing and agriculture, recently introduced liquidity requirements, and progress on insurance regulation.

“At the same time, we have had to manage our own balance sheet to take into account big moves in the kiwi and fragility in offshore sovereign markets. Our foreign reserves benchmarking project will help us to do this in the coming year.”

The Annual Report notes that, as the New Zealand currency ages and security features mature, work has started on a multi-year banknote upgrade project.

It also recognises the improvement to the Bank’s ability to handle significant Wellington disruptions by using its new Auckland office disaster recovery capability.

“As the current environment demonstrates, we can expect more disruption and fragility ahead, much of it originating from offshore. We cannot predict all of this, but we can plan to be resilient through it.”

You can read the Annual Report at the following link: http://www.rbnz.govt.nz/about/whatwedo/0094054.html.

Cut unlikely to hit mortgages

3rd October 2011

Source: Stuff Busines Day

New Zealand's credit rating was knocked down a notch by two agencies, just a day after the Government hauled in a massive $1 billion from investors, showing there is no lack of appetite to put money in New Zealand.

Both Fitch and Standard & Poor's cut New Zealand's rating from AA-plus to AA yesterday, with the biggest impact seen in the dollar, which fell about US1 cent. The Kiwi dollar ended at US76.76 cents late yesterday, down from as high as US78.28 cents the previous day. The dollar is back to levels last seen in April.

A downgrade means New Zealand is seen as more risky, and in theory means higher longer term interest rates to compensate for the risk. Some economists said the downgrade could see longer term rates rise slightly, but it would have little impact on short term or floating rates.

International borrowing costs could rise by 5 to 10 basis points as a result of the downgrade, Deutsche Bank said, but that would be more for long-term borrowing, rather the floating rates where most people borrowed at present.

However, on Thursday, the government's Debt Management Office raised a massive $1b in one of the biggest bond tenders this year, showing there was no lack of interest in New Zealand.

Economists say the Government had easily borrowed money internationally this year.

Bank of New Zealand chief economist Tony Alexander said in theory a credit rating downgrade meant slightly higher interest rates.

But the impact of the downgrade was likely to be "lost in the wash" for mortgage interest rates, with downward pressure on global interest rates.

The five-year swap rate, an indicator of long-term mortgage rates, is about 3.70 per cent, down from about 4.56 per cent in early August. So that recent fall, driven by international events, would cap any rise in longer term rates in New Zealand, as a result of the credit downgrade, ASB Bank said.

Longer term borrowing rates reflected what was happening overseas, while short-term rates were influenced by the Reserve Bank here.

BNZ's Alexander doubted it would lift rates any time soon.

New Zealand had no history of default and the government had run surpluses for many years before the recent run of deficits.

At AA, New Zealand's rating remained high, with a low level of government debt by world standards.

"There is not much the government can do to alter the credit rating outlook. It is up to the private sector and household to build up financial assets and get debt down," Alexander said.

Alexander doubted the credit downgrade would see the Kiwi dollar fall much further, when internationally other countries were being downgraded.

Fitch rating for NZ: AA – a low risk of default New Zealand's rating by Fitch remains near the top of the international tables, close to Australia's AA-plus and well above the basket cases of Europe such as Greece on CCC, or Portugal on BBB minus.How does nz rate?

Anything above BBB is "investment grade" and below that is "speculative" down to a D rating. AA means there is "a very low default risk", that is, little risk of not paying debts as they fall due, while at CCC default is a "real possibility", with single C meaning that a default is about to happen.

NZ Property Report

3rd October 2011

Source: realestate.co.nz

Housing deals work out better for buyers

3rd October 2011

The spring surge of new homes for sale has arrived, despite the distraction of the Rugby World Cup, but average selling prices are still lagging more than $50,000 behind asking prices.

The average asking price in September rose 2 per cent to $425,565, according to the latest New Zealand Property Report from Realestate.co.nz.

However, selling prices are flat, rising just 1 per cent in the past year, despite the lowest floating mortgage interest rates since the 1960s. Those rates are set to stay low till well into next year as a result of the uncertain global economy and an ongoing government debt crisis in Europe.

The surge in listings came through last month, despite the international rugby tournament and the upcoming general election next month, which do not appear to have stopped people putting homes on the market.

"New listings continued to come on to the market – by no means a flood, but in line with seasonal trends," the report says.

Source: Stuff Business Day

The flush of new listings led to a $10,000 rise in the average asking price for property for sale. There is typically a rise in asking prices during spring, but this year it was stronger than usual.

Although there were no figures yet available for final selling prices for homes put on the market last month, the previous month's figures show a large gap between asking prices and final selling prices, the report says.

In August, the asking price was about $415,000, but the selling price was about $363,000 – a gap of almost $52,000. In July, the gap between buyers and sellers was $42,000.

So although asking prices have risen about 3 per cent in the past year, the average sale price is virtually flat, up just 1 per cent, the report says.

There were more than 11,000 new listings on the market in September, up 10 per cent on August, but because there is usually an increase in the month, the seasonally adjusted rise was just 0.3 per cent.

Realestate.co.nz chief executive Alistair Helm said the rise in asking prices showed sellers were "clearly looking to capitalise on the higher demand for property".

The stock of unsold homes on the market was up slightly to 37.2 weeks of inventory, if present weekly sales rates continued. The stock on the market has steadied after dropping for five months, but was still below the average stock on the market of 41 weeks.

Figures issued last month from valuation agency QV showed national average prices were up just 0.1 per cent in the year to August. QV figures showed Wellington house prices were down 2.4 per cent in the same period but Auckland prices rose more than 2 per cent.

National average asking price in September: $425,565, up 2 per cent from August.Slow movers

New listings in September 11,117, up 0.3 per cent seasonally adjusted.

Inventory (stock on the market) 46,299 homes, flats and lifestyle properties.

The stock would take 37.2 weeks to sell at current rates.

More trades places at SIT

29th September 2011

Source: The Southland Times

The Southern Institute of Technology has been awarded more places on trades programmes to ease a predicted skills shortage in Christchurch, but late confirmation of these places and a "subdued demand" means they may not be used.

The Tertiary Education Commission has given the polytechnic an additional 30.6 equivalent fulltime students, or EFTS, for its construction and electrical programmes, which equates to an extra $304,103 funding.

Deputy chief executive and academic manager Julian Galt said the polytechnic could not be sure the additional places would be filled.

"However, we have a sound record of achieving our targets, and expect to do so in this case as well."

The extra places would be available when the polytechnic reached 103 per cent of its budgeted EFTS for the year. If an institution falls below 97 per cent of its target, or goes above 103 per cent, its funding is affected.

The polytechnic could only speculate on reasons for the subdued demand for the trades courses, Mr Galt said.

"In the trades training area demand varies between years and between trades, and it is difficult to determine the drivers of these variations in demand."

The polytechnic was also allocated an additional 10 EFTS on its Youth Guarantee Scheme. Mr Galt said this year's allocation was almost full and it was expected the additional places would be filled as well.

The scheme provides free one-year courses to 16 and 17-year-olds who have not achieved NCEA Level 2, and who will be studying a level 1-3 course with literacy and numeracy. Eligible students have their course fees and costs waived.

'Aussie invasion' to boost tourism in South

28th September 2011

Source: Otago Daily Times

A $1.6 million campaign aimed at boosting South Island tourism numbers with an "Australian invasion" has been launched by Tourism New Zealand and partners.

The Spectacular South Island Road Trips campaign is pitched at three markets - 18-29-year-olds, families and the over-55s - encouraging them to hire a rental car or campervan and explore the South Island.

Tourism New Zealand and regional tourism organisations Destination Queenstown, Tourism Dunedin, Lake Wanaka Tourism and Christchurch and Canterbury Tourism have partnered in the campaign.

Destination Queenstown chief executive Tony Everitt welcomed Tourism New Zealand's support for the "largest single advertising campaign Destination Queenstown has been directly involved in".

After the Christchurch earthquakes, tourism numbers to the resort were down 10% with fewer visitors arriving from Japan and South Korea.

Australia was New Zealand's largest inbound tourism market, and with favourable exchange rates and excellent air links it "still has a lot of potential for us".

New hotel capacity in Queenstown meant the resort needed to grow rather than retain current numbers, he said.

Tourism Dunedin chief executive Hamish Saxton said the campaign was a response to a softening of arrival numbers, and a reduction of airline capacity into Christchurch since the February earthquake.

"This has the potential to revitalise and get Australians coming to the South Island and trying the quintessential road trip."

The three South Island international airports - Christchurch, Queenstown and Dunedin - would be promoted, along with road trips around those arrival points, he said.

Australia was more responsive than long-haul markets and it was hoped the campaign would result in more visitors coming from across the Tasman during the next six months, he said.

Tourism New Zealand general manager Australia Tim Burgess said the three-month campaign would also ensure the South Island remained a popular tourist destination for Australians in the years to come.

"Most New Zealanders know that the South Island is the perfect place to do a road trip.

This campaign enables us to make sure Australians are aware of that too, and encourage them to experience it for themselves first-hand."

Multimillion-dollar port project

28th September 2011

Source: The Southland Times

A $4.5 million dry storage warehouse project will begin at South Port in the next few months to keep up with increasing demand from the agriculture sector.

At the South Port annual meeting yesterday, chief executive Mark O'Connor announced the construction of the multimillion-dollar warehouse, with the first of the two stage development, at 3000 square metres, beginning in the new year.

The port had several contracts for dry storage, which included stockfeed such as palm kernel and molasses, but dry warehousing was limited so more space was needed, he said.

"All the existing dry warehousing at the moment is fully occupied at the port," he said.

It was the growth in the agriculture sector that had prompted the expansion, while there was also an expected increase in stockfeed demand, Mr O'Connor said. "We saw some fairly strong stock import volume in the province in the past year and there is potential for this dry storage warehouse to be required for stockfeed."

The first stage, which would cost about $2.5m, would be constructed by Calder Stewart and was expected to be completed by June, while the second stage was expected to double the size and would be reviewed in about 12 months to make sure it was still viable, he said.

The Bluff-based company's performance figures for the financial year ending June 30 were released last month and showed cargo movements on the island harbour hit a record of 2.64 million tonnes, up 470,000 tonnes on last year. This resulted in a normalised profit of $5.98m, up $770,000.

Primary industries remained the key to the port's growth, with log volumes exceeding 300,000 tonnes last financial year, a substantial lift from about 100,000 tonnes two years previously, Mr O'Connor said yesterday.

South Port outgoing chairman John Harrington, who stepped down from the board of directors following the meeting, said New Zealand Aluminium Smelters was still the most vital client of the port, especially because there was no guarantee shipping lines would continue.

The company's target profit for the 2012 year was between $5m to $5.3m, he said. This reflected the effect on trade from continuing global economic uncertainty and represented a 10 to 15 per cent reduction for the 2012 financial year.

Precincts planned to Invercargill

23rd September 2011

Source: The Southland Times

An inner-city working group tasked with revamping the rundown Invercargill CBD has revealed a strategy in which the Visitor Information Centre and Southland Museum and Art Gallery could be relocated to the city centre.

Carpark buildings and an arts centre could be built, Wachner Place improved and old buildings demolished and replaced with public spaces.

Working group boss Norman Elder said yesterday the idea was to break the city centre into different precincts, such as one for entertainment and others for cafes, night-time, warehouses and during the day.

"There's a lot more detail still to come, including narrowing down Dee and Tay streets to make them more pedestrian friendly," Mr Elder said.

The plan was to make the CBD more relevant to people, he said.

"We want people to come into the CBD because it's attractive, boutique, it's got entertainment and events happening ...

"What we do now has got to save the city centre and set up the city for the next 100 years."

The working group, which has $50,000 a year to spend on its planning, has identified eight priority projects for the central business district.

They revolve around promotion of the city centre, heritage, parking, pedestrians, promoting development, creating areas of open space and facilitating events happening in the city centre.

It has been working on its ideas for six months in a bid to turn around the fortunes of Invercargill's city centre, where pedestrian numbers have fallen and businesses have moved out.

The area has many old and structurally poor buildings and many upper floor spaces are empty.

The working group's ideas, which have been endorsed by the Invercargill City Council, are now going out for public feedback before any final decisions are made.

The council will open a shop in Esk St today where members of the public can view the working group's priority projects and give their feedback during the next 10 days.

Mr Elder said he expected the public consultation phase to be over by December so the design phase could begin.

The group was also getting technical reports done on parking, roading and the strength of buildings in the CBD, and would be asking businesses why they had moved out of the city centre.

Vibrant Invercargill boss Joan Scarlett said yesterday she was excited about the plans the working group had outlined.

She stressed that the location of a proposed new Invercargill Licensing Trust hotel, museum and the Visitor Information Centre in the CBD were critical to its success. If those buildings were located in the right places, they would attract more people to the CBD, which was what was needed, she said.

The top eight priorities of the inner city working group, which has been tasked with upgrading the CBD, are:Promote the city centre in a way that encourages people to visit it and businesses to locate in it.IN A NUTSHELL

Develop measures to make the city centre an attractive place for existing businesses to remain and other businesses to locate to.

The area being discussed goes from H&J Smith at one end to The Warehouse at the other, and takes in the Crescent and the Kelvin St banking precinct.

Promote the CBD as the key place to do business.Retain the authenticity of the inner city while addressing structural issues and obsolete buildings.

Identify parking locations and pedestrian linkages which make it easier for people to move around the city centre.

Make it easier to cross Dee and Tay streets and revamp those streets to make them more pedestrian friendly.

Upgrade and create vibrant and exciting public spaces that provide an enhanced visitor, shopping and worker experience.

Invercargill mayor all for global warming

22nd September 2011

You can't help but laugh at this 3 News article. You've got to love Tim Shadbolt!

While the world worries about the damaging effects of global warming, New Zealand's southern most city is hoping to use the scourge to its advantage.

Invercargill Mayor Tim Shadbolt says rising temperatures will soon make the cold southern outpost an appealing new home for hundreds of people sick of hot and unpredictable weather in their home towns.

"Australia is a great example," Mr Shadbolt said.

"Half a million Kiwis have moved over there and are always gloating about the lovely climate, but with all the firestorms it's really becoming less appealing.

"Coming to lush, green drought-free, fire-free Invercargill will be a great option for a lot of people."

Invercargill had not seen a population rise in 30 years before a tiny increase of 0.08 per cent was recorded at the 2006 census.

Bold plans like introducing free tertiary education are thought to have helped but too many new residents soon leave, turned off by the lack of jobs, chilly climate and isolation.

Undeterred, Mr Shadbolt has unveiled a grand 30-year plan to increase the population by 25 per cent by boosting the region's energy and forestry industries.

He said experts brought in have told him the so-called sunbelt drift to warmer climates was the biggest threat to the city's population growth.

"But we reckon with global warming kicking in and all this catastrophic climate change coming, maybe having a cold climate could work in our favour."

He said locals liked to think they were environmentally conscious but were all thrilled to hear world temperatures were set to rise by two degrees.

"There were cheers across the city. It will be warmer and this will be the place people will want to be."

He said the city had one other major drawcard.

"We've got the best indoor velodrome in the whole of New Zealand, because it's the only indoor velodrome in the whole of New Zealand."

Rugby fans lead surge in visitors

21st September 2011

Source: Stuff Business Day

More than half of the extra visitors who arrived in New Zealand from overseas in August were here specifically for the Rugby World Cup, showing the impact the tournament is having on tourism.

There was a 4.7 per cent increase in the number of people who came here last month compared to August 2010, according to the latest data from Statistics New Zealand.

Of all the people who arrived here in August, 4,400 of them were fans here to celebrate and support the Rugby World Cup. About 1,200 of those arrived in the final week of August.

Since July, a total of 5,600 people have travelled to New Zealand for the Rugby World Cup.

With this time of year not typically popular for international tourists to visit, Tourism New Zealand chief executive Kevin Bowler said local businesses will be glad for the fans' spending.

"We look forward to seeing further increases in international visitor arrivals for the Rugby World Cup 2011, giving many New Zealand businesses a boost during the tourism industry's shoulder season," Bowler said.

In the 10 days since the tournament began, at least $12 million has been spent through credit cards by international visitors in sectors such as food and drink, hire cars and accommodation.

Sales of farm property in New Zealand at highest for two years

21st September 2011

Source: Property Wire

Farm property sales in New Zealand are at their highest for nearly two years and the trend is likely to continue, according to the latest report from the Real Estate Institute of New Zealand.

In total 1,003 farms were sold during the 12 months to August 2011. This is the first time since October 2009 that the annual tally had exceeded 1,000 which indicates an underlying rising trend, the organisation it said.

Institute rural market spokesman Brian Peacocke said farmer returns remained solid with an expectation for commodity prices to hold or in some cases firm slightly as the season progressed.

There were 265 farms sold in the three months to the end of August, up 38% on the same time last year but down 12% on the end of July.
Dairy farm sales were low, as expected for this time of year, although there was demand for good quality grazing, fattening and dairy support units with sales spread evenly across the country, he said.

‘What is encouraging is the solid increases in the number of sales across most farm types compared to this time last year, with all but one region recording an increase in sales compared to August 2010,’ Peacocke explained.

The median price per hectare for the three months to August was $15,148 for all farms, compared to $16,968 last year.

‘I think that as more properties become available based on the inquiries that are emerging already that will put a little bit of pressure on prices if the shortages of supply continues. So we expect that there'll be more properties being sold but the prices will be remaining reasonably constant,’ he added.

Lifestyle market sales for August were down from a peak in May but well above last year The number of lifestyle properties sold for the three months to the end of August was 1,304, up from 1,066 in the same period last year, with a median price of $444,000 down from $453,000 for the period ended July.

‘The continued easing in the median price is consistent with the trends in the rural and residential property markets, where sales volume increases are occurring but prices are either trending sideways or easing,’ Peacocke said.

Extra $12m spent in first 10 days of RWC

20th September 2011

Source: The Southland Times

Tourist spending spiked during the first few days of the Rugby World Cup tournament, with $12 million more spent from overseas-owned credit cards since the opening ceremony.

Electronic transaction processor Paymark, which puts through 75 per cent of all credit card sales in New Zealand, said it saw a 32.5 per cent increase in spending on foreign cards compared to the same period last year.

The bulk of this extra spending was on food and drink, with a $9.2 million or 10.3 per cent rise noticed in the hospitality sector compared to the same time last year.

Rental car companies have enjoyed a $2.1 million or 32.5 per cent year-on-year increase in business, and accommodation spending was up by $0.9 million or 4.1 per cent.

The day after the opening ceremony was held in Auckland, there was an extra $1.5 million spent in the city taking total foreign credit card spending up by 25.1 per cent compared to the same Saturday in 2010.

Paymark chief executive Simon Tong said most of the spending was in cities that were hosting games, which linked the increase to the Rugby World Cup, but spending nationwide outside these sectors had only risen by 3.5 per cent compared to last year.

"So while it's clear that host cities and specific sectors are seeing great benefit from the RWC, for others the story hasn't changed a great deal," Tong said.

"We're hearing a lot of this from customers in the more discretionary categories who are yet to feel any real impact from the Rugby World Cup. With another influx of tourists expected to arrive for the finals, let's hope we see a pickup in the wider retail sector."

RWC a big boost for businesses

20th September 2011

Source: The Southland Times

Two weeks. Three games. Four teams. And a whole lot of potatoes.

While official statistics are not yet available, informal figures show the Rugby World Cup has had a huge impact on Invercargill, with catering companies, bars and even telecommunications sectors reporting massive lifts in demand.

During the three games, Elmwood Catering cooked 1.5 tonnes of chips and sold more than 6000 non-alcoholic drinks.

Elmwood Catering manager Geoff Billows said the players munched their way through 35 kilograms of snake lollies to keep their energy levels up.

Patrons also kept the tills of inner-city bars and restaurants ringing.

Speight's Ale House assistant manager Marina Fonoti said yesterday the restaurant had gone through 200kg of potatoes, about 80kg more than a typical week.

Staff served up almost 300 plates of battered blue cod, and had pulled 5700 pints of the Speight's Gold Medal brew, around double what was usually served, she said.

And while staff had been on their toes, being at work had been exciting rather than stressful.

"We thought the week before [the first week of the tournament, when Scotland played Romania in Invercargill] was full-on, but last week was even bigger.

"It's been busy times, but it's been fun," she said.

Mobile phone networks have also kept frantic.

Telecom corporate communications manager Nick Gowland said more texts were sent at each of the Scotland v Romania and Argentina v Romania matches than for the All Blacks' opening match at Eden Park.

"In fact, text, voice and data traffic at the near sell-out Argentina v Romania match outnumbered what we would normally see on a Saturday night in central Invercargill, by 257 per cent, 429 per cent and 148 per cent respectively," Mr Gowland said.

Alsco New Zealand branch manager Karen Purdue said demand for towels and linen had increased by about 20 per cent in Queenstown, Wanaka and Invercargill.

Northern Southland Transport operations manager Mike Dennison said the volume of rubbish carted away from Rugby Park had about doubled.

Four skips were emptied after each of the Invercargill pool matches.

Big Picture to lift city's population

20th September 2011

Souce: The Southland Times

The Invercargill City Council has set itself the goal of increasing the city's population 25 per cent in the next 30 years.

The council yesterday released its Big Picture for Invercargill in DVD form, with a city population of 60,000 being its aim by 2041. Mayor Tim Shadbolt says in the DVD that, by adopting its 30-year plan, the council believes it will be possible to achieve the goal.

Central to getting the extra residents into the city was attracting industry to bring more jobs. The council's large tract of industrial land at Awarua was crucial to making this happen, he says.

Mineral processors and the pig biotech industries had expressed an interest in setting up on the Awarua land, with Cr Graham Sycamore saying the council would be marketing the land to industry.

The Southern Institute of Technology would play a vital role in training the extra workers to the city, while road congestion caused by the bigger population would be covered by new eastern and western ring roads. The council would also advocate for more rail, the DVD says.

Deputy Mayor Jackie Kruger says the Government will be asked to fund most of the cost for the new roads and rail.

Southland Chamber of Commerce chief executive Richard Hay, who will watch the DVD later this week, said yesterday the council's aim of a 25 per cent population increase in 30 years was possible, if mineral deposit projects involving the likes of lignite, gas and silicon went ahead. The Auckland Island pigs project was a "very real possibility".

"There certainly will be a population increase of some degree, depending on the performance of the projects. There's no question about that, those projects are looking very positive as we get closer to the time," Mr Hay said.

He applauded the council for adopting a 30-year strategic plan. But the challenge would be meeting the infrastructure needs of the population as it increased, with rates rises inevitable, he said.

The council, which is inviting public feedback on its 30-year vision before officially implementing it into its annual and long-term plans, is screening the DVD forthe public each day this week until Thursday. For details ring the city council on 2111777.

To watch the DVD, called The Big Picture, go to icc.govt.nz, where the council expects to load it.

Mortgages - to fix or float

19th September 2011

It's the eternal question for homeowners: to fix or not to fix?

You make the decision, regret or rejoice, and then two years or so later you have to make it again.

If you're in a quandary, no wonder. Seasoned economist Tony Alexander says this may be the most difficult environment for predicting interest rates that New Zealand has ever seen.

So what's a homeowner to do?

Are you an optimist or a pessimist?

There's no easy answer. Economists themselves can't agree on when mortgage interest rates will rise, or whether - if you jump into a fixed rate now - you'll be better or worse off in two or three years.

First of all, if you've already fixed, don't panic. Even though most economists are now saying you'd be better off floating, they also say fixed rates are unlikely to go much lower.

Translation: if you fixed pretty recently, you probably didn't get a bad deal - just missed out on a few months paying the lower variable mortgage rate.

Chances are - like me - you were spooked by economists predicting an imminent rate hike that upped and receded thanks to wobbles in Europe and America.

Now the Reserve Bank has pushed predictions of an official cash rate hike into early next year, making those of us who rushed feel a little bit silly.

At least we weren't alone.

ANZ, ASB, BNZ, Westpac, and Kiwibank all had more people than usual switching to fixed rates during the past two months.

For a heady three weeks, sixty per cent of BNZ customers coming off fixed loans chose to re-fix, compared with the usual 10 per cent.

By contrast most Kiwis are content to ride out the ups and downs - BNZ and ASB both say more than 70 per cent of their lending is floating.

If you haven't fixed, should you?

BusinessDay asked three bank chief economists whether fixed or floating was a better bet right now. Two went for floating and one - just marginally - for fixed.

ANZ's Cameron Bagrie and BNZ's Tony Alexander backed the floating rate over the next two years.

"I don't think there's a big mad rush to jump into those fixed rates," said Bagrie.

"To be expecting floating rates to be to moving up aggressively pretty quickly, you've got to have an expectation that the global economy is going to be relatively robust. I think that's a very heroic assumption at the moment.

"Tony Alexander agreed: "The situation offshore is deteriorating all the time."

Only ASB's Nick Tuffley said fixing for two or three years would work out fractionally cheaper than floating.

"But it is very much at the margins and it wouldn't take much to steer things a little bit either way," he added.

Tuffley said the pre-GFC situation of pricey short term borrowing vs. cheaper long term rates had been turned on its head.

"So there's going to be this trade-off...how much am I prepared to pay for the certainty a fixed rate gets me?"

Certainty, after all, is one thing you can't get from a floating rate.

"The decision between fixing vs. floating is not just about cashflow," says Bagrie. "A lot of people want the certainty a fixed rates offers."

So if sleep is important to you, you might just opt for peace of mind.

"There's nothing guaranteed, the floating rate could go up a long way," says Bagrie.

How much does the OCR matter?

It's tempting to think of the official cash rate as the sole predictor of interest rates.

But a one or two percentage point rise in the cash rate doesn't necessarily mean mortgage rates will rise by the same amount, says Bagrie.

For example, if global economic risks reduced enough for the Reserve Bank to hike the cash rate, the same factors could make borrowing overseas cheaper - reducing the overall effect on interest rates, says Bagrie.

It works both ways, says Tuffley.

"If we do get into a really messy situation with the European debt crisis and that spills over to the European banks...it's always possible that banks' costs (of borrowing) do get lifted high by that.

"But if that was the case, the Reserve Bank might just opt to not lift the cash rate as much (because the inflation environment wouldn't warrant it.)."

Sorted's mortgage repayment calculator is a good way to work out if you can afford an interest hike.

And if you want to give your heart a flutter, check out the historic mortgage rates compiled by the Reserve Bank. A casual 15 per cent interest, anyone? Yep, it happened in 1990.

If you fix, when?

If you want to fix, economists say you probably have some time up your sleeve.

But don't muck around too long. "There's pressure (on fixed rates) to move up," says Bagrie.

Fixed rates tend to move around more often than floating, says Tuffley, so it's not a good idea to wait until after the floating rate has moved.

Right now, fixed rates are on the low side compared with what economists are predicting will actually happen to the cost of money next year.

"One important thing to bear in mind is that market doesn't have much built in the way of interest rate increases going forward," says Tuffley.

"If you wait too long and market starts to re-price, you may miss the boat on getting a fairly low fixed rate."
Alexander says fixed rates are unlikely to go lower before rising.

But: "If you fix right now you're sacrificing a low floating rate to do that, so the real questions how long can one safely stay floating before moving into fixed?"

He still says floaters have time on their sides. "If you stay floating you're not facing the prospect of the fixed rate suddenly jumping up on you."

But he admits waiting is always a gamble.

As for how long to fix for, all of the economists said two year and three year rates were looking much more attractive than longer terms. "I wouldn't go longer than two years," says Bagrie.

Hedge your bets

Remember all those post-GFC headlines about people trying to break their fixed loans?

If you fix and floating rates fall dramatically, it can be costly to get out.

Banks have complicated formulas for deciding how much to charge you, but basically they do their best to recover the difference between what you would have paid by staying on the fixed rate and what they will get by you breaking the term.

With floating there's no penalty if you want to pay the whole amount early.

Alexander says, if he was going to fix, he would hedge his bets by leaving some of the loan floating.

South leads manufacturing

16th September 2011

Source: The Southland Times

Southland and Otago have again led the nation's manufacturing sector after a dramatic increase in performance last month.

Figures released by Business New Zealand yesterday show the Otago-Southland performance of manufacturing index was at 61.8 points in August, 4.6 points above Canterbury, the next highest area, and 17.1 points higher than the same month last year. An index reading above 50 indicates manufacturing is generally expanding, and a result below that shows it is declining.

Otago-Southland Employers' Association chief executive John Scandrett said the southern manufacturing sector appeared to be struggling to expand this year, so the high figures were good to see.

The metal industry, boat building and food manufacturing sectors led the way for the increase and there were signals dairy farm spending was starting to increase stimulation, he said.

Frews Marine owner Brendon Frew said the small boat building industry had been doing well all year and it was strong last month.

He had noticed people spending more on boats to the extent that he moved to a building more than five times the size of his original one last month, which showed confidence for the future, he said.

"We don't like to drum things up too much ... we tend to talk things down than talk things up, but we are confident," he said.

However, Mr Scandrett was wary of global economic problems affecting trading and said it was important to note that concern for the future.

The manufacturing figures follow Paymark figures released on Wednesday that showed Southland recorded the biggest growth of spending in the hospitality sector during the first weekend of the Rugby World Cup tournament, with transactions jumping by 24.4 per cent compared with the same three days in 2010.

National Bank's quarterly regional trends survey released last month found the region had a 2.1 per cent rise in economic activity in the June quarter.

This made Southland the fastest growing region in the country for the first time since 2003, when the province had enjoyed New Zealand's fastest growth for three years from 2000.

House price rises: South near top

15th September 2011

OCR unchanged at 2.5 percent

15th September 2011

Source: Reserve Bank of New Zealand

The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 2.5 percent.

Reserve Bank Governor Alan Bollard said: “The New Zealand economy has performed relatively well while headline inflation has increased somewhat since the June Statement.  At the same time, however, global economic and financial risks have increased.

“Domestic economic activity has surprised on the upside and capacity usage appears to have increased.  Continued high export commodity prices and, in time, reconstruction in Canterbury are expected to provide impetus to demand over the projection horizon.

“However, the outlook for New Zealand’s trading partners has deteriorated markedly.  There is now a real risk that global economic activity slows sharply.

“Global financial market sentiment has also deteriorated. Sovereign debt concerns in Europe and the weakened global outlook have caused international bank funding markets to tighten.  If conditions do not improve, New Zealand bank funding costs will increase.

“Largely because the New Zealand economy has been doing better than many others, the New Zealand dollar has appreciated since the June Statement.  The high level of the New Zealand dollar is having a dampening influence on some parts of the tradable sector and on imported inflation.

“Annual headline CPI inflation continues to be above the Bank’s 1 to 3 percent target band.  However, much of the current spike in inflation has been driven by last year’s increase in the rate of GST, and will therefore be temporary.  Wage and price setters should focus on underlying inflation, which, while rising, is currently estimated to be near 2 percent.

“If recent global developments have only a mild impact on the New Zealand economy, it is likely that the OCR will need to increase.  For now, given the recent intensification in global economic and financial risks, it is prudent to continue to hold the OCR at 2.5 percent.”

View the Monetary Policy Statement page http://www.rbnz.govt.nz/monpol/statements/ for the current policy assessment, Monetary Policy Statement, and data file.

Tills ringing in Invercargill

15th September 2011

Source: The Southland Times

Tills have been ringing in the south since the Rugby World Cup kicked off, with Southland recording the highest spending surge in the country.

Paymark figures released yesterday show Southland recorded the biggest growth of spending in the hospitality sector during the first weekend of the tournament, with transactions jumping by 24.4 per cent compared with the same three days in 2010.

Across all sectors, excluding fuel, there were 149,000 eftpos transactions worth $6,836,000 made in the region, compared with a total spend of $6,477,000 during the same period last year – a jump of 5.5 per cent.

Spending in Otago was also up, by 16.6 per cent.

Canterbury Shop owner Murray Carter said yesterday business had been booming, with sales during the past week at least 10 times more than normal.

Sales had been even better than what he had expected.

"It's much better than a Christmas week. I originally thought `if I get a Christmas week, I'd be happy', but I've exceeded that well and truly," he said.

However, he expected the frenzy would die down soon, with the final Invercargill match between Argentina and Romania to be played in the city on Saturday.

But those selling rugby memorabilia were not the only ones raking in the profit.

Invercargill Licensing Trust sales and marketing manager Gary Muir said yesterday the trust had had a "noticeable increase in traffic" in accommodation, restaurants and bars throughout the city, particularly on match days.

While he declined to say how much income had grown during the period, profits had without a doubt picked up since the tournament began.

"They've definitely spiked, and in some areas they are considerably higher than what we'd see in a normal week, but we expected that," he said.

"It was the same with the Ranfurly Shield challenge on August 7 last year [against Otago]. That was an exceptional night, purely because of the event," he said.

Despite the growth in numbers in the central city during the tournament, the swelling crowds had not proved problematic, with no major problems because of stock shortages or unruly patrons.

"People have just been out there having a fun time, and that [extra visitors] drags the locals along as well, because they want to be part of that special event and they come along to the bars and intermingle with the visitors we have here, and it just works."

Speight's Ale House duty manager Tish Hughes also said while the bar had been filling up earlier, and had reached capacity quickly after the first Invercargill match between Scotland and Romania, on Saturday, the crowds had been well-behaved."It's just a really great, happy atmosphere. Everybody's been just lovely, and they've all just been keen to have a good time."

However, for those not geared towards the rugby crowd, the tournament had not had too much of an impact on business.

Lollie Shop owner Neil Thomas said he had noticed a decrease in traffic during the past week.

Invercargill residents appeared to have avoided the inner city because of "all the hype about the big influx of tourists", which just had not eventuated. While many photographs had been taken of the shop's front window, which featured a display of Scottish and Kiwi items, not many people had gone in to spend money, he said.

Louies Cafe owner Mana Davis had also not noticed much difference in customer numbers, with just a few extra people rolling in.

The restaurant was not focused towards a rugby-oriented crowd and tended to be for those looking for something different, he said.

Southland a big hit with Scottish team

15th September 2011

Source: The Southland Times

Scotland has enjoyed, embraced and revelled in what the Southland province has offered during the past week.

The Scottish squad leave this morning for Wellington with two Rugby World Cup 2011 victories next to their name and memories they say they will never forget.

They beat Georgia last night at Rugby Park in Invercargill to match their victory over Romania at the same venue last Saturday.

Scotland's focus now centres on their all-important clash with Argentina in Wellington on September 25. The Scotland team and their management have been a bit of a hit with the Southland public during their stay and regular Six Nations battlers had plenty of support behind them last night as they clawed their way to a 15-6 win.

The team's goal was to leave Invercargill with nine tournament points and they achieved that.

It is unusual in the modern-day rugby climate for international rugby teams to tour regions like Southland and it seems the experience has been a hit with both the fans and the players.

Last night, Scotland halfback and captain Rory Lawson told news media after the game that the team would leave Invercargill with much more than the two wins. "It's been great to come down here and see some of the sights, and the welcome we had at the airport, and the official capping ceremony and welcome we had at the marae in Bluff was unbelievable. It will stay in our memories for a long time," he said.

As well as the memories off the field, Scotland head to Wellington with their World Cup hopes still intact in pool B, although their wins have been in less than inspiring fashion with a 34-24 win over Romania and the tryless win over Georgia. Lawson maintained the Invercargill phase of Scotland's campaign had to be given the thumbs-up.

"We came here with a real purpose and our purpose was to leave here with two wins, and to pick up bonus points along the way – that would be fantastic as well.

"Ultimately we've achieved that goal and now we'll move on to new surroundings in Wellington," Lawson said.

After Southland received a pat on the back for supporting the Scotland-Romania game on Saturday, where the crowd total in Invercargill reached 12,500, there were some concerns over game two in Invercargill last night when only 6000 tickets had been sold up to the eve of the fixture.

But a surge in ticket sales yesterday led to an impressive crowd of 10,267 attending the match, which met the expectations of World Cup officials.

Police made no arrests and there were no incidents at the Scotland v Georgia match held at Rugby Park Stadium in Invercargill last night. Southland area commander Inspector Lane Todd said the large crowd was well-behaved.

St John treated three people for minor medical matters. There were no breaches of a controlled purchase operation run at the game.

House sales show bounce

14th September 2011

Source: Stuff Business Day

House sales volumes are showing a slightly stronger lift than usual for this time of year, while prices are up marginally and homes are taking less time to sell.

Real Estate Institute of New Zealand figures for August showed 5,192 unconditional sales for the month, up 905 sales or 21 per cent on August last year. 

The volume of sales for August 2011 was up 264 on July - a slightly stronger lift than the seasonal pattern expected at this time of year, REINZ said.

The REINZ Housing Price Index rose 0.5 per cent in August compared with July, with the stratified median house price just over $363,000. The REINZ Housing Price Index recorded increases in Auckland, Wellington, and Other North Island, and falls in Christchurch and Other South Island. 

Compared with August last year, the REINZ Housing Price Index was up 0.7 per cent and is now 4.7 per cent below the peak recorded in November 2007.

The national median 'days to sell' (measuring the number of days from listing date to unconditional date) improved by three days to 39 days in August.  Over the past five years, the median days to sell has averaged 41 days across New Zealand.

Waikato/Bay of Plenty recorded the strongest rise in house sales volumes compared to August 2010 with an increase of 33.2 per cent. Nelson/Marlborough had the next strongest rise, up 29.0 per cent, followed by Auckland, up 27.4 per cent, and Northland, up 25.0 per cent. 

Only one region, Taranaki, saw a drop in sales volume compared to August last year.

Nationally, prices were relatively steady. Northland recorded the strongest lift in prices for the month of August (+11.8 per cent), followed by Southland (+7.0 per cent), Central Otago Lakes (+6.1 per cent) and Otago (+5.6 per cent). Compared to August 2010, Otago recorded the strongest lift in prices (+4.9 per cent), followed by Canterbury/Westland (+3.2 per cent) and Auckland and Southland (both +1.8 per cent). 

"The tight supply of listings across the country is the key feature of the market currently. With the arrival of spring listings are showing signs of increase, but the impact of the Rugby World Cup and the General Election soon after makes it difficult to predict how the market will respond," said REINZ Chief Executive Helen O'Sullivan.

Better volume in the past few months was a positive sign, but prices remained essentially steady, she said.

$23m retirement village to create 60 jobs

13th September 2011

Source: The Southland Times

A new $23 million retirement village in Invercargill is expected to generate more than 60 new jobs and inject about $2.6m annually into Southland's economy.

Bupa Care Services New Zealand, which has bought 4 hectares on the northern side of the Ascot Park racecourse, said yesterday it would lodge a resource consent application in November for its proposed 60-bed care home plus a retirement village consisting of villas and a community centre.

The retirement village villas will be developed in stages, with the first completed late 2012 to early 2013.

The organisation is part of the Bupa Group, an international healthcare company established in New Zealand in 1991. Bupa has three aged care businesses, 45 rest homes and hospitals, and 15 retirement villages in New Zealand.

At a meeting with the Invercargill City Council, Bupa New Zealand chief executive Dwayne Crombie said Invercargill was significantly under-resourced for aged care.

In Southland, over-65s were 14.5 per cent of the population, which was higher than the national average of 12.5 per cent. The next 20 years would bring a huge increase in the need for aged-care services.

Chairman Bryan Mogridge said people were now moving back to, or near, the area they came from when choosing aged-care services, putting pressure on health services in places such as Invercargill.

Mr Crombie said about 60 per cent of the estimated $3.3m going back into the economy would be fpr labour for the care-home facility. Eight to 12 nurses, 30 caregivers, a clinical manager and kitchen and building maintenance staff would be hired.

Bupa had no shareholders, which meant it reinvested its money to provide better healthcare, Mr Mogridge said.

There were no voters to appease and no "shareholders screaming".

"We have a solid balance sheet – we are in a very lucky position."

City councillor Lindsay Abbott, who is also a representative for Bupa personal alarms in Southland, said he saw a great need for the retirement village in Invercargill.

"I saw an opportunity to invest and promoted it actively," he said after the meeting.

"This is exciting for Southland. I'm delighted."

Invercargill Mayor Tim Shadbolt said Invercargill was an ageing city that was thriving.

It was in good shape and a good mood following the first Rugby World Cup match.

Mr Crombie said residential costs at the facility would be about $110 a day.

This is covered by the Government for 85 to 90 per cent of residents who apply.

The villas would be sold privately at an estimated $230,000 to $260,000, though this was yet to be determined.

A public meeting to discuss Bupa's plans will be held on September 28.

Rates set to hold as building hits low

9th September 2011

Source: Stuff Business Day

The Reserve Bank is expected to leave official interest on hold next week with the lowest level in house building for 18 years knocking the wind out of the economy.

Given the recent global financial market turmoil, the Reserve Bank may not make its first move till December and only lift rates from 2.5 per cent to 2.75 per cent initially.

Statistics NZ figures out yesterday showed home building slumped a massive 12 per cent in the June quarter. It has now fallen 24 per cent in the latest year.

The official figures show the total amount of building work fell 6.6 per cent in the June quarter, after adjusting for price and seasonal effects, with overall activity down to the lowest level in 10 years.

Economists said the weak building figures would knock about 0.3 per cent off June quarter growth, which may be about 0.5 per cent, ASB said. More recent home building consent figures showed an upturn in July, suggesting the depressed industry may be now past the trough.

But despite the lowest floating mortgage interest rates for decades, as cheap as 5.6 per cent, residential building work is at its worst since 1993. In part that was due to the low levels of building in Canterbury after the February quake, but the rest of the country was weak too, economists said.

However, a building boom in Christchurch next year was expected to result in home construction up about 50 per cent from present lows, ASB economist Jane Turner said. Over time, as many as 20,000 new homes may be built in Christchurch, but some economists do not expect to see meaningful levels of work till next year, with work held back by a lack of insurance cover.

Westpac Bank chief economist Dominick Stephens expected the Reserve Bank to stay on hold next Thursday, but signal that rates would rise in the near future. The recent tensions in the global financial markets, with the risk of a "messier collapse", argued for caution in the near term, he said. There were growing worries that growth would stall in the United States and Europe, as well as fears that some countries may default on their government debts.

Westpac said the first rise by the Reserve Bank would be by 25 basis points in December, with the economy recovering faster than realised and an increasingly worrying outlook for inflation.

TD Securities head of research Annette Beacher said while the economy had generally recovered in the first half of the year, the increased global risks meant the Reserve Bank would hold off raising rates from 2.5 per cent this month.

Infometrics economists said uncertainty about the housing market, "very weak" investor demand, and difficult financing conditions had all taken a toll on the building industry.Instead, there were likely to be small 25 basis point rises in both October and December, she said, removing the "emergency" rate cut of 50 basis points made in March after the big Canterbury quake.

The value of house building work was a "significant" $142m below Infometrics' forecasts for the June quarter, though additions and alterations work held up.

But with house prices starting to recover and rental returns becoming more attractive, home building was expected to gradually recover, Infometrics said.

The housing market is also facing the headwind of about 5000 more people leaving the country than arriving permanently in the June quarter.

Despite weak building work figures for the June quarter, recent home consent figures for July showed approvals up 13 per cent, including apartments, in a sign the market may be starting to turn. It was the first decent lift in consents in a year.

THE NUMBERS

Building work put in place June quarter volumes: All building activity: down 6.6 per cent to a 10-year low

Residential building: down 12 per cent to an 18-year low

Non-residential building: down 1.4 per cent

The building work put in place figures show how much is actually done while monthly building consents show an intention to build.

Rent rises ahead for most

7th September 2011

Source: The Southland Times

Most people renting face a rent increase over the next year, as landlords compensate for smaller increases in the value of their properties following changes in tax laws.

Some 80 per cent of property investors in a new survey expect to increase their rents this year, a 5 per cent rise on last year, according to the latest ANZ/NZ Property Investors Federation survey.

Investors expect rents to increase by up to 5 per cent on average in the next year. Almost all investors expect rents to rise in the next five years by between 6 to 10 per cent.

Due to the removal of depreciation on investment properties in last year's Budget and other regulatory changes, some landlords have already acted with rents rising 3 per cent nationally last year.

But Property Investors Federation president Andrew King said that 3 per cent rise compared to a 4 per cent increase in inflation, so the 26 per cent of landlords that had already increased rents in the past year ended up not much further ahead.

He said the bite from the Budget changes on depreciation won't really be felt by investors until March next year when tax assessments are made, and he estimated the impact would be around an average $45 a week. A rental increase of $15 a week to recover some of that is likely, he said.

''House prices are not going to scream off any time soon so they [landlords] will be turning their attention to rental returns if there is no capital gain,'' King said.

''If rentals don't rise you won't get investors coming into the market to provide the properties needed, and if they do it's better to have a steady creep up over time than a short, sharp rise due to shortages.'

King said Auckland was leading the way for both rental increases and property prices, whereas landlords in smaller provincial towns were meeting resistance to any rises due to more oversupply.

The survey of 1800 property investors nationwide showed they were expecting only modest increases in property prices - around 2.5 per cent over the next 12 months and 6-10 per cent over the next five years.

Almost nine in 10 investors intend holding onto their property for the longer term, and there's been a 4 per cent rise in those planning to renovate or develop their property rather than sell.

Since two years ago, 16 per cent fewer investors plan on purchasing another property due to economic uncertainty, the depreciation changes, a possible capital gains tax if Labour wins the election, and having other investment options.

The survey also shows almost 40 per cent of investors looked at their insurance cover following the Christchurch earthquakes.

NZ property buyers better off than Aussies

6th September 2011

Source: TVNZ

New Zealand property buyers seem to be getting a better deal than their Australian counterparts, says a commentator from across the ditch.

Chris Gray, the host of Australian programme Your Money Your Call on Sky News, says Kiwis have a big advantage in not paying as much tax on property as Aussies.

Australians are charged a 5% stamp duty when they buy a property. On a $500,000 property this equates to $25,000.

And, also unlike in New Zealand, there is a capital gains tax in Australia.

"With capital gains tax if you sell within 12 months you get taxed on all the profit. If you sell after 12 months you are taxed on half the profit," says Gray, the keynote speaker at the New Zealand Property Investors Federation conference in Queenstown on the weekend.

Interest rates are also better in New Zealand, he says.

"We are paying seven percent, where you can get mortgages for five percent in New Zealand. None of us in the western world have had that.

Even if capital gains tax is introduced in New Zealand, he doesn't think it will hurt the market.

"Good properties in good areas will always do well. Capital gains tax is not the end of the world. If you never sell you never pay the tax."

But Gray warns people not to buy expecting taxes to stay the same because they will change.

The Labour Party is proposing to bring in capital gains tax if it is elected in November, although it is lagging well behind in the polls.

KiwiSaver boosts property market

6th September 2011

Source: Otago Daily Times

KiwiSaver is giving New Zealand's provincial property market a boost. For the past nine months, first-home buyers have been able to withdraw their savings to help them buy a property.

Regional centres in particular have noticed an influx of people at entry level.

Kiwibank spokesman Bruce Thompson said he had been surprised at the number of people wanting to use their KiwiSaver funds to buy property.

"A very high number of Kiwibank KiwiSaver participants have not only inquired about using their savings for a first home, but have activated it,'' Thompson said.

"As soon as the three-year mark ticked over, we began to get inquiries.''

He said that for many young people being able to withdraw the funds was the reason they joined the scheme in the first place.

Thompson said that regional centres such as Palmerston North and Rotorua were feeling the impact of a new generation of home-buying KiwiSavers and that in smaller centres three years of savings was enough for a deposit.

Martin Dear, manager of the Whangarei branch of Barfoot and Thompson, said he was beginning to notice it too.

"People are just starting to get to the stage where they can withdraw funds and we are seeing more and more of it.''

Maree Mortimer, head of the Rotorua Property Investors Association, said she had noticed a big increase in the number of first-home buyers. "Investors don't have the market all for ourselves any more.''

Thompson said he expected to see the benefits flow through to larger centres such as Auckland in about five years, when people had had a chance to save more as deposits in those areas were higher.

KiwiSaver allowed people to show a savings history, something that a lot of young people found difficult.

One Path, which operates four KiwiSaver funds, including those of the ANZ and National banks, has had 715 people withdraw funds to buy a home since it became possible and ASB has had 500 people withdraw funds since July.

Steve Wiggins, the general manager of Gareth Morgan Investments, said the system was a good way to show young people the value of saving. Rather than having to wait 40 years to be able to access the money they had been putting aside for their retirement, young people were able to get their hands on it for something much more immediate.

The 116 completed applications that had gone through his organisation were slightly more than expected.

The average amount withdrawn was about $10,000.

He said people who knew they were signing up to KiwiSaver intending to pull funds out three to five years later would need to talk to their provider about investing in a different way from someone aiming to save purely for retirement.

Whereas most savers in their 20s could take the highest-risk options to save because they had 40 years in which to do it, people who knew they would want funds available in the short term needed to take a more conservative approach.

Fisher Funds spokesman Michael Raynes said that in the nine months to March this year, 29 people had withdrawn an average of $14,000 to go towards a first home.

"That's nearly 5 per cent of a $300,000 house.''

NZ Property report - August

2nd September 2011

Source: realestate.co.nz

NZ Property Report – August 2011

NZ houses for sale jump in August

1st September 2011

Source: Stuff Business Day

Spring has come early to the New Zealand property market with a surge in new listings in August, website realestate.co.nz says.

However, high levels of sales are keeping inventory low, putting the ball in the seller's court.

The traditional spring burst of activity usually came in September but this year there was an earlier rush - with 10,120 new listings on the site in August, up from 8966 last month, chief executive Alastair Helm said.

This was a 3 per cent rise on the same time last year, and the first monthly increase since March.

At the same time, inventory levels dropped for the fifth month in a row due to high buyer demand. At the end of August there were 44,689 properties on the market, down from 45,674 in July and 50,138 a year ago.

The overall market was now pointed in favour of sellers, with 12 of the 19 regions of the country now below their long term average inventory levels, Helm said.

''It's a much more buoyant market we are seeing at the moment. The rate of sale is the highest it has been for 18 months. Interest rates are attractive so buyer confidence is healthy. This has led to more sellers entering the market, but demand is continuing to outstrip supply.''

The demand has led to Auckland recording its lowest level of inventory in four years.

There had also been a slight shift in the average national asking price, which had lifted back up to June's level of $415,000.

This suggested that while the market was in leaning in their favour, sellers were not over-confident on price expectations.

''While the end of winter is traditionally the signal for sellers to list their property, the levels we are seeing now should certainly be seen as a further green light for sellers who are considering entering the market.''

In Auckland, listings were up 16 per cent on the same time last year, while inventory was down 32 per cent. Waikato saw listings rise 21 per cent on last August, and inventory fall 37 per cent.

In Wellington, listings were down 4 per cent on last August, but inventory was also down 19 per cent, while  Canterbury listings fell 17 per cent and inventory was down 10 per cent.

Stadium Southland reopening delayed

31st August 2011

Source: The Southland Times

The rebuild of Stadium Southland would take months longer to complete than anticipated, its owners confirmed yesterday.

Southland Indoor Leisure Centre Charitable Trust chairman Acton Smith said the project had experienced a series of unexpected delays and the stadium's Game On 2012, March 31 open-ing date was no longer practical.

Stadium manager Nigel Skelt confirmed the stadium opening date would be "months" after March 31, but it was not yet known how many months.

The delay means the ILT Velodrome next door will again be used as a backup venue by the Southern Steel netball and Southland Sharks basketball teams.

Mr Skelt said Steel, the Sharks, Invercargill Netball Centre and Southland Basketball had been "extremely supportive", as had all other users who were contacted about the delays.

Many events next year would have to be transferred back to the velodrome, Mr Skelt said.

Mr Smith said health and safety was paramount and therefore the stadium was unable to be opened in stages because of its lack of a fire egress and its status as a construction site.

It was extremely disappointing not to meet the March 31 target but the trust was not prepared to open it until everything had been ticked off by the relevant authorities, he said.

The old stadium collapsed under a heavy dumping of snow on September 18.

Building contractor Amalgamated Builders did not start on the main building construction until last month because of holdups with building consent approval.

The city council delays in issuing building consent were prompted by a peer review of the design, which raised concerns the new stadium might again collapse if another disaster of unusual proportions struck.

A decision was subsequently made to strengthen a major structural brace in the new stadium, but the consent delays meant the building could not be completed on time.

House building slump may be over

30th August 2011

Source: Stuff Business Day

The house building slump may be starting to turn around, with new home consents up 6.3 per cent in July, after the market hit a low point in February.

Including apartments, mainly retirement units, consent approvals for July were up 13 per cent, however apartment consents tend to jump up and down from month to month.

Consents were issued for 1035 homes in July, Statistics NZ figures show, with apartments adding another 168 to take the total of 1203. The figures are adjusted for normal seasonal effects.

Despite the pick up in July, the value of residential consents in July was down 14 per cent to $420 million compared with the same month last year.

"The latest increase, excluding apartments, is enough to confirm a positive swing in the longer-term trend," industry and labour statistics manager Kathy Connolly said. "This now indicates that February was the low point in the number of homes being approved.

"The picture is similar when apartments are included, but one more month of strong data will be required to confirm that these numbers have also turned," added Ms Connolly.

Apartment numbers were relatively high in July at 168 approved. Of those, 111 were assisted-living apartments. Adding apartments to the 1,035 other new homes, the total number for the month was 1,203.

In Canterbury, earthquake-related building consents totalled $32 million in July 2011, compared with $14 million in June and $28 million in May. The July consents comprise $26 million for non-residential work and $6 million for residential work (including 36 new homes, of which 28 are relocatable units intended to house displaced residents).

Non-residential consents nationally rose 17 per cent in July to $343m, compared with the same month last year, reflecting a $105m consent for work on Middlemore Hospital in Auckland.

Overall, consents for homes and commercial buildings in July were worth $763m, down 2.6 per cent on the same month a year ago.

Kiwis abandon sprawling homes for savings

30th August 2011

Source: Stuff Business Day

The five-bedroom, triple-car "McMansion" style home is becoming less popular as Kiwi buyers struggle to afford them.

Figures from Statistics New Zealand show the size of the average new dwelling fell in the year to June for the first time in years.

After growing relentlessly since the 1970s, it seems house sizes may finally have hit a temporary peak at 200 square metres in 2010.

The last time the average floor size was the same as it is now - 196sqm - was in 2009, when more apartments were being built. This suggests most standalone dwellings were actually larger than they are now.

Fletcher Residential general manager David Halsey said while people still aspired to own large homes, the question was whether they could afford them.

Rising land prices, a squeeze on borrowing and a slower housing market were putting huge houses out of people's reach, he said.

"If we could build three-car garages with five bedrooms and have them at a certain price the houses would sell like hotcakes," he said.

But in 2007 the market slowed and affordability became a factor. "People building houses now say, 'if I put it at $800,000 [in Auckland] they are not going to sell,' so you have to price it at say $720,000. The only way can do that is to slightly skimp on floor area."

Halsey said people were squeezing more into a smaller area - adding storeys and cutting bedroom sizes, halls and backyards.

In Australia, the trend has been dubbed the "end of the McMansion", a phrase coined by US media to denote subdivisions of mass- produced luxury houses.

Statistics New Zealand building consent figures show that in the year to June 1974, the average new house was a modest 110sqm.

Ten years later it had crept up to 125sqm, before ballooning the following decade to 160sqm in 1994. By 2004 the average new house was 180sqm and growing.

2010's peak size was almost double the floor area of 1974's standard three-bedroom bungalow.

"In the 1970s people were building houses of about 100sqm . . . and people were satisfied with that," Halsey said.

"After that people became slightly wealthier. They saw American magazines and they wanted ensuites, walk-in wardrobes and they needed more than three bedrooms . . . and more than one bathroom," he said.

"That 100sqm house grew into a house probably of 250sqm with an attached double garage, 2 1/2 bathrooms and probably four bedrooms," he said.

"It led to a market where if you had a house with five bedrooms you got a heck of a lot more for it than one that had three."

Now Fletchers is building housing like the Stonefields development at the old Mt Wellington quarry, and scrapping the individual 600sqm backyards of old.

"We've put quite large homes on small sites and these houses don't have gardens like I was brought up in," Halsey said.

"They have outdoor living areas where you can sit out in the sun and have a beer and you might have two of those. But you don't have a garden that you can throw a ball in."

Property search via mobiles on the rise

25th August 2011

Kiwi homebuyers who search for property online are also turning to their mobile devices to track down homes for sale, says a real estate industry survey released today.

The Neilsen Real Estate Market Report, based on a survey sponsored by Realestate.co.nz is into its sixth year, and aims to understand how the ability to search for homes and investment properties online plays a major part in the way the real estate industry does business.

Questions about accessing online property information via mobile devices were added to the survey for the first time this year. The Report found that nearly a third of New Zealanders with Internet-enabled mobile devices who research property online have accessed property information web sites from their device.

The Report also discovered that real estate researchers online were much more likely than the national population to own an Internet-enabled phone or device, with 48 percent compared to 34 percent of the overall population.*

Alistair Helm, CEO of Realestate.co.nz, says that the Report confirms that the huge growth in smartphone usage by New Zealanders is changing the way consumers look for property to buy and rent, and how the real estate industry will need to market properties into the future.

Source: Voxy.co.nz

"The options for researching property via mobile devices that have become available to consumers in the last year are making the home buying process more immediate and dynamic," says Mr Helm.

"Mobile phone users with Internet access don't tend to do frivolous browsing for property. They are more likely to be serious home hunters looking to buy or rent."

Mr Helm says that the Report findings are backed up by the fact that Realestate.co.nz's iPhone app has been downloaded more than 35,000 times since launching late last year.

"The app is location-aware and lets users discover properties available for viewing and sale in their immediate vicinity - usually a one kilometre radius - in real time."

Mr Helm says that of the estimated 200,000 iPhones in New Zealand, one in six have the Realestate.co.nz app, which is also in the top 100 downloaded apps of all kinds available in New Zealand.

"Use of the Realestate.co.nz iPhone app always surges on weekends, when people have time to go out and look for property to buy in their preferred locations."

The Nielsen Real Estate Market Report is based on a site-intercept survey on New Zealand real estate web sites conducted during May to June 2011 with a sample size of 1,219 respondents and a margin of error of 2.86 percent.

Realestate.co.nz is the country's most comprehensive property listing website profiling listings of licensed real estate agents with more than 107,000 real estate listings covering residential, commercial, business and farms for sale.

Further analysis of the findings of the Nielsen Real Estate Market Report, and the New Zealand property market in general can be found on <a href="http://www.unconditional.co.nz/"> www.unconditional.co.nz</a>, the news and information website for New Zealand real estate.

Building more homes key to affordability

24th August 2011

Source: New Zealand Herald

Policy-makers need to focus on housing supply as they try to make homes more affordable, according to the Reserve Bank.

The pace that new housing can be built is a "critical factor" for house prices, and needs to be the focus of any long-term policy, the central bank said in its submission to the Productivity Commission's investigation into home affordability.

That comes after recent local and international research shows New Zealand's housing supply hasn't been responsive to big swings in housing demand.

"Evidence suggests that significant supply constraints lead both to bigger house price booms and eventually to nastier house price corrections," the submission said. "Policy should focus on regulation that gets supply conditions in the housing market right and removes barriers that impede productivity gains in the construction sector."

The commission was asked by the government to evaluate the factors influencing the affordability of housing (both rental and owner-occupied housing) and examine potential opportunities to increase housing affordability.

The central bank also said a "sensible tax structure" is likely to matter, and inflation indexing the treatment of interest would reduce benefits of property investment.

"A more appropriate tax treatment of the inflation would probably largely eliminate reported tax losses on residential rental properties even near the peaks of the housing booms," the submission said.

New Zealand house prices hit their peak in 2007, according to the discussion paper released by the commission. House prices rose 180 per cent in real terms relative to 1990 levels through to 2007, with the largest price increases exceeding 200 per cent in real terms and concentrated in major urban centres and holiday locations, and exceeded only by Australia.

Since the global financial crisis nominal house prices have fallen around 5%. House prices had risen from an average of around two and a half times personal income to five times between 1990 and 2007.

Among other submissions, construction company Fletcher Building Ltd. said land costs was the primary cost for building new housing, followed by materials, project management costs, labour and regulatory costs. To lift productivity in the sector, land needs to be more available and greater standardisation is needed to drive efficiencies, it said.

Commercial property lobbyist the Property Council said in its submission the debate on housing affordability was "wrongly skewed primarily in favour of public analysis about demand," and supply issues had a wider impact on the issue.

The Department of Labour talked down the impact of immigration on house price appreciation, saying that although there was evidence of a correlation at a national level, that didn't filter into a regional level.

Housing New Zealand Corp. said low rental yields restrained both rents and the cost of government support for housing, though if that reverses, rental affordability could become a "real issue."

Insurer IAG New Zealand used the recent bout of natural disasters to ask the commission to "not lose sight of an important point; making houses more affordable must not occur at the expense of making them less resilient to the dangers posed by our geography and climate."

Rental property owners group, the New Zealand Property Investors Federation used its submission to criticise any tax reform, saying "current tax settings seem to be efficient and are not overly lenient for residential rental property providers."

The commission was allowed to examine the efficiency of tax treatment for owner-occupied and rental housing, even though the current government has ruled out a land or capital gains tax.

Last month, the Opposition Labour Party said it will introduce a capital gains tax on most assets, excluding the family home, at a flat rate of 15 per cent if it is elected in the November election. 

Fiordland tunnel opposed by board

22nd August 2011

Source: The Southland Times

The Otago Conservation Board has refused to back Milford Dart's application for a proposed $170 million tunnel to Fiordland.

In a document released under the Official Information Act this week, the board advises the Department of Conservation not to accept the company's application because it is not permitted under the Mount Aspiring National Park Management Plan.

Yet Milford Dart director Tom Elworthy was not fazed by the board's refusal to back his venture.

"The concession application is inconsistent with the new Mount Aspiring National Park Management Plan (2011) and the department should not grant the concession," the board says.

Christchurch-based Milford Dart plans to build a 11.3-kilometre tunnel between the Routeburn station and Hollyford Valley to cut travel time between Queenstown and Milford Sound to two hours.

In the board's submission to DOC it says the general policy for national parks states no new roads will be made through a park except with the minister's consent.

"The ... development of new roads in national parks is generally inconsistent with the preservation of national parks in a natural state. It is considered that there is sufficient roading in existing national parks and that further roads are not desirable."

The board's advice follows that of the Southland Conservation Boardlast month which was neutral on the matter, despite the company's application being changed significantly since it was lodged in 2005 to minimise its impact on the parks.

Yesterday, Mr Elworthy said he was not worried about the advice and while he would rather the support of both boards, he felt confident DOC would decide in Milford Dart's favour.

"We have always maintained we disagree with their perspective – everyone is entitled to their view and now it is over to the Department of Conservation to make their decision."

The company has received the draft recommendation report from DOC and is expected to respond before it is returned to the department's decisionmaker within a week or two.

The decision on the application is expected within a few weeks and if granted it will be opened up for public submissions.

Auctions - the hottest ticket in town

22nd August 2011

Source: Stuff Business Day

The overall property market may be a little sluggish still in some parts of the country but property auctions are running hot.

Recent statistics from the real estate industry have proved what many potential house buyers have probably discovered - properties selling at auction are becoming more mainstream.

June and July saw the number of residential properties up for auction at a four-year peak, according to industry website realestate.co.nz, with 1168 homes up for auction in June and 1132 in July against a typical month of about 600 auction listings.

Auckland, always at the forefront of any property trends, saw one in five listings going to auction over the past two months and accounted for 56 per cent of the 1132 national auction listings in July.

TradeMe's Paul Ford said auction listings had "ticked up" in recent months on the site, with the most noticeable rise occurring in July, which recorded a boost in auction listings of 25 per cent on the previous month.

This increase was both because of the lift in the number of auctions listings but also because of a decrease in total listings, meaning auction listings increased proportionally, Ford said.

The increase was driven by listings in Auckland, Waikato, Christchurch, Bay of Plenty and Otago, Ford said.

These trends have been noticed by agents.

Ray White's Carey Smith said the national real estate group had seen a "substantive" lift in the group's auction listings, from 460 to 607 in the last quarter.

"The Ray White Group was appointed to over 20,000 controlled listings per annum and during 2011 14 per cent of those have been by auction and during the last quarter, this has lifted to 21 per cent," Smith said.

But are the properties at auction selling?

Yes, said the BNZ Real Estate Institute's residential market survey released earlier this month.

The survey, which collates data from the institute's members, said that agents believe more properties are selling at auction after holding negative views of auction sales in May and June.

BNZ chief economist Tony Alexander said while this wasn't an actual figure for completed auction sales it showed agents' perceptions had switched to being positive about auction sales.

Again, Smith agreed and said Ray White's "under hammer success rate" had gone from 58 per cent a year ago to 71 per cent now for auctions.

But why the sudden popularity of the auction? And what are the benefits and potential pitfalls of auctions, for sellers and for buyers?

Smith had some ideas.

"Auctions are providing vendors with the ability to polarise the buyer pool into a set time frame. With the reduced amount of stock on the market, auctions are also showing an increased response rate from buyers attending open homes and also registering to bid for properties."

In short, an auction draws a line in the sand that both seller and buyer have to adhere to.

Once the auction date is set, it's all on.

Because auctions are unconditional sales all the legwork has to be done in the lead up to auction day. That includes investigating the condition of the property, possibly organising a builder's report, reading through the paperwork like unit title and body corporate information if its an apartment or unit and most importantly, arranging your finance so you are ready to roll on auction day.

That's because if you are the winning bidder you are required to sign an unconditional cash deal on the day - if, of course, the seller's reserve has been met.

Harcourts' national auction manager Richard Valentine said auctions add impetus and urgency to the process that's good for both parties.

He said buyers can be sure they are dealing with motivated sellers, who have invested in marketing campaigns to get a result.

"In addition, at an auction buyers can compete on an equal footing with others and everything is out in the open. They can track their competitor's bids and control theirs - and if their bid is accepted it's a done deal in a very timely and straightforward fashion."

Anyone who has played the "multi-offer bid game" will know how appealing a blunt bidding duel can be in comparison.

For vendors the unconditional cash sale at auction is clearly appealing and it should also flush out more buyers, some of whom can get caught up in the moment of competing against other bidders and end up paying more than they might have offered in a less heated environment.

Smith said there had been specific examples at Ray White where an auction had "pepped up" buyer demand.

"At a recent auction held by Ray White Ponsonby price expectations were exceeded by almost 20 per cent. This was directly attributed to the auction form of marketing."

The pros and cons

Pros

No secret negotiations. An auction puts the sale process all out in the open, you are either the highest bidder - or you're not, and your property has either sold, or it hasn't.
There is no shadow boxing with another bidder, and trying to guess which magic number will secure you the property over and above someone else. For a seller, you know how much you are going to get within a matter of minutes and can control the price by setting a reserve.

You can plan ahead. Because you know when and where the auction is happening planning your strategy, including your top dollar, should be a breeze. You also must have all information to hand from the seller about the property and have any reports you have commissioned completed.

Show them/me the money. If you buy at auction the sale is unconditional, including your finance, so you have to get this organised in advance. The upside is you know what you can afford to bid and there is no anxious wait for bank approval. Of course, this is also great for the vendor.

Cons

Caught up in the moment. The auction bidding could get heated and take you, and your budget, along with it with the end result that you pay more than you had budgeted for. (This is probably a pro for the vendor, however)

Who's that bidder? Yes, it's the vendor. The vendor/auctioneer can bid against you until the reserve is met.

Out of pocket. You have had a building inspector in and had the lawyer go through the paperwork. Then you miss out at auction. Unfortunately, these bills still need to be paid.

Unconditionial. No conditions on the sale that will safeguard the buyer if something later turns out problematic such as leak issues.

Shell joins oil, gas quest in south basin

17th August 2011

Source: The Southland Times

Multinational giant Shell has joined the hunt for Great South Basin oil and gas but has warned Southlanders not to expect a gold rush.

The OMV consortium announced Shell had joined it as a major partner yesterday and said it had given one of its exploration permits back to the Crown, to focus on its other two, which will be mapped in 3-D.

Once the mapping is completed, Shell will take over management of the project.

This may not be good news for Invercargill as Shell could choose to base its rig support operations – should production go ahead – in Dunedin rather than Bluff.

OMV New Zealand managing director Peter Zellinger and Shell New Zealand chairman Robert Jager refused to be drawn on how the decision would affect Invercargill's hopes.

"The next step after seismic will be potential drilling," Mr Zellinger said. "Only then will we think about development of operations ... we'll see where the most productive areas are."

Southlanders should not expect instant payoffs from Shell's investment, he said. "Be realistic. It's not a gold rush. It is a very careful exploration process ... don't have the wrong expectation [that] everything will change."

The companies held a briefing at the Ascot Park Hotel yesterday.

OMV exploration manager Tim Allan said the fact that the briefing was held in Invercargill reflected the respect it has for the community.

The Invercargill City Council, the Southland Energy Consortium and the Chamber of Commerce hope the city will enjoy an economic boom from any potential oil and gas exploration.

Southland Energy Consortium chairman Mark O'Connor said it was positive that OMV had attracted Shell as a partner.

"The area designated for further research is half way between Dunedin and Bluff.

"Whether the region can gain more commercial development depends on the actual drilling commitments ... it's still positive to see."

OMV believe the 3000 square kilometre seismic survey, set to begin this spring, is more likely to find gas than oil.

"We can't exclude oil but the likelihood of gas is high," Mr Zellinger said.

If wells were drilled, they would be around 800m to 1200m deep.

When asked about potential enviromental risks from rigs, Mr Jager said Shell would make sure its safety standards were robust enough for the Great South Basin.

"In the unlikely event [of a pollution threat] we have a number of things we can call on."

However, both companies expect some protests from environmentalists, as were seen off the East Cape in March, when Brazilian company Petrobras was looking for oil.

"We are open to constructive dialogue," Mr Zellinger said.

"Protesting deep-sea drilling leaves very little room for dialogue.

"Being concerned about how we carry out our operation and our [environmental] footprint is constructive."

Far from being a vote of no confidence in the basin, Mr Zellin-ger said OMV's reduced stake showed it was totally committed to the project.

"We could have done it alone ... we are very confident in the next step ... [and] will be ready," he said.

"I would be happy with 18 per cent in a huge stake."

South gets snowed under

16th August 2011

Source: The Southland Times

The Wakatipu Basin was yesterday blanketed in its deepest and most persistent snow dump in 50 years, and MetService warned last night more is coming.

The polar blast adversely affected the whole of the South Island and few parts of New Zealand missed its fury.

Queenstown was among the worst hit, as most suburbs awoke to at least 20cm of snow on front lawns. Drifts piled between half a metre and 80cm in parts of Frankton, Kelvin Heights and Arthurs Point.

Longtime Queenstown weather forecaster David Crow said it would have to be the heaviest snowfall in the district since 1962, having been around for every winter since then. "It certainly beats anything I can remember. I think this will be one of the longest-lasting cold snaps we've had."

The big snow of 1968, when helicopters were landing on central Queenstown's recreation ground ferrying supplies of feed to outlying farms, was no deeper than this fall, Mr Crow said. "I think this will be one to remember, people will be talking about the big snow of 2011 for a while."

Many roads were impassable, the region's schools shut and airports closed as the bitterly cold southerly swept across the country.

In Wanaka, the snowfall was not as pronounced, with about 1cm on the ground at lake level, and little snow in Hawea.

Cromwell, Alexandra and Roxburgh also started the day with a covering of snow, which was enough to have schools cancelled and roads closed.

The Lumsden area also experienced heavy snowfalls.

The Vincent Community Board postponed its Monday meeting until next week.

Weather in Fiordland was described by some as blizzard-like.

Southland District Council Te Anau ward councillor Diane Ridley said she had seen plenty of snow in the area before, but not quite as much in a single day.

"I've lived here forever, like 40 years, but I've never known so many snowfalls in the town in one day," she said.

An Education Ministry spokeswoman said most schools in Southland, Otago and Canterbury had been closed for the day, while the Southern District Health Board also cancelled all outpatient clinics and elective surgery at Dunedin and Wakari hospitals.

The polar blast was also responsible for closing several courts, including Dunedin, Queenstown and Balclutha district courts, and NZ Post cancelled its deliveries in Balclutha, Gore, Alexandra, Queenstown and Wanaka. Power outages occurred across the southern coast, from Waikawa to Fortrose.

Ian Ruddenklau, of Fortrose, said while conditions had improved slightly by yesterday afternoon, with power restored and most of the snow underfoot melting, strong southeasterly breezes were still wreaking havoc.

"Everyone's miserable. The farmers are miserable, the stock's miserable. Bring on the good weather."

Federated Farmers' adverse events spokesman and Southland farmer David Rose said the lambing season was not expected to start until next month.

In Queenstown, a full council meeting scheduled for today was cancelled and Queenstown Airport was closed, grounding scheduled domestic flights and services to Australia.

Queenstown Airport Corporation spokeswoman Nina Crawford said a team was working to clear the runway, but the storm's severity meant reopening was questionable.

Staff would reassess whether the runway and airport could reopen at 7am today, she said.

Arrowtown's Night'N Day dairy ran out of bread, and fresh milk supplies did not get through until 3.45pm. Commercial bread stocks were also getting low at Queenstown's New World but the supermarket's bakery team was busy making bread to replenish the shelves.

At FreshChoice they ran out of bread, but an emergency delivery was on its way from nearby Queenstown Bakery late yesterday.

Fuel pumps ran dry at Frankton's BP Connect, where staff had been rushed off their feet.

BP communications manager Di Papadopoulos said tankers were lined up waiting to get through from Bluff and Christchurch to replenish supplies.

Shell Queenstown had enough petrol for a few days, but had its quietest day in a long time, with not much traffic about.

Banks were closed for trading in Queenstown and Frankton, as staff were unable to get to work.

Most Queenstown and Frankton shops were closed yesterday morning, but many opened with limited staff as the afternoon wore on. Glassons was closed for the day.

The Warehouse, open with limited staff, had a big rush on snowboots, selling at least 40 pairs.

Service manager Caroline Macpherson said heaters and hot-water bottles were also moving fast.

MetService duty forecaster Heath Gullery said the temperature did not get above zero in Queenstown yesterday, and last night's overnight low was expected to be minus 4degC, with minus 5degC forecast overnight tonight.

Snow showers would continue tonight throughout the south, with another front likely to hit today, but easing a little by tomorrow, when the region could look forward to some "very severe frosts" – probably near minus 5degC for the rest of the week, Mr Gullery said.

Motorists throughout the south are again being urged to take again care this morning.

Emergency Management Southland manager Neil Cruikshank yesterday warned that snow was forecast to continue falling today.

Queenstown Lakes District Council chief executive Debra Lawson urged people to check on their neighbours, especially elderly residents, to ensure they had adequate heating and food supplies.

Police in Queenstown and Central Otago urged people to stay indoors and avoid all but essential travel.

A police spokeswoman said some drivers were "idiots", venturing out in vehicles without chains and parking dangerously.

Roads that remained closed in the south last night were State Highway 93 from Clinton to Matarua, and SH94 from Te Anau to Milford Sound.

Motorists on SH8 from Alexandra to Roxburgh, SH6 from Cromwell to Queenstown, SH6 from Kingston to Five Rivers, SH6 from Queenstown to Kingston, SH8 from Raes Junction to Milton, and SH8 from Raes Junction to Roxburgh were warned to use caution and carry chains.

Pak 'n Save Invercargill owner Bryan Dobson said while stocks of essentials such as bread and milk were holding up reasonably well, the picture could look a bit different if delivery trucks were unable to come south again today.

Most people appeared to have stocked up earlier, with sales skyrocketing in the weekend, Mr Dobson said.

Crystal ball gazing

12th August 2011

Source: The Southland Times

OPINION: Two weeks I ago I wrote in this column that the time had arrived for risk averse borrowers to consider fixing in light of data showing higher than expected inflation and economic growth earlier in the year, writes Tony Alexander this week.

Plus there was evidence of rising fixed interest rate borrowing in the business sector causing the cost to banks to rise sharply.

For example, the key rate which influences the cost to banks of lending fixed for three years to homeowners rose from below 3.8 per cent at the end of June to 4.1 per cent come the third week of July.

In the space of a fortnight the world has turned completely on its head and now there is little chance of a near term tightening of monetary policy and wholesale borrowing costs have plummeted. The three-year wholesale interest rate is now near 3.6 per cent.

Nothing much has changed in New Zealand.

Our latest BNZ Confidence Survey found a fall in the net percentage of people expecting the economy to improve to 22 per cent from 45 per cent in July.

But the result is still quite positive and not suggestive of fresh NZ weakness. We have continued to see a string of weak economic data releases in the United States, Standard & Poor's has cut the US credit rating for the first time, and responding mainly to the first factor but with the second as a trigger, investors have aggressively sold shares.

In addition there has been a fresh surge of concern regarding the debt situation in Europe, this time centred on Italy. That also has led to fresh worries about low economic growth and encouraged more selling of shares.

Whether the weakness in share prices continues or not is impossible to say.

One thing we can be certain of is that the shock of falling asset values will cause householders to pull back on their spending, businesses to ease off on hiring and put on hold their capital spending plans for a tad longer.

These developments will mainly occur overseas but at the margin we will act the same way in New Zealand.

In addition we can anticipate that fewer people will feel inclined to visit our country, therefore the tourism sector's prospects have just become worse. Also we are seeing falls in global commodity prices and that will make NZ farmers delay further their plans for boosting spending in response to strong pastoral incomes.

It all adds up to an environment in which the Reserve Bank is not going to feel the time is yet safe for raising interest rates and the chances are that now rather than raising the cash rate in September it will wait until December.

Thankfully for at least two years now we have commented that this is the most uncertain forecasting environment we have known, that people should not base hedging decisions on a reasonable expectation of any particular set of forecasts proving correct, and that whatever we forecast today the chances are we will not be forecasting the same thing six months down the track.

This time around it has taken less than four weeks for our interest rate forecasts to change back after being altered.

The interesting thing is that this is actually the third time since the end of March 2009 that I have suggested borrowers look at fixing part of their mortgages, then pulled back to suggesting floating after only two to three weeks. The environment we are trying to forecast in and in which you are trying to run your businesses and household budgets has been, is, and is likely to remain for the next three years the most uncertain and volatile we have seen. The message out of that can be nothing other than to try to get debt down, build cash reserves, to monitor cash flows closely and make them robust.

But also keep an eye on the fact that we still see reasonable growth coming in the NZ economy from the Christchurch rebuilding stimulus, housing construction catch-up in Auckland, feed-through of some lift in farm spending, growth in some sectors like film production and some element of household spending catch-up.

Flyer deal could be 'lifesaver' for Kingston economy

12th August 2011

Source: The Southland Times

The vintage Kingston Flyer is back on track and it could be an economic lifesaver, the new owner said yesterday.

Company director David Bryce, of Renwick, in Marlborough, has bought the train and other assets from the receiver for an undisclosed sum.

The deal includes two steam locomotives, carriages, the Kingston Tavern, storage sheds, a 14-kilometre section of track to Fairlight, residential lots and development land.

Queenstown Lakes District Mayor Vanessa van Uden said the deal was fantastic. She said the Flyer was synonymous with Kingston and it was a boon for tourism, businesses and the economy.

Mr Bryce – who grew up in Lumsden – said the next stage of the development plan was steam train licensing and re-opening the tavern, which closed in May.

The tavern was the community hub and one of the assets tied up in the receivership of Kingston Acquisitions, a company run by Auckland-based developer Dan McEwan.

Mr Bryce said the deal was a potential lifesaver for the village economy and the train could be running by October.

"It could be the saviour of Kingston. Kingston has a very strong future with the Flyer operating again and we'd like to get the tavern open as soon as possible.

"(The Flyer) is in very good condition and I see it as a reasonably easy process to get it operating again."

The deal could kickstart the village economy, which has suffered since the train stopped running in 2009.

Tourists and residents lamented the loss of the service, a significant drawcard for the village and one of the most visible Queenstown Lakes district attractions.

Kingston Community Association chairwoman Annette Dalziel said it would be wonderful to see such a beautiful train running again.

"It would be lovely to hear the whistle blow again and wave to the people," she said.

Kingston Motels and Holiday Parks owner John Jones said the news was marvellous.

Previously, the Flyer was a significant employer and the tavern was the community focal point, he said.

"Hopefully, it will increase the number of people stopping off," Mr Jones said.

"It's been a fairly testing time for businesses in the area, particularly any associated with hospitality and tourism."

Mr Bryce said licensing, maintenance and re-opening the tavern were the first steps before a full restoration and resumption of the tourist attraction.

"I feel quite humbled I have been given the opportunity to take ownership of it," he said.

Former Flyer manager and engine driver Russell Glendinning was working with the NZ Transport Agency on licensing to resume operations, Mr Bryce said.

Mr Glendinning was appointed operations manager.

Kingston Flyer may steam again

11th August 2011

Source: The Southland Times

Veteran steam train driver Russell Glendinning is hoping Queenstown's iconic Kingston Flyer will be back on track by Christmas after sitting idle for the last two years.

The vintage steam train has not been fired up  since the company operating it was placed in receivership owing $4.7 million in 2009.

The train attracted thousands of tourists each year on its run between Fairlight and Kingston at the southern end of Queenstown's Lake Wakatipu.

Mr Glendinning, 75, who had been driving the old train for about 40 years, said he hoped meetings would resolve licencing issues with the NZ Transport Agency and that would be another hurdle overcome in the bid to get the train back in business.

He said others were looking at the finances of the train and the debt which led to it going into receivership.

"If the financial situation can be resolved hopefully in the next week or two, then the train should be up and running again ... perhaps by December or something like that," he said.

Mr Glendinning, said he did not anticipate any problem in starting up the engine.

The historic steam train was operated by Kingston Acquisitions Ltd which went into receivership in November 2009 owing Prudential Mortgage $4.7 million.

The train had been stored in a yard in Kingston.

Grab 'cheap' fixed rate now

11th August 2011

Source: The Southland Times

Mortgage rates should remain cheap for a few more months, but homeowners are being urged to take advantage of cheap fixed-term loans before it is too late.

The advice came as New Zealand and global shares staged a strong recovery yesterday on news the United States Federal Reserve will maintain low interest rates for the next two years.

Global economic uncertainty has led to most economists revising their expectation of an increase in the New Zealand official cash rate from next month, to the end of the year instead.

But Roger Kerr, an economist at Asia Pacific Risk Management, said homeowners should grab unrealistically cheap short-term fixed rates "before the herd fixes".

Banks were charging about 6.45 per cent for a two-year fixed rate and up to 6.99 per cent for a three-year term. Based on a floating rate of 5.75 per cent, payments for every $100,000 mortgage on a three-year fixed rate would increase by about $77 a month.

Most homeowners would not switch to fixed rates till the Reserve Bank had lifted the OCR. By then fixed rates would already have moved off their artificially low levels, Mr Kerr said.

Other economists say the environment is too volatile to clearly choose between fixed and floating.

ASB was forced to reverse an across-the-board fixed-rate increase this week but said yesterday that customers who had taken up the higher rates would be able to choose the revised rates.

The New Zealand sharemarket closed up 2.78 per cent, recovering nearly all of its $1 billion losses on Tuesday. But brokers advised that more volatility could be ahead.

Plans proceed for Kingston Village

11th August 2011

Source: The Southland Times

The proposed Kingston Village development will go ahead, the developer says.

Developer Ian Pillans, of Dunedin, said yesterday that withdrawing court proceedings against the Kingston Flyer's mortgagee would not stop the plans.

His firm has consent as part of a plan change for a village development with 740 residential sections, a school, golf course and parks.

Mr Pillans said the overall plan had gained consent and the firm was progressing with planning.

"We've quite a bit of fairly specific survey work to be done for the first stage of the development.

"Given the economic climate, we're happy to be in the planning stage."

The village would unfold as part of a 25-year development in Kingston. Once survey work was finished the company would lodge a subdivision plan for stage one, to include up to 150 lots, landscaping and a walking and cycle track, Mr Pillans said.

He hoped to reach an access agreement with the owner, or owners, of the Kingston Flyer.

The firm was not having discussions with any party related to the Flyer at this stage, he said.

National property values hold steady

9th August 2011

Source: QV

National property values have steadied according to the QV residential property index for July.

“Nationwide property values have steadied over the past month and are now only 0.4% below the same time last year, and remain 5.2% below the market peak of 2007” said QV.co.nz Research Director Jonno Ingerson.

“Over the past three months values have increased in many parts of the country, with particular strength in the Canterbury region and parts of Auckland” said Ingerson.

“Across the wider Auckland area values have increased 2.4 percent since January, and as a result are now 1.9 percent above last year and only 0.6 percent below the previous market peak of late 2007. This growth in values over the past few months has not been evenly spread across the Supercity with the old Auckland City growing the most, modest increases in Rodney, North Shore and Waitakere, while Manukau, Papakura and Franklin have stayed more or less stable” said Ingerson.

 “Values in Hamilton, Tauranga and Dunedin have all been relatively stable for the past six months, although declines in the six months prior to that mean that all three areas remain below the same time last year” said Ingerson.

Ingerson said “Wellington remains the only main centre where values continue to decline in recent months, dropping 1.8 percent since January, and now sitting 2.7 percent lower than the same time last year. Possible Public Sector restructuring remains a dampening factor in the property market”.

“Values in Christchurch have been volatile since the first earthquake in September, first increasing for a few months, then dropping prior the February quake, and since then have been increasing. Over the past three months values across Christchurch have grown 1.1 percent, and are now 0.5 percent above the same time last year. The increase in recent months is due to increased demand for properties in undamaged areas particularly in the West and North of the City” said Ingerson.

Ingerson said “values across the rest of the Canterbury Region have also increased in recent months due in part to demand from displaced Christchurch residents. Values in Ashburton have grown the most at 4.0 percent over the last three months. Waimakariri District immediately North of Christchurch has increased 2.9 percent and Selwyn District immediately to the West has increased 2.1 percent.”

While unrelated to the QV index, and a less reliable measure of value change, the average New Zealand sales price over the last three months is $414,261 up slightly from the $412,746 reported last month.

The provincial centres have seen some variability in values in recent months with some dropping, others rising and others staying flat. However values in most provincial towns remain below the same time last year. Wanganui is the furthest below last year at -6.8 percent, with Gisborne next at -4.6 then Invercargill at -4.0. Whangarei (-2.7), Rotorua (-2.9), Hastings (-1.0%), Napier (-1.5), New Plymouth ( 2.6) and Palmerston North (-1.0) are all down slightly on last year. Nelson values are at the same level as this time last year while in Queenstown Lakes values are 1.5 percent above last year.

Main urban commentary

Auckland

QV’s Residential Price Index for July shows that property values in the Auckland region are 1.9% higher than the same time last year. Values continue to increase although not as quickly as last month.

Ms Glenda Whitehead of QV Valuation said; “Auckland is an extensive region and while values sit 1.9% above a year ago, when you look at each area this reflects too little for some and too much for others. We are seeing local influences at play within each of the former cities, their suburbs, that even go down to street and property level. These are driving much of the shift in value with most of the upward price movement within the former Auckland City.”

“Values for former Auckland City show an annual growth close to 3%. Whilst there has been some steady growth our valuers have seen some spiky values being achieved for individual properties that tick all the boxes. While other more homogenous type properties or those with faults have shown little value movement” Ms Whitehead said.

Ms Whitehead said “we continue to see strong demand based on both locality and building type. This has seen value rises in the older traditional suburbs such as Royal Oak, Epsom, Mt Eden, Mt Albert, and other suburbs in close to proximity to the CBD. These leafy suburbs offer popular school zones, village atmospheres, and large numbers of character homes or homes built with trusted and proven building materials.”

“In terms of other parts of the region there is little to report that was not said in prior months. Values levels remain stable, as reflected by the limited change in the underlying index for the past year to 18 months” Ms Whitehead said.

Ms Whitehead said “There are definitely two distinct speeds prevalent across the region. It is a seller’s market in the leafy inner city suburbs, while elsewhere we have greater balance between listing levels and number of buyers.”

“We are in the depths of winter now, so we expect listing levels to increase from now onwards. We may see some vendors hold off until after the election, somewhat of a pattern noted around previous election years, but realistically, the result is unlikely to have any direct impact on the property market, it’s just another reason to stall” Ms Whitehead said.

QV’s Residential Price Index is calculated using sales data from the 3 months leading up to the month being reported. It is not the same as the average sales price, which fluctuates in line with the mix of properties selling in upper or lower price brackets. The average sales price for the Auckland region in July was $541,357.

Hamilton

QV’s Residential Price Index for July shows that property values in Hamilton are 3.4% lower than the same time last year. Values in recent months are remaining fairly steady.

 
Mr. Richard Allen of QV Valuations said: “Values have oscillated in a very narrow band. Although Hamilton remains subdued there is some evidence to suggest that things may be picking up a little.”

“There are variations in the property growth across the different localities within Hamilton City. Central City/North West decreased slightly, whilst South West Hamilton, which has been fairly static moved in a positive direction this month. The North East and South East Hamilton values also increased” Mr. Allen said.

QV’s Residential Price Index is calculated using sales data from the 3 months leading up to the month being reported. It is not the same as the average sales price, which fluctuates in line with the mix of properties selling in upper or lower price brackets. The average sales price for Hamilton in July was $340,225.

Tauranga

QV’s Residential Price Index for July shows that property values in Tauranga are 1.7% lower than the same time last year. Values in recent months continue to be steady.

 
Mr. Shayne Donovan-Grammer of QV Valuations said; “There has been no significant changes to the Tauranga market over the last month or two. Feedback from real estate agents suggests there is a shortage of listings for central, tidy, lower to mid value properties.”

“I am seeing an uplift in first home buyer activity. They are encouraged by the continuation of low interest rates, a relaxing of credit criteria and the odd seller more than willing to compromise. Second home buyers and investors are more reluctant to enter the market with many not having the appetite to take on more debt in what is a constrained market” Mr. Donovan-Grammer said.

Mr. Donovan-Grammer said “for the buyer who is willing to put in the leg work there are some good buys out there presently.”

QV’s Residential Price Index is calculated using sales data from the 3 months leading up to the month being reported. It is not the same as the average sales price, which fluctuates in line with the mix of properties selling in upper or lower price brackets. The average sales price for Tauranga in July was $432,461.

Wellington

QV’s Residential Price Index for July shows that property values in the Wellington region are 2.7% lower than the same time last year. Values in recent months continue to decrease.

Mr Kerry Buckeridge of QV Valuations said “As has been the case for some time now the Wellington market continues to be very slow. Though there has been a noticeable increase in activity over the last week – coinciding with the end of the school holidays.”

“The busiest segment continues to be at the more modestly priced/first home buyer end of the market. With prices lower than at the market peak and historically low interest rates it can be argued a first home is currently more affordable than it has been for many years” Mr Buckeridge said.

Mr Buckeridge said “More and more are commenting there is a shortage of good stock in the mid to upper price segments. This may be reflective of the fact that those that traditionally looking to upgrade have stayed out of the market over the last twelve months or so. If this situation continues it is possible that good quality offerings may once again begin to attract multiple offers and higher prices – we shall see! Thus far buyers continue to be very cautious.”

QV’s Residential Price Index is calculated using sales data from the 3 months leading up to the month being reported. It is not the same as the average sales price, which fluctuates in line with the mix of properties selling in upper or lower price brackets. The average sales price for Wellington in July was $438,974.

Christchurch

QV’s Residential Price Index for July shows that property values in Christchurch are 0.5% higher than the same time last year. Values have fluctuated over the last year due to the affects of the earthquakes. In recent months values have been growing steadily, probably driven by higher demand in undamaged areas, such as in the North and West of the city.

 
Mrs. Melanie Swallow of QV Valuations said; “House prices appear to have shown a slight recovery in the aftermath of the 13 June earthquake. The delay in activity as a result of earthquakes was expected and now some signs of normality can be seen emerging. There are more buyer enquiries and open home attendance, along with foot traffic through new show homes. Although the signs are encouraging we need to treat it all with some caution due to the fragmented market and low sales volume.”

“An increase in demand for properties in relatively unaffected suburbs is exactly what we expected to see. Overall, sale prices appear to have held, even in the eastern suburbs, however this could be influenced by the low sales volume. We expect to see some traction in the market over the next two months” Mrs. Swallow said.

Mrs. Swallow said “there is strong interest overall for well priced quality homes in suburban Christchurch at present, this continues to be evident in the North West and South West suburbs as well as the main Selwyn and Waimakariri townships and Christchurch’s North and Western suburbs.”

“The increase in activity, particularly buyer enquiry is being driven by those in red zone areas. They will be evaluating their options and testing the waters in anticipation of future property decisions. Whilst this will be a gradual process we expect to see continued pressure in the interim on the affordable housing market” Mrs. Swallow said.

QV’s Residential Price Index is calculated using sales data from the 3 months leading up to the month being reported. It is not the same as the average sales price, which fluctuates in line with the mix of properties selling in upper or lower price brackets. The average sales price for Christchurch in July was $386,279.

Dunedin

QV’s Residential Price Index for July shows that property values in Dunedin are 2.9% lower than the same time last year. Values continue to fluctuate in a narrow band.

Mr. Tim Gibson of QV Valuations said: “The Dunedin residential property market continues to remain subdued. The winter months have traditionally always been a slow period for residential activity as listings and potential purchasers hold off from entering the market until spring.”

“Whilst values are fluctuating slightly from month to month, overall they are holding steady after a period of decline in the latter period of 2010” Mr. Gibson said.

Mr. Gibson said “with new listing volumes and average listing price down combined with lower buyer interest, it appears these conditions may continue in the short term within the Dunedin residential market.”
 
“Overall reasonable demand still exists for well presented properties in sought after localities. It is values for properties with maintenance requirements that are being affected more in the slow market. They often have longer selling periods and greater discounting is required in order to secure a sale. It is typically potential buyers being more selective in their decision making. They are not being rushed with factors such as multiple offers on properties, which was common during better market conditions” Mr. Gibson said.

QV’s Residential Price Index is calculated using sales data from the 3 months leading up to the month being reported. It is not the same as the average sales price, which fluctuates in line with the mix of properties selling in upper or lower price brackets. The average sales price for Dunedin in July was $273,335.

Confidence on the up in south

9th August 2011

Source: The Southland Times

Southland is finally rising out of the recession, with more people looking to spend money and business confidence picking up in the past month, business leaders say.

Southland Chamber of Commerce chief executive Richard Hay said confidence had picked up quite nicely in recent weeks.

"We are starting to see the worm turn.

"It's been a little bit longer for us down here but we are certainly starting to see that happen now with people seeming to be more interested in spending.

"The general mood, the general confidence of people is looking much brighter ... and we couldn't see that even six weeks ago when people weren't interested in spending," Mr Hay said.

Businesses were starting to reinvest and looking to employ staff, unemployment had dipped from 3.8 per cent to 3.4 per cent and there was more optimism in the manufacturing sector, wholesale sector and in the trades, he said.

He noted that it would take at least another 18 months to get back to where many businesses were before the recession.

And the sharemarket crash at the weekend had cast doubt over what would happen in coming days.

The recession had seen many Southland retailers and manufacturers reduce the working hours of staff, and other businesses had shut their doors in the past two years, but Mr Hay said things were now changing.

"Employees are starting to get their old hours back due to some of the prudent decisions that have helped to save a lot of businesses."

Market South senior marketing consultant Erin Ward agreed things were looking up, saying a lot of conferences and networking activities were being held in Invercargill, which was a positive sign businesses were wanting to move forward.

"It's been an upward trend in the last few months."

Southland Master Builders Association president James Carter said clients had made a lot more inquiries about doing building work in the past month.

Dairy and sheep farmers were starting to spend more money and "even in the city people are wanting to do their houses up and build new houses", he said.

This would lead to more people being hired in the building industry next year, he believed.

H&J Smith chief executive John Green said its sales were distorted by the change in school holiday dates to suit the Rugby World Cup. But high-ticket items such as furniture had been selling strongly.Invercargill job recruitment agencies did not return calls yesterday.

Peak to peak

8th August 2011

An adventure-ready team from hoamz entered one of Queenstown's best-known multi-sport races this week - the North Face Peak to Peak. The race takes competitors on a whirlwind journey from skifield to skifield - from the top of The Remarkables all the way to the top of nearby Coronet Peak. Encompassing a 2km ski, 17km downhill mountain bike, 7km kayak, 9km run and culminating in a 9km uphill bike, the gruelling race was a challenge too tempting for the outdoor-loving hoamz team. Achieving a respectable time in the Business house category of 2hrs 46min 47secs, the team are already keen for next year.

Resources make us 'luckiest country'

8th August 2011

Source: The Southland Times

Solid Energy chief executive Don Elder is bullish about New Zealand's prospects, with his company's lignite developments near Mataura one of his biggest hopes.

Speaking at the Southern Primary Sector Business Forum conference in Invercargill this month, Dr Elder said New Zealand was "the luckiest country".

Lignite developments had the chance to obliterate New Zealand's dependence on imported fertiliser from China and boost profits in the agricultural sector, he argued.

The soon-to-be-constructed Mataura lignite and briquetting plant was the first step in the process, with a lignite-to-fertiliser plant going through feasibility studies.

While wages are the highest component of farm expenses, fertiliser is a close second.

Dr Elder said that as demand for dwindling coal supplies increased, the price of fertiliser from Asia would rise to excessive levels.

"(Lignite) very easily replaces things we import. We can replace fertiliser from China."

Lignite development gave the opportunity to not only export things dug out of the ground, as Australia does, but also added value to them before sending them abroad, he said.

He dismissed objections that the size and breath of the lignite operation would swallow vast swathes of Southland. "(The factory) sits in a paddock and the mine sits in the next paddock," he said.

"Vast swathes of Southland? More like vast swathes of one paddock in Southland." He also showed results from a survey that showed only 9 per cent of Southlanders opposed lignite extraction.

Dr Elder had some harsh words for opponents of mineral exploitation in New Zealand, pointing to the debate over opening up conservation land to mining exploration last year.

He said the initial proposal was to have a look at what was there, but this was hijacked "within 30 seconds" and turned into a debate about whether there should be mining in national parks.

"That never was the question," he said. "We don't have discussions, we don't even have debates, we have polarised arguments."

New Zealand is well placed for the future of the global economy, thanks to its abundant water, land and energy resources, he said.

In a wide-ranging speech, he said the country had the chance to increase exports by more than $10billion by 2025 through exploitation of what it has, pointing to potential coal seam gas, underground coal gasification, methane hydrates, ironsand and conventional coal resources being pursued by Solid Energy and other companies.

He believes Solid Energy is a world leader in underground coal gasification technology.

That method of extracting energy gets about 70 per cent of available energy from the coal seam. Coal-seam gas operations produce 2 per cent.

"NZ is number one per capita in natural resources ... we have the technology, we have the people. We are number one.'

Sharp rise in auction properties foreshadows tightness in the market

5th August 2011

Source: realestate.co.nz

In a typical month, around 600 properties come onto the market advertised as auction sales. In the months of June and July this number has spiked to 1,168 and 1,132 respectively – in absolute terms these months have seen the highest recorded looking levels going back over the past 4 years.

This spike is even more significant when viewed against the decline in new listings witnessed this year. As a percentage the number of properties brought to the market in June, it was the highest ever seen at 13% – far outstripping the prior high of 9% back in September / October 2009. July has continued this trend with another month with 13% of new listings being marketed as auctions.

The vast majority of properties marketed as auctions are in the Auckland region – in July, Auckland accounted for 56% of all of the 1,132 auction properties marketed across the country in the month.

In general across all property listing categories, Auckland represents around 24% of the total – it would therefore seem that Auckland is the epicenter of NZ property auctions and in June and July over 1 in 5 of all new listings brought to the market across the Auckland market were auctions, far above any prior period.

Whilst this spike in auction listings is significant; it is important to ground the stats by stating that currently on realestate.co.nz there are 1,378 properties on the market as auctions this compares to just over 48,500 properties for sale across NZ in total on the market – that amounts to less than 3% of all properties currently on the website.

Having made that statement; there is no doubt that there is a very clear correlation between the state of the market in terms of inventory of unsold properties and the proportion of new listings being marketed as auctions. When listings are in short supply, as we are seeing at this time we tend to see a rise in the proportion of properties being marketed as auctions. The last time this happened was in 2009 as seen in the chart below:

The message is clear – the level of new listings coming onto the market over the past 3 to 4 months continues to be lean, this is matched to a steady but significant rise in property sales. Such a situation when combined with falling stock of property for sale places the “power” in the hands of sellers. In these circumstances the real estate agent acting on behalf of the seller is clearly recommending taking the property to auction to encourage those motivated buyers to battle it out in the auction rooms and front lawns to grab their chosen home.

For prospective sellers looking to put their property on the market in the coming couple of months, now would seem to be as good a time as any to get ahead of the game and list that property.

Pressure on banks to keep mortgage rates low

5th August 2011

Source: Stuff Business Day

Consumer power and pressure to hold on to customers could keep the brakes on rising fixed-term mortgage rates and even start a new price war, accounting firm PWC says.

ASB on Wednesday became the first bank to break ranks, lifting its fixed-term mortgage rates across the board. Its two-year term was now the most expensive at 6.65 per cent, but was still cheaper than most over three years at 6.95 per cent.

But rivals have yet to follow suit, and the costs of funding fixed-term loans for banks has fallen this week back to where they were about three weeks ago.

BNZ chief economist Tony Alexander said yesterday that the ongoing concerns about the United States economy and the European debt crisis had driven wholesale money markets down again.

Alexander last week advocated fixing half of a mortgage for three years to beat interest rate rises.

Yesterday he said in normal times there was a strong case for fixing and he personally would continue to hedge his bets.

"But these are not normal times. In fact they are the most uncertain times I have ever seen."

PWC financial services partner Sam Shuttleworth said that with more than half of all mortgages now on floating rates rather than fixed, the balance of power had switched to borrowers. Home owners with a floating-rate mortgage could change banks much more easily than those on a fixed term, and if nothing changed, their number could swell to 80 per cent within a year.

"That would mean that competitive pressures would result and put the brakes on fixed rates." There could also be a repeat of the price war that erupted a few years ago as banks sought to protect their customer bases or win new business, Shuttleworth said.

Alexander said "very few people have shifted to a fixed rate from floating".

Shuttleworth said it had been a tough year for the main banks.

ANZ National, ASB, Bank of New Zealand, Westpac and Kiwibank saw their collective core profits rise just 2 per cent to $2.3 billion in the first half of their financial years compared to the previous six months.

Higher income from interest and fees was offset by a rise in operating expenses as well as a halt to the decline in bad debts following the Christchurch earthquakes.

Relief packages for Christchurch businesses and households through special interest rates and adjusted repayments terms also hit profits, Shuttleworth said.

There were also concerns a pending further review of the sector by ratings agency Standard & Poor's could lead to another ratings downgrade for all banks, he said.

All four of the big banks had their credit ratings downgraded one notch by Moody's in May to Aa3, mainly due to their reliance on overseas funding and bringing them into line with Standard & Poor's.

A further one notch downgrade could not be ruled out and two notches was possible in the current volatile financial markets, Shuttleworth said.

If that happened funding costs for banks would increase, putting further pressure on lending profit margins.

Standard & Poor's has revised its ratings model for financial institutions and that would probably affect all banks around the world, not just New Zealand banks and their Australian parents.

But New Zealand banks were ranked among the top 20 in the world for their financial strength, Shuttleworth said.

NZ Property Report – July 2011

2nd August 2011

Source: realestate.co.nz

The July 2011 NZ Property Report published by Realestate.co.nz provides an insight into the state of the New Zealand property market as measured by the supply side of the property market over the month of July. The key measures of the market analysed in the report are the number of new listings, the asking price expectation for those new listings and the level of inventory of unsold houses on the market at this time. The report is compiled from data captured by the website and represents close to 95% of all property movements in the NZ market as managed by licensed real estate agents.

A full print version of the NZ Property Report – July 2011 is published below and is available for download (1.0MB) and distribution. Alternatively watch the video below for a presentation of this month’s report.

Summary of the market – July 2011

The property market is edging toward the Spring period – a time traditionally when more buyer activity appears at open homes and new properties appear on the market. This year unlike the past couple sees a challenging set of circumstances. New listings are in short supply, not just in the major cities but now right around the country. Matched to this and as a function of this and the upturn in sales the level of inventory of unsold property on the market is edging down – nationally below the long-term average. This low level of supply, if not met by a rise in supply in the short term could result in either or both price pressure upwards or disillusioned buyers exiting the market.

This trend of falling inventory off the back of rising sales and shortages of new listings began a couple of months ago in Auckland and then spread out through the major metropolitan areas into provincial NZ. Auckland remains the epicenter of this trend and now sees a situation where available inventory of property for sale is the lowest seen since this recent property malaise began back in 2007. Auckland currently has just over 5½ months of available inventory based on the recent rate of sale, not since September 2007 has the region seen this level – the highest level of inventory was recorded in June 2008 at just over 13 months.

Whilst shortage of supply matched to low inventory and rising sales usually sees pressure on prices, the asking price for July showed what is a traditional fall – seasonally adjusted it was down 1.6% indicating that sellers new to the market are not being wildly optimistic in their expectations – potentially keener to sell quickly than inflate expectations.

Asking Price

The truncated mean asking price for all new listings in July fell significantly from $415,053 in June to $403,474. On a seasonally adjusted basis the asking price fell 1.6% in the month indicating a continued degree of caution amongst sellers.

The overall trend of the past 2 years continues to show a slow but steady strength in asking price expectation.

New Listings

The level of new listings coming onto the market in July fell again to 8,966. This represented a 15% year-on-year decline but a marginal 1% seasonally adjusted rise from June.

On a 12 month moving basis the number of new listings in the past year totals 124,228 as compared 145,733 for the same period a year ago – a fall of 15%.

Inventory

The level of unsold houses on the market at the end of July continued to fall from prior months. July reported 45,674 down from 47,738 in June and 48,352 in May.

The current inventory is now well below the long term average. The winter season traditionally sees a reduction in new listings, this when seen against a strengthening of sale over the past 3 months is likely to see inventory levels continue to fall as Spring approaches.

Regional Summary – Asking price expectations

The national asking price expectation fell in July by 3.8% vs the recent 3 month average, this performance was mirrored across the regions with 14 regions showing a fall of which 4 reported asking price falls of more than 5%.

Countering this trend were 5 regions showing strength in asking price growth the most significant region being the Central Otago Lakes region including the key center of Queenstown, this saw a 7.4% rise in asking price to $581,666 – this is 10% up on a seasonally adjusted basis which when reviewed against the shortage of listings and low inventory would seem to highlight that the Queenstown property market is gathering pace again with recent 3 months sales volume up 26%.

Regional Summary – Listings

The dominant perspective for the 19 regions of the country is that in terms of new listings the market is definitely skewed to favour sellers. This month there are no regions reporting year-on-year growth in new listings.

There are 7 regions showing year-on-year falls of more than 20%, most notable in size are the Central Otago, Manawatu / Wanganaui and Coromandel. The latter being a region, which has seen a heavy weight of unsold inventory for many months, and has of late seen a significant improvement as these falls in new listings have taken effect.

Two regions saw record lows of new listings – Northland with 335 down from the previous record low of 352 from last month and Marlborough with 101 down from the previous low of 110 back in April 2009.

Regional Summary – Inventory

The NZ property market has markedly changed in the space of 4 months – in April of this year every one of the 19 regions showed an inventory well above long term average indicating that these regions as well as the national picture at 54 weeks of equivalent sales was stuck in a buyers market as it had been for well over 18 months.

Now just 4 months later the picture shows 9 regions as defined as sellers markets, just 4 as definite buyers markets and the remainder balanced markets.

The regions that are seeing the greatest pressure in inventory are the major regions of Auckland, Otago, Nelson, Otago Lakes and the Waikato. These 5 regions are all sitting with inventory well below long term average and based on recent listing shortages will see levels fall further heading into Spring.

Despite the national view there remains a number of regions which have inventory well above long-term average of which the Wairarapa and Northland feature strongly.

Lifestyle

Lifestyle property listings across the country fell significantly in July to a new record low of just 628; this was below the prior low of 727 seen in January of this year. The Auckland region – one of the largest regions for lifestyle property recorded a low of 124, lower than the prior record from January 2010 of 153. Overall listings were down 25% year-on-year and down 10% on a seasonally adjusted basis.

In terms of asking price the national truncated mean asking price at $520,109 was down 5% on a seasonally adjusted basis and down 8% as against recent 3-month average.

Apartments

Listings of apartments showed a 16% decrease on a seasonally adjusted basis, reversing what had been a strong June for new listings of apartments. A total of 443 new apartments came onto the market in the month. The truncated mean asking price for these new listings was $372,983, which was down 4.0% on the recent 3-month average, and up 4.3% as compared to July 2010.

In the Auckland apartment market, which represents over 60% of the market there were 295 new listings with an asking price of $340,344. The new listings shows a fall of 21% on a seasonally adjusted basis, and a 15% fall when judged on a year-on-year basis.

Property Price Index

Comparing the sale price of properties across the country to the asking price expectation is not a perfect comparison; however the trends tend to align. The benefit is that the data for asking price is of the market today, whilst the selling price is reflective of the market active between 4 and 6 weeks ago. The latest comparison is highlighted below:

Realestate.co.nz: data is compiled from asking prices of new residential listings as they come onto the market via subscribers to the realestate.co.nz website. The Realestate.co.nz website currently has over 95% of all licensed real estate offices subscribing and providing all of their listings onto the website. The asking price is presented as a truncated mean price at a 10% interval.

REINZ: data is compiled from reported unconditional residential sales from all members of the Real Estate Institute of New Zealand representing all licensed real estate offices. The sale price is published as a stratified median house price and is developed in association with the Reserve Bank of NZ.

Housing now a 'seller’s market'

2nd August 2011

Source: Stuff Business Day

A continuing slide in new listings has turned New Zealand housing market into a seller's market, says property website Realestate.co.nz.

However, asking prices are continuing to slide - the mean asking price in July was $403,000, nearly $11,000 lower than it was in May.

It reports that the number of new listings - 8966 in July - was 15 per cent below the number listed in July last year.

"Winter is traditionally a slow time for new listings, this year a 15 per cent year on year decline is making this felt more acutely right across the country.

"The stock of unsold houses in the market fell to 38 weeks of equivalent sales as compared to the long-term average of 41 weeks as a result of the lower level of new listings and the slow but steady rise in sales activity.

"In the space of just two months the regional picture of New Zealand has moved from a buyer's to a seller's market. In all but four of the 19 regions sellers now hold the upper hand.''

There was a shortage of new listings right around the country.

"The trend of falling inventory off the back of rising sales and shortages of new listings began a couple of months ago in Auckland and then spread out through the major metropolitan areas into provincial New Zealand.

The 45,674  unsold houses on the market in July was well below the long-term average and the strengthening of sales over the past three months was likely to see inventory levels continuing to fall with the approach of spring.

Average asking prices in Wellington fell 4.4 per cent to $413,000 in the past three months.

The biggest lift was in the Central Otago Lakes region, where listed prices rose 7.4 per cent to an average $582,000.

Leaky home relief imminent

28th July 2011

Source: stuff.co.nz

Leaky homeowners can access a financial assistance package from tomorrow, the Government has announced.

The Government and councils would each pay 25 per cent of the cost of repairs, and the homeowner must get a loan from the bank to pay the rest.

But councils who didn't sign off the building work, or  who have not signed up to the compensation deal will not contribute, meaning property owners will have to find 75 per cent.

Signing up to the deal meant homeowners waived the right to sue contributing councils and the Government. They could pursue other liable parties, such as builders.

The New Zealand Bankers Association said eight banks had signed up to lend under the deal.  They were ANZ, ASB, BNZ, HSBC, Kiwibank, SBS, TSB and Westpac.

The Government would underwrite the bank loan, but it was not clear by how much.

NZBA chief executive Sarah Mehrtens said home owners would still need to meet the banks' lending criteria. And she urged homeowners to seek independent legal advice "because the FAP may not be appropriate for everyone".

"Eligibility and affordability are key elements of the package,"  she said. "Banks will work closely with affected home owners to see how they can assist.  It is important to note that lending criteria conditions will still need to be met.''

The Government said the cost of the package would be about $1bn over five years, based on 70 per cent of affected homeowners taking up the deal.

It estimated there were 23,500 households eligible for the deal, but lobby groups and homeowners groups said that figure was under-estimated.

The leaking dwelling had to be a private residence and it had to be up to 10 years since it was built, or altered to cause leaks.

Homeowners who had unresolved claims with the Weathertight Homes Resolution Service would be able to apply for the Financial Assistance Package.

If the inspection or sign-off was done by a private certifier councils would not contribute, but owners could still access the Government contribution of 25 per cent.

OCR unchanged at 2.5 percent

28th July 2011

Source: The Reserve Bank of New Zealand

The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 2.5 percent.

Reserve Bank Governor Alan Bollard said: “The economy has grown more strongly than was expected, and it appears that the recovery is getting back on track, supported by a strong terms of trade.  At the same time, however, current fragility in global financial markets, including the uncertainty around the US Government’s debt ceiling, continues to highlight the downside risk to trading partner activity noted in the June Statement.

“Annual headline CPI inflation continues to be above the Bank’s 1 to 3 percent target band.  However, much of the current spike in inflation has been driven by the October 2010 increase in the rate of GST, and will therefore be temporary.  Wage and price setters should focus on underlying inflation, which is currently estimated to be below 2.5 percent.

“Provided current global financial risks recede and the economy continues to recover, the Bank sees little need for the March 2011 ‘insurance’ cut to remain in place much longer.  The current very high value of the New Zealand dollar is acting as a drag on the New Zealand economy.  If this persists, it is likely to reduce the need for further OCR increases in the short term.”

Snowstorm 'shuts' south

26th July 2011

Source: The Southland Times

Southland and much of Otago was brought to a standstill yesterday when the worst snowstorm in 15 years hit the South Island.

Queenstown was all but shut down by about 30cm of snow to lake level, with the airport, roads and businesses closed.

However, skifields were reporting massive numbers as school holiday visitors flocked to the mountains.

In Invercargill the airport was also closed and motorists were warned to stay off treacherous roads.

Sections of highway closed included State Highway 1 from Dunedin to Christchurch and Dunedin to Gore; State Highway 6, Queenstown to Kingston and Kingston to Five Rivers; State Highway 87, Outram to Middlemarch; State Highway 85, Palmerston to Kyeburn; State Highway 93, Clinton to Mataura; and State Highway 94, Te Anau to Milford.

State Highway 93 between Clinton and Mataura was the only Southland road to remain closed last night, but motorists were urged to drive carefully and to the conditions.

In Otago, State Highway 85, Palmerston to Kyeburn remained closed, as did State Highway 87, Outram to Middlemarch.

Minor crashes were reported throughout the region and tow trucks were kept busy.

Queenstown's Shotover Engineering reported selling close to 50 pairs of snow chains yesterday.

Office manager Zoe Pierce said people were lining up at the door when she arrived at work.

"For the next four hours there was a queue of people at the counter waiting to be served and get chains fitted. It was a pretty dramatic increase in sales."

In Invercargill, Auto Breakdown owner Michael Corson said his company received "just a couple" of callouts early in the day, and the incidents were fairly minor.

The Southern District Health Board postponed all elective procedures yesterday because of road conditions.

Some non-urgent procedures scheduled for today were also postponed because of transport difficulties for many key staff.

Those who planned to travel were also out of luck, with all flights cancelled in and out of Invercargill Airport, and at Queenstown Airport flights were unable to land or takeoff until late in the afternoon.

An Air New Zealand spokeswoman at Invercargill Airport said some early-morning flights today were also cancelled because aircraft were unable to land last night.

Hastings man Stephen Shaw said his partner Lynne Ellingham was bound to find more shopping to do in town as they waited for their flight.

"It's been good for Invercargill so far," he said.

Mail deliveries were also severely affected by the wintry blast.

Invercargill and parts of Southland had limited courier and rural post deliveries yesterday, while postie and rural delivery services in Gore, Queenstown, Alexandra, Balclutha, Clinton and Cromwell and Wanaka were cancelled for the day.

The snow also disrupted banking services across the South Island, with ANZ and National Bank branches closed as far north as Christchurch.

Many shops and businesses also opted to remain closed, or opened later than usual, while in Balclutha the day's court proceedings were postponed until today. In Queenstown, court was postponed yesterday and today.

Difficulties getting into Invercargill also proved troublesome for event centres in the south, with six functions cancelled at the Ascot Park Hotel already. Functions manager Andrea Thomas said most were relatively small.

The weather also effected deliveries of The Southland Times.

In Gore, district roading manager Murray Hasler said graders and grit trucks were out yesterday morning after freezing conditions, followed by heavy snow, made roads deceptively dangerous.

He had considered closing some roads but would have had to close the entire network, he said.

Central Otago was quiet as people heeded advice to stay home. Chains were required to travel between Roxburgh and Alexandra.

Trucks bringing milk, bread and mail from Dunedin did not get through.

Metservice meteorologist media and communications representative Daniel Corbett said New Zealand had not had a cold outbreak like this in 10 to 15 years.

Homeowners face interest rate dilemma

26th July 2011

Source: Stuff Business Day

Homeowners face a dilemma in the coming months, on whether to accept sharply higher mortgage payments now, in the hope of saving money in the future.

The Reserve Bank is expected to leave the official cash rate on hold on Thursday, but expectation is building that the central bank could start raising the rate from its historic low of 2.5 per cent in September.

Stronger-than-expected economic growth and higher-than-forecast inflation have helped push up the funding costs of banks by around 0.3 per cent on two and three-year terms, crimping profit margins and raising the chance of an increase in fixed mortgage rates.

PSIS broke ranks by raising its two, three and four-year fixed term rates yesterday, by between 0.1 per cent and 0.2 per cent.

Bank of New Zealand chief economist Tony Alexander said he believed it was "a matter of time" before fixed-rate mortgage prices increased.

However, banks might delay increases to gain market share or build a reputation that they were slow to increase rates.

Kiwibank spokesman Bruce Thompson said margins had fallen in recent weeks, but he appeared to play down the prospect of an imminent increase. "I would think for Kiwibank, it's a watch and wait.

"We certainly aren't planning a pre-emptive strike to raise rates," he said, although floating-rate customers should "carefully consider" fixed rate deals.

An expected rise in fixed rates poses a dilemma for borrowers on floating rates. At present, average floating rates are more than 1 per cent cheaper than three-year fixed rates.

Hundreds of thousands of households have moved on to floating rates recently, reaching 853,000 in May, an increase of more than 200,000 in a year.

But with OCR increases seeming inevitable, the price of floating rates could rise significantly, and economists have warned that by the time the official rate starts climbing, fixed-rate deals will already cost more.

BNZ has predicted that the OCR will increase from 2.5 per cent to 5 per cent by early 2013, so longer term, fixing now could prove cheaper.

Alexander said that for those who were actively considering a move to fixed rates, now would be a low risk time to do so.

But he conceded that with so much uncertainty about the world and local economy, many mortgage holders could balk at the prospect of voluntarily increasing their repayments now. "It is a hard ask, and that's why I think most people, the overwhelming majority, will stay floating," he said.

Mike Pero Mortgages chief executive Shaun Riley said his staff had seen early signs of a move towards fixed rates, with a 5 per cent to 10 per cent increase in the number of customers wanting to lock in repayments, mainly for two or three years.

"I think when the Reserve Bank gives its outlook on Thursday, that will be a defining event. If there is a strong signal that [governor Alan Bollard] is going to move sooner rather than later, I think you will see a lot more people jumping on to fixed rates."

Mortgage Brokers Association chairman Darren Pratley said mortgage holders were increasingly looking for packages to suit their personal circumstances, such as leaving a portion of their rates floating in case they had the opportunity to make large one-off repayments.

With interest rates expected to rise, he expected an increase in those seeking the certainty of fixed rates, even though short term, repayments could be higher.

"It's more about what the rate's going to be in a year, two years, three years' time that you're basing your decision on today."

'Time's up' for low floating mortgages

25th July 2011

Source: The Southland Times

Homeowners on floating interest rates should quickly look to lock in fixed rates before prices move up in coming months, a leading economist warns.

Tony Alexander, chief economist at the Bank of New Zealand, said that during the past fortnight there had been clear signs that the economy was gathering speed.

Economic growth was rising faster than experts had predicted, and inflation had hit a 21-year high.

This meant interest rates were likely to increase sooner than expected in an effort by the Reserve Bank to stop inflation getting out of control.

"What this means for borrowers is that time has now run out for comfortably sitting floating, planning to fix before fixed rates rise," Mr Alexander said.

"Such rises are probably just around the corner, with some banks' fixed-borrowing costs up 0.3 per cent from just a fortnight ago. If I were a borrower ... planning to fix, then I would see high risk in waiting any longer."

Only a week ago, Mr Alexander said floating rates were likely to offer better value for several months.

An increase in the official cash rate, which looks increasingly likely in September – with even a slim chance of an increase on Thursday – would have an immediate impact on floating rates offered by all of New Zealand's banks.

Floating mortgage rates have become increasingly popular in New Zealand in recent years because the rates offered have been so much lower, averaging 5.9 per cent since March.

According to the Reserve Bank's figures, 853,000 households were on floating rate mortgages in May, up from 629,000 a year ago and 382,000 five years ago.

A few weeks ago, most economists had expected the Reserve Bank to leave interest rates unchanged until at least December, but recent figures have resulted in a big change in thinking.

ANZ chief economist Cameron Bagrie said it was now possible that the Reserve Bank could increase the official cash rate this week, and that it would have to come up with a good reason not to raise them in September.

Shortage of listings is key to the state of the property market

21st July 2011

Source: realestate.co.nz

The monthly sales report from the Real Estate Institute (REINZ) states clearly that “Listings tight in June housing market” – this assessment comes from “strong indications from agents in many regions that the supply of properties is really tightening“.

This perception is reality; the data in the monthly NZ Property Report underpins this with the numbers to show the decline in new listings as detailed in the chart below.

Listing numbers have been falling steadily for over a year, and matched to a slowly rising rate of sales, is beginning to show in the declining stock of homes on the market. This could potentially lead to a demand heavy market which could see price pressure in the medium term.

To better highlight the listings to sales ratios; I have developed these charts to show the picture nationally and regionally. I have assessed the property market based on the first 6 months of 2011 vs the first 6 months of 2010. Nationally this year is showing sales down 1% – however if you remove the Canterbury region the national picture shows a 4% growth in sales. Matched to this is a 14% decline in new listings (17% decline if you include Canterbury).

The chart ably demonstrates why Auckland is most definitely feeling the effect of a tighter property market – sales up 10% and listings down 13%. Wellington sales are sluggish but again listings are down 12% whilst Canterbury is experiencing the unique aspects of the earthquake of February.

Looking around the country the regions that are showing growth in sales year-on-year are grouped in the chart below. Eight of the 19 regions show year-on-year growth in sales – the West Coast of the south island topping out with a sales rise of 14%. All regions though show declines in listings.

The remaining 11 regions of the country presented in the chart below are witnessing year-on-year sales declines, some double digit declines. Equally they all (with the exception of Nelson) are seeing declining listings, largely in line or greater than the decline in sales.

Peer review delays start to stadium

21st July 2011

Source: The Southland Times

The main building consent for Stadium Southland was finally approved yesterday, but the delays have cast doubt on whether the stadium will be completed before the Southern Steel's opening ANZ Championship netball game next year.

The city council delays in issuing building consent were prompted by a peer review of the design which raised concerns the new stadium might again collapse if a disaster of unusual proportions struck.

The last stadium collapsed under a heavy dumping of snow in September.

Stadium Southland Indoor Leisure Centre Charitable Trust chairman Acton Smith said yesterday that stadium engineer Alan Reay and peer reviewer Matthew Lander, of Beca Carter, had now agreed that a major structural brace designed for earthquake loadings in the building should be strengthened.

There were 54 different elements in total the two parties had been discussing in recent weeks, with the peer reviewer saying the new building would be "100 per cent" for the codes it had been designed for, Mr Smith said.

"He (peer reviewer) has now confirmed that we have met all the latest codes and it's been subjected to probably more earthquake testing and loading than anything that's been done down here."

Under normal circumstances the builder, Amalgamated Builders Limited, would certify its own construction work during the building process, which ultimately required city council signoff.

But Mr Smith said the stadium trust, which owns the stadium, had also decided to hire an "independent clerk of works" to ensure the building's quality standards were met.

The scrutiny on new buildings had "gone through the roof" since the Christchurch earthquakes.

"What we have had to confront here is that this is the first large public building that's been built in the South Island since the earthquakes, so we are being subjected to a level of scrutiny and standards that are probably at the highest level people have had to work with. And I think it's totally appropriate. I have no issue with that."

The stadium building work is understood to be about a month behind schedule.

Mr Smith said he had asked Amalgamated Builders Limited to give him a revised programme for construction, adding it was still possible it would be completed before the scheduled March 30 opening.

Invercargill City Council building services manager Simon Tonkin confirmed he yesterday gave approval for the stadium's building consent to be issued.

"I am very happy the process has been worked through and construction can begin as soon as possible."

Pressure on Bollard over interest rates

21st July 2011

Source: Stuff Business Day

Interest rates may head higher as early as September, with the Reserve Bank of New Zealand looking to contain inflation pressures in an economy showing signs of life, AMP Capital Investors says.

The fund manager is picking Reserve Bank Governor Alan Bollard will hike the Official Cash Rate (OCR) by 25 basis points at its September meeting after a surprise surge in first-quarter growth and stronger-than-expected inflation.

The risk for Bollard is that if mortgage rates don’t go up faster than he hikes, homeowners may jump into fixed terms and erode his ability to gain traction with future increases, AMP Capital head of fixed interest Grant Hassell told a media briefing in Wellington.

More than half of all mortgages were on floating rates, meaning borrowers are currently susceptible to shifts in the benchmark interest rate.

"By doing 25 basis points, you’ll see a jump up in fixed rate mortgages as the market factors in more and more rate hikes," Hassell said.

Bollard cut the OCR 50 by basis points in March to 2.5 per cent in response to the February earthquake in Christchurch, and said he won't remove that stimulus until he sees signs of the rebuild stoking economic activity. The central bank releases its decision on interest rates next Thursday.

Hassell said two-year-ahead inflation expectations were already near 3 per cent, the top of the Reserve Bank’s target band, and the latest data will probably push that higher.

"That's troubling for the Reserve Bank," Hassell said.

The turnaround in New Zealand's economic fortunes comes as Australia’s central bank is facing a two-speed economy and is tipped to start cutting interest rates.

AMP Capital's Sydney-based chief economist Shane Oliver said the divergence in the two nations' monetary policy would stoke further demand for the New Zealand dollar, which today hit new post-float highs at US85.66c, and that could take the Kiwi even higher.

"It might go through a short-term pause, but I think the odds of it reaching parity are still fairly attractive," Oliver said. However, he didn’t think the Kiwi would catch its Australian dollar counterpart.

Separately, JBWere investment strategist Bernard Doyle said a soft global economy posed risks to New Zealand, and interest rate rises were not a certainty.

"The best thing Dr Bollard can do next week is pull out the poker face and give no hint as to his bias," said Doyle, who suggests too many economists and traders are treating the New Zealand dollar as a "popular one-way bet".

Doyle said Goldman Sach's Leading Global Indicators measure showed a worryingly sharp slowdown in global growth in recent weeks, which could have an impact on the New Zealand economy if it continued.

"Momentum has evaporated," Doyle said. "If things remain this weak, rate hikes will be the last thing on Dr Bollard's mind by year end."

"We've been here before, more than once.

"Those believing higher rates in New Zealand are a lay down misere should consider how finely balanced the world economy is at this juncture."

New Zealand closely following global economic patterns.

Such a growth slowdown would be expected to drop strong global food prices, which have underpinned New Zealand's recent more buoyant trade and farm sectors.

"The usual lag between global growth and NZ commodity prices suggests we should expect falling New Zealand export prices by the end of the year. But we won't have to wait that long - dairy prices are already falling," Doyle observed.

While a rising Kiwi was "fine as long as global growth remains strong and stable", the currency's propensity to rally on any excuse at present made it dangerous for the RBNZ to signal a view on rate rises.

JBWere still believed New Zealand interest rates could still need to rise by the end of this year to cope with higher inflation, but "we are also open to other, somewhat darker outcomes".

Doors open for first-home buyers

21st July 2011

Source: Stuff Business Day

Conditions for first-home buyers continue to improve, and banks are increasingly jostling to get their attention before interest rates rise.

The June home affordability report from mortgage broker Roost said a combination of factors had put younger, double-income households in their best position since November 2004.

Flat prices for starter homes, floating mortgage rates at multi-decade lows and a slight increase in after-tax income had all made entry-level housing the most affordable for seven years.

However, Roost noted that the prospect of higher interest rates later in the year was coming on to home buyers' radar. It was spurring banks to offer discounts on legal or set-up fees and loan to value ratios of up to 95 per cent.

"Banks are competing hard for first-home buyers and investors alike," said Roost spokeswoman Rhonda Maxwell.

"Home loan affordability ratios are the best we've seen in seven years, but the interest rate outlook is beginning to change."

Harcourt's real estate agent Savita Robinson, of Wellington, said she had seen a pick-up in business over the last month, but it was not among first-home buyers. "I'm getting a lot of people with $500,000 to $600,000 [to spend] ... I'm selling a house a week at the moment."

Housing stocks were lower at present because of winter, she said.

According to Roost, a young couple earning the median wage needed 21 per cent of their take-home pay to service an 80 per cent mortgage on a first quartile priced house in June, a very slight improvement since May.

Any level over 30 per cent is considered unaffordable for first-home buyers, but a level near 20 per cent is seen as attractive.

Those on a single median income needed about 52.6 per cent of their after-tax income to service a mortgage on a median house in June, up from 51.3 per cent in May. A figure above 40 per cent is considered unaffordable.

The typical "standard" household with more than one income needed to spend 34.6 per cent of their income on their mortgage, the same as May.

However, house prices were beginning to rise, with the national median house price jumping $10,000 to $360,000 in June.

The median price for a Wellington house in June was $380,000, up $5000 from May but down 6 per cent from $405,000 a year ago.

NZ house prices down 11% since April 2007 in inflation-adjusted terms

20th July 2011

Source: interest.co.nz

House prices have now stagnated for more than four years, their longest period since the 1988-1993 plateau.

And it's not over yet.

On an inflation-adjusted basis, this current period also represents the biggest decline in real house prices in almost 30 years.

Capital gains for most of the market have evaporated. Capital losses are a real prospect.

CPI inflation has risen to over 5.3% per annum in the latest quarter, and we are entering a period where housing debt is being inflated away. Savers are paying the price, but borrowers may also be risking their equity.

For the 51 month period from April 2007, median house prices in New Zealand rose just 3.2% from NZ$349,000 to NZ$360,000.

Over this same period, the CPI index rose from 1010 to 1157, up 14.6% over these 17 quarters.

On this basis, real inflation-adjusted house prices have fallen 11.4%, the second largest fall since records began in 1963, a period of 48 years.

We are probably in the middle of this period of nominal house price stagnation. We also seem to be entering a period of high inflation. The combination will drive real house prices down.

These latest trends are just one third of the fall in real terms that the New Zealand real estate market went through in the seven years from 1974 to 1980. At that earlier time, nominal prices rose more than 6% per year but average inflation over this period was more than 15% per year. The net result was a whopping fall in real house prices of more than one third over seven years - a decline of 36%.

The last time prices stagnated in nominal terms was between January 1997 and July 2001, a 55 month period when national median prices rose 6.3% from NZ$160,000 to NZ$170,000, or just 1.4% per year.

Over this period inflation was especially low and the CPI index rose from 823 to just 876, up 6.4%, which meant that house prices declined -0.1% in real terms in those four and a half years.

For most markets in New Zealand, housing is no longer a hedge against inflation. In fact it hasn't been since mid 2007. Although there is no way to know how long the current stagnation will last, public policy seems to be shifting to accept - even encourage - a shift away from 'investing in real estate'. The current trends may well last as long as, or even longer than, the ten year stretches 40 years ago. We could be less than half-way through the cycle.

* Data on median house prices from 1992 is from the REINZ database. Prior to 1992 the data is based on Statistics NZ long-run data series. CPI data is from Statistics NZ.

KiwiRail to spend $4b on upgrade

18th July 2011

Source: The Southland Times

KiwiRail is spending millions of dollars upgrading Southland infrastructure after freight movements more than doubled in the past year.

Rail freight increased from about 150,000 tonne to 320,000 tonne in Southland in the past 12 months because of the boost in rail use from the dairy, timber and coal sectors.

KiwiRail chief executive Jim Quinn said the company had committed to spending $4 billion in infrastructure upgrades across New Zealand in the next 10 years and Southland was expected to benefit from that.

The upgrades included improvements to lines south of Dunedin to prevent bottlenecks in traffic as well the import of thousands of new rolling stock, such as wagons, which would eventually be seen in Southland, he said.

The company was also near completion of a $2.5m upgrade of the line between Invercargill and Ohai, where 26,000 wooden sleepers have been replaced to handle the increased traffic, he said.

There was a lot of demand on the rail lines south of Christchurch and the addition of Fonterra's fourth dryer to the Edendale plant in 2009 had been a large contributor to that, with increased loads of bulk dried and chilled dairy products, he said.

Mr Quinn was in Invercargill this month as part of a nationwide tour of KiwiRail sites to update workers on how the company was doing and its plans.

Despite about 40 people laid off at Hillside Engineering in Dunedin this month, Mr Quinn said there were no plans to review staff numbers in Southland and instead there was the possibility of employing more people.

Listings squeezed as demand grows

18th July 2011

Source: Stuff Business Day

Listings are running short as Christchurch red-zone dwellers begin house-hunting, real estate agents say.

Market activity stalled when the June 13 aftershocks hit but increased "markedly" after the Government's June 27 announcement of a buyout in quake-damaged red-zone suburbs, the Real Estate Institute says.

Harcourts Grenadier auction manager Roger Dawson said demand was already up in some parts of Christchurch and he expected pressure on listings as red-zone residents started buying.

"They are still waiting for details of payouts, but they are definitely out there sniffing around," he said.

"We're getting great open-home attendance, and people are making plans."

Some properties were selling well above rating valuation, Dawson said.

Auction clearance rates had improved, with 14 out of 22 homes selling under the hammer during the company's June auctions. In April, only 10 out of 30 houses sold.

One damaged hillside home attracted four bidders and sold above rating valuation, despite being covered in plywood.

The institute's figures show 262 homes sold in the city last month, down from 473 in June last year, with most sales in the north, west and south of the city.

Most eastern suburbs had just a handful of sales.

The median price paid in the city last month was $330,000, down slightly from May and the same as in June 2007.

The median for Canterbury-Westland was $300,000.

Median prices in other regions included: Nelson-Marlborough $322,750, Central Otago lakes $433,500, Otago $224,000 and Southland $184,500.

The national median was $360,000.

Quotable Value spokesman Jonno Ingerson said Christchurch house sales were still "too patchy" to give a clear picture of values.

"Properties in undamaged parts of Christchurch tend to be selling for around their pre-earthquake values, with little sign that prices are either significantly up or down," he said.

A survey by the BNZ and the Real Estate Institute found increased demand for homes in Christchurch and Auckland, especially from first-time buyers, and house prices picking up in some suburbs.

Rental properties surplus starting to ease

The surplus of rental properties is starting to ease, and supply in some parts of Christchurch is barely meeting demand,  website Trade Me says.   The city's rental listings were down by six6 per cent in the past quarter and tenant demand up by nine 9 per cent, Trade Me head of property Brendon Skipper said. 

"If we drill down into the suburb-by-suburb picture, it's clear that there are areas where both supply and demand is very low,'' he said.

"On the flipside, in less quake-affected parts of the city, demand is extremely high and supply is struggling to keep pace. We expect this will be the case for the foreseeable future.''

The change follows reports from letting agents and property managers that eastern Christchurch homes had been hard to rent for several months, with landlords having to cut rents to find tenants.

Skipper said the tapering-off in listings was seen in cities nationwide and would ease the "lofty heights'' of rental surplus seen three months ago.
He expected the next few months would see more demand as tenants "came out of hibernation'' in spring to look for new accommodation.

House prices on the rise

15th July 2011

Source: The Southland Times

House prices gained nearly 3 per cent in June compared to a year ago, and there was an increase in the number of properties changing hands, the latest figures from the Real Estate Institute show.

The national median sale price rose to $350,000, up $10,000, while 5229 properties changed hands in the month of June, up 654 on the same month last year.

"Activity levels are recovering slowly with prices more or less flat, but we are getting strong indications from agents in many of our regions that the supply of properties is really tightening", said REINZ Chief Executive Helen O'Sullivan.

"Rather than an influx of buyers, we are seeing very low levels of listings as sellers continue to sit on their assets."

There were significant regional variations in the June numbers, O'Sullivan said.

Northland recorded the strongest lift in price, up 13 per cent, while Hawke's Bay fell 5 per cent.

Sales volumes had trended downward since May which was in line with seasonal patterns, O'Sullivan said.

Auckland continued to dominate the market, with the region accounting for 40 per cent of all sales. The region's median price slipped $3000 from May, but was still up $16,000 on June last year.

The shortage of listing had become the main reasons for buyers holding back, O'Sullivan said.

Houses took slightly less time to sell with the national median of 44 days.

The total value of residential sales, including sections was $2.26 billion in June, compared to $1.9b in June last year.

Council commits $7m to cycle track

15th July 2011

Source: Otago Daily Times

The Southland District Council will spend up to $7 million if it is given approval to build a 184km cycle track running from Nicholas Station to Kingston.

A resource consent application for the Around the Mountain cycle trail has been made to the Department of Conservation, Environment Southland, Queenstown Lakes District Council and the Southland District Council.

Provided consent is given, construction could be under way as early as mid-August.

Questions about tendering will be addressed this month.

The Southland District Council's senior policy analyst, Wayne Heerdegen, said there was cautious optimism the plan would be approved by his own council next week.

"We still have to obey our own rules," he said.

"So we are getting an independent commissioner to have a look at the paper work."

The cost of the 120km leg of the track running from Walter Peak to Lumsden would be at least $4 million.

It was part of Prime Minister John Key's $50 million cycleway initiative, Mr Heerdegen said.

Mike Barnett, Southland District Council's project manager for the Around the Mountain trail, said work was more likely to begin by early December.

He hoped to see 90% of the track finished by March next year.

Construction of the track will include the building of nine toilets, three shelters, a car park and 41 bridges. This will add more to the total cost.

The track will begin at Walter Peak, run past the Mavora Lakes and, upon reaching Lumsden, will follow State Highway 6 to Kingston.

Cyclists can take a night's rest at any one of the townships of Mavora, Mossburn, Lumsden, Five Rivers, Athol or Garsten before finally reaching Kingston.

There they can either turn back and do it all again, or take a shuttle bus.

Mr Barnett said he was interested in linking up with whoever bought the Kingston Flyer, to add a different dimension to the cyclists' travel.

"I'm not watching too closely ... who gets it [the Flyer]," Mr Barnett said.

"They will come to us, hopefully, once it is all sorted out."

The track had been planned for five years.

It will be built as a moderate-level exercise and recreation track.

Once complete, it will take four or five days to ride.

Mr Barnett said cyclists could continue on to the Queenstown trail from the Walter Peak end by taking the boat.

He said the track targeted the same customers as those who enjoyed the 150km Otago Central Rail Trail.

Signs of a property market pick up

14th July 2011

Invercargill property prices drop again

14th July 2011

Source: The Southland Times

Invercargill property values continued to slide last month with the average property value down 3.8 per cent on the same month last year.

The QV residential property indexes for June show the average sale price for houses in the city was $212,140, down 3.8 per cent compared to 2010 and a 0.4 per cent decline on the May figure.

The average sale price for Southland last month was $197,265, down by 0.6 per cent on June last year, while in Gore the average sale price was $194,598, up 1.1 per cent, but because of low sales figures QV warned that may not be accurate.

In Central Otago the average sale price was $279,193, down 5.1 per cent on the same month last year, but 1.9 per cent higher than the decline in May, while in Queenstown the average sale price was $585,561, up 0.1 per cent on last year.

Nationally, the average sale price was $412,746, down 0.9 per cent on last year, but up 0.7 per cent on May .

QV research director Jonno Ingerson said the national figure was an increase on the relatively stable market for the past few months, which was mostly driven by a boost in sales in Auckland.

This was because of several factors, including a strong demand for established character locations, good school zones and the perception purchasing in Auckland was a safe investment, he said.

More first home buyers hit market

13th July 2011

Source: Stuff Business Day

First home buyers are showing increased interest in the real estate market, according to a BNZ-Real Estate Institute of New Zealand survey.

The survey, which has been running for four months, is based on the perceptions of licensed real estate agents.

BNZ chief economist Tony Alexander said over the past four weeks, about 30 per cent of agents reported increased interest from new home buyers, while 1 per cent of agents reported a fall in investor interest.

About 14 per cent of agents believe prices are rising, compared to the previous three months where agents felt prices were falling.

These perceptions of price rises are strongest in Auckland and Christchurch, but there are still perceptions of prices falling in Tauranga, New Plymouth and Invercargill.

The survey is based on the opinions of 742 real estate agents.

Welcome snowfall makes mark

12th July 2011

Source: ODT.co.nz

Queenstown's first major snowfall for the winter left the district a white canvas yesterday, with snow down to lake level, more than 1000 airline passengers affected - and winter sports enthusiasts thrilled.

More snow is forecast for this week. Residents of Queenstown's hill suburbs, Arrowtown and Arthur's Point woke to at least 15cm of snow yesterday and 5cm was deposited on downtown streets.

However, the weather caused havoc at Queenstown Airport over the weekend, with many flights unable to make it in and out of the resort. Air New Zealand alone had to divert or cancel 10 domestic and transtasman flights - affecting about 1000 people who had flights transferred, or in some cases, were bused to Queenstown.

A spokeswoman for Qantas said two incoming and two outgoing services - affecting over 300 people - were cancelled.

Official figures for cancelled Jetstar and Pacific Blue Flights could not be obtained yesterday.

Part of State Highway 94 between Te Anau and Milford Sound was closed by snow yesterday and further north the Lindis Pass, Arthur's Pass, Haast Pass and Porters Pass were last night closed to towing vehicles and motorists without chains.

The only Queenstown skifield to open yesterday, Coronet Peak enjoyed sunny conditions for the best part of the day, before snow fell the afternoon.

By last night, Coronet Peak had gained 25cm to 30cm of new snow, and sister NZSki field the Remarkables, closed by bad weather yesterday , got 45cm over the weekend.

NZSki chief executive James Coddington said Coronet Peak's new snow meant the mountain was now fully operational, with the opening of the Greengates chairlift and Rocky Gully terrain.

Remarkables Ski Area manager Ross Lawrence said that with the snowfall they would " definitely be able to open up a few more trails tomorrow [Monday]".

Veteran Queenstown weather forecaster David Crow predicted snow showers for Queenstown early today then more snow showers tomorrow. "A quite active cold front is going to pass through on Wednesday, continuing until Thursday," Mr Crow said. "Friday is not going to be a hell of a lot better."

Police reported relatively few major traffic incidents caused by the snow.

The worst occurred at 10.15am yesterday when the driver of a car containing two Taiwanese tourists lost control on State Highway 6 along the Nevis Bluff and the car rolled down a bank. The passenger was taken to the Lakes District Hospital for a check-up.

Sergeant Linda Stevens of Queenstown said the driver and sole occupant of a vehicle heading up the Moonlight Track about 5pm yesterday slid down a 2m bank when she reversed to allow another vehicle heading down the track more room. The woman was unhurt.

First-home buyers: Why the time is right

11th July 2011

Usually this news comes too late. We look at the squiggly lines and slap our foreheads for not taking advantage of favourable market conditions back when they

were staring us in the face.

But real estate experts agree - now is a great time for prospective buyers to be splashing out on their first homes.

Reserve Bank interest rates are hovering at around 6 per cent, the lowest they have been since 1965. After the global financial crisis led to a clenching of the purse strings, banks are now relaxing their lending criteria. And sellers are "meeting the market", accepting more realistic prices than the over-valued days when the market peaked four years ago.

But experts say the window of opportunity will not last long, predicting that a shortage of properties in future years will put pressure on existing stock. Building consents declined to 14,611 in the year to March, compared with 25,406 in 2006. That's predicted to cause a long-term housing shortage.

With just 60,000 homes sold throughout the country in the past year, there were half as many transactions as in 2007. And that means fewer homes to choose from. The market has been good for first-home buyers for the past two and a half years, says BNZ chief economist Tony Alexander. In fact, the best time was in 2009, in terms of low house prices.

"That's when the vendors were most panicked," says Alexander. But it's not too late to take advantage of the circumstances now - before they change. Alexander predicts we are at the start of the cyclical upturn in the housing market that is being driven by an improving labour market, increasing rents and a growing awareness of the shortage of houses.

As people get more confident with their employment situation they will get "itchy feet" and move out of home or the shared flats where they have been nervously waiting out the recession for the past three years. These buyers would be wise to negotiate on financing because the loan market is swinging back in their favour, says Alexander.

"Lending growth is relatively weak. There are not all that many businesses and people wanting to borrow out there. It's a competitive environment." House prices are lacklustre throughout the country.

According to figures from QV.co.nz, the average house sale in Tauranga this year is $392,502, $45,000 less than in 2007. Hamilton houses are on average $21,000 cheaper than they were four years ago, going for $368,361 today compared with $389,307.

Meanwhile, house prices in Central Auckland, North Shore and Manukau are showing signs of recovery, steadily approaching similar levels to 2007.

It is Stephen Hart's business to hunt out good buys. The publisher of Where to Live in Auckland also runs Auckland HomeFinders, buying properties for clients. Hart has noticed a big shift over the past four months in the loosening of banks' lending criteria.

"That, more than anything, has led to more first-time buyers in the market," he says. That doesn't make it a cakewalk for potential buyers. Hart says there is huge competition for good properties that tick all the right boxes - weatherboard or brick-and-tile homes in good school zones with flat freehold sections. It is common for Hart to see such properties go for 25 to 30 per cent over CV.

"We are competing pretty full-on to get great properties." Auckland is still relatively unaffordable for first-home buyers, he says. They are forced to move away from the central city to suburbs such as Mt Wellington, Te Atatu and Penrose to find homes in their price range.

Josh Young, a real estate agent for Ray White in Mt Wellington is noticing a scarcity of properties for sale in his area. New online listings are dribbling through at around three or four a week, compared with about 10 weekly a year ago.

Despite this, Young says a number of first-time buyers are looking to break into the market. Three-bedroom homes with outdoor living and do-ups are particularly sought after. Prices across town in the western suburb of Te Atatu are being "kept honest", says real estate agent Leonie Higgins of Barfoot and Thompson.

A creep out from the pricier inner-city suburbs of Pt Chevalier and Mt Albert is seeing young couples and families buying their first homes in the area. Higgins says buyers and sellers are more likely to be making lifestyle decisions at the moment, not speculating on the market. Older people who have raised families are downsizing and moving on, leaving room for younger professional families.

"It's cyclical. It's regenerating," says Higgins. "It's more of the same moving in, but probably slightly more affluent than [the generation who came] in the 1950s and 60s."

Montie Baskett had been toying with the idea of buying a house for six years. This year, the 32-year-old solicitor decided the time was finally right. He had saved a bigger deposit, got a pay rise and the economic environment had swung in his favour.

"The two main things that drove me to look more seriously were the fact that rents were increasing and the overall cost of buying went down, interest rates were lower and you could buy at a better price," says Baskett. It took Baskett and his partner Rosanna Guardamagna, 30, a retail assistant, only a month to find their three-bedroom 1980s townhouse in Kohimarama.

They made a pre-auction offer at Easter and settled in May for $75,000 less than the CV. They now pay about the same in mortgage repayments as they were in rent for a similar three-bedroom home in Epsom. The bank obviously supported his choice.

Baskett was able to get a favourable deal on his mortgage rate, with a 0.4 per cent discount on the floating rate for the next two years. This is a symptom of increasing competition in the home-loan market.

Chairman of the New Zealand Mortgage Brokers Association, Darren Pratley, says money is easier to come by these days. Lenders are moving back towards dishing out loans at 90 and 95 per cent levels - provided borrowers have the right credentials. There is more caution in the loan industry and assessments are on a case-by-case basis.

Baskett says prices were more realistic this year than the last time he was seriously looking in 2007 and 2008. "I felt we weren't competing with a whole lot of speculators, which was what I thought the last time I was looking," he says. Jonno Ingerson, research director at QV.co.nz, agrees it is a good time for first time buyers, as long as they can find what they want in a market that offers only half the number of properties that were available at the peak of the market in 2007.

Alistair Helm, CEO of realestate.co.nz, the official website of the real estate industry, says realistic is the perfect adjective for today's market.

"We've all grown up and learned that you can't bank on property to return to the levels that were almost seen as guaranteed back in 2004 and 2005." Helm says there are still good opportunities available for first-time buyers, provided they do their homework. "They're not being priced out of the market as yet. It's more that they're getting out-manoeuvred by their own competing buyers who are faster on their feet."

Home sweet home

Two years ago, buyers could find their first home in Sandringham for $450,000. Today, prices for a basic, rundown house in the inner west suburb have skyrocketed to more than $500,000, shunting Sandringham on to the list of suburbs alongside Grey Lynn, Westmere and Kingsland that have risen out of an entry-level purchaser's grasp.

So where should they be looking? John Bolton, of mortgage brokering company Squirrel, says Te Atatu Peninsula is "gold" at present but tricky because of the scarcity of properties on the market. Mangere Bridge is a good find and the Penrose end of Onehunga is still good value for money, he says.

Bolton predicts Hillsborough and surrounding areas Lynfield and New Windsor will go up in value once the new Mt Albert motorway is built. On the North Shore, Bolton singles out Birkdale.

The value of properties in the area varies. Nearby coastal Beach Haven is too pricey for most first-time home buyers. Inland Beach Haven is more affordable but considered undesirable because it is too rough.

Similarly Pt England, bordering affluent Glendowie, is often disregarded by first-time home buyers because of perceived problems with security. "You can buy a full-site, little ex-state bungalow for $380,000. The prices are totally deflated there because of who your neighbours are," says Bolton.

Mt Wellington has also had a reputation for being rough but its image is changing, and entry-level properties are still available. For an indication of where a suburb is heading, look to the retailers.

Mt Wellington has a Farro Fresh deli and new supermarket. Yes, the yuppies are moving in. Frances Morton and Jane Phare When Kate and John Sutherland started looking for their first home in January they fancied the idea of a do-up. But as the search dragged on, and with a baby on the way, things got urgent so they narrowed their vision.

In April they snapped up at auction a tidy, 1960s three-bedroom weatherboard home in Green Bay. It's an area becoming increasingly popular for couples such as the Sutherlands or as John, 40, puts it:"Wasps (white Anglo-Saxon Protestants) with kids on the way."

Kate, 37, a graphic designer, had done her research and decided the time was right to get into the market.

"I'd been thinking about it for a long time and I had earmarked this year as the time to buy." It took the couple a few months to find a suitable property and Kate visited up to seven open homes every weekend.

They concentrated on the western suburbs of Titirangi, New Lynn and Glen Eden, which offered more bang for their bucks than areas closer to the city. By the time the Sutherlands turned up for the Green Bay house auction, they were confident they knew how to play the game, having already missed out on other properties.

"It was wonderful," says Scotsman John, an art director. "I started the day off with a dream and a dram." With some aggressive bidding, they sealed the deal at $436,000, $1000 above CV but well below the sellers' asking price of $460,000.

Before becoming homeowners, the couple were renting in Sandringham. Their landlord hiked the rent earlier in the year, which was added motivation to buy.

Now the Sutherlands pay $53 less a week for their mortgage than they did in rent. They live further from work but don't mind the extra commute. Kate says getting away from the city at the end of the day is a good thing. "We have lovely views of the Waitakeres and it's quiet."

Relax away holiday homes

8th July 2011

Property investors take note – owning a holiday rental shouldn’t be stressful!  

Brand new to the Queenstown market, Relax away holiday homes are committed to bringing holiday home owners professional property management and marketing services with the personal touch.

As an off-shoot of progressive, Queenstown-based real estate firm hoamz, Relax away identified a niche in the market at the same time as completing their stable of property businesses. Already established as major players in long-term property management through their market-leading hoamz to rent brand, Relax away holiday homes is targeting owners of luxury holiday rentals, and seekers of holidaymakers looking for high-end accommodation. The company has instigated a big emphasis on internet marketing of the properties, both through their own newly-built website www.relaxaway.co.nz and multiple popular portal websites to capture bookings from holidaymakers from around the globe and provide Relax away owners with the maximum income.

The Relax away philosophy is simple, says Managing Partner Fred Bramwell; ‘Relax away – it’s what we encourage our customers to do. Owners can relax away knowing their valuable asset is in the best hands. Guests can relax away on holiday in their luxurious Queenstown holiday home’  

The brand is under management of new hoamz Business Development Manager Neil Martin. As the well-known face of retailer LV Martin, Neil Martin was beamed into the homes of New Zealand on a daily basis. After almost a decade abroad in charge of a major property development, it’s time for a change. He’s committed to making Relax away holiday homes the ‘go to’ brand for holiday home services in the Wakatipu.

Warning on capital gains tax

7th July 2011

Source: Stuff Business Day

Opponents of a capital gains tax say housing is different to other investments and rent and property prices could rise if such a tax is introduced.

But the leader of the Government-appointed 2009 Tax Working Group says the tax – Labour's rumoured new election policy – had some validity to it.

The Property Investor Federation warned yesterday that Labour's attempt to make houses more affordable could backfire.

President Andrew King said a capital gains tax would simply make investors reluctant to sell, and deter new investment when all signs pointed to a housing and rental property shortage.

"People won't build new homes and people will sit on their properties and not put them on the market, so there could in fact be a reduction for supply and prices could potentially go up."

Mr King said if shortages emerged, rents were sure to rise, locking some people out of home ownership forever. "And a large constituency of Labour, I would have thought, would be tenants."

Another critic, Ernst & Young's head of Oceania, Rob McLeod, opposed a capital gains tax in his 2001 government-appointed review on taxation.

His research assistant, Ernst & Young tax partner Aaron Quintal, said yesterday that their work had shown that returns in the property market were not driven by pure investment decisions.

For example, a four-bedroom rental house was not a pure investment because the price would be dictated by both investors and would-be owner-occupiers, who might place more value on it.

Mr Quintal said any capital gains tax should take out the effect of inflation, which meant there was little tax to be reaped long term. "And if you look at places that had the biggest housing bubbles, Sydney, the US and London, all had capital gains taxes."

Although Prime Minister John Key has deemed a capital gains tax too problematic, the head of 2009's Tax Working Group says a capital gains tax does have some merits.

Professor Bob Buckle, of Victoria University, said international research had shown property tax was less damaging to economic growth than personal or corporate taxes.

It could also make the tax system fairer. Capital gains taxes were also already applied to some financial dealings and intellectual property, and applying it to property would create less distortion. "Particularly those with higher wealth who can put it into property which may not be subject to tax."

But Professor Buckle admitted there could be fishhooks. Exempting the family home could lead to the "mansion effect", through overinvestment in a primary house.

LABOUR'S GAMBLE

Labour has not yet announced its policy but is expected to tout the 15 per cent tax as an alternative to National's plan for asset sales.

The tax would not apply to the family home.

The Tax Working Group estimated a capital gains tax on property excluding the family home could earn the government $4.5 billion a year.

Australia, the United States and Britain all have capital gains taxes, but have also had some of the biggest housing market bubbles in big centres such as London and Sydney.

Property investors face capital gains tax under Labour

6th July 2011

Source: TVNZ

Labour will introduce a capital gains tax on investment properties if it wins the election.

The policy was supposed to be under wraps until next week but ONE News tonight confirmed it.

Sources say the capital gains tax is a key plank in Labour's proposed tax overhaul to be officially unveiled next week.

Property investment is something of a national obsession in New Zealand, encouraged by the fact that when investors sell the property they usually don't pay tax on their profits.

Australia has long had a capital gains tax, and it seems that if elected Labour will follow suit in New Zealand.

Asked by ONE News political editor Guyon Espiner whether he is announcing any new taxes, Labour leader Phil Goff said: "Ah I'm going to leave all comment about the announcement until I make the announcement."

ONE News understands Labour will include a capital gains tax in its tax policy next week, although it will exclude the family home.

Tax experts believe such a tax could raise up to $4.5 billion.

Property investor Kevin McCarthey has seven investment properties and is worried a capital gains tax could hurt his business.

"We employ carpet layers, plumbers, electricians, builders. We employ a lot of people in our business and it's a big business, its a billion dollar business in New Zealand, and we don't think it should be tinkered with or destroyed," he said.

The Greens have long supported a capital gains tax.

"New Zealand's problem over the last decade has been a lot of capital has gone into housing because of the tax incentives when where we really needed it was in the productive sector," said Russel Norman, Greens co-leader.

Prime Minister John Key says the only winners from a capital gains tax will be accountants.

He said capital gains taxes don't raise a lot of money up front for a government.

"People only pay the tax when they sell the asset and so people tend to hang on to those assets for longer. They are hideously complex and people spend their life with their tax accountants," Key said.

Labour has some big spending promises to pay for, including making the first $5000 of income tax free and removing GST from fruit and vegetables, so it will probably also raise the top personal tax rate.

"I'm not ruling anything in or out at this stage. You'll just have to wait for the announcement," Goff said.

That announcement comes next Thursday.

Guyon Espiner says he understands the capital gains tax rate would be set at about 15%. So if an investor had bought an investment property at about $400,000 and sold it for $500,000, making a profit of $100,000, the investor would pay 15% or $15,000 of that to the government in tax.

Espiner said the tax would not be retrospective, so profit that might have been made from buying a property some years before the tax was introduced would not be taxed.

He said no-one likes paying tax, a new tax is difficult to sell, and the approximate 200,000 property investors in New Zealand are not going to like it. But he pointed out most new Zealanders do not have an investment property and will not be hit by the tax.

Also in Labour's favour, he said, is that it's easy to find experts in New Zealand and overseas who say that a capital gains tax is a good way to drive investment away from housing and into the productive side of the economy.

No mysterious spike in mortgagee sales

6th July 2011

Source: realestate.co.nz

Mortgagee sales are still a part of the NZ property market. Currently there are 333 properties being marketed in NZ as mortgagee sales. These properties are being marketed by real estate agents on behalf of the mortgagor (in most cases the bank that loaded the money on the house in the first place).

This total though needs to be placed in perspective. There are today 49,782 properties for sale being marketed by real estate agents (excluding sections) across NZ; that means that a mortgagee listed properties represents just 1 in every 150 properties on the market.

The level of mortgagee sales as measured by the number of mortgagee listings on realestate.co.nz has been declining in the long term trend since the peak in early 2009. There has been some small ups and downs, however the chart below certainly highlights the trend over the past 4 years since the data has been collected.

In respect of this trend this chart which tracks year-on-year comparison of listings on a 3 month moving average basis shows when the emergence of mortgagee sales occurred; when the fall off from the peak occurred; and then just how steady this category has become over the past 6 to 9 months with a steady flow of new mortgagee listings coming onto the market matched to ones that have been sold.

It should be noted that the listings data only relates to properties for sale that are marketed as mortgagee sales and excludes sections. At this time there are some 113 sections which are mortgage sales.

This separation of mortgagee property from mortgagee sections in the presented data could be the reason behind the confusion of data presented in the Sunday paper article titled “Mystery spike in mortgagee sales“.

The article cited the number of mortgagee sales listed on realestate.co.nz as of last week at 435. This total would be for both properties and sections. This was then compared to a figure from October of last year of 321 listings; this lead to a supposition that listings were up 37%. (Our office was not unfortunately contacted to share the mortgagee data we track and thereby a misinterpretation occurred).

I believe that the article writer or researcher may have reviewed the article written on this blog back in October last year which detailed the then latest data of 321 listings for mortgagee properties on the market. The comparison is that the number of mortgagee properties on the market today is very nearly identical to that number on the market last October.

The data shows that there in no mysterious spike in mortgagee properties; they are still a part of the property market and from historical review tend to be a lagging indicator of the economic recessionary times that catch out home owners as unemployment and financial hardship hits home.

NZ Property report

4th July 2011

NZ Property Report – June 2011

Source: realestate.co.nz

The June 2011 NZ Property Report published by Realestate.co.nz provides an insight into the state of the New Zealand property market as measured by the supply side of the property market over the month of May. The key measures of the market analysed in the report are the number of new listings, the asking price expectation for those new listings and the level of inventory of unsold houses on the market at this time. The report is compiled from data captured by the website and represents close to 95% of all property movements in the NZ market as managed by licensed real estate agents.

A full print version of the NZ Property Report – June 2011 is published below and is available for download (1.0MB) and distribution.

Summary of the market – June 2011

What began last month as an early trend towards a sellers market has taken on a faster pace through June. Nationally whilst the inventory levels hover just above the long-term average of 41 weeks, key regions of the country are now firmly set in a sellers market. This situation has the potential to be exacerbated by the traditional reluctance of property owners to list their homes through the winter period. During the winter, sales per month tend to drop by around 5% as against a normal month, however new listings tend to fall more significantly by up to 15% as compared to a normal month.

Heading into the winter period with a growing number of regions seeing inventory levels below long term average could well result in elevated buyer demand with a potential to see property price appreciation. Those regions are Auckland, Queenstown, Bay of Plenty, Waikato and Otago.

Countering this potential for price appreciation is the fact that in June the asking price expectation of those new listings coming onto the market at $415,053 showed no change as compared to May and in fact represented a 2% fall in price as compared to the recent 3-month period.

Asking Price

The truncated mean asking price for all new listings in June rose very slightly from $414,308 in May to $415,053. On a seasonally adjusted basis the asking price rose just 0.8% in the month indicating a degree of caution amongst sellers.

The overall trend of the past 2 years continues to show a slow but steady strength in asking price expectation.

New Listings

The level of new listings coming onto the market in June fell again to 9,111. This represented a 18% year on year decline but a 2% seasonally adjusted rise from May.

On a 12 month moving basis the number of new listings in the past year totals 125,848 as compared 145,920 for the same period a year ago – a fall of 14%.

Inventory

The level of unsold houses on the market at the end of June continued to fall from prior months. June reported 47,738 down from 48,352 in May and 50,398 in April.

The recent relative strength of sales as seen in March through to May has now stared to see a clearing of what has been a high level of unsold houses on the market over the past 18 months. Heading into Winter, a time of traditionally weaker listing will likely see this inventory level fall further in coming months.

Regional Summary – Asking price expectations

The asking price, having fallen in May barely changed in June. Across the regions there is certainly some variances. A total of just 6 regions saw an increase in asking price expectations as compared to 13 showing falls.

The scale of some of these movements was significant, even outside of the smaller regions, which tend to exhibit large variances. Most noticeable were falls of greater than 5% in Wellington, the Hawkes Bay, Taranaki and Otago. The largest asking price rises of greater than 5% were seen in the Bay of Plenty and Coromandel region, the latter still witnessing high inventory and as such is very much stuck in a buyers market. The biggest movement in asking price this month was seen in Southland with a 6.8% increase as compared to the recent 3-month average.

Regional Summary – Listings

The regional perspective of new listing is very clear this month with one solitary region showing a rise in new listings comparing June 2011 with a year earlier. The Central North Island as well as seeing a rise in new listings is experiencing a buyers market with inventory of unsold properties exceeding long term average.

The majority of regions (13 out of 19) saw double-digit falls of new listings on a year-on-year basis with the biggest falls seen in the West Coast, Gisborne, Bay of Plenty, Marlborough, Canterbury and Wiararapa.

Two regions in June reported the lowest levels of listings going back to Jan 2007, they were Northland with 352 listings and Wiararapa with 117 listings.

Regional Summary – Inventory

The levels of inventory of unsold homes on the market fell further in June. In the space of just 3 months the levels have fallen from significant highs to be very close to long term average for many regions of the country.

For 2 years the predominant look of the regional inventory map has signaled a buyers market. In June there were 7 regions on or below their long-term average for inventory of properties on the market.

The most significant regions experiencing this shift to a seller’s market are Auckland and Queenstown; now joined by the Bay of Plenty, the Waikato and Otago. Not far behind the regions of Nelson, Wellington, Canterbury and the West Coast all of which are edging to a turning point in the market with more balance between buyers and sellers.

That still leaves 9 regions, all of which are provincial NZ firmly in a buyers market with existing inventory well above long term average.

Lifestyle

The level of new listings of lifestyle property coming onto the market in June fell by 4% on a seasonally adjusted basis from May. A total of just 829 new properties were listed with a truncated mean asking price of $554,864. The asking price was down 1% as compared to the recent 3-month average, and down 3% as compared to prior year.

On a rolling 12-month average basis new listings are down 10.5% with 11,346 listed in the past 12 months compared to 12,679 last year.

Apartments

Listings of apartments showed a 21% increase on a seasonally adjusted basis as compared to May with 439 new apartments coming onto the market. The truncated mean asking price for these new listings was $397,747, which was up 4.0% on the recent 3-month average, and up 8.3% as compared to June 2010.

In the Auckland apartment market, which represents over 60% of the market there were 274 new listings with an asking price of $383,980. The new listings shows a rise of 17% on a seasonally adjusted basis, and a 3% rise when judged on a year-on-year basis.

Property Price Index

Comparing the sale price of properties across the country to the asking price expectation is not a perfect comparison; however the trends tend to align. The benefit is that the data for asking price is of the market today, whilst the selling price is reflective of the market active between 4 and 6 weeks ago. The latest comparison is highlighted below:

Realestate.co.nz data is compiled from asking prices of new residential listings as they come onto the market via subscribers to the realestate.co.nz website. The Realestate.co.nz website currently has over 95% of all licensed real estate offices subscribing and providing all of their listings onto the website. The asking price is presented as a truncated mean price at a 10% interval.

REINZ: data is compiled from reported unconditional residential sales from all members of the Real Estate Institute of New Zealand representing all licensed real estate offices. The sale price is published as a stratified median house price and is developed in association with the Reserve Bank of NZ.

Notes:

Signs of property shortage

4th July 2011

Source: Stuff Business Day

The number of new property listings continues to fall and shortages are beginning to show in some areas, a monthly property report out today says.

Realestate.co.nz, the real estate industry website, said listings in June slumped 8 per cent from the previous month and 18 per cent year on year.

Some areas, including Auckland, Queenstown, Tauranga and Waikato, had firmly become seller's markets after two and a half years of being buyer friendly.

Realestate.co.nz's chief executive Alistair Helm said it was a ''bit of a concern'' as winter approached and listings traditionally fell further because sales did not always fall to the same degree.

''It might be just the right time to say, why wait until October?'' he said of vendors.

Despite some ''pretty impressive auction prices'' now coming in, the mean vendor's asking price was unchanged from May at $415,053.

''Inventory'' - the number of weeks it would take to clear the backlog of unsold homes on the market - also fell significantly.

It tumbled to 42 weeks, a 10 per cent fall from May and 8 per cent lower than a year ago. The long-term average is 41 weeks.

Fixing creeping back on the radar

1st July 2011

Click here for the current ASB home loan rate report.

Key highlights RBNZ leaves the OCR at 2.5%, but hints at possibility of an interest rate increase  as early as December. We expect interest rates will remain low over 2011, before lifting over 2012. Floating remains the cheaper option for now, but relative cost will depend on exact timing of interest rate increase.

German investors pay $33m for farm

1st July 2011

Source: Stuff Business Day

A German investment management company is now possibly the largest player in rural land in Southland after it spent $33million to buy a dairy farm at Dipton.

Aquila AgrarINVEST Investitions Gmbh was granted approval under the Overseas Investment Act to secure the acquisition of rights or interests in up to 100 per cent of the units of Glencairn Ltd Partnership, which owns or controls a freehold interest in 1401ha of an existing dairy farm.

The company plans to operate three dairy units to increase milking capacity on the farm.

It now has interests in more than 2458ha of land in the south and it has spent $79m buying six farms in the province during the past year.

The vendor was Glencairn Land Company, which has four shareholders.

MyFarm (which handled the sale) director Grant Rowan said Glencairn was an exciting development project.

Following development, Glencairn will employ four more people and during the next 12 months on-farm projects will create 10 fulltime-equivalent jobs.

Mr Rowan said it was the biggest sale in Southland their company had handled. A sale of this size for this type of property was rare and would happen only every five to 10 years.

He said he believed the German investment management company was coming near to the end of its search for land in Southland, but he could not confirm if more sales were pending.

The company had sought land in Southland because it was attractive and gave good returns, he said.

Southland District Mayor Frana Cardno said the investment was good for Southland.

However, family farms were an integral part of Southland, she said.

"I'm nervous about big companies coming in and taking over the land and not looking after it. I hope they can prove to us that they are good community citizens because Southland is all about looking after the community."

The latest sale has come at a time when farmers nationally are questioning the levels of foreign ownership in the country.

Prime Minister John Key, who spoke to farmers at Nokomai Station this month, said foreign investment in New Zealand land was worth more discussion.

"We've got to be careful of the levels of foreign land ownership in New Zealand," he said."We would [be] much better to seek foreign investment in productive assets."

"Foreign investment nationally was less than 3 per cent, which is not that much," Mr Key said.

DID YOU KNOW?

Aquila AgrarINVEST II is a fund comprising more than 1000 small investors from Germany. Milchfarm Investments and Alceda Star are institutional investors, also located in Germany. New plans for Glencairn inject $3.825m capital to create a third dairy unit Production will involve milking 3115 cows on a total of 1170ha. Production is forecast to increase by 530,000kg milksolids to 1.28 million kilograms milksolids by 2015-16.

House construction statistics 'a tale of two cities'

1st July 2011

Source: Stuff Business Day

House-building work is picking up by the barest of margins, and remains "very weak", according to economists.

There are signs of construction in Christchurch, but other regions such as Wellington are weak, with monthly housing consents well down on May last year as planned government spending cuts cast a chill on the market.

National building consents issued in May were down 16 per cent on the same month last year, at just 1139 new homes and apartments, according to Statistics NZ.

Seasonally adjusted, the consent numbers were up 2.3 per cent from April.

But excluding flats, the house consents were up just 1 per cent over the month.

Master Builders Federation chief executive Warwick Quinn said the trend in house consents was flattening out after falling in recent months, and there were "signs of life" in Christchurch.

"It is the tale of two cities ... we are starting to see activity down there and we may see a similar concentration in Auckland as time goes on, but the rest of the country might be quite poor," Mr Quinn said. Work on leaky homes should start to pick up by early next year, but it will be mainly in Auckland.

The prospect of interest rates starting to rise from the end of the year was a "real worry" because they were a key driver for the market, Mr Quinn said.

"The minute rates go up the phones stop. We are hopeful they will stay low as long as possible.

"I'm particularly fearful of Wellington, with the government [sector] continuing to shrink."

There was a chill factor as government workers waited to see what might happen, so they were less likely to build new homes.

Although monthly figures can bounce around, there were just 89 housing consents in the Wellington area in May, down 52 on the same month last year, despite extremely low mortgage rates.

Wellington is also running out of new commercial building, with few cranes on the skyline, though some apartment and office building projects are being planned.

Despite that, it was thought a lot of house additions and alterations work was under way in Wellington, as well as in other parts of the country, such as decorating, decking and fencing that do not need consents.

Nationally planned alterations and additions rose a seasonally adjusted 8 per cent between April and May, but from a low base.

The housing market is also facing a net loss of population, with more people leaving New Zealand than arriving since the February earthquake in Christchurch.

There was a net loss of 400 people in May.

At current monthly consent levels, about 12,000 homes may be built this year, well below the 20,000 a year that ASB Bank economists say is needed in coming years to satisfy housing demand.

If consents remained at such low levels, there was a significant risk of a housing shortage in areas where the population was growing and more homes would be needed in the years ahead, ASB said.

ANZ Bank economists said the Government's announcement last week on the worst-affected homes in Christchurch would give people greater certainty about their future and so consents in the city should be boosted by the end of the year.

If all 5100 homes in the red-zone of Christchurch were replaced, that would equal a third of all national consents last year.

"This is huge," ANZ said, but was only the tip of the iceberg given the scale of damage in Christchurch.

Consents for 68 new homes related to the Canterbury earthquakes were authorised in May and 63 were relocatable units intended to house displaced residents, Statistics New Zealand said.

However, Mr Quinn said builders were still laying off staff in Canterbury because the major work had not started yet.

But now the red-zone homes had been decided, insurance companies could settle claims "and hopefully we will see some action".

On the Friday and Saturday after the Government announcement builders' show homes were full, he said. "People are starting to make inquiries about what they will do and that has not been the case for months."

National building consents issued in May:

1139 new homes and apartments

Down 16 per cent on the same month last year

Seasonally adjusted, the consent numbers were up 2.3 per cent from April.

Compared with May 2010, the value of residential building consents fell $93 million, or 19 per cent

Non-residential consents rose $52m, or 17 per cent, to $350m, seen as encouraging lift.

Regional breakdown of housing consents for May compared with May 2010:

Wellington 89 (down 52)

Auckland 236 (down 85)

Waikato 163 (down 39)

Taranaki 30 (down 37)

Canterbury 251 (up 14)

Otago 85 (up 10)

Annual building consents for homes and non-residential:

$8.7 billion, down 8.2 per cent

How to land a property deal

29th June 2011

Source: Stuff Business Day

With any purchase, you like to feel you are getting value for money. That's never more important than when buying a house, because it could well be the biggest financial commitment you make - especially with property prices as high as they are.

Whether you are looking for an investment property or a home to live in, there are two things you need to do to bag a bargain: leave your emotions behind and hone your negotiating skills.

''Good negotiators are good listeners and can pick up on why a property is being sold,'' says the managing director of buyer advocacy specialist Keyhole Property Investments, Melissa Opie.

They also tend to ask a lot of questions ''but keep a lot of information close to their chest''.

Opie says people buying a ''heart home'' - one that they intend to live in - need to be particularly careful not to let their emotions get in the way.

''People will put a price on the quality of life and are more likely to pay more for a heart home but they still need to think with a business mind - like will the banks value the property for what you are prepared to pay,'' Opie says. As an investor, there is always another property, she adds.
Be prepared

If you are buying property as an investment then you should be prepared to work for a better price, says a property and finance adviser with Smartline Personal Mortgage Advisers, Kevin Lee.

And if you are going to negotiate with a vendor, you should do it based on facts.

This means educating yourself on investing in property, being realistic about what you can afford, seeking professional advice and developing an appropriate strategy.

''If you're prepared to learn, you will mitigate the chance of being ripped off because you are so much more in control of the sales process,'' Lee says. ''The dream deal is doing your homework and paying a fair price for a property that fits within your strategy - it's where everybody wins.''

Opie agrees knowledge is power.

''Do your research,'' she says. ''You have to have undergone due diligence in the market and the house in order to know what the right price is. Some of the critical research may be finding out the sale prices of similar properties in the area and finding out why the vendor is selling.''

The chief executive of McGrath Estate Agents, John McGrath, says getting finance approved before making an offer is a powerful demonstration of commitment to buy.

''The best way of showing you're serious is by signing the contract and attaching a cheque for the deposit,'' he says.

''This makes your offer a lot more seductive to the vendor. Alternatively, put your offer in writing and mention you have your finance approved.''

McGrath advises against starting negotiations with your best offer.

Vendors always assume your first offer will not be your last, he says. ''If the property is overpriced, it's OK to start with a cheeky offer as long as you've done your research and can justify it using market information and comparable sales.''

And a professional valuer's appraisal that is much lower than the asking price is also great ammunition, McGrath says.

Understand any quoted prices

Consumer advocate Neil Jenman says experienced buyers know that agents underquote the selling price by about 20 per cent. So when an agent tells you bidding at an auction will start at $300,000, the price is more likely to be about $360,000.

''If your maximum price is $320,000, be careful. You could spend money on inspections, get your heart set on buying the home and all to no avail,'' Jenman says.

His tip for buyers who can't get a straight answer from an agent about the price, or who are certain they are being misled, is to ask the sellers about the price. Either write to them at home or via their lawyer.

The other point about a quoted price is to understand when the price was set.

The sellers understandably want to get the best price they can for their property. But that doesn't mean it is the price it will sell for.

If a property has been on the market for several months or even years, it becomes what is known as ''stale''.

Depending on the desperation of a seller's situation, the price might start dropping to something that is closer to the fair price it probably should have started at.

Months later, all they might want to do is sell the property at whatever price someone is prepared to pay.

Buyers who have done their research will know what the price should be, possibly put in a lower offer and pick up the property for an apparent bargain.

The buying game

Auctions can be a stressful experience for the unprepared, which is why many people engage the services of a professional to do the bidding on their behalf.

''Buying a property is all to do with psychology and affordability,'' Opie says. ''The average person is not a seasoned bidder at auctions. I've seen people put in bids over their own bid and push the price up.''

If a property is going to auction but a buyer wants to put in a bid beforehand, that buyer needs to understand whether he or she is paying too much.

That understanding can only come through doing the research as outlined above.

That knowledge will be equally important if you are the highest bidder at auction but are yet to reach the vendor's reserve price and start entering into negotiations. Stand your ground about what you are prepared - and can afford - to pay.

If you can't get your price, get your conditions, which McGrath says are ''powerful bargaining chips''.

''You can negotiate the length of settlement, inclusions (such as furniture), an early release of the deposit and/or offering to rent the property to the vendors after settlement if they haven't yet bought a new home,'' McGrath says.

Widening your house buying options

27th June 2011

Source: Stuff Business Day

Traffic queues. House prices six-times the average yearly salary. Hookers stalking the pavement outside your office. Crime.

Living and working in the city certainly has its drawbacks. So why not pack up and move to a country town?

If house prices are anything to go by, trading in an Auckland or Wellington property and buying in a small town could lead to a Lotto-esque (for the average punter) windfall.

Last year the cheapest house in the country sold for a tiny $7000. And unsurprisingly, it wasn't in one of our major cities. It was down south in Mataura, about 15 minutes drive from Gore.

While there's no doubt that house was a steal, the price of property in some smaller provincial towns seems stuck in a time warp.

If you don't believe me, Check out TradeMe's property listings for properties going for up to $100,000.

Fancy a three-bedroom house bathroom with shower and bath, sunny open plan kitchen and dining area flowing through to lounge with log burner, oh and a conservatory?

You could nab this for exactly six-figures in Featherston, north of Wellington in Wairarapa.

But if you are feeling really scrooge-like you can buy for under $100,000 in Patea, South Taranaki.

I found numerous three-bed houses in the town all priced to sell at around $75,000 including this property which is handily located close to the beach, golf course and school. That compares with $350,000 for a three-bedroom house in the suburb of Beachhaven on Auckland's North Shore.

Yep, that's right, Patea is a beachfront town. And a river town, and a bit of a fishing town too.

Local community board member Shelley Brenda Dew-Hopkins said the fishing was "fantastic". And that's not all Patea had to offer.

"The beaches are beautiful, it's very close to Hawera and other main centres. We have a great little cafe, the people are friendly and there's a new pool being built."

Dew-Hopkins said Patea was primarily a service town for the agriculture sector with sawmills, the farming and energy sectors big employers with Fonterra and Silver Fern Farms among those companies with a presence in the area.

"Housing is cheap, but Patea has all the essential services and everything you need," she said.

It also had free Wi-Fi internet access at the local library, a doctors surgery, Four Square, good weather in summer - it was a temperate winter 15 degrees the day I wrote this story - and no McDonalds or big fast food chains.

So why were houses so darn affordable?

It was bit of a mystery to Allied Farmers First National real estate divisional manager Shawn Gibbon.

He put it down to the commute. He reckoned most people who live in Patea work in Hawera. But they have paid for the privilege of inexpensive housing. These brave souls suffered through a 15 minute commute, each way, every day.

"Local people think a five minute drive is too far," Gibbon said, "they won't even buy on the other side of town."

So what would a drive to the other side of town in Patea be like? Well there are no traffic lights. Nor traffic for that matter, Gibbon said.

It's also about one hour-and-a-half hours from New Plymouth, the region as a whole boasts one of the highest average weekly incomes, at $706, in the country and Patea itself can lay claim to being the home of that most Kiwi of anthems, Poi-E.

And yes, Gibbon said that $100,000 would buy a tidy home in Patea with the top-end properties sold for around $200,000 depending on location ( possibly beachfront) and size.

But if Patea doesn't sound like your cup of tea, what about Mataura, home of the $7000 house?

Motorsport legend and transport operator Inky Tulloch was the mayor of Mataura, population about 2000, for seven years.

While he has now moved out of Mataura to north of Gore, Tulloch said Mataura is well-situated at the crossroads between Invercargill, Dunedin and Queenstown.

"It's an hour-and-a-half from the sea, from the ski fields and from the lakes," Tulloch said.

It was the proud owner of a new community centre, a "very good" swimming complex and great local community feeling, the former mayor said.

It doesn't have a high school, teenagers are bussed to Gore - population 12,108 - and Dunedin University is the closest uni.

But there was work available at the local freezing works for maintenance engineers, electricians, laboratory technicians, seasonal process workers, boners, slaughter men and labourers, according to the Southlandnzjobs website.

And more jobs could well be coming. Tulloch said the freezing works owner, Alliance Group, had announced plans to double capacity at the plant and the area was also becoming known for a growing lignite industry.

"There are a lot of good things happening," Tulloch said.

And in the Southland region as a whole it would seem, with another high weekly average income of $713 and unemployment rates well below the national average at 4.7 per cent for the year ended March 2011. Also with 72 per cent of Southland's working age population gainfully employed - again, better than the national average - it was all positive stuff.

But before you rush off to buy this "neat little three bedroom" house with aluminium windows, new gas hot water and double garage in Mataura, or any of the properties in Patea, you do have to do your research.

"It may seem romantic to move to the country but the fact of the matter is there must also be commensurate work opportunities, with matching incomes," New Zealand Institute of Economic Research principal economist Shamubeel Eaqub said.

"Regional economies, particularly the farming ones like Waikato, have been doing well. But I would suggest we can't all pack up and move to the country. While a few people may be well-placed to milk cows at 5am, the mere mortals out there - people like me - can only ever contribute to a service economy. That requires a big city."

On the flip side, ultra-fast broadband should make life easier for those choosing to work in remote locations.

So if it all gets too much for you in the city, Patea - and its cheap property, beaches, fishing and relaxed golf course -  awaits.

Are property buyers really in the box seat?

24th June 2011

Source: Realestate.co.nz

“There has never been a better time to buy a house” – this was the first line of the Sunday newspaper article this past weekend. A big call some may say, especially when the property market has seen a very sober and lacklustre market over the past 3 years.

It is worth pausing for a moment to reflect on what circumstances arise to cause the property market to be either a great time to buy, or a great time to sell.

These circumstances are usually in opposing territory. However there are always exceptions and most recently in that heady period around 2004 when the pace of the market favoured both buyers and sellers with prices and volumes rising steadily and at such a pace that you almost “had” to buy and sell – or you feared being left behind in the market.

Great time to buy!

Great times to buy are generally when the cost of borrowing (interest rates) are low; when the availability of property on the market is high, and when there are not many other competing buyers in the market.

As to whether falling prices are a great incentive to buy is debatable as a cautious buyer will usually hold off  in these situations to see if prices may in fact falling further.

Great time to sell!

Great times to sell are generally when the cost of borrowing is cheap thereby encouraging a lot of buyers to come into the market. Ideally this is also combined with a shortage of properties on the market therefore forcing buyers to compete with each other to buy your property.

As to price, it is likely sellers are not that concerned. All they want is to sell. The price they sell at will be as the market dictates, which will allow them to move on and buy another property as appropriate.

The newspaper article went on substantiates the claim of it being a great time to buy, by stating that interest rates are currently at the lowest levels for decades. That is certainly true and with the vast majority of property purchased with a mortgage the cost of borrowing is a key driver of the market. The chart below (courtesy of the Reserve Bank) tracks mortgage rates over the past 20 years and clearly shows how low today’s rates are on a historical comparison – especially when you see the peak at over 15% in 1991.

Reserve Bank of New Zealand - Floating & 2yr fixed rates for new borrowers

The article stated that in addition to low mortgage rates the other key driver of a “great time to buy” was the fact that “prices across the country plunging in the past month”. I would challenge this assertion from the standpoint as made earlier that falling prices can in certain circumstances impede buyer motivation. It is also so important to look at house prices not on a one month basis but on a trend perspective.

The recent blog post entitled “NZ property prices continue to ease” highlighted the Stratified mean sales price across the country. This showed no sign whatsoever of “plunging prices”. Property sales price are in all cases below the peak of the property market back in 2007 (with the sole exception of Wellington which has managed to set a peak back in late 2009). Prices would be better described as stable or lacklustre rather than plunging.

One fact the newspaper article omitted completely was the a key driver of the property market – the inventory of unsold homes on the market. As stated earlier this statistic, far more than sale price is likely to impact the state of the market as either a buyers or a sellers market.

Realestate.co.nz publishes its monthly NZ Property Report which tracks this inventory measured as the number of equivalent weeks of sales of unsold properties on the market. In the May report published on the 1st June as well as the regional Property Pulse regional factsheets the data showed that in the Auckland market and now emerging in the Queenstown market the power is moving from buyers to sellers. A lack of new listings and a rise in sales volumes which is helping to clear what has been high inventory is leading the Auckland market to be in a deficit of properties on the market. If as a consequence of these low interest rates, buyers are more active in the Auckland market, then there will be a need for more listings to come onto the market. This then directly favours sellers. Potentially in this seller’s market a consequence of the lack of listings may lead to property appreciation due to more demand than supply.

Outside of these major markets of Auckland, Queenstown and possibly Wellington the rest of the country is still very much in a situation of high inventory of unsold properties. This means that if there are buyers eager to take advantage of low interest rates then in these more provincial areas they will have ample opportunity to pick and choose amongst the properties on the market and allow them to drive a good bargain – maybe these are the areas of the country where buyers may well be “in the box seat”!

Property sales in south up but prices down

20th June 2011

Source: The Southland Times

The Southland real estate market has rebounded 18 per cent in the past year by sales volume, but prices are down and the number of properties on the market has spiralled, according to latest sales figures.

The realestate.co.nz report says the the 160 properties sold in May is up from the 131 sold a year ago – an increase of 18 per cent.

However, the average asking price in the south in May was $228,436 – down 8 per cent on a year ago, and that drop is mirrored in the median sales price of $180,500, down from $195,000.

The number of new listings in May was also down on last year with 272, down 19 per cent.

Meanwhile, the inventory of unsold homes in Southland sits at one of the highest levels recorded, with an average time on market of 50.2 weeks – up 24 per cent on a year ago, a strong indicator that it remains a buyer's market.

This is despite the 18 per cent lift in the number of properties sold.

However, in the Queenstown Lakes region the opposite holds true, with the region getting the results of stronger sales matched with lower levels of new listings leading to it being viewed as a seller's market, the report says.

In Queenstown, this potentially points to a caution over the state of the market with no significant inflation expectation among vendors new to the market.

Central Otago and Queenstown Lakes, and Otago were among five regions showing declines of more than 5 per cent in asking price at a 7.4 and 6.3 per cent reduction respectively.

Otago listings fell 25 per cent to the lowest level recorded in four years, edging to a turning point in the market with a closer balance between buyers and sellers.

The report is produced by industry website realestate.co.nz, run by the Real Estate Institute and six of the largest real estate companies, and gives insight into the state of the New Zealand property market as measured by the supply during the month of May. The key parameters of the market analysed in the report are the number of new listings, the asking price expectation for those new listings and the level of inventory of unsold houses on the market at this time.

The report is compiled from data captured by the website and represents almost 95 per cent of all property movements in the New Zealand market as managed by licensed real estate agents.

The report says the prolonged sluggishness of new property listings, which has been evident for almost two years, has at last seen a tip in the balance of the property market from favouring buyers to favouring sellers.

"At least that is now being seen in two of the major markets around the country, Auckland and Queenstown Lakes," the report says.

The small real estate firm with the big reach - hoamz on TV!

17th June 2011

Source: hoamz.co.nz

Stepping outside the square is nothing new for market-leading independent real estate firm hoamz. They pride themselves on doing things just that little bit differently to offer a service that’s above and beyond the norm.

However their latest move even surprised the staff!

hoamzhave invested significantly to film a series of television ads to tell the world (well, New Zealand’s entire South Island at least) about the brand and the service and advice they can offer. Under the tagline ‘Lets be honest’ the ads offer a series of insights into what makes real estate tick. Set to run on TVNZ as part of an ongoing campaign, the ads are designed to introduce the brand and their professional services to areas outside their current geographical span of Queenstown and Invercargill, and make sure buyers from all over the South Island know which team to turn to for property advice in their specialist areas.

Why television advertising? ‘Simple’, said Managing Partner Fred Bramwell – ‘the cut-through of the ads reaches areas we’d struggle to target through the usual avenues of print media, radio and internet promotion. We offer superior service and advice to buyers and sellers, and want to make sure everyone’s aware of the hoamz way of conducting real estate business. For our property vendors it’s another way of cementing hoamz as the go-to company for Queenstown and Invercargill real estate, which means more buyers through our doors and better prices for them’.

The television campaign commences from mid-June and is anticipated to reach audiences of more than a quarter of a million people on a monthly basis.

Click here to view advert 1

Click here to view advert 2

Click here to view advert 3

Southland property pulse factsheet

17th June 2011

Southland Propert Pulse factsheet – May 2011

Tenancies without tension – hoamz to rent come to Invercargill

14th June 2011

Source: hoamz

An exciting new offering for property investors and property renters is now available in Invercargill – hoamz to rent. With a catch-cry of ‘tenancies without tension’ the brand launched in Queenstown two years ago with a promise of exceeding expectations of both landlords and tenants. Having made good on this promise, they’ve turned their eyes to the south.

Following on from the hugely successful launch of the hoamz real estate division in August last year, the next step was to bring the powerful hoamz to rent business model to Southland. Having been in the planning stages since the start of the year, the company is delighted to be opening a rentals division in Invercargill. ‘It was a natural progression’ says Managing partner Fred Bramwell. ‘The launch of the real estate brand has been such a success, we decided to bring forward plans for the rental division as it’s something many of our investment buyers have been asking us for’.

The company have invested in a cutting-edge website along with use of all the busiest rental property portals and most popular print advertising to make sure tenants know they’re the place to go for rental property. Behind-the-scenes are software programmes designed specifically for property management to make sure owners receive the best reporting and communication possible.

Under the leadership of award-winning property manager and well-known Invercargill face, Paula New, the hoamz to rent team is off to a flying start. Paula brings with her a decade of property management experience, a wealth of skills and a commitment to growing hoamz to rent into the number one position in Invercargill rentals and property management.

New rules for apartment owners

14th June 2011

Source: Stuff Business Day

The Unit Titles Act doesn't sound like a particularly glamorous piece of legislation but it affects the lives of thousands of apartment owners around the country.

It governs the rules determining activities around apartments and flats where owners have property titles split into smaller individual lots.

The Act dates back to 1972 and since then the proliferation of large apartment blocks now commonplace in our major cities has led to a spate of joint ownership issues and stoushes between apartment owners and the body corporate companies that help maintain the buildings.

That's why the Act has been overhauled and a new version is coming into force next week [June 20].

In New Zealand there were about 18,000 unit title developments as of June 2010. Most are residential - apartment blocks, townhouses and flats.

The new Act, imaginatively entitled the Unit Titles Act 2010, will provide unit title developers and unit title owners with a "modern framework for the joint ownership and management of land, buildings and facilities on a socially and economically sustainable basis by communities of individual owners".

That's a bit of a mouthful, but essentially it aimed to deal with the particular challenges of developing and owning a unit title.

Unit titles by their very nature, as one of many, shared resources, access, and areas with lots of others. 

Owners in these developments have needs that are clearly different to a stand alone property owner.

Because of these joint ownership issues and the need to live alongside each other - and in some cases almost cheek by jowl - unit title properties and their owners need rules which spell out who is responsible for what, who pays what, and what to do if things go wrong.

For example, the act seeks to simplify the calculation of how much you - as an apartment owner - have to pay towards maintaining the building and states that the body corporate owns common property like hallways and lobby areas.

Robbie Muir, the register-general of land, said ownership and utility interests replace the old "unit entitlement calculation" which previously was used to figure out levies.

Under the old act levies were calculated based on the relative capital value of a unit with no opportunity to have your levies reassessed.

Under the new act you can have your apartment reassessed for levies any time you please, as long as three years have elapsed since the last reassessment, Muir said.

So if you are confused as to why you pay more than your neighbour for body corporate levies when your apartments are identical, perhaps it's time to ask for an assessment.

Another change in the act is aimed at the rules which govern body corporates, such as dropping voting thresholds.

There have been reports of body corporate stoushes as long as there have been unit title residential properties, but as apartment buildings have grown so have the issues related to their governance and management.

Central to these disputes has been entrenched body corporate secretaries charging fees and levies which apartment owners found too high or allegations of mismanagement and conflicts of interests with service providers.

Under the old act an incumbent body corporate secretary held the balance of power over apartment owners through body corporate rules (often written by the secretary) which were often well and truly stacked in their favour.

Now the requirement for a body corporate to have to unanimously agree for a resolution to do things like removing a body corporate secretary have been replaced with just a majority of apartment owners voting in favour, Muir said.

All body corporates have 15 months under their old rules before it becomes mandatory to adopt those required under the new Act, AUT property law expert Rod Thomas said.

"But I think it would be better for body corporates to adopt the new rules now."

He had concerns that while the old act was too inflexible in terms of governance and voting thresholds, the new act may have gone too far the other way.

"By a default provision under the new act you could get only ten people turning up at a meeting and 51 per cent of them voting to make changes," Thomas said.

The new act also allowed apartment owners, for the first time, to use the Tenancy Tribunal to settle disputes both with the body corporate, and with each other.

While this change had been welcomed, Thomas had a major issue with the price tag.

While a tenant can head to the tribunal for a nominal fee, filing a dispute related to a unit title could cost as much as $3300.

Thomas said the cost didn't compare favourably with other similar fees. For example, To file with the Disputes Tribunal costs about $100, the District Court $189 and the High Court $1124.

"The scale of these fees will amount to a denial of access to justice, to people simply seeking to sort out a disagreement with people in the flat next door, and are completely over the top,'' Thomas said.

Thinking about selling your apartment?

The Act brought in new disclosure rules for sellers, buyers, developers and bodies corporate.

Among the things sellers would need to disclose was the amount of the body corporate levies, the period covered by the levies, proposed levies for the next 12 months, proposed maintenance and costs for the next 12 months.

If your unit or common property has been subject to a leaky building claim or proceeding under the Watertight Homes Resolution Service you also have to disclose it.

Additional information is available on the Department of Building and Housing's website or Land Information New Zealand.

Check the changes out.

OCR unchanged at 2.5 percent

9th June 2011

Source: Reserve Bank of New Zealand

The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 2.5 percent.

Reserve Bank Governor Alan Bollard said:  “The outlook for the New Zealand economy has improved since the publication of the March Statement.

“Economic activity has been significantly disrupted by the Christchurch earthquake. However, while many firms and households – particularly within Canterbury – continue to be adversely affected, it appears the negative confidence effect of the earthquake on economic activity throughout the rest of the country has been limited.

“The early signs of recovery noted in the March Statement have continued. Despite some continuing signs of weakness in the world economy, commodity prices remain very strong and firms expect to increase their hiring and capital investment. Reconstruction in Canterbury is projected to add about 2 percentage points to GDP growth over 2012, and boost the level of activity for several years thereafter.

“Despite the strong outlook for export earnings, household expenditure is expected to grow only modestly. Household debt remains very high and is expected to constrain retail spending and the housing market for some time. Continued fiscal consolidation will also act to dampen activity.

“The New Zealand dollar has appreciated substantially over the past two months. This appreciation, supported by high export prices for primary producers, is negatively affecting other parts of the tradable sector, constraining rebalancing of the New Zealand economy.

“Headline inflation is currently being boosted by recent increases in indirect taxes, food and petrol prices, and surveyed expectations of future inflation have edged up. Despite this, indicators of capacity usage and core inflation suggest underlying inflation remains constrained.

“As GDP growth picks up, underlying inflation is expected to rise. A gradual increase in the OCR over the next two years will be required to offset this, such that CPI inflation tracks close to the midpoint of the target band over the latter part of the projection. The pace and timing of increases will be guided by the speed of recovery, but for now the OCR remains on hold.”

Floating mortgage rate rise on cards

7th June 2011

Source: Stuff Business Day

THE Reserve Bank will hold the official cash rate this week, but floating mortgage rates at their lowest levels since the early 1960s may not last many more months, economists say.

Some economists suggest the Reserve Bank will make its first move up on the OCR late this year, while others say that because of the still uncertain outlook, rates will be held till March next year.

The Reserve Bank's monetary policy statement will be issued on Thursday, including its first full set of forecasts since the Canterbury earthquake in February.

The central bank slashed the cash rate by 50 basis points in March to 2.5 per cent as an emergency measure after the quake.

Bank of New Zealand chief economist Tony Alexander said there were perhaps only six months left of floating mortgage rates at the lowest levels for four decades and then they would start rising.

Floating mortgage rates are as low as 5.6 per cent – levels last seen in 1964.

BNZ assumed the official cash rate would rise to 5.5 per cent in the middle of 2013 and that floating rates would peak at 8.6 per cent, about 300 points higher than they are now.

But shifting from a low floating rate now to one-year fixed would mean jumping up to about 6 per cent interest rates, with a three-year rate at about 7 per cent. Mr Alexander said that if he were a borrower, his inclination would be to stay floating but aim to fix before the end of the year.

A "key risk" to the economic outlook is the relentless strength of the New Zealand dollar, according to TD Securities head of research Annette Beacher.

The kiwi hit a post-float record above US82c last week and also hit 50 pence against the English pound, hurting exporters not selling high-priced commodities such as dairy products and meat.

ASB said the Reserve Bank was highly unlikely to intervene in currency markets, given that the rise was backed by strong commodity prices.

Ms Beacher said that while there had been a strong rebound in business confidence recently "there is no hard evidence that the recovery is on track and inflation forecasts are threatened to the upside".

While market pricing suggested a high probability of a move by December, the next move was more likely to be early next year, according to Ms Beacher, who is pencilling in a 25 basis point move in the March quarter.

ASB chief economist Nick Tuffley said the official cash rate would be held at 2.5 per cent till March next year.

While business confidence had improved and inflation pressures were creeping up, there was a large degree of uncertainty about the outlook, especially because of the big Canterbury earthquake.

Rebuilding preparations had yet to start in a meaningful way, with aftershocks still happening. A recent survey of architects suggested they did not expect rebuilding to begin until later in 2012, and that rebuilding work was a key plank in the wider economic recovery expected next year.

The Mix

What's good and bad in the economy?

The Good

Business confidence has bounced back strongly

Housing market is improving, at least in Auckland, which will support consumer confidence

Electronic card spending rose in March and April, despite high food and fuel prices

Tourism numbers bounced back in April

Commodity export prices remain high

The Bad

The Christchurch quake did billions of dollars of damage

The timing of the rebuilding effort is unclear

The record high New Zealand dollar is hurting exporters

Farmers remain cautious about spending

Global growth is uncertain, with high oil prices a worry

NZ property report

2nd June 2011

Source: realestate.co.nz

NZ Property Report – May 2011

The May 2011 NZ Property Report published by Realestate.co.nz provides an insight into the state of the New Zealand property market as measured by the supply side of the property market over the month of May. The key measures of the market analysed in the report are the number of new listings, the asking price expectation for those new listings and the level of inventory of unsold houses on the market at this time. The report is compiled from data captured by the website and represents close to 95% of all property movements in the NZ market as managed by licensed real estate agents.

A full print version of the NZ Property Report – May 2011 is published below and is available for download (1.0MB) and distribution.

Summary of the market – May 2011

The prolonged sluggishness of new property listings, which has been evident for nearly 2 years, has at last seen a tip in the balance of the property market from favouring buyers to favouring sellers. At least that is now being seen in two of the major markets around the country – Auckland and Queenstown lakes.

The Auckland market which saw strong late summer property sales has now as a consequence of these sales matched to the slow flow of new listings, seen inventory levels below long term average. At the end of May the inventory of unsold houses on the market fell to 30 weeks as compared to the long term average of 34 weeks. The last time this level was seen was at the end of 2009.

The asking price expectation of the new listings coming onto the market in May fell back from the peak seen in April. Historically there is always an adjustment seen at this time of year. The seasonally adjusted asking price fell 2% nationally and that was reflected right across the regions indicating that the market still senses no significant property price inflation as yet with new-to-the-market vendors pricing to attract buyers who are still small in number across the regions.

Asking Price

The truncated mean asking price for all new listings in May fell significantly from $429,249 in April to $414,308 in May. On a seasonally adjusted basis the asking price fell just 2% in the month indicating a degree of uncertainty amongst sellers.

The overall trend of the past 2 years continues to show strength in asking price expectation.

New Listings

The level of new listings coming onto the market in May fell to 9,898. This represented a 16% year on year decline but a 1% seasonally adjusted rise from April.

On a 12 month moving basis the number of new listings in the past year totals 127,843 as compared 144,375 for the same period a year ago – a fall of 12%.

Inventory

The level of unsold houses on the market at the end of May continued to fall from prior months. May reported 48,352 down from 50,398 in April and 51,980 in March.

The recent relative strength of sales as seen in March and April has now stared to see a clearing of what has been a high level of unsold houses on the market over the past 18 months. Heading into Winter, a time of traditionally weaker listing will likely see this inventory level fall further in coming months.

Regional Summary – Asking price expectations

After reaching a new peak of asking price in April the national asking price for new listings fell in May. This fall was reflected around the regions with 12 regions reporting falls and just 7 showing any increase. There is seasonal trend behind this which sees the asking prices for May fall significantly as compared to April, likely as a result of the market entering the winter period.

There were 5 regions showing declines of more than 5% in asking price with both Wellington and Queenstown Lakes among them, both of these regions are also showing low levels of inventory. This potentially points to a caution over the state of the market with no significant inflation expectation amongst vendors, new to the market.

Regional Summary – Listings

The continuing trend of new listings as has been the case for over a year is decline in number. Again the chart by region shows a overall trend towards a sellers market with only Marlborough and Central North Island bucking the trend to show year-on-year increases in listings.

Two regions in May recorded the lowest level of monthly listings stretching back 4 years – Northland and Otago.

The level of new listings in the Canterbury region continues to remain weak as a result of the earthquake. In May 1,188 new listings came onto the market, down 29% as compared to last year. Comparing the first 5 months of 2011 with 2010 the number of new listings in the region has fallen from 8,972 to 5,736 a fall of 36%.

Regional Summary – Inventory

The levels of inventory of unsold homes on the market changed markedly in May. For more than a year the predominant view has been that the property market is firmly stuck in a buyer’s market with inventory levels well above long term averages.

Starting in March and now accelerating through May the key markets of Auckland and now Queenstown Lakes are seeing the results of stronger sales matched with lower levels of new listings leading to these two markets now being viewed as seller’s markets.

Not far behind the regions of Otago, West Coast, Waikato and Bay of Plenty are edging to a turning point in the market with more balance between buyers and sellers.

That still leaves the remainder of provincial NZ firmly in a strong buyers market with 11 regions seeing existing inventory well above long term average.

Lifestyle

The level of new listings of lifestyle property coming onto the market in May fell by 12% on a seasonally adjusted basis from April. A total of just 844 new properties were listed with a truncated mean asking price of $567,575. The asking price was up 2% as compared to the recent 3 month average, and up 12% as compared to prior year.

On a rolling 12 month average basis new listings are down 8.6% with 11,462 listed in the past 12 months compared to 12,546 last year.

Apartments

Listings of apartments showed a 17% decline on a seasonally adjusted basis as compared to April with 406 new apartments coming onto the market. The truncated mean asking price for these new listings was $369,834, which was down 3.0% on the recent 3 month average, and down 2.1% as compared to May 2010.

In the Auckland apartment market which represents over 60% of the market there were 267 new listings with an asking price of $328,326. The new listings shows a decline of 20% on a seasonally adjusted basis, and a 27% decline when judged on a year-on-year basis.

Property Price Index

Comparing the sale price of properties across the country to the asking price expectation is not a perfect comparison; however the trends tend to align. The benefit is that the data for asking price is of the market today, whilst the selling price is reflective of the market active between 4 and 6 weeks ago. The latest comparison is highlighted below:

Realestate.co.nz data is compiled from asking prices of new residential listings as they come onto the market via subscribers to the realestate.co.nz website. The Realestate.co.nz website currently has over 95% of all licensed real estate offices subscribing and providing all of their listings onto the website. The asking price is presented as a truncated mean price at a 10% interval.

REINZ data is compiled from reported unconditional residential sales from all members of the Real Estate Institute of New Zealand representing all licensed real estate offices. The sale price is published as a stratified median house price and is developed in association with the Reserve Bank of NZ.

Invercargill rates to rise 4.6pc

1st June 2011

Source: The Southland Times

Invercargill residents are facing a 4.59 per cent rates increase after the city council discussed its 2011-12 draft annual plan last night.

The council discussed submissions on the draft annual plan and Mayor Tim Shadbolt's report on submissions before accepting the recommendations.

The draft annual plan had predicted a rates increase of 4.99 per cent, but the council's director of finance and corporate services Dean Johnston revised that figure at the end of the meeting to take into account changes to the draft plan. Mr Johnston said that was a $160,000 decrease on the proposed rates draw.

An extraordinary council meeting is scheduled for 4pm on Tuesday to adopt the 2011-12 annual plan.

Properties in New Zealand bigger

30th May 2011

Source: Property Wire

The average size of a new property in New Zealand has been getting bigger as more detached homes with more bedrooms were built in recent decades, new research shows.

The size of properties has soared over the last 30 years, but the rate of growth is slowing as home owners are now faced with increased building costs.
 
Latest research from Quotable Value puts the average size of a home built since 2010 at 205 square metres compared with 142.4 square metres in 1980.
 
Quotable Value research director Jonno Ingerson said much of the increase could be put down to a rise in the construction of four bedroom homes, particularly during the last 20 years.
 
The research shows that since 2000 more houses have been built with four bedrooms than three for the first time. Five bedroom homes have also increased from 3% up to 11% per cent.

It also found that four bedroom homes currently account for about half of all new builds in New Zealand and ensuite bathrooms and extra living areas have been high on the wish list for many people.
Many modern houses also tend to have garages under the main roof, and where this is the case they also count as part of the floor area of a house.

The research shows house sizes were relatively stable until the 1930s and 1940s, when the depression and war led to smaller homes being built. Since the 1950s house sizes have steadily increased, with the rate of growth accelerating between 1980 and 2010.

However, significant increases in the cost of building in recent years meant the rate of growth was now slowing, suggesting homes may not get much larger.

‘There is also a push by some of the larger city councils to encourage medium density housing in fringe city suburbs. This type of housing will have smaller floor areas than the traditional suburban family homes that have been built over the last 20 years,’ said Ingerson.
 
The director of Massey University's real estate analysis unit, professor Bob Hargreaves, said there was also evidence that the McMansion type of house was becoming more difficult to sell, and more expensive to heat.
 
‘My feeling is that house sizes will start to level off and may fall in some areas as builders are faced with affordability issues for the end user when building costs are set to increase quite substantially,’ he added.

Smelter plans big spendup

30th May 2011

Source: The Southland Times

The Tiwai Point aluminium smelter has ramped up its capital expenditure and is planning to spend about $80 million annually for the next four years, with southerners expected to benefit.

New Zealand Aluminium Smelters is anticipating doubling its normal spending until 2015 after it secured a long-term electricity contract with Meridian Energy, ensuring power for the smelter until 2030.

New Zealand Aluminium Smelters general manager Ryan Cavanagh said the smelter typically spent $30 million to $50 million annually on project work and rebuilding aluminium cells, but last year spent about $76 million, and now the company had certainty of power its future looked safe, so he expected it to spend a similar amount, if not more, this year.

The outlook for the next few years was good because of strong demand for metal, and the smelter had also secured a new product from a sister smelter in Canada to produce billets – long cylinders of aluminium – for the Japanese market, Mr Cavanagh said.

However, smelters worldwide had closed in the past few years because of the global downturn and things could change, so the expenditure was still based on the markets, he said.

"We cannot control the metal prices, but at the moment it is healthy. As long as that continues we will too," Mr Cavanagh said.

The increased expenditure would not mean new jobs at the smelter, but it was good news for the community because businesses in the south typically tendered and picked up contracts for project work, he said.

"Our local contracting firms are very successful with getting this work ... [so] a fair whack of that money is retained locally," Mr Cavanagh said.

Project work included buying and installing new cranes on the production lines and putting in a new ship unloader, he said.

Venture Southland enterprise and strategic projects group manager Steve Canny said the increase in the smelter's capital expenditure was great news for the region because it showed the smelter was committed to investing in its future.

The smelter produced about 14 per cent of the region's gross domestic product and was a major contributor to the economy through jobs and the flow-on effects on the service industry, Mr Canny said.

Invercargill-based engineering business George Wilson and Sons workshop manager Rex McDonald said the smelter's increased spending was great news for Southland.

Work had quietened down in the past few years so any ramping up of the industry or flow-on effects were good, he said.

The Banks want to lend you More Money

24th May 2011

Buying at auction

23rd May 2011

Some great information from realestate.co.nz on buying a property at auction. What to do and what to avoid - call the specialised hoamz auctioneering team on 03 441 8858 for Queenstown or 03 214 6269 for Invercargill for more information.

Auction video

Bluff oyster eaters enter their personal nirvana

23rd May 2011

Source: TVNZ.co.nz

Oyster lovers are flocking in their thousands to a famous celebration at the bottom of the South Island.

Bluffies and out of towners downing as many oysters as they can. The good weather and big oysters making it one the most successful festivals ever.

“Look at this who could believe it this could be the best weather I have ever experienced in the 21 years I have been coming to these festivals,” says Invercargill mayor Tim Shadbolt.

The 16-year-old festival is back to its best after a turbulent past.

“My wife’s from Invercargill and she has never been to a Bluff oyster festival,” says Paul Halliwell.

This year it's stripped down, held in true unsophisticated Bluff style. Organisers say this year they have the festival formula just right.

“We don't need corporates we don't need fenced off areas we just mingle and have a good old day,” says festival chairman John Edminstin.

Now the locals are running it and it seems to be a lot better and lot more family orientated and friendlier. And Bluffie's love it that way just like their oysters, natural, while the Prime Minister likes his oysters cooked.

A good day in the sun downing Bluff’s most prized seafood delicacy, the oyster.

Southland Property Pulse factsheet – April 2011

20th May 2011

The Southland region property pulse factsheet for April 2011 is published using data from Realestate.co.nz and REINZ (Real Estate Institute of NZ).

Property sales in Southland at 126 in the month rose slightly on a seasonally adjusted basis in April but were down 5% as compared to a year ago. The inventory of unsold houses on the market rose to 56 weeks to remain well above the long-term average of 32 weeks of equivalent sales.

Median sales price at $193,250 was up 4% as compared to a year ago, and up on the prior month. The asking price expectation of new listings was up 2% as compared to a year ago at $245,093.

The level of new listings coming onto the market in April at 222 fell as compared to March and was down a significant 44% as compared to a year ago.

Budget 2011: What the budget means for borrowers, savers and home owners

20th May 2011

Source: Bernard Hickey - interest.co.nz

So what does Budget 2011 mean for borrowers, savers, KiwiSavers and home owners?

Budget 2011 doesn't contain the same major taxation reform seen in Budget 2010. Last year income taxes were lowered, the GST rate was increased and changes were made to taxation rules for property investors.

This year's budget contains more tinkering than reform.

It contains a few tweaks to the tax rules for KiwiSavers and student loan borrowers. See Alex Tarrant's article with details of the KiwiSaver changes.

It also makes some marginal changes for Working For Families that actually increases payments for those on lower incomes but 7,000 families will see their payments cut. See Alex Tarrant's article with more detail on Working for Families changes.

The biggest impact over the longer term will come from much stronger economic growth will be on interest rates and on house prices.

The government is forecasting economic growth of 4.0% in 2012/13 and a rise in the 90 day bill rate to 5% from under 3% now.

That implies floating mortgage rates of around 8% by then.

The risk, however, is that economic growth is lower than the Treasury has forecast.

If growth is lower than is forecast then the budget deficit and borrowing will be higher than expected.

Standard and Poor's commented after the budget that it wouldn't change New Zealand's current AA+ rating with a negative outlook, as long as the outlook for borrowing and the deficit did not worsen.

If it does worsen this will increase the cost of borrowing for New Zealand through higher long term interest rates.

The problem for homeowners and borrowers is that interest rates have fallen as far as they will. If they do fall further, it's because the economy is in dire straights and unemployment is rising. That will also suppress demand and prices in the housing market.

The surge in activity in central Auckland in March was sparked by the March 10 cut in the Official Cash Rate after the February 22 earthquake.

Economists expect the Reserve Bank to begin reversing that cut from December or early in 2012.

That is what will hold back the housing market -- the likelihood of future interest rate increases.

More savings options

Meanwhile, the government also announced details of its plans to part privatise the big four state owned energy companies (Mighty River Power, Genesis Energy, Meridian Energy and Solid Energy) and sell down its Air New Zealand stake. 

It hopes to sell these stakes to raise NZ$5-7 billion over 3 to 5 years from 2012 through initial public offerings on the NZX. It aims to give fund managers and individuals more options for savings.

Also, the government plans to offer Earthquake Kiwi Bonds to help build a NZ$5.5 billion earlthquake fund. These will be available for individual investors and offer similar rates to wholesale rates, initially around 4%.

My view

My view is this budget does nothing to fix the government's structural deficit and eventually it will have to cut spending harder and tax more to ensure New Zealand's foreign borrowing is bought under control.

Property sales rise, prices fall - REINZ

12th May 2011

Source: TVNZ

New Zealand property sales rose in April, though the median price fell and houses took longer to sell, according to the Real Estate Institute.

The volume of sales rose 3% to 4,987 last month, seasonally adjusted, compared to March, the institute said in a statement. The national median house price fell to $360,000 from $365,000 in March, and was up from $356,000 in April 2010.

The data showed continued strength in Auckland, where the median price rose to a record $479,500, though the volume of sales slipped 0.3% from March and was up 11.4% from April 2010. Days to sell in New Zealand's biggest city fell to 34 from 35 in March and were the lowest of any region.

Auckland continues to lead the national statistics "reflecting the continued tightening conditions in the Auckland market," REINZ chief executive Helen O'Sullivan said.

Nationally, the median days to sell lengthened to 43 days from 41 days in March and were up from 40 days in April last year. Northland was the laggard, at a median 73 days to sell, still an improvement on March at 94 days.

The REINZ Housing Price Index rose 1.1% in April from March and was down 0.4% from April 2010. The index is 4% below its peak of November 2007.

The median price in Northland fell almost 12$ to $292,000, the lowest since June last year. The number of properties sold fell to 98 from 122 in March and from 156 in April 2010.

In Auckland, 1,854 houses sold last month, down from 2,437 in March.

In the Waikato/Bay of Plenty/Gisborne the median price rose 2.6% to $312,875, though was down 0.7% from April; last year. There were 708 sales, down from 798 sales in March.

Hawkes Bay prices rose 4.4% to $271,500 to be 1.5% down on the same month last year. Properties sold fell to 118 from 195 in March.

In the Manawatu/Wanganui the median price rose almost 1% to $220,000, with 219 properties selling, down from 250 in March.

Taranaki's median price rose 3.3% to $279,500 and sales fell to 142 from 166.

In Wellington, the median house price dropped almost 7% to $386,500 and sales fell to 574 from 710 in March.

Nelson/Marlborough recorded a 3% increase in prices to $339,000 and 191 sales in April, down from 214 in March.

Canterbury/Westland prices rose 4.7% to $310,000, with 626 homes selling, up from 477 in March.

Central Otago Lakes had an 8.2% gain in prices to $479,000 and an increase to 106 sales from 84 in March.

Otago's median price rose 9.3% to $235,000 and sales fell to 225 from 259. Southland recorded a 4% increase in median price to $193,250, with 126 homes sold, down from 136 in March.

Housing market showing improvements

12th May 2011

Source: Stuff Business Day

Latest data suggests the property market has reached a trough, and the Reserve Bank appears to agree.

Reserve Bank Governor Alan Bollard today said he thought the housing cycle had bottomed out and was gradually strengthening.

"We don't put too much stress on month by month data in one particular region, but what we've been seeing in Auckland is broadly symptomatic of the sort of gradual recovery we're expecting to see across the country. Part of which is made more uncertain and more unclear, of course, by the Christchurch situation."

He made the comments shortly before the Real Estate Institute of New Zealand (REINZ) released its sales figures for April, which recorded 4987 unconditional sales last month, down from 5848 in March and 5207 in April 2010.

The national median house price eased by $5000 from March, to $360,000, but was up $4000 compared to a year earlier.

Auckland reached a new all time high median house price of $479,500, up 2 percent from both March and from a year earlier, while the region also led the country in the number of days to sell which eased from 35 to 34 days in April, reflecting a shortage of listings.

Nationally, the median days to sell in April was 43 days, up from 41 in March and 40 a year earlier. All regions other than Wellington, Southland and Nelson/Marlborough recorded a fall in days to sell.

The REINZ housing price index was up 1.1 percent in April compared to March, with the stratified median house price at just under $365,600.

Compared to April 2010, the index fell 0.4 percent, and it is now 4 percent below the peak of November 2007.

ASB economist Chris Tennent-Brown said ASB expected nationwide prices were troughing now, and should rise by about 3 percent in the year ahead.

Behind that lift would be a range of experiences, from stronger price appreciation in areas such as Auckland, and ongoing weakness in areas where population and income growth were less supportive.

ASB calculated nationwide sales were up a seasonally adjusted 0.4 percent in April from March, with the big driver of the lift coming from Canterbury. When the Canterbury figures were stripped out, turnover was down a seasonally adjusted 3.7 percent.

As well as the damage and disruption caused by the February earthquake in Christchurch itself, insurance difficulties had held up sales. There were only 193 sales in Christchurch in March, compared to 315 last month and 511 a year earlier.

Goldman Sachs economist Philip Borkin said the market appeared to be consolidating after recent improvements, although the level of activity remained low.

He did not expect large increases in house prices, largely due to affordability headwinds.

But the stabilisation in prices opened the door for households to potentially begin slowing the pace of deleveraging, resulting in modestly improved household consumption growth.

April sales lift a 'turnaround'

11th May 2011

Source: Stuff Business Day

A "very strong" lift in retail sales in April, following a similar rise in March, is seen as a clear turnaround in consumer spending from the gloom of last year, according to Westpac.

Retail sales picked up 1.7 per cent in April, led by food and hospitality businesses, though the rise was across the board, aside from service sector firms, according to Statistics NZ figures.

The Reserve Bank cut the official cash rate sharply early in March, with floating rate mortgages down 50 basis point immediately, which economists say has probably bolstered shop spending.

Westpac chief economist Dominick Stephens said the turning point for retail sales came in January, but was disrupted by the February quake in Christchurch, though this was short-lived.

"It's clear consumers are in a better mood than at the end of 2010," he said, and were willing to spend more rather than save so hard.

The emergency rate cut in March might have helped spark the lift in spending in April, other than for Christchurch.

The situation was "very depressed" at the end of 2010, but Westpac had picked a lift in consumer spending, contingent on a stronger housing market and stronger commodity prices lifting rural incomes.

"Even before the March rate cut, interest rates had been falling," Mr Stephens said. There had been very little disruption to consumer spending, outside Christchurch, since the quake.

At the same time, there was little inflation pressure, with room for the economy to grow rapidly in what was a "sweet spot" without hitting inflationary speed limits.

"There is no need for the Reserve Bank to hike interest rates just yet," he said.

ASB economist Christina Leung said the retail sales rise in April was encouraging, building on the strength seen in the previous month.

The rise in April was fuelled by higher spending on food and eating out, which suggested an improvement in discretionary spending as consumers became more optimistic, she said.

The lift in mood might reflect improving demand for workers and a pickup in house sales volumes. The 6c-a-litre drop in petrol prices on Monday was also a "welcome development".

But the recovery in retail spending would be gradual and there was no urgency for the Reserve Bank to lift the OCR, ASB said, with the first move upward likely to be in March next year.

ANZ economist Sharon Zollner said a continuing rebound in Canterbury retail sales probably explained more than half of the national rise in April.

But a strong second month in a row might indicate growing momentum in consumer spending more generally. Income growth had been good for wage earners and farmers recently and repaying debt was becoming a choice rather than a necessity, she said.

"We are not expecting a boom in spending. The days of borrowing-led growth are gone for years yet."

To see a marked and more sustained pickup in retail spending would require a turnaround in the housing market, Ms Zollner said.

Museum to downsize 'Rolls-Royce upgrade'

9th May 2011

Source: The Southland Times

The "Rolls-Royce" plans for the Southland Museum and Art Gallery upgrade will be scaled back in an effort to cut costs.

Museum trust board chairman Darren Ludlow said that, when the original $24.6 million upgrade was planned, it was a realistic figure but, since last year's snow and the collapse of Stadium Southland and the Christchurch earthquakes, funding would be harder to secure.

"It's just bad timing for us and not practical for us to try to pursue a project of that scale. We always knew that $24.6 million was a lot of money and I guess it was our hero option, to use the common vernacular. Instead of looking for that Rolls-Royce we are now looking for something more practical and seeing what we can dream up," Mr Ludlow said.

"Where can we cut costs? What are the priorities and what can wait? What can we live without at the moment that can perhaps be added at a later stage?"

Project staging was common, he said, and the trust board would aim for a new figure of $18m to $19m for the project.

The reasons for the redevelopment had not changed, he said, and the trust board was committed to seeing the project completed. The final, trimmed-back design might not be as "pretty" as the proposed inverted pyramid, he said.

The existing pyramid needed a new roof and more storage space was required.

It was revealed last year that, if there was a fire, the liquefied plastic holding together the polystyrene roof panels of the pyramid would produce a toxic smoke and be virtually impossible to put out.

About 90 per cent of the museum's artefacts are stored in the pyramid.

They could start the whole thing from scratch, Mr Ludlow said, but Southlanders said they identified with the pyramid and the trust board wanted to protect that.

The Community Trust of Southland had pledged $5m toward the original plans, but Mr Ludlow expected that amount to be reduced with the overall cost decreasing. The trust board had always known that would happen, he said.

The Invercargill City Council had signalled a contribution of $3.6m in its 2011-12 draft annual plan, he said, and that would be discussed on Tuesday at a meeting to hear submissions on the plan.

An application for funding from central government and the Invercargill Licensing Trust would be made, as well as fundraising and corporate funding applications.

Mr Ludlow predicted it could take 12 months to review the concept design and hoped by then groups would have a better idea of how much they could contribute.

The new design would still encroach on to four tennis courts at the park, and Mr Ludlow said the trust board would help Tennis Southland relocate them and the organisation supported the museum's plans.

Trust asks council to back environmentally friendly plan

6th May 2011

Source: The Southland Times

The Stadium Southland trust has approached Environment Southland for financial support as it reveals a $1.46-million plan to make the new stadium environmentally friendly.

Southland Indoor Leisure Centre Charitable Trust chairman Acton Smith attended a regional council meeting on Wednesday and outlined its plan to add further features to the new stadium to make it sustainable and also able to function during a civil emergency.

The community has been given two options for the rebuild of the stadium after its collapse under heavy snow in September – the "zero" option, costing funders between $1.5m and $2.7m, and the hero option, which would cost funders between $6m and $8m.

Mr Smith told councillors the plan included installing such things as double glazing, solar hot water, a stand-alone water supply and a low-emissions boiler system that would cost an extra $1.46m on top of the "hero" option.

He acknowledged the council did not usually get involved in community projects, but said the function of the stadium had changed.

When the original stadium was built 12 years ago it was about sport and getting children out of the cold, but it developed into a regional facility used for everything from craft shows to funerals, he said.

Councillors agreed to attend a trust workshop on May 12 and said they would consider a submission to the Long Term Council Community Plan.

Subdivision OKed despite neighbours' concerns

4th May 2011

Source: The Southland Times

The Invercargill City Council has quietly approved a 21-section Otatara subdivision, despite neighbours raising concerns.

Acting under delegated authority, environmental and planning services director Pamela Gare granted the consent on April 18 without it being publicly notified or a hearing being held.

The decision states there were three reasons it was not publicly notified: the effects on the area were no more than minor, no parties who were considered to be adversely affected had been identified and there were no special circumstances.

However, several neighbours of the France Rd subdivision had written to the council expressing concerns.

Lester Laughton said he wrote because while he thought the subdivision was good, he was concerned that France Rd should be sealed.

About nine residences are already accessed from the road and use would probably more than triple if the 21 subdivisions went ahead.

"If it goes ahead it has to be resealed. The road barely stands up to the traffic we have at the moment."

While the resource consent specified a means for imposing a levy on the second stage of the development, it did not seem to be a given that the road would be sealed.

He was also concerned at the removal of trees that protected nearby bush on his land.

The council appeared to have glossed over his concerns.

"I think the city council has not lived up to their standards," he said.

Doug Dold said he had written to the council asking to be heard on the proposal.

"We just felt a little bit side-tracked by the whole process."

Neighbour Brett Lucas had also written to the council about the road sealing and trees being removed.

"We made it known we would like to be heard. They made a call to disregard that."

While he was happy with the subdivision, he was concerned about the many subdivisions proposed in Otatara and the pressure that would put on infrastructure.

One neighbour said he was concerned the subdivision was rushed to beat a proposed change to the district plan, which could mean new home subdivision sizes at Otatara would increase from a minimum 1 hectare to 2 hectares if they could not be connected to the council's existing reticulated sewerage system.

Public submissions have been received on the plan and cross-submissions have now been called for.

Landowners Alan and Kaye Sherman said they did not intend to subdivide the block but lodged the application to give future owners the option.

The couple have been given eight years to progress with the subdivision. Lots would range in size from 1.01ha to 2.92ha.

It has also been granted an exemption from the 200-square-metre house-size restriction for houses on land containing "outstanding natural features and landscapes" in Otatara, and a 300-square-metre limit imposed.

Otatara Community Group chairman Frank Dean said he was concerned too many developments would not only impact on infrastructure demands, but would also negatively affect the lifestyle choice of Otatara residents.

Several subdivisions have been proposed in Otatara during the past few years, including a 77-section development between Korimako Ave and Otatara Rd proposed by Mr Sherman's brother Errol Sherman, while work began early last year on a 16-property subdivision on Marama Ave South.

NZ Property Report – April 2011

2nd May 2011

The April 2011 NZ Property Report published by Realestate.co.nz provides an insight into the state of the New Zealand property market as measured by the supply side of the property market over the month of April. The key measures of the market analysed in the report are the number of new listings, the asking price expectation for those new listings and the level of inventory of unsold houses on the market at this time. The report is compiled from data captured by the website and represents close to 95% of all property movements in the NZ market as managed by licensed real estate agents.

A full print version of the NZ Property Report – April 2011 is published below and is available for download (1.3MB) and distribution.

Summary of the market – April 2011

The NZ Property market certainly is showing signs of renewed activity, far from the levels of the mid 2000’s the current activity is measured and very much centered on the Auckland region. Whilst in overall terms the level of inventory weighs heavy on all regions the levels of sales reported in March show that buyers are certainly back in the market and beginning to clear some of this high inventory.

By the nature of the way inventory is reported (actual stock divided by 3 month average sales) the very low levels of sales in January and February is in some way holding back the reporting of this trend of greater activity. It is likely that with the reporting of the April sales that the next inventory report for May will show a significant fall in inventory levels of unsold houses.

The market amongst sellers is certainly not showing any impact of inventory levels, as a function of such seller confidence the national truncated mean asking price has risen in April to a new record high of recorded stats going back to the start of 2007.

As a further lead indicator to the market, the levels of new listings continue to track well below prior year. In fact we have seen 10 consecutive months of falls in listings numbers year-on-year.

Asking Price

The truncated mean asking price for all new listings in April rose to establish a new peak at $429,249 up from $421,940 in March. On a seasonally adjusted basis the asking price rose 2% in the month indicating a continued confidence amongst sellers.

The trend of the past 2 years shows continued strength in asking price expectation.

New Listings

The level of new listings coming onto the market in April fell to 10,181 in April. This represented a 17% year on year decline and an 8% seasonally adjusted decline from March.

On a 12 month moving basis the number of new listings in the past year totals 129,678 as compared 142,635 for the same period a year ago – a fall of 9%.

Inventory

The level of unsold houses on the market at the end of April continued to fall from prior months. April reported 50,398 down from 51,980 in March and 52,672 in February.

This steady decline in the physical number of new listings is not being reflected in the representation of inventory as measured in rate of sales as the recent 3 month period (Jan – March 2011) contained two of the lowest sales months recorded.

Regional Summary – Asking price expectations

The national asking price rising to a new peak at $429,249 was mirrored across the country as can be seen from the chart with a significant growth in all but 2 regions. The highest rising region was Otago which with a 12.5% increase to $298,817 has itself hit a new peak of asking price.

The Auckland market at $555,572 whilst not quite hitting the peak, continues to track at all time highs close to the peak set in December 2010 at $564,853. The April asking price was up 5% on April last year and showed a 1% seasonally adjusted rise from March.

Those regions that showed falls, Bay of Plenty with a 3% fall and the Central North Island with a 7% fall, both had seen strong asking prices through the latter part of 2010 and into early 2011.

Regional Summary – Listings

The picture for new listings across the country continues to show that there is weakness in bringing new properties to the market. There were 13 of the 19 regions that reported new listing down on prior year with 6 reporting falls of over 20%; both Coromandel and Southland over 40%. The former region has been suffering under a significant weight of inventory of unsold houses for many months.

In the main metro areas listings are low with the impact of the earthquake restricting new listings in Canterbury (down 32%), Wellington was weak with just 741 new listings, down 29% and Auckland down 17% with 3,325 new listings.

Two regions did see very strong growth in listings; of particular note was the Queenstown Lakes area which saw a raft of new listings including a large collection of apartments.

Regional Summary – Inventory

The regional map of inventory of unsold houses shows a very consistent picture of high inventory in all but the one region that of Auckland. This scale of inventory at levels well above long term average is very much a function of very low sales at the start of the year which despite the actual fall in properties on the market is making the evaluation of the market point to very high inventory based on rate of sale.

The Auckland market is very much on the boundary of moving from a buyer’s market to one favouring sellers. The Auckland market has seen a reduction of properties on the market from around 14,100 just before Christmas to currently 12,376.

Around the rest of the country the inventory levels reached new peaks in the Hawkes Bay, Manawatu/Wanganui, Northland, Otago and Southland.

Lifestyle

The level of new listings of lifestyle property coming onto the market in April fell just 1% on a seasonally adjusted basis from March. A total of 1,032 new properties were listed with a truncated mean asking price of $571,611. The asking price was up 5% as compared to the recent 3 month average, but up just 1% as compared to prior year.

On a rolling 12 month average basis new listings are down 4.5% with 11,764 listed in the past 12 months compared to 12,314 last year.

Apartments

Listings of apartments showed a 9% rise on a seasonally adjusted basis as compared to March with 452 new apartments coming onto the market. The truncated mean asking price for these new listings was $399,927 which was up 8.5% on the recent 3 month average, but down 4.1% as compared to April 2010.

In the Auckland apartment market which represents over 60% of the market there were 285 new listings with an asking price of $350,306. The new listings shows a rise of 24% on a seasonally adjusted basis, although when judged on a year-on-year basis they are down 22%.

Property Price Index

Comparing the sale price of properties across the country to the asking price expectation is not a perfect comparison; however the trends tend to align. The benefit is that the data for asking price is of the market today, whilst the selling price is reflective of the market active between 4 and 6 weeks ago. The latest comparison is highlighted below:

Realestate.co.nz data is compiled from asking prices of new residential listings as they come onto the market via subscribers to the realestate.co.nz website. The Realestate.co.nz website currently has over 95% of all licensed real estate offices subscribing and providing all of their listings onto the website. The asking price is presented as a truncated mean price at a 10% interval.

REINZ: data is compiled from reported unconditional residential sales from all members of the Real Estate Institute of New Zealand representing all licensed real estate offices. The sale price is published as a stratified median house price and is developed in association with the Reserve Bank of NZ.

House prices tipped to lift

28th April 2011

House prices are set to rise 4 per cent this year, with the market led by Auckland, but borrowers should expect floating mortgage rates to rise sharply over the next three years, according to Westpac Bank forecasts.

The drop in mortgage interest rates last month was adding "zing" to the housing market, Westpac says, but floating rates would start rising early next year and may rise 200 basis points or more by 2014, as the Reserve Bank eventually pushes up the official cash rate to 6 per cent.

"There could mean substantially higher business and [floating] retail interest rates in three years from now," said Westpac chief economist Dominick Stephens.

The markets were not pricing in rising interest rates in 2013 and 2014, which were part of Westpac's view, he said. "The official cash rate hikes won't start until there are cranes on the skyline in Christchurch. But once interest rates do start rising, they could rise rapidly."

With the expected building boom in Christchurch, the Reserve Bank would keep pushing up rates through 2012 and 2013 to keep inflation in check.

Rising interest rates would crimp activity elsewhere, but the economy was expected to grow 4.6 per cent in 2012, according to Westpac's forecasts.

Despite an expected 4 per cent lift in house prices in the coming year, the long-run outlook for prices was "fairly flat", Mr Stephens said, as mortgage rates rates rose next year.

House prices are still relatively high compared with incomes, but fell about 20 per cent after adjusting for inflation between the peak in 2007 and the end of 2010. That adjustment was needed after house prices became "a bit over-valued" in the past decade, he said.

"The end of declining house prices is a positive sign for retailers, though nobody is talking of a return to the helter-skelter [spending] of the last decade."

Retailing was miserable last year and there should be a lift this year from that subdued level. Sales had risen about 1 per cent a month in the past few months, but that was unlikely to be sustained.

Overall household spending was expected to rise about 3.8 per cent, after inflation, for the year to June 2012, including both shop sales and services. "That's a decent increase and the strongest since 2007," Mr Stephens said.

House prices have been flat for some time, hit by tax changes and weak net migration last year. As mortgage rates fell and migration improved the market steadied, and sales volumes had improved from extremely low levels.

"Prices are rising now in Auckland, [are] stable in many parts and falling in others," Mr Stephens said, but the big cut in mortgage rates in March would add zing to the market.

"The reduction in rates makes life easier for first-home buyers, makes property more attractive for investors and makes upgrading the house more affordable."

In the past decade, Auckland, Wellington and Christchurch have led the rest of the property market.

Auckland's recent lift was a "leading signal" for the rest of the market.

However, Wellington faces government retrenching and public servants receiving low or no pay rises, leading to "under-performance" in the city's property market.

The Christchurch market's future was also highly uncertain since the February quake.

On balance, house prices were expected to fall there. "Prices will probably be down a bit in both Wellington and Christchurch," Mr Stephens said.

The regional housing market would be boosted eventually by "very strong returns for farmers" from high commodity prices.

Key Forecasts

In its latest quarterly economic overview, Westpac predicts overall economic growth of just 1.3 per cent this year after the $4 billion disruption to the economy caused by the quake in Christchurch.

Economic growth:

1.3 per cent this year

4.6 per cent in 2012

House prices: up 4 per cent this year

Reserve Bank to start lifting official cash rate early in 2012

Cash rate to rise from 2.5 per cent now to 6 per cent in March 2014

Bargain hunters on the decline

26th April 2011

Source: Stuff Business Day

Call it Murphy's Law but a real estate website says the number of desperate sellers is increasing while the number of people searching for "must sell" bargains is decreasing.

Realestate.co.nz chief executive Alistair Helm has monitored how many of his approximately 110,000 listings reflect a degree of seller urgency over the last two years.

He says in January 2009 the phrase "must sell" was attached to 3269 listings, but fell six months later to 2527 only to rise again to stand even higher at 3444 in today's market.

Properties with the key word "motivated" attached are also up on their January 2009 level, from 1377 to 1477.

"Urgent" sellers currently number at 386 and "desperate" sellers are steady at the July 2009 level of 67 listings.

But Helm says online property searchers using the four key terms reached its highest level - almost two percent of all searches - in mid-2009 and has declined steadily ever since.

House hunters quoting motivated, must sell, desperate or urgent in their online research now only make up 0.5 percent of all searches.

"The high level of searches for those keywords indicates that property is distressed and vulnerable from vendors or owners who need to get out and liquidate, either because the bank's about to foreclose or because they've lost their jobs," says Helm.

"Having the data looking back all that time we can look at what happened around the global financial crisis and the extent to which people were looking for the opportunity to grab what might've been perceived as bargains back in 2009."

He says the current lower level of searching for desperate vendors was in fact "a steady norm" for the market.

Head of Trademe Property Brendan Skipper says none of those key words featured in its top ten search terms, although "mortgagee" came in at sixth place.

The top three were "garage", "pool" and "home and income". Skipper says Trademe property has about 1.3m unique browsers per month.

RealEstate.co.nz claims to display 93 percent of all agency advertised listings in New Zealand and says it has about 360,000 unique browsers per month.

Stadium Southland trust unveils two options

20th April 2011

Source: The Southland Times

The Stadium Southland trust has unveiled two options for the stadium rebuild and it wants the community to have its say on which one should go ahead.

The Southland Indoor Leisure Centre Charitable Trust has left no doubt which of the options it wants to pursue, with chairman Acton Smith labelling the cheaper choice the "Zero" option, and the $8 million planthe "Hero".

Few Southlanders will need reminding that Stadium Southland was virtually destroyed in a catastrophic roof collapse during last September's Big Snow.

The last of the pilings were to be finished today as work continues towards a March completion date.

Just what the new stadium will look like could be the source of some debate.

"What we've tried to do very clearly from the outset was take the community along from the outset and ask the community what they wanted," Mr Smith said.

The Zero option would have the most dramatic changes in the court area, with the roof raised from 14m to 18m and room for additional seating up to 4000 to ensure the stadium could host international netball tests.

The cheaper option would require $2.75m of additional funding above the final payout from the stadium's insurer, but it would leave the current foyer area largely unchanged structurally.

While the roof above the main court and community courts would be built to current earthquake and snowloading standards, the area above the entrance would not be.

The Hero option would cost an additional $8m and would include a completely new roof over the entire structure, encompassing a three-level entrance with a start-of-the-art appearance.

"The trustees could live with either option, but our recommendation is for the Hero option simply because we think there is a structural problem left in the (old building).

"Murphy's law suggests that we would get another thumping snowstorm and it falls down," Mr Smith said.

The Invercargill City Council's preference was for the building to be reinstated to current building code requirements. The insurer also favoured the more expensive option, Mr Smith said.

Stadium trustees believe they will be able to put about $1.25m of savings into the new stadium with the money coming from areas including its business interruption insurance. That would leave the trust approaching community funders for either $1.5m for the Zero option, or $6.7m for the Hero.

The stadium had also put in a funding application with the Lotteries Commission for $1.5m.

Lotto provided a $1m grant towards the original stadium.

An information pack had been put in front of community funders and Mr Smith is in the process of meeting the various bodies to discuss the two options.

He met the city council yesterday, will see the Community Trust of Southland next week and Environment Southland early next month, with the Southland District Council and Invercargill Licensing Trust to follow.

In the meantime, the stadium trustees were hoping to get feedback from the public about which choice they believed should be made.

"If the community want us to do the hero option, then we will move mountains for them," Mr Smith said.

Trustee Denis Woods said widespread consultation of stadium stakeholders had revealed higher expectations from groups including the musical theatre company.

Most would be better catered for in the new stadium, but tennis would come out worse off, with three of the five community courts being converted to wooden surfaces, partly to allow a mobile southern stand to be moved around.

Tennis officials had been party to the discussions and understood the issues, Mr Woods said.

STADIUM OPTIONS:

Making sense of the dollars

Hero option

Total price $28,721,200 Insurer contribution $20,627,000 Potential stadium contribution $1.25 million Potential funders contribution $6.7m

Zero option

Total price $22,655,900 Insurer contribution $19,906,000 Potential stadium contribution $1.25m Potential funders' contribution $1.5m

Both choices come with optional add ons for upgrades, wooden surfaces for courts 6 and 7, and more comfortable seats. Price tag: $1,434,100

South left shivering after early snow

19th April 2011

Source: The Southland Times

Rural Southlanders who awoke to snow yesterday morning should not take the scene as a sign of things to come this winter.

MetService forecaster Ian Miller said snow fell to about 420m above sea level yesterday after a "very cold southerly" off the Southern Ocean.

In Te Anau, the snow was about 5cm deep in some places, but it was not unusual for this time of year, he said. Snow was to be expected in the south in late-April and early May but "I wouldn't read too much into it", Mr Miller said.

"While it has come quite low the amounts have been quite small – I wouldn't say it is unusual, but certainly wintry," he said.

The weather for the remainder of the week was expected to be variable across Southland, but in Invercargill maximum temperatures would range from 14degC to 17degC from today to Friday, while in Te Anau it would range from a maximum of 14degC to about 16degC from today to Friday, Mr Miller said.

He suggested trampers heading into the alpine areas of Fiordland this weekend keep an eye on the forecast because heavy rain was expected and that could cause streams and rivers to rise quickly, he said.

Wakatipu residents were also scrambling for their woollies yesterday morning after awakening to an unseasonally early blanket of snow coating the surrounding mountains.

A cold southerly blast took hold overnight dumping 6cm on Coronet Peak and 10cm on the Remarkables across the valley.

Recessionary stress still felt in number of mortgagee properties for sale

12th April 2011

Source: Unconditional blog

Whilst there maybe some signs of the recovery that most people have been longing for, one of the well known “lag” indicators – mortgagee property repossessions continues to make its presence felt in the NZ property market.

At this time there are around 280 properties on the market in NZ  (covering both residential and lifestyle properties) identified as being in foreclosure where the lender is forcing a sale as a result of the borrower being in arrears on the repayment of the loan or the borrower has signaled to the lender their inability to continue to pay and is therefore looking to exit the property.

There has not been any recent statistics released as to the scale of mortgagee sales since late last year, so in an attempt to shed light onto this sector of the property market we have examined key data from the website of realestate.co.nz.

Reviewing the current state of the market, the absolute scale of mortgagee properties is well below the peak of 2008 and 2009 when close on 400 properties were being marketed in this manner as shown from the chart below.

In absolute terms 280 properties is a significant number, however when put into context it represents less than one half of one percent of all the properties on the market in NZ for sale today – put another way it is only 1 in every 200 properties is a mortgagee sale. Even at the height of the recession the total only ever reached 0.75% of all listings.

This figure is far lower than the close to 10% of US properties that were in foreclosure in the peak recession period of 2008/9 – a situation that is yet to be resolved in many US states where the continuing levels of mortgagee listings and sales continues to drive down the sale prices.

Examining the past 3 years it would be fair to say that the trend for mortgagee listings is on a slow decline. It will likely take a considerable period for all the effect of the Global Financial Crisis and its impact on the NZ property market to work its way out of the system as far as mortgagee listings and for the level to return to the rate of around 100 at anyone time.

Another key indicator of the mortgagee sector of the property market is the use of the keyword search terms on realestate.co.nz as a means to locate mortgagee property. Over the past 3 years we have tracked this each week and the latest chart below shows the recent year.

Clearly the  peak of activity of keyword searching for terms such as mortgagee sale / mortgagee auction / mortgagee properties was back in 2008 and into early 2009. The recent 12 to 15 months has seen this fall away to a fairly steady level. That level is still resulting in these terms being in the top 5 terms searched on the site.

Now's the time to fix mortgages: Tower

12th April 2011

Source: Stuff Business Day

It is still a good time to buy a house, but mortgage holders should now look to fix their interest rates long-term to avoid "severe rate rises" brought about by inflation, Tower Investment CEO Sam Stubbs says.

Speaking in Auckland today, Stubbs said housing affordability is at a 7-year low and Tower's view is that will continue, especially in Auckland.

But inflation is the "100-pound gorilla in the room" that will impact the investment markets in the next 12 months, he said, and will rise sooner than expected.

Keeping interest rates low can cause inflation to rise which would work against the role of our Reserve Bank to meet its mandate of keeping inflation to between 1 and 3 per cent.

It's currently around 4 per cent following last year's GST rise but the Reserve Bank is forecasting the rate rising to 5.4 per cent in the June quarter before starting to fall back to 2 per cent by year's end.

Stubbs says central banks and governments have been "effectively working in collusion to keep interest rates lower than we normally would for longer than we normally would" because what really matters to them coming out of the global financial crisis is growth and employment.

"That is a legitimate strategy but the longer it goes on, the riskier the strategy becomes in terms of inflation coming out at the other end.

"It means that you'd likely to see interest rates go up sooner than later all around the world. You just saw that in the European central banks last week."

Mortgage holders should now take fixed longer-term rate mortgages, he says, because although floating rates look more attractive currently, "ultimately if interest rates go up, the severity of these rate rises and the speed by which they could come on would potentially make five-year-plus fixed mortgage look attractive right now".

On the other hand, investors and superannuitants should not keep long-term fixed-interest investments.

"We think you should be investing out in something like zero to 2 years because as attractive as [fixed] long-term interest rates may seem to you now, they'd look very unattractive when interest rates go up."

Stubbs says over the long-term there is only two ways for governments to deal with high debt - one is to default of keep inflation high. As a rule, they'd only default when inflation ceases to be an option.

"We think the majority of Western nations will choose to inflate their way to solve their debt problems and that's going to be bad news for fixed-interest investors and very good news for people who are on houses on mortgages.

Invercargill CBD set for store shakeup

11th April 2011

Source: The Southland Times

Invercargill's city centre looks set for a shake up with three Esk St businesses closing their doors and at least one chain store looking to move in.

Fashion store Supre is planning to close next week, Paper Plus is moving into the H & J Smith store and Discovery World will close later this month.

Despite having spent some time closed in the last two months, Morrisons Deli is still open but operating reduced hours.

Speaking from Sydney, Supre international sales manager Adrian Powell said the shop opened six years ago.

"We've obviously been there for a while and in that time we haven't been able to make the store meet its expected budget ... the lease has come to an end and we've chosen not to renew it."

It is understood six staff would be affected by Monday's closure.

Australian-based clothing store Cotton On is rumoured to have taken over the lease of the Esk St business, but recruitment and selection manager Lauralee Schroeder could not confirm that yesterday.

However, the company which has the Cotton On and Factory clothing brands was definitely planning a move into Invercargill in the near future, she said.

"Cotton On has been in New Zealand at least four years now. This year we're looking at extending the brand to more regional locations."

H & J Smith chief executive John Green said the company planned to consolidate the Paper Plus franchise with Take Note at the H & J Smith store in about two months.

H & J Smith bought the Paper Plus franchise last year. Another tenant was being sought for the Paper Plus site on Esk St.

"We've got somebody very keen to pick up the property. It's a multi-store operator with operations throughout New Zealand who's keen to move into Invercargill," he said.

Morrisons Deli, which opened shortly before Christmas has reduced its hours from 12 hours days, seven days a week, to 10am to 4pm on Tuesdays to Saturdays.Owner Keir Morrison said the shop had closed its doors recently for "a little bit of a re-jig" and was now open less hours. Business was going "not bad at all," he said.

Educational products shop The Discovery Shop is also closing its doors after six years this month.

Home buyers look to nab a bargain

11th April 2011

Source: The Southland Times

Real estate agents in Southland say more people are looking to nab a bargain, as the region holds on to its title as the cheapest place to buy a house.

Massey University's latest Home Affordability Report showed falling house prices and interest rates resulted in a 6 per cent improvement in affordability, compared to the same time last year.

The report looked at the three-month period up to the end of February.

Professor Bob Hargreaves, director of the university's real estate analysis unit, said average monthly mortgage interest rates decreased from 6.63 per cent to 6.59 per cent, while the average weekly wage increased from $972.69 to $991.05, the report says.

Southland homes were the cheapest, with the province recording an index of 65.6 per cent of the national average. Central Otago houses topped the other end of the scale, recording an index of 133.1 per cent.

Professionals-MacPherson Realty director Brian MacPherson said yesterday there had been "emerging signs" of greater demand in Southland, particularly from first home buyers and people looking to invest in rental properties.

The province was traditionally among the cheapest places to live throughout the country, he said.

"It's been that way for 20 years."

Hoamz principal Stephen Hebbend said there was always a noticeable increase in the number of house-hunters when conditions – such as low interest rates – were right.

Reduced interest rates and indications renting would soon be more expensive meant more people were looking to buy, he said.

Banks were also contributing to the increase, according to another realtor.

Southern Wide Real Estate director Tom Dowling said less stringent lending criteria had contributed to the slight increase, making it easier for people to get into their own homes.

"It's a good time to buy, let's put it that way."

Resort property ray of hope

11th April 2011

Source: Scene.co.nz

A new report offers hope for the Queenstown economy despite the gloomy state of the international financial environment. 

Colliers International argues the resort is well-placed for the future because it has continued growing in the face of the global economic crisis. 

The conclusion comes in the property consultancy’s “Queenstown Market Overview 2010-2011” being launched tomorrow. 

“The Queenstown area continues to grow in the face of a difficult economic environment, which puts the market in a strong position to grow as domestic and international economies recover,” the report states. 

“This year we see some very positive indicators towards a faster rate of recovery for the Queenstown economy and property market.” 

Examples at Frankton Flats are the $50 million stage one of the Five Mile shopping centre, $24m of airport work over the next two years, the final stage of the Remarkables Park retail development and rezoned commercial and industrial land.

The report also cites that Queenstown Lakes District Council is budgeting to spend about $42m on infrastructure, building consents have risen $30m last year, there’s upward pressure on CBD ground-floor rentals and also continued high growth in the resort’s permanent and visitor populations. 

“All of that stuff leads to economic growth even though it’s been a bloody tough time”, local Colliers sales broker Mark Simpson says. 

“We’ve been smacked over the knuckles on a couple of big development projects but that doesn’t reflect the nature of our economy as a whole.” 

Simpson’s colleague John Scobie also says low land, funding and construction costs – assuming builders are available – are encouraging house construction. 

But the report also touches on the low volume of residential property sales. 

Sales last year were about 50 per cent of those recorded in the peak years of 2002 and 2003. 

Some apartments were now selling at 50 per cent of prices achieved a few years ago. 

The report predicts managed apartment returns will fall further. 

But there should be “a small increase” in total sales levels, it says, with investors re-entering the market due to 
lower prices, lower funding costs and clearer Government policies. 

“Encouraging signs are starting to emerge out of Auckland with investor confidence returning for good quality investment property, which we anticipate will flow through to our market this year.” 

In the accommodation sector, the report notes an average five per cent increase in occupancy and yields. 

But for the first time in years the budget sector shows a small decline, blamed on new supply, especially the 390-bed Nomads hostel. 

With key events throughout the year, including the Rugby World Cup, “the next 12 months will show a solid improvement across the board”.

Positive signs for Queenstown 

- Renewed large-scale commercial building activity including Five Mile, Queenstown Airport and Remarkables Park 

- Council’s budgeted infrastructure spend of $42m for 2010-11 

- Building consents on the up - $98m worth for 2010, $68m in 2009 

- Prime ground-floor retail vacancies in the CBD are nil 

- Continued growth in permanent and visitor populations

Quake boosts Invercargill's population

8th April 2011

Source: The Southland Times

The impact of the Christchurch earthquake on the Invercargill Licensing Trust's bottom line could be offset as quake-led migration boosts the city's population.

That was the revelation presented by trust member Sean Bellew at a board meeting yesterday.

He said he believed Invercargill's population had swelled by up to 6000 people from Christchurch in the wake of the February earthquake and continuing shaking since September. He also believed their move south was permanent.

The news came as a surprise to the board, as general manager Greg Mulvey projected no growth in profit for the coming year.

He said the trust's operating profit for January of $345,600 was comparable with the figure posted in January 2010 and in line with a trend that began in November.

July to October had been lean months and represented the lag in time it took for the ripples from the recession to reach the south.

The trust's forecast profit after tax was $5.2 million, down on 2010's result of $5.5m and the continuing effects of the recession meant the trust was unlikely to perform at the financial level it had a few years ago, Mr Mulvey said.

However, "imponderables" such as the impact on the wider economy from the earthquake could significantly change the final result, with an expected drop in business for the trust's distribution operations, he said.

However, Mr Bellew said the trust should brace for the boost in the city's population – driven in part by quake-weary Southlanders returning home.

"There's a lot of Southland blood, we've had 18 families looking for houses in the week."

He believed Invercargill had experienced a 5 to 10 per cent jump in population, he said.

Board member Neville Cook suggested the trust could bring some of its maintenance projects forward to offer newcomers employment.

NZ Property Report

4th April 2011

NZ Property Report – March 2011

The March 2011 NZ Property Report published by Realestate.co.nz provides an insight into the state of the New Zealand property market as measured by the supply side of the property market over the month of February. The key measures of the market analysed in the report are the number of new listings, the asking price expectation for those new listings and the level of inventory of unsold houses on the market at this time. The report is compiled from data captured by the website and represents close to 95% of all property movements in the NZ market as managed by licensed real estate agents.

A full print version of the NZ Property Report – March 2011 is published below and is available for download (1.3MB) and distribution.

Summary of the market – March 2011

Any analysis of the NZ property market for March would be incomplete without reference to the impact of the Christchurch earthquake. The Canterbury region is the second biggest property region representing around 15% of the market. In March the level of new listings in the region fell 36% compared to a year ago, whilst the country excluding Canterbury fell only 11%. Based on a representation of the national total it is likely that around 480 less properties were listed in the Canterbury region in the month than would have been anticipated at this time of year.

Nationally the rise in asking price was the most significant single piece of data from the overall report. The asking price nationally is now hovering close to all time highs and is particularly strong in the major cities. Auckland at $551,720 is up 1% as compared to prior month and prior year; with Wellington at $453,021 up 2.5% on last year and 1% from last month. Canterbury at this time shows no significant change in price in line with recent 3 month average.

The level of inventory of unsold homes on the market continues to grow, recording its 3rd consecutive month of rise to break through the psychological level of one year, reaching 53 weeks. Given this high level of inventory, matched to slow levels of new listings it is becoming clear that the high asking price is more likely to be the result of keen interest focused purely on new listings; leaving older listings somewhat “languishing on the shelf” at what could be unrealistic prices or presentation that needs refreshing to attract buyers.

Asking Price

The truncated mean asking price for all new listings in March rose again to $421,940 up from $420,265 in February. On a seasonally adjusted basis the asking price rose 1% indicating a continued confidence amongst sellers.

The trend of the past 2 years shows continued strength in asking price expectation.

New Listings

The level of new listings whilst rising in March was still 15% down compared to March last year. The current 12 month moving average total shows 131,722 new listings down 6% as compared to the prior 12 month period. The market continues to remain quiet in terms of listings and sales as has been seen in the REINZ sales reports for the last few months with both January and February reporting record lows. February sales totaled 4,502.

Inventory

The level of unsold houses on the market at the end of March actually fell from 52,672 in February to 51,980 in March. This represented the equivalent of 53.1 weeks of equivalent sales, as assessed on a seasonally adjusted basis.

The key driver of this rising inventory is more a reflection of somewhat lackluster sales than excessive new listings. The absolute level though at over a year of equivalent sales will continue to impact the market and maintain the “buyers-market” perspective.

Regional Summary – Asking price expectations

With a strong national asking price growth of 1.9% as compared to the recent 3 month average, the expectation would be to see a consistent trend across the country. The fact is that 11 regions of the 19 did post rises in asking price, however there were some significant falls. The majority of the falls were in provincial regions.

Both Wellington and Auckland saw asking price rise close to peak, with Wellington particularly strong with a 4.1% increase to come within $2,500 of the peak asking price indicating confidence in vendor expectations.

By contrast the situation in Northland and Marlborough, which both showed significant falls in asking prices taking those regions to record low asking price levels.

Regional Summary – Listings

Recent months has seen a consistent decline in listing numbers when judged on a year-on-year basis, this month of March shows some change.

Four regions posted an increase in new listings with Waikato the standout showing a 9% increase to 994 new listings, the highest level in over 3 years.

As previously noted the Canterbury region saw a 36% fall. Over the past 7 months since September a total of 8,558 new listings have been brought to the market across the region. This is down 30% from the 12,232 recorded in the same period in the prior year.

Wellington regions showed a strong performance with a 6% increase. This region has been active with increases consistently over recent months taking the 12 month average up 6% on the prior year.

Regional Summary – Inventory

A consistent picture of high inventory of unsold house on the market pervades the region map. There are pockets where levels are moderate, particularly in Bay of Plenty and Central North Island, however the remainder sit well above long term average.

Of the 19 regions a full 8 of them are now sitting at record high levels of inventory – Central Otago, Hawkes Bay, Manawatu / Wanganui, Nelson, Northland, Otago, Taranaki and the Wiakato.

In total provincial NZ which comprises all of the regions excluding the main centres of Auckland, Wellington and Canterbury reached a record peak of inventory of 76.7 weeks which compares with 36.6 weeks in the metropolitan areas.

These record highs as noted earlier are as much a factor of slows sales, are clearly offering a broad range of options to buyers active in the market.

Lifestyle

Lifestyle property performed fairly strongly in respect of new listings with a total of 1,096 coming onto the market in March up 17% from February and in line with March last year. The asking price expectation fell by 2% in the month from $552,591 to $542,975 which was down 8% as compared to March 2010.

Despite the overall levels in Canterbury lifestyle listings remained steady with 130 new listings as compared to 144 in March 2010, the reality would be that almost all of the lifestyle properties in the region would be well outside of the immediate vicinity of Christchurch city.

Apartments

Apartment listings grew in March but at 516 failed to reach the level of 613 seen a year ago. Based on a 12 month moving average volumes of apartment listings continue to fall with 6,216 in the most recent year down 9%. In Auckland the trend is down with 5% decline on a 12 month moving average basis. March saw 332 new apartment listings in Auckland down 8% from a year earlier.

The asking price expectation rose 4% in March from $365,150 to $378,494. This level though is down 3% as compared to a year ago and down 4% as compared to the recent 3 month average. Auckland apartment listings reflected a similar trend down 4% year-on-year.

Property Price Index

Comparing the sale price of properties across the country to the asking price expectation is not a perfect comparison; however the trends tend to align. The benefit is that the data for asking price is of the market today, whilst the selling price is reflective of the market active between 4 and 6 weeks ago. The latest comparison is highlighted below:

Realestate.co.nz data is compiled from asking prices of new residential listings as they come onto the market via subscribers to the realestate.co.nz website. The Realestate.co.nz website currently has over 95% of all licensed real estate offices subscribing and providing all of their listings onto the website. The asking price is presented as a truncated mean price at a 10% interval.

REINZ: data is compiled from reported unconditional residential sales from all members of the Real Estate Institute of New Zealand representing all licensed real estate offices. The sale price is published as a stratified median house price and is developed in association with the Reserve Bank of NZ.

Christchurch housing market 'getting on with it'

4th April 2011

Source: Stuff Business Day

The real estate industry is seeing signs of resilience in the Christchurch property market following the devastating February 22 earthquake, although nationwide the inventory of houses for sale topped one year.

In March, the number of new listings in Canterbury was 36 percent lower than a year earlier, while for the rest of the country the decline was 11 percent, according to industry website Realestate.co.nz.

The 1297 new properties that came onto the Canterbury market in March was 10 percent up from the previous month.

Realestate.co.nz chief executive Alistair Helm said that while Canterbury's listings were down an annual 36 percent, the figures showed business and people were already picking themselves up and working to resume some state of normality.

"Property is still being listed, marketed, viewed online, researched, inquired about, negotiated and sold," Mr Helm said.

The truncated mean asking price for Canterbury homes was down 2 percent from the previous month to $357,986, while the inventory of unsold homes rose to 41.2 weeks, up 7 percent from a year earlier and up 16 percent from February.

Nearly 1400 people worked in real estate in the Canterbury region, operating from 120 offices, 87 of which were based in Christchurch, Mr Helm said.

"While there was some damage to a number of real estate offices in the city, many have found temporary offices or consolidated operations in an existing office that hasn't been affected."

Nationally, the 12,247 new listings in March was 8 percent up on the previous month, but still 15 percent down on the number of listings at the same time last year.

With sales remaining low, the national inventory of unsold homes rose to 53 weeks - close to the highest level ever recorded. The average asking price also crept up 2 percent to $421,940, just 1.7 percent below the market peak of October 2007.

While there was traditionally a surge of new listings at this time of year, the latest figures were the lowest March numbers recorded by Realestate.co.nz in three years, Mr Helm said.

Realestate.co.nz's latest NZ Property Report, published today, showed the inventory in Auckland up 1 percent from a month earlier but 2 percent down on a year earlier at 38 weeks, and in Wellington the inventory was 27.9 weeks.

In provincial New Zealand - which excludes Auckland, Wellington, and Canterbury - the inventory level reached a peak of 76.7 weeks, compared with 36.6 weeks in metropolitan areas.

Given the high level of inventory, matched to slow levels of new listings it was becoming clear that the high asking price was more likely to be the result of keen interest focused purely on new listings, the report said.

Older listings were being left somewhat languishing on the shelf at what could be unrealistic prices, or with a presentation that needed refreshing to attract buyers.

Invercargill banks extra World Cup game

1st April 2011

Source: Stuff.co.nz

Invercargill has been given an extra Rugby World Cup fixture and Georgia has been added to the list of teams using Queenstown as a training base following changes to the tournament programme.

Christchurch lost all five of the games which were to be played at AMI Stadium because of last month's earthquake.

The two quarterfinals will now be played at Eden Park, while Nelson, Dunedin and Invercargill will host additional games.

Invercargill was already hosting Scotland v Romania on September 10 and Argentina v Romania on September 17.

Rugby Park will now also be the venue for the Scotland v Romania game on September 14, meaning there will be three games in the space of eight days in the city.

The new waterfront Dunedin Stadium, which was also given the pass mark as a World Cup venue yesterday, will host a fourth game, involving Argentina v Italy.

Hanmer Springs has been added to the list of team bases.

RWC2011 Southland strategic group chairman Neil Boniface said the additional game was exciting for the province.

"There's no extra cost to the funders down here, so that's a key thing. We've got a Saturday-Wednesday-Saturday game so the Taste of Southland Venture Southland showcase was just going to carry on that week anyway."

Mr Boniface suggested Southland had been keen on the Argentina v Scotland game, which has been sent to Wellington.

Scotland and Romania will both spend a total of eight nights in Invercargill, Argentina will be here for three and Georgia four.

Ireland will spend seven nights in Queenstown, while Romania (four), England (five) and Georgia (six) will also spend significant time in the resort.

Having three teams, with more than 50 personnel each and their supporters, in the city over a week would put pressure on Invercargill accommodation, Mr Boniface said.

"I'm a bit concerned that Southlanders get in behind it and offer their homes if people are coming to visit us to watch games and we are a bit tight on accommodation."

He was not concerned about struggling to fill Rugby Park three times in quick succession.

Many of the stand tickets for the two previously confirmed games had been accounted for, although they may be returned later as part of the complicated business agreements which surround the event.

SOUTHERN POOL GAMES

DUNEDIN Sept 10 Argentina v England Sept 18 England v Georgia Sept 24 England v Romania Oct 2 Ireland v Italy

INVERCARGILL Sept 10: Scotland v Romania Sept 14 Scotland v Georgia Sept 17 Argentina v Romania

Relocated World Cup match venues named

30th March 2011

Source: stuff.co.nz

Rugby World Cup matches originally scheduled for Christchurch have been allocated to another three South Island cities in the wake of last month's devastating earthquake.

Nelson, Dunedin and Invercargill will host pool games set down for Christchurch while two other matches have been reallocated to Wellington and Albany.

Organisers confirmed a fortnight ago that two quarterfinals earmarked for Christchurch will instead be played in Auckland on October 8 and 9.

Rugby New Zealand 2011 (RNZ 2011) today announced a raft of changes to the original tournament schedule forced upon it by major infrastructural damage inflicted on Christchurch by the February 22 earthquake which killed an estimated 182 people.

Rugby World Cup Ltd chairman Bernard Lapasset said that all tournament stakeholders had been supportive throughout the rescheduling process.

"Following the difficult decision to transfer the Christchurch matches all involved have worked hard to confirm the new venues as quickly as possible. We are pleased that three of the five matches will remain in the South Island."

RNZ 2011 chief executive Martin Snedden said today's decisions provided certainty for the affected seven teams.

RNZ 2011 also announced that the new fully enclosed Otago Stadium in Dunedin, which is nearing completion, has met the criteria to be confirmed as a World Cup match venue.

"The Otago Stadium operators have provided us with the assurances we need for us to now be confident that the new venue will be ready to deliver on its tournament obligations," Snedden said.

The rescheduled matches will see Argentina play England in Dunedin on September 10, Australia play Italy at Albany on September 11, England play Georgia in Dunedin on September 18, Argentina play Scotland in Wellington on September 25 and Australia play Russia at Nelson on October 1.

Also, as part of the rescheduling, operational reasons have necessitated the transfer of one non-Christchurch match, Scotland against Georgia, from Dunedin to Invercargill on September 14.

"Our desire was always to transfer as many of the Christchurch pool matches as was reasonably possible to other existing South Island venues," Snedden said.

Organisers also said that ticket purchasers for all Christchurch matches and Scotland's game against Georgia match will receive a refund and the opportunity to secure replacement tickets to the rescheduled matches during a priority purchase period.

As well, the rescheduling decisions have also meant a number of changes to team bases.

Queenstown will now host Georgia as well as Ireland, Romania and England while Hanmer Springs in north Canterbury becomes a new team base and will host Australia over four nights.

Construction turnaround looms

29th March 2011

Source: Stuff.co.nz Business Day

BNZ economists are anticipating a "massive" rise in housing construction, as the rebuilding of Christchurch gets under way, and as leaky building problems add to demand.

While forecasting just 15,000 new housing consents nationally this year, they expect 21,000 a year from 2012 to 2014.

Adding in renovation work, they estimate residential construction rising 41 percent next year after a 7.7 percent drop this year and then 22.4 percent in 2013 before a return to normality begins to set in.

"The housing and construction markets have been through a torrid time over the last four years," BNZ head of research Stephen Toplis said today.

"We believe that the worm will soon turn and turn dramatically in the case of residential construction. It's just unfortunate that the key driver of this transition was such a terrible tragedy."

Mr Toplis cautioned that estimates for Christchurch were back-of-the-envelope for now, while there was no guarantee of full replacement, and the timing was extremely uncertain and likely to take a number of years.

Best estimates suggested that as many as 10,000 homes would need to be demolished and that total damage to the housing stock would total around $9 billion.

Even before the earthquake, too few new houses were being built nationally to meet future demand. By itself that would tend to suggest significant upward pressure on rents, property prices and construction activity - in that order.

Before investors were willing to re-enter the housing market they were likely to require positive cash earnings flows, and for that to happen rents would need to rise or property prices fall, Mr Toplis said.

Anecdotal evidence supported a view that rents had started to push higher, while official data on rents from Statistics New Zealand indicated that was not yet happening nationwide.

Assuming roughly 2-1/2 people per household, enough houses were being built to cope with 35,000 more people each year, but annual population growth of 1.2 percent for the past decade was adding around 52,000 a year. As a start, that left a shortfall of 7000 houses a year.

On top of that, it had been estimated the cost of dealing with the leaky building debacle could be $10b to $15b.

There was a risk that if demand did pick up, the supply response would be so constrained that the result would be house price inflation, but BNZ's central scenario was for an appropriate supply.

Invercargill looks set to host Scotland match

24th March 2011

Source: ITV.com

Rugby Park in Invercargill looks set to host Scotland v Argentina and perhaps more 2011 Rugby World Cup games after it was confirmed that the seven matches scheduled for earthquake-hit Christchurch will all be switched to different locations.

It was announced that the two quarter-finals scheduled for Christchurch would go to Auckland, and officials have now said that they want the five pool games to remain in the South Island.

That leaves Invercargill, Dunedin and Nelson as the frontrunners to pick up the fixtures.

Invercargill will already host two games, on 10^th September when Scotland take on Romania before Argentina play Romania on 17^th September.

However, with the Scotland and Argentina pool B game being one of the games that will be moved from Christchurch, that game looks to now be played in Invercargill.

The would see Invercargill hosting World Cup games three Saturdays in a row in September, a huge boost for rugby in Southland.

There has been a strong feeling from officials and the public to keep Christchurch involved in the tournament – citing the town as a possible training venue or base for a team.

Searches for Property Increasing

18th March 2011

Source: emigrationgroup.co.uk

The UK has recently experienced one of the coldest winters on record and thanks to the long dark days of winter it seems that the yearning for warmer climates has increased throughout the country. While the number of “dreamers” who search for living space and visa options in Australia always increasing in January, an overwhelming number of these searchers are turning their dream into reality.

During the past two months the number of searches on the Rightmove Overseas website has increased by more than 50 per cent and the most popular emigration destinations have fuelled this growth. The number of searches for homes in New Zealand has increased by 91 per cent and searches for Australian homes have increased by a staggering 114 per cent.

Robin Wilson, the head of Rightmove Overseas, has said that searches “always pick up in January and February but nothing on this scale”. Searches for countries such as Spain and Portugal seem to have fall when compared to previous years with the majority of people looking to buy property in Australia or New Zealand.

National and world events greatly affect the number of searches to a specific region. With the recent earthquakes in New Zealand Mr Wilson expects searches for the country will decrease, however the number of searches for homes in Australia is expected to increase due to the high number of TV programmes on relocating to the country.

Property prices in New Zealand increase for first time in a year

18th March 2011

Source: ibtimes.com

New Zealand house values rose slightly last month for the first time since last March, due to continued sales of good quality houses in larger locations, according to the latest figures from valuer QV.

Property values in February were down 1.7% on a year earlier, following a similar sized decline in January, but were 0.13% higher than in January, the report also shows.

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Bollard slashes OCR, banks cut rates

10th March 2011

Source: New Zealand Herald

Reserve Bank Governor Alan Bollard has cut the official cash rate half a percentage point to 2.5 per cent in what he termed an "insurance measure" to stave off a severe downturn in the wake of the 6.3 magnitude Christchurch earthquake.

The move has already prompted four banks to slash their interest rates and one economist to pick the Reserve Bank will not move on the rate until next year.

Westpac was the first to move dropping its everyday floating rate 5.60 per cent and its floating rate to 6.24 per cent. ASB followed suit shortly after dropping its floating rate by 0.50 per cent to 5.75.

Kiwibank and BNZ have also now lowered their floating rates - Kiwibank to 5.65 per cent and BNZ's standard variable rate to 5.99 per cent.

"We have acted pre-emptively in reducing the OCR to lessen the economic impact of the earthquake and to guard against the risk of this impact becoming especially severe," Bollard told reporters in Wellington. "While it is difficult to know exactly how large or long-lasting these effects will be, it is clear that economic activity, most certainly in Christchurch but also nationwide, will be negatively impacted."

The statement confirms the widespread anticipation of a cut to stem the blow to economic confidence after last month's quake, which killed at least 166 people and wreaked some $15 billion worth of damage. About $9 billion of that is assumed to be on residential property, with commercial property and public infrastructure assets costing $3 billion each.

Read the Monetary Policy Statement here.

ASB chief economist Nick Tuffley said it was unlikely the Reserve Bank would cut the rate further in the short term.

The timing of future OCR increases would be closely influenced by the timing of Christchurch reconstruction along with signs of broader economic recovery, he said.

"We judge the RBNZ will be on hold until March 2012," Tuffley said.

ANZ economist Mark Smith said he is anticipating the first rate hike to come as early as December.

This was based on the view that inflation would prove less benign than what the Reserve Bank had projected, and that reconstruction efforts will begin by the end of quarter three, he said.

Today's statement suggests official interest rates will rise steeply next year, as reconstruction takes hold in Christchurch, with economic growth seen peaking at close 6 per cent in 2013. The bank expects the high proportion of floating rate mortgage lending to mean today's cut will create a swift improvement, while making a reversal quicker in a year or so.

Prime Minister John Key stepped on constitutional niceties last week when he told Bloomberg he expected a rate cut and would welcome such a move, while major lenders have already pre-empted a reduction in the OCR, shaving half a percentage point from their one-year mortgage rates.

Bollard had to weigh up whether the impact of the quake was so great as to warrant a cut that wasn't focused solely on price targets, and would have the effect of shoring up business confidence.

The quake is expected to push up prices as resources are mobilised to rebuild Christchurch, and it would be inappropriate for stimulatory rates during the rebuild, the statement said.

Earlier this week, the Treasury said there were inflationary pressures throughout the global economy, and the Christchurch reconstruction was so large it would inevitably have an impact on inflation. The faster the rebuild, the greater the pressure on prices, it said.

The central bank expects inflation will come back within its target band of between 1 per cent and 3 per cent once the effects of last year's hike in consumption tax flow through, and forecasts 4.4 per cent growth in the consumer price index in the March 2011 year, slowing to a pace of 2.1 per cent in 2012 and 2.4 per cent in 2013.

The bank offered uncharacteristically limited economic projections in today's statement as it struggled to come to grips with the size and scope of the quake. "Readers should view the forecasts as a thematic representation of the thinking behind the policy decision, rather than a strict prediction of the future," it said. Full projections will be included in the June MPS.

Bollard pushed out the expected track of rate hikes even further, having already trimmed the forecast. The 90-day bank rate is expected to be 3 per cent in the 2012 March year, 0.7 percentage points lower than forecast in the December statement.

Traders had been betting he would hike the OCR by 50 basis points over the coming 12 months before the quake, and were expecting the rate to be just 7 points higher in a year's time before the release, according to the Overnight Index Swap curve.

The move puts New Zealand at odds with other central banks, which are looking at removing the extraordinary stimulus put in place to cope with the collapse of the global financial system in 2008 and tightening monetary policy.

Bollard stopped tightening monetary policy after two increases in the middle of last year as the economic recovery struggled to take hold, with an unexpected contraction in the third quarter and minimal growth in the second.

The quake has made the prospect of a double-dip recession a reality on the central bank forecasts, with annual growth in the March 2011 year trimmed by 0.8 percentage points to 0.9 per cent. Much of that comes from the quake, which will shave 0.6 percentage points from economic growth in the first quarter, in an economy that was already flat-lining.

The Treasury's expecting economic growth of just 2 per cent this year, down from the 3.5 per cent forecast in the half-year update, but still stronger than the 0.5 per cent predicted by the New Zealand Institute of Economic Research.

Before the disaster, there were signs of the economy was picking itself back up, with sentiment surveys showing increasing numbers of firms optimistic about the future, while Fonterra hiked its forecast pay-out to farmers on the day of the quake on the back of record high prices for locally produced commodities.

"The earthquake has dealt the economy a serious blow. Limited information to date quantifying the extent of the earthquake damage suggests around 2 per cent will be knocked off national GDP in 2011 leaving growth at only 1.5 per cent, but surging to 5.1 per cent in 2012 during reconstruction," said Imre Speizer, market strategist at Westpac Bank, in a note before the announcement.

Small rise stops property value drop: QV

8th March 2011

Source: Stuff.co.nz

New Zealand house values rose slightly last month for the first time since last March, due to continued sales of good quality houses in larger centres, according to valuer QV.

Property values in February were down 1.7 percent on a year earlier, following a similar-sized decline in January, but were 0.13 percent higher than in January, QV.co.nz research director Jonno Ingerson said.

National values gradually declined throughout most of 2010 and then flattened for several months before their small increase. Values remain 5.6 percent below the market peak in late 2007.

"Although the volume is pretty low, the type of properties that are selling at the moment - which tend to be quality family-type properties in good areas - they are still selling strongly and for good prices," Mr Ingerson told NZPA.

"Because of that you're seeing across the main centres prices holding or increasing slightly, and because of that it's pushing up the New Zealand number."

Buyers were going for safe bets, and provincial and rural areas in contrast were consistently sliding backwards.

"All of that speculative investment stuff's gone, people at the lower end of the market aren't buying anymore, so you're left more with middle New Zealand doing what they need to do, moving house because they're moving jobs or they need to upsize because of the family or whatever it is," he said.

The devastating earthquake in Christchurch on February 22 did not affect the data, which was based on the three months to the end of February, but its effects on the housing market would start showing up next month.

Canterbury values would slump as Christchurch sales stopped, but it was impossible to pick the impact at a national level.

The Christchurch market had begun to show some positive signs after a slow recovery from the original earthquake in September, and February values were 0.3 percent above the same time last year.

There was anecdotal evidence that the level of enquiry in Auckland about property had dropped right back for a week or two after the quake, possibly because people were worried about the impact on the national economy, he said.

Values across the Auckland area increased last month, driven by central Auckland with the rest of Auckland remaining steady.

Values across wider Wellington were steady, increasing in Lower Hutt and Upper Hutt, declining in Porirua and holding flat in Wellington city.

In contrast, values in Hamilton and Tauranga continued to decline.

The average New Zealand sales price over the last three months rose to $411,712 from $409,067 last month.

Banks slash rates for fixed interest terms

2nd March 2011

Source: Stuff Business Day

Banks are slashing their fixed interest rates by up to half a per cent as the Christchurch earthquake sends shockwaves through the money markets.

ANZ National Bank led the market by reducing its one-year fixed rate to 5.95 per cent, down 50 basis points. The two-year rate has reduced by 16 basis points to 6.49 per cent and the three-year rate by 11 points to 6.99 per cent.

ASB Bank matched the one-year rate, but undercut the market on all other terms out to five years, except for Westpac's new 5.75 per cent rate for a six-month term. BNZ and Kiwibank were not planning to follow suit yesterday.

The new one-year rate would save nearly $31 a month for every $100,000 of mortgage over 25 years and beats all floating rates in the market.

ANZ National chief economist Cameron Bagrie said the earthquake was a "big, massive shock" to the economy which called for leadership from the Government, businesses to look after staff, and banks to play their roles by lowering the cost of borrowing.

"The Reserve Bank should step up to the plate and cut interest rates so that even more benefits can be passed on to the consumers," Mr Bagrie said. "The spirit of what New Zealand needs here is decisive action across the whole spectrum, everybody needs to play their part."

Most economists now expect the Reserve Bank to lower interest rates by 25 basis points when it next reviews them on March 10 to help soften the impact of the earthquake on the economy. Mr Bagrie said that would be immediately passed on through lower floating rates.

There has been a steady flow of homeowners shifting from fixed-term rates to cheaper floating rates since the middle of 2009. At that point, floating mortgages accounted for just over a quarter of all mortgages. Since last September they have made up more than half, and climbing.

Homeowners have been lured by expectations that floating rates will not rise till later this year while the Reserve Bank waits for stronger signals that the economy is recovering before raising the official interest rate.

Last week BNZ chief economist Tony Alexander advised homeowners to stick with the floating rate. "There will probably not be another increase in the official cash rate till January next year at the earliest."

But while borrowers would be better off, those with savings in term deposits would earn between 25 basis points and 60 basis points less interest on their investment for terms up to two years.

NZ Property Report – February 2011

2nd March 2011

Source: realestate.co.nz

The February 2011 NZ Property Report published by Realestate.co.nz provides an insight into the state of the New Zealand property market as measured by the supply side of the property market over the month of February. The key measures of the market analysed in the report are the number of new listings, the asking price expectation for those new listings and the level of inventory of unsold houses on the market at this time. The report is compiled from data captured by the website and represents close to 95% of all property movements in the NZ market as managed by licensed real estate agents.

The February 2011 report covering the final month of summer shows an active level of new listings coming onto the market. The total of 11,395 is up 37% as compared to January, but down 20% as compared to February last year. The seasonally adjusted number of new listings for February shows a 9.5% increase. All of these numbers show that in the context of recent market activity the property market in NZ is somewhat more active, however when assessed over the recent couple of years the market continues to be weak and the recent 12 months is the lowest level of activity with just 133,883 new listings in the recent 12 months, down 3% as compared to the same period 12 months ago.

The expectation of vendors remains confident despite the low level of sales volume. The truncated mean asking price rose in February by 3.3% to $420,265. There is a traditional seasonal lift in asking price at this time of year and allowing for the seasonal adjustment the asking price actually fell slightly by 1.1% to $412,128. This February asking price of $420,265 does come within 2% of the peak of the market asking price from back in November 2007.

The inventory of unsold houses rose slightly in the month, having fallen for the past 3 months. The level of 48.9 weeks of equivalent sales still sits well above long term average at 40 weeks. The key factor for this continual high level of inventory is the weak sales volumes which with just 3,252 property sales in January, places the past 3 months of sales as amongst the lowest 3 month period on record with just 13,438 total sales.

In overall terms the NZ property market continues to turnover at a slow rate. The relative levels of inventory as matched to sales volumes is high indicating a buyers market. However the actual level of new listings continue low which is resulting in specific markets seeing a genuine shortage of listings which is stimulating price as a function of unsatisfied demand. This is most conspicuously seen in the major cities. Auckland especially is showing this with an asking price expectation which peaked in December and in February continues at high levels. Equally the level of new listings in the Auckland market is amongst the highest in the country with over 34% of all listings coming from this region, the highest share seen over the 4 years of this report

Summary of the market – February 2011

After seeing the first two months of summer result in record low levels of new listings the month of February saw a strong rise with 11,395 new listings come onto the market. This level, whilst up a seasonally adjusted 9.5% as compared to January was still well down on the February levels of 2010 (14,329) and 2009 (12,164). This clearly shows that the overall sentiment in the market is quiet as was witnessed by the January sales levels reported by REINZ of 3,252, the lowest month on record.

The rise in new listings coupled with the low sales saw the inventory of unsold homes on the market rise again as measured on an equivalent number of weeks of sale basis. Having fallen for 3 months in a row the inventory levels rose to 48.9 weeks – well over 11 months supply. This level as compared to a long term average of 40 weeks means the property market is still very much in the camp of a buyer’s market with ample selection of properties to review.

Asking Price

The truncated mean asking price for all new listings coming onto the market in February rose by over $13,000 from $406,525 to $420,265.

On a seasonally adjusted basis the asking price actually fell by 1.1% to $412,128. The summer peak of new listings traditionally sees a rise in asking price.

The current asking price edged closer to the peak of asking price back in October 2007, it is currently just 2% below that peak.

New Listings

The record lows seen in the months of December and January when in total 17,224 new listings came onto the market, have been replaced by a surge in listings in February with 11,395 new listings coming onto the market. This level whilst relatively strong as judged by recent months, is significantly lower than prior years. The February total shows a 20% decline as compared to February last year.

On the most recent 12 month period a total of 133,883 new listings have come onto the market which represents a 3% decline compared to the same period last year.

Inventory

The level of unsold houses on the market at the end of February fell slightly to 52,673 from 53,297 at the end of January. This represented the equivalent of 48.9 weeks of equivalent sales, as assessed on a seasonally adjusted basis.

The inventory of unsold houses remains high in absolute terms as the level of sales activity continues to be so weak.

At the current level the inventory still remains well above the long term average of 40 weeks.

Regional Summary – Asking price expectations

In spite of the overall rise in asking price nationally from $406,525 to $420,265 the regional picture shows significant variance. Just 7 of the 19 regions are showing increases in asking price. Of the remaining 12, four regions are showing falls in asking price of greater than 5% when judged against the recent 3 month average.

The significance in the price movement in the national asking price is the fact that the 3 major metro areas of Canterbury, Wellington and Auckland collectively representing 54% of all listings and in the month all saw increases in asking prices of up to 3%. In the case of Auckland and Wellington the February asking price was within 3% of the peak pricing which was reached towards the end of last year, this would indicate that the local markets in these key cities are more active with pressure on prices more noticeable than in provincial areas of the country.

Regional Summary – Listings

Judging the regional property market based on the number of new listings and the change over the past 12 months potentially presents a misleading picture as all regions are showing a significant year-on-year decline. This picture presented in the chart would normally indicate a move to a sellers’ market when listings are in short supply, however at this time the governing factor is the weakness of sales. So despite the low volume of listings the rate of sale still means that inventory of unsold properties in overall terms is growing.

In total 9 of the 19 regions are showing volumes of new listings over 20% down as compared to February last year. The issue could arise in the coming months when if sales were to be stimulated by seasonal factors matched to favourable lending rates the lack of new listings may result in pressure in local markets.

Regional Summary – Inventory

The inventory of unsold houses on the market rose in February after seeing 3 consecutive months of falls through the new year period. At 48.9 weeks this represents over 11 months of equivalent sales of property on the market. This results in 52,673 properties on the market (excluding sections).

Across the country there are just 2 regions (Central North Island and Bay of Plenty) that have a fair balance between inventory and sales. The remaining 17 regions comprise 10, which are significantly having an inventory well above long term average with the remaining 7 regions having level just above long term average. Such levels of inventory above long term average highlight a buyers market with ample selection of property for sale.

It is now over 12 months since the market last showed an inventory level below long term average as was seen through the 2009 year.

Lifestyle Property

A total of 936 new listings of lifestyle properties came onto the market in February. This represented a 6% increase on a seasonally adjusted basis from the prior month, when seen against February last year it represents a 17% decline indicating that the lifestyle sector is performing in line with the overall property market.

The truncated mean asking price rose by 2.2% from January to a level of $552,591. This level still remains well below the peak of asking price seen in February 2009 at $633,811

Apartments

The number of new apartment listings coming onto the market in February totaled 478 a rise of 32% as compared to January although on a seasonally adjusted basis it represented a 4% fall. As with other sectors the relative level of new apartment listings remains subdued with the February 2011 level showing a 36% year on year decline.

The truncated mean asking price rose very slightly to $365,150 from $362,041 in January, this level is down 8% as compared to the recent 3 month average.

The representation of Auckland listings for apartment of the total for the country rose to over two thirds with 321 new listings with an asking price expectation of $324,716.

Property Price Index

Comparing the sale price of properties across the country to the asking price expectation is not a perfect comparison; however the trends tend to align. The benefit is that the data for asking price is of the market today, whilst the selling price is reflective of the market active between 4 and 6 weeks ago. The latest comparison is highlighted below:

Realestate.co.nz data is compiled from asking prices of new residential listings as they come onto the market via subscribers to the realestate.co.nz website. The Realestate.co.nz website currently has over 95% of all licensed real estate offices subscribing and providing all of their listings onto the website. The asking price is presented as a truncated mean price at a 10% interval.

REINZ: data is compiled from reported unconditional residential sales from all members of the Real Estate Institute of New Zealand representing all licensed real estate offices. The sale price is published as a stratified median house price and is developed in association with the Reserve Bank of NZ.

Notes:

Truncated mean

The monthly asking price for new listings presented in this report utilises the measure of ‘truncated mean’. This measure is judged to be a more accurate measure of the market price than average price as it statistically removes the extremes that exist within any property market that can so easily introduce a skew to traditional average price figures.

The truncated mean used in this report removes the upper 10% and the lower 10% of listings in each data set. An average or mean of the balance of listings is then calculated.

Methodology

With the largest database of properties for sale in NZ, realestate.co.nz is uniquely placed to immediately identify any changes in the marketplace. The realestate.co.nz NZ Property Report is compiled from new listings coming onto the market from the more than 1,050 licensed real estate offices across NZ, representing more than 95% of all offices.

With an average monthly level of over 10,000 new listings, the realestate.co.nz NZ Property Report provides the largest monthly sample report on the residential property market, as well as a more timely view of the property market than any other property report. The data is collated and analysed at the close of each month, and the Report is compiled for the 1st day of the following month. This provides a feedback mechanism as to the immediate state of the market, well in advance of sales statistics which by the very nature of the selling process can reflect activity with a lag of between 2 and 4 months.

In analysing the details of the 11,395 new listings in the month of January a total of 133 listings have been excluded due to anomalies. The categorisation of Lifestyle property is defined by the land area of the property. The criterion is a property having in excess of 0.3 hectares and being situated outside metropolitan areas.

The full NZ Property Report for February 2011 can be downloaded here (1.3MB pdf document). Additionally the raw data is accessible here as an Excel spreadsheet enabling anyone to analyse the raw data and establish any trends or observations.

Lower-value Invercargill homes face big rates hike

2nd March 2011

Source: The Southland Times

Invercargill homeowners with the lowest-value properties faced some of the highest percentage rates hikes in the financial year starting July, the council's finance boss said.

A report to yesterday's finance committee meeting, prepared by finance director Dean Johnston, said the budgets for the 2011-12 financial year resulted in a net rates increase of 5.8 per cent. The draft figure was reduced by councillors to 5.3 percent during the meeting. Cr Norman Elder questioned if the council couldn't get the overall rates increase down from 5.3 per cent to about 4 per cent. Committee chairman Graham Lewis said the word had gone out to departments to try to trim.

Cr Neil Boniface said in the previous five years the city's rates hikes had averaged 4.5 per cent to 5.5 per cent and he wondered if the council could keep doing this.

The council had asked its chief executive Richard King to look at its cost efficiencies and it hadn't seen a lot of that, Cr Boniface said.

Cr Lewis said the council couldn't cut everything to make it a zero rates increase because it needed infrastructure in place.

"We can't keep trimming at the risk of the comfort or facilities of our ratepayers, it's a balancing act."

After the meeting, Mr Johnston said the lower-value properties in the city faced some of the higher percentage rates hikes because their uniform annual charges were the same as people who owned higher-value homes. The council also worked out its rating on the value of homes.

The council's total rates draw of $43.201 million was less than the $43.756m predicted, Mr Johnston said.

BID TO HOLD PARK RATES QUERIED

The Invercargill City Council is aiming for a "0 per cent" rates hike in its parks and reserves department this year, but Mayor Tim Shadbolt has questioned whether it is a good move.

Cr Carolyn Dean, speaking at this week's infrastructure and services committee meeting, said there was a resolve at the council that it didn't want to increase rates in the parks department while there was a recession.

"From my perception the parks department has the capacity to try and trailblaze to come up with a 0 per cent increase without having an impact on service," adding it was a lofty goal.

Mr Shadbolt said customer surveys always revealed parks and reserves were the No 1 area the public endorsed. He struggled with the council cutting back on an area that had so much public support.

The council's works and services director Cameron McIntosh said the council would try to minimise the effect on services at its parks and reserves.

After the meeting, the council's finance committee chairman Graham Lewis said the council was not looking to hold rates to a 0 per cent increase across the board.

"I can't see that happening."

Christchurch earthquake

23rd February 2011

To all those living and working in Christchurch and suffering in the aftermath of tuesday's earthquake, our thoughts are with you.

This event has impacted people the length and breadth of the country, and will continue to do so for a long time to come.

Stay strong Christchurch.

Mortgages most affordable for seven years

23rd February 2011

Source: Stuff Business Day

A mortgage became the most affordable in seven years in January as house prices fell and low interest rates lifted home buyers' purchasing power, a report shows.

A slight rise in weekly wages and the benefits of last year's income tax cuts for those on higher incomes boosted affordability to its best levels since February 2004, according to the latest Roost Home Loan Affordability report.

The proportion of a single median after-tax income needed to service an 80 per cent mortgage on a median-price house has improved to 51.7 per cent from 53.8 per cent.

For the Wellington region mortgage payments took up 52 per cent of the median weekly take-home pay, compared with 61.8 per cent a year ago and 81 per cent in January 2008.

The Hutt Valley was the most affordable at 45.7 per cent of take-home pay, and the Kapiti Coast became less affordable than in December at 58.1 per cent.

However, Roost Home Loans spokeswoman Rhonda Maxwell said there were renewed signs of a "two-speed housing market" with prices of more expensive homes in Auckland, and Wellington firmer than entry level investment properties in other centres.

"Home buyers have the upper hand in many areas where house prices are flat to falling."

A first home had become dramatically more affordable for young couples over the last five years. It now cost less than a quarter of the median wage to pay for an 80 per cent mortgage on a house worth $245,000.

The average price of a house in the lowest quartile of home values has come down from its peak of $257,100 in March last year.

The national median house price fell to $340,000 in January, compared with $352,000 in December. Affordability has been improving since the end of 2009.

Queenstown is the most expensive place in New Zealand while Whanganui has replaced Invercargill as the cheapest.

Stadium blueprints 'exciting'

16th February 2011

Source: The Southland Times

Blueprints for the next Stadium Southland herald an exciting phase in the rebuild of the region's sporting headquarters, its general manager says.

Nigel Skelt said there was renewed excitement now that plans had been revealed for the replacement of the stadium that collapsed under heavy snow on September 18.

Among the variations to the original is a single pitched roof line and a proposed increase of seating arrangements around the main court.

The key aspect is in its construction, to more rigorous building standards, making it stronger than its predecessor.

Mr Skelt said it also exhibited a new approach to the arena with the benefit of 10 years' experience and advancements in technology.

It would be more versatile and not just a sports stadium but able to host first-rate entertainment events, he said.

Southlanders could get something that would service the community for the future, but do to it, they needed to support it, he said.

Insurers have signed off on more than $13 million for initial work, with a further $750,000 coming from the Southland Indoor Leisure Centre Charitable Trust.

Mr Skelt said additional funds would be needed to accomplish everything included in the new design and the refurbishment of the surviving stadium entrance.

"There's a huge opportunity to build something special."

And with a timeframe to open the stadium in March next year that would need to happen sooner rather than later, he said.

The design is also favoured by the core users of the stadium.

Netball Southland chief executive Julie Paterson said if seating capacity increased the organisation would be in a better position to bid for tests.

More seats, up 1000 to 4048 would allow for a bigger crowd to watch Southern Steel games too, Ms Paterson said.

She was further impressed with more space around the main court for teams and support staff and the possibility for digital signage around the court.

"I think it's taking us into the future."

The praise was shared by Southland Basketball general manager Jill Bolger who said while the old stadium met her organisation's needs the new design looked better. If there were more wooden courts it would make it feasible to hold national tournaments.

The possibility that the main court could be surrounded by spectators could create an imposing cauldron-like atmosphere for visiting teams, she said.

Should the rebuild go to plan the first home game for the Southland Sharks in April could be a great showcase for the new venue.

Space agents promote imaging stations

15th February 2011

Source: The Southland Times

Southland is closer to hosting a multimillion-dollar satellite imaging station as European space agents prepare to promote the benefits of satellite technology.

Representatives from the European Space Agency and German Aerospace Centre arrived in Southland on Sunday to begin spreading the word about space and how New Zealand can benefit from data obtained from passing satellites.

Agency head of international relations Chris De Cooker said satellites were used by countries throughout the world to take images of the earth from space as they passed overhead.

The images were then transmitted in the form of data to imaging stations and after being interpreted, could be used for anything from gauging glacier melt to finding foreign boats in New Zealand territorial water or tracking bushfires as small as 2m across, he said.

The possibilities for using the data were endless and could save a lot of money, but few people knew about the imaging in New Zealand so the agency wanted to educate people, he said.

Venture Southland enterprise projects manager Robin McNeill said Venture was working with the agency to host the What on Earth colloquium in Wellington tomorrow, which would be used to discuss the benefits.

Venture had looked at the use of satellite data for about four years and estimated it would cost between $2 million and $15m to build an imaging station at Awarua, Mr McNeill said.

However, support was needed from government and private-sector agencies to build the station and that was what the colloquium was about, he said.

Meanwhile, the arrival of the space agency reps coincides with the launch into space tomorrow of the European Space Agency's automated transfer vehicle , which will be tracked across the southern sky by a station at Awarua, near Invercargill.

Full speed ahead to rebuild stadium

14th February 2011

Source: Otago Daily Times

The new Southland Stadium has a "non-negotiable" completion date of March 30, next year.

Plans to "future proof" the stadium had been released and the stadium owners and management were working as fast as they could to rebuild it, Stadium Southland general manager Nigel Skelt said.

The stadium's roof collapsed on September 18 last year after a heavy snowfall.

Click photo to enlarge

An image of the development encompassing the stadium re-establishment (stage 1) to the left and the foyer area (stage 2) to the right.

The new design incorporated the changing nature of the stadium, reflecting the need to cater for entertainment as well as sport.

Over the years, booking for entertainment and conferences had become a major part of the stadium's income, Mr Skelt said.

The new structure would be "bigger and higher" than the old one, with twice as much steel.

Piling would go 15m into the ground, with piles 1m apart, he said.

"It'll be a different structure and roof line."

Phase one of the project, re-establishing the courts, would be funded by $13.2 million from the stadium's insurers plus $750,000 from the Southland Indoor Leisure Centre Charitable Trust.

There were plans to increase the seating capacity to give people a choice of seats, as well as decisions to be made about the court surfaces.

"It'll be bigger and better using more technology than before."

Phase two of the plans was to renovate the existing administration block left standing after the snowfall, but further community funding would be needed for that, he said.

The block includes the foyer, squash courts and toilets. Money was also required for a retractable grandstand at the south end of the main courts.

"We want to future proof it for the next 25 years and we have the opportunity to do that."

It was hoped piling could begin in about three weeks and that the main contractor would be on site by the end of March, he said.

Big coup as city to host test

9th February 2011

Source: The Southland Times

Netball New Zealand's decision to award a Silver Ferns test to Invercargill this year was about repaying the support Southlanders have given the code in the past.

The collapse of Stadium Southland last September threw doubt over Invercargill's ability to host any top-level netball but, four months on, the ILT Velodrome and its temporary wooden court will host a full season of trans-Tasman netball and an international between the Silver Ferns and England.

Netball NZ operations director Kate Agnew said the shift to the velodrome would be an "adventure".

"We get such fantastic support from Invercargill and Southland ... we get great support down there. We really want to be able to support Southland and Invercargill and the stadium in their time of need."

The Silver Ferns enjoyed playing in Invercargill, regardless of the venue, Agnew said.

"It's a good hunting ground ... they are a great netball public. There's an adventure in coming into the velodrome as well, I think."

Agnew, who is also in charge of New Zealand operations for the trans-Tasman competition involving Southern Steel, said several factors were involved in confirming a venue, from the quality of the surface to seating capacity and broadcasting facilities.

Seating for the test is expected to be between 2200 and 2700, which was smaller than most venues.

Agnew said Silver Ferns tests were sought after, with planning done on a two or three-year cycle.

Netball Southland chief executive Julie Paterson said that, having been pencilled into the test calendar before the stadium collapse, she had initially thought the opportunity would be lost.

However, the ongoing support from Agnew had encouraged local authorities to continue with plans for the game.

Paterson said hosting England would be a highlight of the Southland netball season.

"I was really excited when I heard it was England. We can't expect to get Australia every time. Netball New Zealand want to make as much revenue from those games as they can, at the same time as getting a reasonable geographic spread. A test against England is certainly no longer an easy-beat."

A date for the opening of ticket sales is yet to be confirmed. Paterson was confident the game would sell out.

Stadium Southland hosted a thriller between New Zealand and Australia in 2009, with the Diamonds winning by one goal.

Previous tests at the stadium were held in 2005 (England), 2002 (Barbados) and 2001 (Australia and England).

Signs that house prices are steadying

8th February 2011

Source: Stuff Business Day

Residential property values stabilised in January after nine months of decline, according to government valuer Quotable Value.

Average property values in January were 1.5 per cent lower than the same month a year ago when property values were still climbing, although they were unchanged when compared to December's 0.9 per cent decline.

Values are now 5.8 per cent below the market peak of late 2007.

"Despite overall New Zealand values stabilising in recent months, there is considerable variability between areas," said research director Jonno Ingerson.

"Values across the combined main centres have been stabilising, while across combined provincial and rural areas values have continued to slide."

Of New Zealand's three main urban areas, Christchurch was the only centre to record any growth in January, with demand for housing undamaged by the September 4 earthquake helping to lift prices 0.3 per cent higher when compared to the same month last year.

In January, Auckland's values were stable, down 0.6 per cent on 2010 levels, while in Wellington values have been rising since October after declining steadily in the six months prior, and are now 2.5 per cent below last year.

The remaining centres all declined in January as economic uncertainty and lack of confidence sap demand, with values in Hamilton down 3.4 per cent on the same month last year, Dunedin values down 3.7 per cent, and Tauranga down 2.2 per cent.

New Zealand's property market has been struggling to haul itself out the slump it fell into last year as households focused on repaying debt amid historically low interest rates.

In December the median house price fell 2.2 per cent to $352,000 compared to the same month in the previous year, according to sales data from the Real Estate Institute.

The record low volumes of property sales have kept new construction in a rut, with building consents falling to their lowest level of issuance since April 2009 in December.

"Sales activity slowed down over December and January as is usually the case," Ingerson said.

"With the Christmas holidays over and people settling back into their routines, some will now be considering their plans for the year and beginning to act on them. However it is still too early to tell whether the property market in
2011 will be any different to 2010."

Demand for new houses tipped to rise

8th February 2011

Source: Stuff Business Day

House prices could rise quickly next year as an expected pick-up in demand and a shortage of building activity causes a squeeze in supply.

New forecasts by building industry analyst BIS Shrapnel predict that demand for new houses will increase towards the end of this year as the economy improves.

Coupled with the lower than average number of houses being built – building consents last year were around half of the peak reached in 2004 – increased demand would cause a squeeze on supply and push up prices.

BIS Shrapnel senior analyst Adeline Wong said Auckland in particular had seen "severe under-building" of new houses in recent years, which was likely to lead to a shortage as a strengthening economy increased demand.

"When demand starts to come back then the price levels will start to grow quickly again because you have a tight supply on one hand and greater demand on the other."

House prices in December were 0.9 per cent down on a year ago, and 5.8 per cent below the peak in 2007.

Ms Wong predicted prices, which have been flat in recent months, would begin to turn towards the end of this year, with "strong growth" in 2012 of 4 per cent to 6 per cent.

A rise in demand is also likely to drive an increase in building consent applications, which fell below 1000 in December for the first time since 1965.

Ms Wong predicted a strong pick-up in consent applications in the latter months of the year to the end of March 2012, before more gradual growth over the next two years to around 25,000 dwellings a year.

Registered Master Builders Federation chief executive Warwick Quinn said that after several years of falling activity there were concerns in the building industry about its ability to cope with a return to the levels of a few years ago.

Building consent applications hit 30,000 in 2004 but were just over 15,000 last year. Thousands have left the industry or moved overseas to work.

"We're concerned with our long-term capacity because we have lost a lot of apprenticeships and tradespeople."

This, coupled with increased licensing for the industry which come into place in March 2012, would further hit capacity.

Mr Quinn said forecasts of a return to new build consents of 25,000 would be welcomed. That level was more sustainable than the 30,000 peak which had strained the industry.

"We think anything between 20,000 and 25,000 is quite manageable. Anything less than that puts pressure on our capacity in the sector and anything more than that we struggle to get resources."

NZ Property Report – January 2011

2nd February 2011

Source: realestate.co.nz

The January 2011 NZ Property Report published by Realestate.co.nz provides an insight into the state of the New Zealand property market as measured by the supply side of the property market over the month of January. The key measures of the market analysed in the report are the number of new listings, the asking price expectation for those new listings and the level of inventory of unsold houses on the market at this time. The report is compiled from data captured by the website and represents close to 95% of all property movements in the NZ market as managed by licensed real estate agents.

The January 2011 report shows a new record low level of new listings coming onto the market. This was matched with a significant drop in asking price expectation. Whilst the level of new listings would normally push the market in favour of sellers given the dearth of new listings, the significant level of unsold property still on the market presents an opportunity for buyers.

The market as it enters the key summer period is opening up some opportunities with vendors considering putting their house on the market able to take advantage of an uncluttered position in the portfolio of new listings, ready able to attract the buyers that are out there. Existing property owners who have a property for sale as part of the current unsold inventory may need to review their asking price expectations as the new listings may be more reflective of the market today.

Buyers have a varied and diverse selection of property to review before making buying decisions with 48 weeks of inventory of unsold houses presenting a level considerably above the long term average of 40 weeks.

Summary of the market – January 2011

The first month of the year is traditionally a quiet period with significantly less business days and therefore listings coming onto the market tend to be subdued. The level of new listings for January 2011 is significantly low as compared to long term averages. Back at the start of 2008 as the Global Financial Crisis was just starting and the property market was turning down, a total of 26,097 new listings came onto the market in the combined months of December 2007 and January 2008; a year later as the market abruptly slowed the number in Dec/Jan had fallen to19,313. In 2009/2010 a year ago, there had been a degree of pick up to 20,621. This year over the same period the total is 17,224.

The market situation is unusual. Such low level of listings would normally reflect in a tight market where sellers would have the upper hand; however the scale of the unsold inventory, matched to still relatively low levels of sales, means that buyers have a great selection to research and a strong buyer advantage. It strangely would seem to be a market where the needs of buyers and sellers can be met. New listings tend to attract most interest in a property market and with such a recent shortage; new listings in the coming months will likely attract buyer interest. Recent new vendors with new listings are setting realistic price expectations as shown by the truncated mean asking price down to $406,525 this month.

Set against these statistics is the news that in terms of buyer interest online it could not be more active. As measured by Nielsen Online January saw over 2,000,000 browser visits to all the real estate websites in NZ, up 25% from 2010.

Asking Price

The truncated mean asking price for all new listings coming onto the market in January fell by over $9,000 from $415,750 to $406,525. On a seasonally adjusted basis the asking price remained unchanged from December at $416,666. There is traditionally a fall in asking price in January.

The current asking price slipped further from the peak of asking price back in October 2007, it is currently off 5.2%.

New Listings

Traditionally January is a weak month as it is a short business month; however the fall from the record low of new listing in December is significant. Just 8,300 new listings compares to 10,272 a year ago and 9,942 in January 2009.

On a moving annual basis the past 12 months have seen 136,817 new listings, just up on the 135,746 in the prior 12 month period, an increase of just 0.8%.

Inventory

The level of unsold houses on the market at the end of January rose slightly to 53,297 from 53,077 in December. This represented the equivalent of 47.9 weeks of equivalent sales, as assessed on a seasonally adjusted basis.

The inventory of unsold houses remains high in absolute terms as the sales activity impact is not being felt, even allowing for the significant lower level of new listings.

At the current level the inventory still remains well above the long term average of 40 weeks.

Regional Summary – Asking price expectations

The very clear message from the chart below showing all of the 19 regions is that the asking price expectation of sellers with new listings right around the country is that asking prices are slipping lower. Nationally asking prices are down 2.7% as compared to the recent 3 month average. The only regions bucking the trend are the three east coast regions of Coromandel, Bay of Plenty and Gisborne, together with Southland.

Significant slippage in asking prices are being seen in 5 regions – Waikato, Central North Island, Queenstown Lakes, Otago and the largest fall of 8.4% in the Hawkes Bay. The three main metropolitan regions of Auckland, Wellington and Canterbury are all showing weaker asking prices of between 3% and 4%.

Regional Summary – Listings

The national low record level of new listings for January was reflected right across the country with all but 2 of the 19 regions showing new listings down as compared to January 2010.

There were 7 regions reporting a record low of listings – Waikato and the Bay of Plenty, Central North Island and Manawatu / Wanganui. Then in the South Island, Otago, Canterbury and the Central Otago Queenstown Lakes district.

Such low levels of listings pushes the market into a situation with a shortage of new properties to attract buyer, for despite the high inventory levels the attraction of new listings remain the lifeblood of the industry.

Regional Summary – Inventory

The inventory of unsold property on the market continues to ease since the latest peak in November last year when the inventory stood at 53.2 weeks of equivalent sales. It has now fallen to 47.9 weeks. Whilst this is a continuing trend of easing, the level of inventory remains stubbornly above the level at the same time last year and the long term average.

This level of inventory leads to an assessment of the market being a buyer’s market; however the shortage of new listings is lessening this effect given the dearth of new properties to attract such buyers.

Set against this overall high level of inventory there are key markets where inventory levels are pretty much now at long term averages – Auckland and Wellington as 2 key markets are fairly balances and the Central North Island is now below long term average establishing this region as being in a seller’s market situation.

Lifestyle

Lifestyle property listings fell significantly in January. At 727 new listings, the month represented a new record low. As compared to January last year the level of new listings is down 22%.

The asking price expectation for the new listings was up slightly at $540,825 from $537,368 in December. This represents a 3.2% decline as compared to January last year and a 3.5% decline in asking price as compared to the recent 3 month average.

Apartments

January new listings of apartments came close to beating the prior low record of 352 in January 2009. For January just 363 new apartment listings came onto the market. This represents a 16% year on year decline. The asking price expectation for apartments remains low with a figure of $362,041 in January down 8.3% as compared to the recent 3 month average and only just up on the record low of $356,306 in October 2010.

In Auckland just 238 new apartment listings came onto the market which represented a 5.2% year on year decline. The asking price for Auckland apartments in the month was $342,250 which was 7% down on the recent 3 month average, but identical to the asking price expectation of a year ago.

Property Price Index

Comparing the sale price of properties across the country to the asking price expectation is not a perfect comparison; however the trends tend to align. The benefit is that the data for asking price is of the market today, whilst the selling price is reflective of the market active between 4 and 6 weeks ago. The latest comparison is highlighted below:

Realestate.co.nz data is compiled from asking prices of new residential listings as they come onto the market via subscribers to the realestate.co.nz website. The Realestate.co.nz website currently has over 94% of all licensed real estate offices subscribing and providing all of their listings onto the website. The asking price is presented as a truncated mean price at a 10% interval.

REINZ: data is compiled from reported unconditional residential sales from all members of the Real Estate Institute of New Zealand representing all licensed real estate offices. The sale price is published as a stratified median house price and is developed in association with the Reserve Bank of NZ.

Brighter times ahead

31st January 2011

Source: Stuff Business Day

Cheer up Kiwis, because 2011 is looking like the brightest economic year since the global financial crisis plunged the world into recession three years ago.

Treasury has this afternoon released a series of figures and commentary on the state of the economy so far this year.

It's hardly a cause for celebration, with growth expected to be 0.9 per cent less than earlier forecast, but its growth all the same.

Treasury said it expected real economic growth in 2011 of around 3 per cent, which was better than the 1.5 per cent recorded in 2010 and the -1.7 per cent decline in 2009.

The good news stemmed mainly from historically high food prices and a one-off hit from the Rugby World Cup.

New Zealand commodity prices continued to climb, the Treasury found, with one measure, the ANZ Commodity Price Index, at its highest since it began in 1986.

Further increases were possible early this year as dairy prices in two global DairyTrade auctions showing a combined increase in sale price of 8.5 per cent.

Rugby World Cup - "a key one-off event" - would boost the economy across the September and December quarters.

On the down side, the recovery from the recession had ''undershot expectations'' and December had failed to bring out much Christmas cheer.

''Domestic demand has been softer than we expected, despite the incentive for a pre-GST spend-up, owing to greater caution being shown by households, farms and firms,'' the Treasury report said.

Shift to fixed mortgage rates, economists say

28th January 2011

Source: Stuff Business Day

When the Reserve Bank begins cranking up the official cash rate later this year, mortgage holders on floating rates may be wise to look to fix their rates, economists say, but there is no hurry yet.

Bank of New Zealand chief economist Tony Alexander said the fixed versus floating question would become more serious later in the year, but for now the advice was to stay floating.

"At some stage people will be wanting to go fixed but I think we're still months away from that. Stay floating, take the low rate to get your principal down and somewhere down the track, maybe towards the middle of the year, you'll look at the issue more seriously."

Felix Delbruck, senior economist at Westpac, said there was no urgency for people on floating rates to lock into fixed rates yet. "The Reserve Bank's been articulating a pretty cautious stance and that means floating rates should stay on hold for quite a few more months. Because of that there's no urgency to fix at the moment."

According to Reserve Bank data the average size of all New Zealand mortgages, based on when they were drawn down, was $120,654, although the figure ignores subsequent repayments.

The average size of the 4756 mortgages drawn down in the week to January 21 in New Zealand was $129,478.

Bollard keeps interest rates on hold

27th January 2011

Source: mortgagerates.co.nz

Bollard kept his official cash rate (OCR) steady at 3% and said "it seems prudent" to keep it there "until the recovery becomes more robust." However, Bollard maintained his tightening stance, saying the OCR is likely to rise "modestly" over the next two years.

Bollard did acknowledge economic data through the second half of 2010 was weaker than expected but said forward indicators are more promising.

"They (the Reserve Bank) were focusing on the positives rather than pointing out the downside risks," says Chris Tennent-Brown, Commonwealth Bank of Australia's New Zealand economist.

"They will be on hold for several more meetings and eventually hiking later this year."

Doug Steel at Bank of New Zealand says the local dollar had been pushed down ahead of the statement for fear of the statement being more dovish than it turned out to be and the currency jumped from about 76.55 US cents before the statement to more than 77 cents afterwards, but that was still within its recent trading range.

"Going in to it, there was a risk they might give a little ground from their December forecasts on the back of the weaker data we've seen, but they've held firm," Steel says.

Among the positives such as higher commodity prices and improving business confidence, Bollard said "there are tentative signs that housing market activity has stabilised after having trended lower for some months.

Darren Gibbs at Deutsche Bank says while we've had two months of improving house sales since the particularly weak October figures but the housing market is still very weak.

"Housing is thrown in there because it's a big one that everyone knows they focus on," Gibbs says. "If you look on a chart, it's (the improvement) still barely perceptible but at least it means it's not going lower."

NZ high on global prosperity list

25th January 2011

Source: Stuff Business Day

New Zealand has been ranked fifth on an international scale of the prosperity, with its education system rating as the best in the world.

The ratings have been published by Britain's Legatum Institute which has been attempting to produce different kinds of indices to mainstream economic scales.

Its Prosperity Index ranks 110 nations, and includes both material wealth and quality of life.

Norway headed the index, followed by Denmark, Finland, Australia and New Zealand.

The indices said New Zealand rated only 19th in the health rankings and 17th in economic.

It was first in education and third in ranks of personal freedom and social capital. It was fourth in governance and seventh in safety and security. It was 14th in entrepreneurship and opportunity.

New Zealand would have been higher than Australia had it not been for Australia's much stronger economy.

On the overall scale, the US was 10th, Britain 13th, Japan 18th , China 58th and India 88th.

At the other end of the scale, Zimbabwe came in at the bottom. Pakistan was second to last and the Central African Republic third to last.

No Pacific country is listed because Legatum said there was insufficient data on them.

It said their research showed a falling away among developed countries for scores on the economy.

"The data shows that public confidence in financial institutions is declining," the institute says.

Broadband boost 'too slow for us'

20th January 2011

Source: The Southland Times

Southland could gain $400 million in export-related benefits if the Government speeds up the rural broadband plan it plans to adopt during the next six years.

Venture Southland enterprise and strategic projects manager Stephen Canny said the figure was based on internationally accepted industry gains once high-speed broadband capacity became available.

The company that wins the contract to implement the Government's $300 million rural broadband initiative will have six years from the beginning of next year to install high-speed broadband in rural areas.

Mr Canny said the dairy sector anticipated gains of 3 per cent, or $36 million in Southland, once broadband was in place and other export sectors expected gains of 1 per cent, or $35 million a year in Southland.

"Clearly a six-year provision isn't on our horizon. It's unacceptable in this day and age.

"Every year we don't have these opportunities is tremendous lost potential." Mr Canny said.

"We'd much rather see a three-year deployment of this investment."

Mr Canny said that, even if other fiscal restraints arose, the Government needed to prioritise the development of broadband capacity in rural New Zealand and Southland in particular if it wanted to encourage an export-led economy.

The overall rural economy produced 64 per cent of New Zealand's exports from a work force of 260,000 people, or 11.8 per cent of the total work force.

"On top of that, we have got a couple of unusual things in Southland. Over and above agriculture and forestry, we also have a significant amount of tourism-related activity and $1.15 billion worth of exports come from New Zealand Aluminium Smelter."

In total Southland produces 11.4 per cent of New Zealand's exports, worth $4.7b, with a population of 94,000 people, or 2.1 per cent of New Zealand's total.

"What we're really saying is, if you really want to have an export-driven economic recovery, then you have to invest as a priority in parts of the country producing the exports," Mr Canny said.

"You enable those first and that way you can get an immediate return on your investment from an export perspective and balance-of-payments perspective."

Investment properties a stepping stone

20th January 2011

Source: Stuff.co.nz

Soaring property prices have made it difficult for many first home buyers, but there is another way to enter the property market. Buying an investment property before your first home is a good way to start building an asset portfolio to help you get ahead.

Michael Furlong, director of MAP real estate, was renting until last year, when he bought his first home at the age of 39. However, his first home was not his first time in the property market; he had bought and sold 18 properties before finally buying his dream home. He says there is a big difference between being a renter and a renter who is also an investor.

"The way you win is to have all of your money work for you throughout that phase that you’re still renting. The term I use is a 'professional renter'," he says.

Furlong says there are many reasons why it can be a good strategy to buy an investment property before your home.

"You’ll be able to afford to live in a much better property as a tenant than what you could if you were to buy it – we were living in a A$700,000 or A$800,000 property and only paying A$550 a week [in rent]. As a professional renter you’ve got a much better property for a smaller amount of money for your own personal use."

Furlong says it also doesn’t suit many people to solidify their first home until their late 30s.

"Renting is a great option in your 20s and 30s if your lifecycle is still in that changing period, if you haven’t met a partner or haven’t had children. You’ll probably move every two to three years anyway and if you were to buy and sell every two to three years the transaction costs would be horrendous," Furlong says.

By instead building a portfolio over this time, the end result is likely to be much better. "I could almost guarantee that the home someone would buy in their late 30s would be much better than in their 20s – and they’ve got these assets off to the side. Ten years of full tax benefits, gearing and depreciation will set you up for the future far better than [buying a first home earlier in life]."

Treasha Lim, a strategic property adviser at financial advisers KlearPicture, says many people are raised with a strong mantra to buy their home and not pay rent.

"Parents struggle through their mortgage and always say, 'don’t buy anything unless it’s your home, don’t pay dead money on rent'. The kids see it as such a hard task so that is ingrained in them," Lim says.

Lim has six properties around Melbourne and has mainly chosen to purchase off-the-plan where she saves money on stamp duty and doesn’t need to pay the full purchase price until a future date, and rents tend to rise in the meantime.

"I was fortunate that I had a few friends in the same boat; we all paired up and rented so we could keep investing so we could use as much of our tax dollars as possible. My rent has never exceeded A$850 a month and even though my pay was rising a lot every year, I didn’t change my spending. With some people the more they earn the more they spend, whereas the more I earned, the more I invested," Lim says.

Lim says the key to success is the compounding growth of property, compared to holding cash in the bank – which is not only tempting to spend, but also grows at a smaller rate than property.

"If you leave A$45,000 in the bank and you’re only earning 5 per cent, then you earn A$2250 a year and you have to pay tax on that at the end of the day. Whereas if I use that A$45,000 on a 10 per cent deposit on a A$450,000 property, let’s say it grows at 6 per cent, then you’re growing your net worth by A$27,000 a year not A$2000 a year."

She says this size of investment is possible for many investors, as the shortfall to be paid each month, after rent is paid and taxes and depreciation benefits are deducted, is often as small as a monthly car loan repayment.

Once people realise what is possible, it becomes easier to build a portfolio of multiple investment properties, Lim says. Even with two properties, she says, you could be growing your net worth at a rate of A$54,000 a year – which, after five years, is an increase of A$270,000, assuming 6 per cent growth.

"And then you can get your dream home."

CONCEPTS TO OVERCOME

1. Fear of debt – distinguish between productive and non-productive debt.
2. 'Rent is dead money' – ideas from past generations may not work today.
3. Property is too expensive – only if you live in it and do not enjoy cash injections from tenants and tax benefits.
4. I want a lifestyle NOW – but don't expect it to be long-term if you don't have a plan that allows for rising costs of living. Learn to spend less and save hard.
5. It's too high a risk – not if you choose a property that matches your financial capabilities and have a cash buffer.

DOs

1. Allocate spending rather than spend willy nilly.
2. Pay into a savings pot monthly no matter how small the contribution.
3. Invest as soon as you can under proper guidance. Stop finding reasons to procrastinate.
4. Save now spend later, rather than the other way around.
5. Make practical, calculated choices rather than impatient, emotional ones.
6. Keep it simple – you don't need a degree or complex plans. Just a CONSISTENT savings plan into a vehicle that appreciates in value over time.
7. Search for stepping stones rather than the dream home today.
8. Make it fun and light-hearted.
9. Determine what you really want in life. Don't feel guilty for trying to make money. It does not make you look materialistic. It's being smart.

A good time to own a house

20th January 2011

Source: Stuff Business Day

Buying or owning a house right now is a "pretty good idea" with inflation risk rising around the world, says New Zealand's Tower Investments.

Chief executive Sam Stubbs told a media briefing on investment markets in times of rising inflation housing investment has proved a good decision for Kiwis.

His team believes mortgage rates will rise this year but not nearly as high as the Reserve Bank could lift the Official Cash Rate (OCR) because banks had large enough margins to absorb these rises and still lend on first mortgages. The OCR is currently at 3 per cent and the central bank is not forecast to lift it more than 65 basis points in the next 12 months.

Asked if suggesting buying a house as a hedge against inflation contradicted Reserve Bank and Government advice to Kiwis to quit their obsession with residential property and get saving, Stubbs said the central bank was trying to avoid another property market bubble burst.

"There's no indication that will come along but equally, our argument goes that if you have the option of buying a house and you are worried about what will happen to the value of that house over the long term....we think that with rising interest rates and inflation...it will get ever more expensive for you to buy this thing if inflation comes along and we believe it will."

Housing as an investment "doesn't look like bad value right now", he says.

Mortgage rates looked like being "reasonable" for the short to medium term because banks were keen to lend on mortgages, the lowest-risk form of lending.

"We've been through the global financial crisis now, if banks wanted to exit the mortgage markets in New Zealand they've had plenty of opportunity but they chose not to. They've chosen to withdrawn from commercial and industrial (lending), that's why so many small and medium enterprises are hurting."

The price of a house does not go down in inflationary times, it goes up, says Stubbs.

"Make no mistake, the great value destroyer of the 1970s and early 80s in New Zealand and globally was inflation. Those who had mortgages and houses protected themselves against a lot of that. Those who had a lot of fixed interest deposits in banks ended up suffering in terms of diminution of the real value of their investment portfolios."

Tower is "quite bullish" on New Zealand's economic prospects for the next year.

"We don't see New Zealand in a perilous state economically, relatively we are in a good place."

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Inflation is one of three ways countries deal with an uncomfortable load of debt, Stubbs says.

"You can grow your way out of it; restructure your way out of it; or inflate your way out of it. We think this year there will be a combination of debt restructuring and inflation.

"We think the majority of reserve banks will be quite happy for inflation to overshoot (targets) because it solves a lot of the problem of global indebtedness as long as it doesn't get out of control."

On a positive note, "ordinary" Kiwis should be able to tap into a supply of inflation-linked fixed interest securities, he says.

Other global investment trends this year would include "ever more borrowing". Governments which had promised fiscal stimulatory packages will be printing money, Stubbs says. Currency wars will continue and there are mountains of cash in the world still be invested.

Inflation risk is already being priced into financial markets as evidenced by the rise of long-term bond rates, Stubbs says.

Normally money printing such as has been seen post-financial crisis would quickly lead to inflation, he says. But inflationary pressure has been soaked up by "empty factories, empty buildings and overbuilding".

Now with signs of growth and money still being printed, inflation is on the rise.

History teaches us that three asset classes are natural inflation hedges - property, equities and commodities, Stubbs says.

Rare Riverton rocks attract big interest

19th January 2011

Source: The Southland Times

Interest in Riverton's rocks continues to grow, with residents and scientists flocking to the area to share their finds.

Interest in the rocks has exploded after scientists from Geological and Nuclear Sciences visited the area and were "gobsmacked" by local rock formations last year.

Among those were Riverton's argillite, as well as rare "Brook Street terrane" – rock from the centre of the Earth.

The organisation had since committed to a research and education programme at Te Hikoi Southern Journey.

Te Hikoi manager Carole Power said the education programme was being developed and would provide southern pupils and teachers with valuable information on Riverton's geologically unique properties.

While the education programme was extremely exciting, interest in the region's geology had also grown within the community, she said.

Regular information afternoons and guided walks were growing in popularity, and many were being booked out, she said.

She was surprised by the mix of people attending the sessions.

Among the participants were farmers, teachers, scientists, high school students, and people from outside the area.

People were also bringing in their own rock collections, which was exciting, she said.

Interest in the rock formations was highlighted in September, when an outdoor rock display was unveiled at the museum.

It is believed to be one of only two such displays in New Zealand, she said.

The other is at Te Papa, in Wellington.

It was hoped interest in the area would grow as the education programme was developed, she said.

Hold on interest rates on the cards

17th January 2011

Source: Stuff Business Day

Cash-strapped homeowners will see some relief this year, with experts predicting the Reserve Bank will keep official interest rates low until at least September.

However, some experts say even that may be too early.

After two rises of 0.25 percentage points in June and July, the Reserve Bank has held the official cash rate steady at 3 per cent, as economic growth stalled.

Economists still expect a recovery this year, but there is a growing view that Reserve Bank governor Alan Bollard will leave rates on hold for another eight months.

The good news is coupled with predictions the stalled housing market will get a boost because of a property shortage.

At present, banks are charging between 6.15 per cent and 6.74 per cent for floating rates. A 0.25 per cent increase to mortgage interest rates means an extra cost of $250 a year for homeowners with a $100,000 mortgage, or $750 for those with a loan of $300,000.

With house prices remaining flat, unemployment above average and low longer-term inflation pressures, economists have been gradually pushing back when they expect the Reserve Bank to raise the official cash rate. It is well below the 5.9 per cent average of the past decade.

Economists at ASB and Deutsche Bank have moved their rate-rise predictions from June to September, and Westpac chief economist Brendon O'Donovan said even that may be too soon.

"It's been an environment where shocks seem to be the norm. If that continues, then the Reserve Bank's view will be fluid. At the moment it's looking like September but that's probably at the earliest."

Bank of New Zealand chief economist Tony Alexander said BNZ was still predicting a rise in July, but there was a growing shift towards a later date.

BNZ head of research Stephen Toplis agreed official data "suggests that there's a reasonable likelihood that that will be pushed back to September".

For the past two years, the official cash rate has been hovering around its lowest levels since it was introduced in 1999, but Mr Alexander said it was likely to return to about 5 or 6 per cent in the next two years. "We think in 2012, we'll be looking at around 5 per cent, but it depends.

"We keep pushing it out further and further, but it's extremely unlikely to go down – the next move will be upward unless the world goes into another meltdown."

At present, floating mortgages attract lower interest rates than fixed rates, but the key for homeowners will be picking the right time to switch to a fixed rate.

If they waited too long, rising interest rates would see the floating option become less attractive.

Mr Alexander said only a small percentage of mortgage holders would be lucky enough to pick the optimal time to fix.

"Most won't, because one thing that causes it to go up is everyone taking the fixed option. So, for example, in March 2009, people switched to fixed all at once and boom, fixed went up. Most will not fix at the current low rates."

Mr Alexander said the property market was likely to become more competitive because not enough houses were being built.

"About 16,000 a year when nationally we need about 23,000."

That, combined with a predicted shortage of builders because of the rebuilding needed in Christchurch and Queensland, would give the housing market a boost.

"At the moment, it's a buyer's market, but it will start turning around later this year."

Slump in home building consents in November

12th January 2011

Source: New Zealand Herald

The value of non-residential building work reached an 18-month high during November, against a slump in activity across the residential sector.

Latest figures from Statistics New Zealand (SNZ) show the value of consents issued for non-residential buildings was $479 million during November, up 23 per cent on the same period in 2009.

The main contributors were education buildings, factories and industrial buildings, SNZ said.

The value of residential buildings fell by 4.4 per cent to $514 million across the same period.

The seasonally adjusted number of new housing units authorised, excluding apartments, fell 2.6 per cent in November 2010, the fifth consecutive monthly fall.

When the volatile apartment category was included, the number of new housing units authorised rose 8.8 per cent, following a 1.8 per cent fall in October 2010.

Goldman Sachs economist Philip Borkin said the 'lumpy nature' of apartment and non-residential issuance meant it was difficult to know what the implications from today's numbers might be for monetary policy.

"We still believe it is too early to warrant a review of our expectations, but at this stage we see upside risk to our forecasts."

During November consents were issued for; 1470 new housing units (including apartments), 1244 new housing units, (excluding apartments), 226 new apartments (154 were assisted-living apartments associated with retirement villages).

Meanwhile the total value of earthquake-related consents in Canterbury during November was $2.3 million.

Two of these were for new dwellings, Statistics New Zealand said.

Building consent values include goods and services tax (GST), which increased from 12.5 per cent to 15 per cent from 1 October 2010.

It was not possible to separate the impact of this change on consents, SNZ said.

South rises again

12th January 2011

Source: The Southland Times

Invercargill is on the up and up as a top destination in New Zealand after moving up two places become the 18th most popular place to visit in 2010.

Wotif.com revealed the results from its top 20 places to stay yesterday that were booked through its website.

Queenstown was unchanged from last year at No 4, while Wanaka was up two places at 14 and Te Anau down three at 15.

Auckland again topped the list and Wellington pushed quake-ravaged Christchurch into third.

TOP 20 NZ DESTINATIONS

1. Auckland
2. Wellington
3. Christchurch
4. Queenstown
5. Rotorua 
6. Dunedin 
7. Taupo 
8. Hamilton
9. Napier 
10. Palmerston North
11. Nelson
12. Paihia 
13. Tauranga 
14. Wanaka 
15. Te Anau 
16. New Plymouth
17. Hanmer Springs
18. Invercargill 
19. Blenheim
20. Franz Josef Glacier

New rental housing law clears up grey areas

11th January 2011

Source: Stuff Business Day

A grey area in rental housing legislation has been cleared up so that tenants cannot be kicked out or leave with no notice if their fixed-term tenancy is over.

The Residential Tenancies Amendment Act (RTAA) took effect from October last year and landlords organisations are urging members to do their homework as people begin to shift around in the new year.

Key changes in the act include the process for terminating tenancies and new penalties for tenants who harass neighbours.

Under the old act, people whose fixed-term tenancies had expired were in a no-man's land for three months until they became an open-ended or "periodic" tenant".

"During that 90 days there was no minimum-notice period required," said a Building and Housing Department spokeswoman, Maria Robertson.

"Tenants theoretically could be told to leave, or could choose to leave, with no notice."

She said now fixed-term tenancies immediately became periodic when they expired, giving much more certainty to everyone.

Jackie Thomas-Teague, president of Wellington Property Investors Association, said 85 per cent of landlords were managing their own rentals and it was important they got a handle on the new act. Changes included rules about fire safety, disposal of leftover belongings and penalties for substandard or unmaintained housing.

Landlords are liable for damages of up to $3000 for poor housing, although spurious claims by tenants can result in them being forced to pay for wasting the Tenancy Tribunal's time.

Tenants also have some new responsibilities. It is now unlawful for tenants to harass neighbours or have too many residents on the property, with a fine of up to $2000.

Tenants who abandon or fail to vacate a property can also be fined $1000.

But Ms Thomas-Teague said heaping penalties on those who already owed money was not always effective. "Enforcement is going to be the big catch on this."

Landlords also had to appoint a property manager if they were going to be out of the country for more than 21 days, which was a "brilliant idea".

"A lot of tenants have problems contacting their landlord if something goes wrong, even if they're in the country but if they're out of the country, it's impossible."

She said the new act also made tenants more responsible for leaving properties clean and tidy, although this was not easily defined.

Landlords could also now dump goods left by a tenant if their market value was lower than the cost of storing and selling them.

This was an area which had been fraught with danger for landlords who in rare cases had been challenged for throwing out something of value. "It used to be really difficult because they used to have to get an order from the Tenancy Tribunal and go through a bit of rigmarole as to proving they had indeed tried everything to get hold of the tenant."

Homeowners warned on interest rates

5th January 2011

Source: Stuff Business Day

A leading bank economist is warning home buyers that current below-average fixed term mortgage rates could start rising "quite rapidly".

Westpac senior economist Dominick Stephens said people had flocked to the value of low interest floating rates, in the wake of the global economic crisis and subsequent slow recovery.

But it would be prudent to keep a close eye on some key economic indicators in the short to medium term to see if floating rates still provided the best value, he said.

Consumers preferring a floating rate now might find they ended up paying more over the next two years or so than if they took a fixed rate, Mr Stephens said.

Fixed term rates represented good value now as consumers were able to lock in below-average mortgage rates for a long period, but the fixed rates could rise earlier and faster than floating rates if the economy performed better than expected this year.

Westpac expected the Reserve Bank's expectation of subdued growth during the next 12 months would be exceeded.

Mr Stephens said the Reserve Bank might have to raise the official cash rate earlier than the end of 2011, which was its plan for now.

Consumers should keep an eye on four key factors.

Those were whether the housing market stabilised sooner than the Reserve Bank anticipated, the economic impact of the Rugby World Cup, earthquake reconstruction activity in Christchurch, and high commodity prices for farmers.

The Reserve Bank and Westpac had contrary views on whether farmers would spend the cash or use it to reduce debt, Mr Stephens said.

The housing market, particularly in Auckland, was already showing some signs of stabilising. If maintained, pressure would go on the Reserve Bank's prediction of a 2 percent decline in house prices in the first half of 2011.

Farmgate returns would be excellent, and while the Reserve Bank expected farmers to use the cash to pay down debt, Mr Stephens believed farmers would spend more freely than in 2010 although they would not return to the heady spending of last decade.

Coupled with the rebuilding of Christchurch and the Rugby World Cup's predicted $1.15 billion in total economic activity, fixed rates could rise earlier and faster than floating rates, Mr Stephens said.

"Those factors would force the markets to reassess the outlook and fixed term mortgage rates could rise quite rapidly."

Many variable floating rates are now between 6.2 percent and 6.5 percent, with fixed two-year mortgages around 6.6 percent and three-year around 7.1 percent.

NZ Property Report – December 2010

5th January 2011

The December 2010 NZ Property Report published by Realestate.co.nz provides an insight into the state of the New Zealand property market as measured by the supply side of the property market over the month of December. The key measures of the market analysed in the report are the number of new listings, the asking price expectation for those new listings and the level of inventory of unsold houses on the market at this time. The report is compiled from data captured by the website and represents close to 95% of all property movements in the NZ market as managed by licensed real estate agents.

The December 2010 report shows a record low level of new listings coming onto the market. This was matched with a slight drop in asking price expectation. The constant factor in the market is the scale of the inventory of unsold houses which in absolute number began to decline this month as somewhat stronger sales began to clear some of the inventory. When judged against the rate of sale of property, which continues to be weak, the inventory in number of weeks of sales continues to sit well above long term average, currently at 50 weeks.

Summary of the market – December 2010

December traditionally is the quietest month of the year for listing of new properties for sale. The run up to Christmas tends to curtail the listing period to a part-month rather than a full-month with the consequential lower listing count. On a seasonally adjusted basis December this year shows no percentage change as compared to November, indicating the seasonal trend was expected, however the absolute level of listings is significant at this new low level.

The 2010 year has seen a consistent lower level of listings as the sales of properties has slowed through the year. In the full year 138,789 new listings were added to the market which began the year with 52,817 listings (at the time equivalent to 37 weeks of sales). The year ended with 53,077 barely a discernible difference in absolute number of properties on the market yet with a lower rate of sale the inventory of unsold houses now amounts to 50 weeks.

The recent sales report for from REINZ for November of 5,138 properties sold, did show a significant increase of 28% on a seasonally adjusted basis indicating that the market was showing some signs of life as the stability of interest rates and economic indicators moved into more positive territory.

The indicator of asking price expectation has shown a repetition of 2009 with a couple of peaks; currently returning down to a midpoint reflecting the fact that in the past 3 years vendors expectations of price increases have as yet not found a firm footing.

Asking Price

The truncated mean asking price for all new listings coming onto the market in December fell very slightly from $417,660 to $415,750. On a seasonally adjusted basis the asking price actually rose by 1.3%. Asking prices seem to be showing volatility especially with such low levels of listings coming onto the market.

The current asking price continues to drift down below the peak of Oct 2007, currently off 3.1%.

New Listings

The traditional seasonal fall in December was as expected, but when coming off a slower level of preceding months the actual level of 8,924 hit a record low. No single month since Jan 2007 has seen a total of less than 9,000 per month.

On a moving annual basis the past 12 months have seen 138,789 new listings compared to 135,416 in the prior year an increase of just 2.5%.

Inventory

The level of unsold houses on the market at the end of December fell to 53,077 from 54,365 in November. This represented the equivalent of 50.1 weeks of equivalent sales, as assessed on a seasonally adjusted basis.

The inventory of unsold houses, whilst dipping slightly as a consequence of a strong November sales continues to sit well above the long term average of 40 weeks of equivalent sales, this still sees the market showing a “buyers-market” inclination.

Regional Summary – Asking price expectations

Whilst the national asking price expectation remained steady with just a small fall from prior month, the regional analysis shows some significant variances.

Amongst the 19 regions almost half showed a rise whilst the remained showed a fall. Strong increases in asking prices were seen in the North Island with Auckland showing a significant 5.2% increase as compared to recent 3 month average. The Hawkes Bay and Central North Island also showed strong increases, although in the latter region the volume of new listings was low.

Price movements in asking prices across the South Island were less significant with the Nelson / Marlborough region showing increases of over 5%.

Regional Summary – Listings

With the record low level of new listings in the month the sentiment of the market based on new properties fresh to the market would seem to show an inclination to a seller’s market. This however takes no account of existing inventory of unsold houses on the market

In spite of the overall fall in new listings across the country, both the Coromandel and the Wairarapa both saw rises in new listings as compared to December last year.

There were 5 regions of the 19 across the country that saw year on year falls of more than a third – Northland, Gisborne, Hawkes Bay, Marlborough and Central North Island. With the exception of the latter region all of the others still have a relatively high inventory of unsold houses on the market.

Regional Summary – Inventory

Despite the record low level of new listings and the relatively strong sales of properties in November the overall level of inventory of unsold houses on the market is still significantly above the long terms average (50 weeks as compared to 40 weeks).

The Auckland region now sitting with 36 weeks of unsold houses as compared to a long term average of 34 weeks is more finely balanced and with a 25% seasonally adjusted increase in property sales in November is certainly a more active market than other areas of the country.

Also of note is the Canterbury region which whilst suffering a significant initial impact of the September earthquake reported a 38% seasonally adjusted increase in sales in November – such levels seeing a reduction in available inventory edging the region towards a more balanced market.

Lifestyle

Lifestyle property listings In December totaled 927 – not a record low as compared to the total of all property listings seen in the month. In fact the total was 20% up on the low of January 2009.

In terms of asking price expectation the truncated mean for the month was $537,368 which was 13% down on the same period last year and 4% below the recent 3 month average. The current asking price is 15% below the peak asking price which was in February 2009.

Apartments

Listings for apartments fell in December from 594 in November to 452, again not a record low, that being 352 in January 2009. Over the past 12 months a total 6,651 new apartments have come onto the market – up 3.7% as compared to the total of 2009 at 6,416. The asking price (truncated mean) rose in December by a significant 26% as compared to the recent 3 month average.

The Auckland apartment market showed a degree of activity with 268 new listings at an asking price of $479,258. This asking price was significantly up on the recent 3 month average of $315,410. This asking price is the highest level of asking price recorded going back to January 2007.

Property Price Index

Comparing the sale price of properties across the country to the asking price expectation is not a perfect comparison; however the trends tend to align. The benefit is that the data for asking price is of the market today, whilst the selling price is reflective of the market active between 4 and 6 weeks ago. The latest comparison is highlighted below:

Realestate.co.nz data is compiled from asking prices of new residential listings as they come onto the market via subscribers to the realestate.co.nz website. The Realestate.co.nz website currently has over 94% of all licensed real estate offices subscribing and providing all of their listings onto the website. The asking price is presented as a truncated mean price at a 10% interval.

Rental crackdown

5th January 2011

Source: The Daily Post

Bad landlords and bad tenants are expected to "get their comeuppance" as changes to the Residential Tenancies Act bed in.

Changes that came into effect on October 1 have been welcomed by the industry for introducing new "unlawful acts" and adding more teeth to existing legislation by increasing financial penalties. Real Estate Institute of New Zealand property management group chairman Richard Evans described the changes as "good lawmaking, from the point of view of tenants, landlords and property managers".

Feedback from the Real Estate Institute of New Zealand (REINZ) property managers' conference in Wellington in October was very positive. "The changes seem to be working very well. There have been no major cases yet, with landlords being fined $3000 for not doing work, but it will happen."

Changes include 11 new unlawful acts and an increase in financial penalties for breaching them. These include:

* Owners asking for unauthorised forms of security.

* Owners failing to appoint an agent if they are out of the country for more than three weeks.

* Tenants harassing neighbours.

* Tenants using the premises for unlawful purposes.

* Unlawful entry by the landlord.

Mr Evans said the changes made the law more evenly balanced and would encourage some investors, who felt they had previously received a raw deal, to re-enter the market.

"There was a perception that the 1986 act was unevenly tilted against landlords.

Whether that was true or not, it is now history."

Both the REINZ and the Tenants' Protection Group were consulted before the changes were made and Mr Evans said the amended act created a more level playing field and a more balanced set of rules.

"We are all looking forward to seeing bad landlords and bad tenants get their comeuppance."

The REINZ has been working with the Auckland District Law Society to create a new generic tenancy agreement template that reflects the changes. Mr Evans said the aim was to have this available on both organisations' websites by Christmas.

THE RESIDENTIAL TENANCIES ACT

What are your rights and responsibilities?

Rent

* Landlords cannot ask for rent to be paid more than two weeks in advance.
* Sixty days' written notice must be given for rent increases.
* Rent must not be increased within 180 days of the start of the tenancy or the last rent increase.
* Receipts must be given immediately if rent is paid in cash.
* If rent has been reduced, a return to normal rent is not considered an increase.

Bond

* A landlord may require a bond of up to four weeks' rent.
* Bonds must be lodged with the Department of Building and Housing within 23 working days.
* Receipts must be given for bond payments.
* If the property is sold, the landlord's bond rights pass on to the purchaser.
* The bond covers damage or loss to the landlord if the tenant's obligations are not met, but does not cover fair wear and tear.

Landlords must

* Provide and maintain the premises in a reasonable condition.
* Allow the tenant quiet enjoyment of the premises.
* Comply with all relevant building, health and safety standards.
* Not seize tenants' goods for any reason - abandoned goods should be dealt with as per the Residential Tenancies Act.

Let tenants know if the property is for sale.

* Give 90 days' written notice of tenancy termination or 42 days' if there is an unconditional agreement to sell with vacant possession or the premises are needed for the owner or a member of his/her family.

Rights of entry

The landlord must enter the premises only:

* With the tenant's consent.
* In an emergency.
* After 24 hours' notice for repairs or maintenance, between 8am and 7pm.
* After 48 hours' notice for an inspection
* To show premises to prospective tenants or purchasers or associated professionals with the tenant's prior consent.

Tenants must

* Pay rent on time.
* Keep the premises reasonably clean and tidy and notify the landlord of any necessary repairs.
* Use the premises mainly for residential purposes.
* Pay for consumables such as electricity, gas, telephone charges and metered water.
* Leave the property clean, tidy and clear of rubbish and possessions; leave all chattels; and leave all keys with the landlord at the end of the tenancy.
* Give 21 days' written notice to terminate a tenancy.

Tenants must not

* Damage or permit damage to the premises.
* Disturb neighbours or other tenants.
* Alter the premises without written consent.
* Use the property for any unlawful purposes.

Slow rebound in dairy growth predicted

5th January 2011

Source: The Southland Times

Easing prices and high returns were driving investors' dollars back into Southland dairy farms but it would take a few years yet to return to lofty heights of the boom times, the director of a farm investment firm said.

MyFarm director Andrew Watters said that last year 68 investors put $44 million into nine syndicated investments through his company, including four Southland dairy farms.

That brings the total number of syndicated farm purchases co-ordinated by MyFarm in Southland to 17, representing between 13,000 to 14,000 cows.

Dairying had become particularly rewarding in a market with farm availability at reduced prices, cash returns of between 7 and 10 per cent and a positive outlook spurred by increased demand from developing nations, he said.

He believed that combination of factors has resulted in an active real estate market in areas like Southland.

Southland was an attractive region for farm investors with good value for money, usually reliable weather and high land productivity, Mr Watters said.

There had been a lot of doom and gloom since farm sales took a dive but there were promising signs in Southland, he said.

Mr Waters said there had been a reasonably significant number of sales recently.

He predicted dairy farm profitability would improve this year.

Mortgagee sales falling

20th December 2010

Source: Stuff Business Day

Mortgagee sales in September remained on a par with August but continued a trend of falling forced sales, data shows.

Terralink International figures showed 187 forced sales nationwide during September - comparable with the 188 in August but well down on the 217 in July. Mortgagee sales peaked at 264 in May.

Terralink managing director Mike Donald said forced sales were still nearly five times higher than the pre-recession period but that there was now a clear downward trend for the first time since 2008.

"The latest figures show a slight drop on the month before, but it is the overall trend which is most significant," Mr Donald said.

"Over the last quarter we have seen an ongoing downward trend that signals, at an overall level, that the pain is easing for property owners."

The biggest drops in mortgagee sales in September were Manawatu (down 43 percent), Wellington (50 percent), and Canterbury (65 percent). However, they increased in Otago (up 22 percent), Auckland (12 percent) and Waikato (9 percent).

"Mum and dad" homeowners accounted for 24 percent of mortgagee sales in September, Mr Donald said.

"While the effects of the recession seem to be easing, our data shows that it's increasingly ordinary Kiwi property owners losing their home. Sadly, this trend is likely to continue for as long as there is a sluggish economy."

Mortgage Approvals Finally On The Rise

17th December 2010

Farm sales up, but prices fall

16th December 2010

Source: Stuff Business Day

New Zealand farm sales picked up from a slump in October, though prices continued to decline.

The number of farm sales rose to 170 in the three months ended November 30, according to Real Estate Institute data. That's up from 147 in the three months through October, though still down on the 223 sales in the same period a year ago.

Prices continued to decline, with the median sales price dropping 1.9 per cent to $950,000 from a month earlier. That's still some 10 per cent more than the same period in 2009. The media price dropped in six out of 14 districts.

"After a very quiet period there is now a higher level of genuine inquiry and increased activity in the rural market resulting in the lift in sales, but that is to be expected at this time of year," spokesman Bryan Thomson said in a statement.

"While there is plenty of investigation going on, both sellers and buyers are still coming to terms with the changes in price levels and taking time to make their decisions."

Farm sales have hit a downturn in recent months as banks are unwilling to fund the purchase of rural real estate in the current economic climate, though existing farmers are using weak exchange rate against the Australian dollar to repay outstanding debt.

Farm prices have been on the decline over the past two years after the global financial crisis choked up farmers' ability to raise cash to expand their business.

Reserve Bank Governor Alan Bollard is expecting farmers to ramp up spending once they've repaid their outstanding debts.

Still a buyers' market despite increase in house sales

15th December 2010

Source: Stuff Business Day

The weak housing market is still "tipped in favour of buyers", despite prices perking up 1.9 per cent in November and home sales volumes rebounding from extremely low levels during winter, economists say.

The lift in sales volume to more than 5000 homes in November was the first rise since April and the largest gain in volumes for almost two years, with some economists suggesting the weak patch in housing could be coming to an end. Others said the figures were a sign of the market steadying after trending down for months, but no more than that.

The housing market typically goes into a quiet patch in December and January, though the Real Estate Institute said there had been a "late spring" flush of listings at the start of November. With pent-up demand to buy and sell, trading was expected to continue "without the usual slowdown over Christmas", according to REINZ spokesman Bryan Thomson.

"The housing market continues to look weaker than this time a year ago, but the pickup over November provides some comfort that that market is not deteriorating further," ASB Bank economist Christ Tennent-Brown said.

Given the high level of stock on the market – it would take 12 months to sell all homes at present sales rates the market remained "tipped in favour of buyers", he said. The Real Estate Institute's monthly housing price index was up 1.9 per cent in November, but economists said the monthly figures could bounce around, especially with low sales volumes and it was better to look at the three-month average. In the three months to November, the house price index was down 0.5 per cent and remains down 1.9 per cent on a year ago.

Last week, the Reserve Bank said it expected house prices to fall a little more in coming months, so the 1.9 per cent rise in November was against the grain of the central bank's view. But ANZ pointed out that it was just one month's figures and would need to be followed up by a number of strong numbers to shift the Reserve Bank from its view that interest rates could remain lower for longer.

Bank of New Zealand economists said it still expected the trend in house prices to be "flat to negative", pointing to sales volumes that were still down 15 per cent on a year ago.

The Real Estate Institute figures show house sales turnover in November picked up about 20 per cent from a dismal level in October.

There were 5138 homes sold in November. However, volumes have been trending down for most of the year and remain exceptionally low.

UBS senior economist Robin Clements said the lift in house prices and volumes were the most positive figures for many months, suggesting "the weak patch could be coming to an end" though more figures were needed to be sure.

ANZ Bank economist Mark Smith said while sales volumes were up strongly in November, it was after many months of subdued figures. Sales were still low in relation to the stock on the market and a cautious mood remained.

In Wellington, house prices in November were 0.9 per cent up on a year ago, with Christchurch down 4 per cent and Auckland down 1.2 per cent, according to the REINZ index.

Better housing market figures out yesterday were countered by worse than expected retail sales figures for October, suggesting a poor start to the December quarter for the economy.

House prices rise in November

14th December 2010

Source: Stuff Business Day

House prices perked up in November, rising 1.9 per cent in the month, partly offsetting the declines earlier in the year.

In the three months to November house prices were still down 0.5 per cent, and down 1.9 per cent on levels of a year ago according to the Real Estate Institute of New Zealand, REINZ Monthly Housing Price Index.

House prices remain 4.7 per cent down on their peak in late 2007.

In Wellington, house prices in November were 0.9 per cent up on a year ago, with Christchurch down 4 per cent and Auckland down 1.2 per cent for the year, according to the REINZ index.

There was also a lift in monthly sales volumes in November, to more than 5000 sales, after a slow winter with sales under 4000 in October.

The sales volume for November was still about 1000 down on the same month last year.

The national median price was $360,000 according to REINZ figures, up from a median of $350,000 in October.

The median price is not adjusted for quality, so is a less accurate guide to price movements than the house price index, which compares like for like.

Dollar soars against greenback

14th December 2010

Source: Stuff Business Day

The New Zealand dollar rose to its highest level in nearly a week against the United States currency which was broadly weaker, partly on concern a tax deal could swell the large US budget deficit.

At 8am today the kiwi was around session highs at US75.69c, having climbed through the night from US74.82c at 5pm.

Michael Woolfolk, currency strategist at BNY Mellon, said markets were confident that a deal cut last week by the White House and Republicans to extend Bush-era tax cuts would boost growth, and that helped lift the greenback last week.

But the markets also feared that with unemployment near 10 percent, the US central bank would press on with a US$600 billion ($792.7 billion) bond-buying program to keep long-term rates low, he said.

That, together with the tax cuts, could swell a budget deficit already in excess of US$1 trillion.

BNZ currency strategist Mike Jones said financial market sentiment had brightened noticeably overnight.

The fact that China appeared to be holding off on interest rate hikes, in favour of increases in bank reserve requirements, saw investors heave a collective sigh of relief, Mr Jones said.

The improving risk appetite and commodity price gains had bolstered demand for growth-sensitive currencies such as the NZ and Australian dollars.

The NZ dollar remained in a tight range against the aussie overnight between about A76.10c and A75.70c as it bumped along near seven-week lows.

The kiwi slipped to 0.5642 euro at 8am from 0.5670 at 5pm, and edged up to 63.01 yen from 62.89. The trade weighted index lifted to 67.90 at 8am from 67.79.

ANZ said it expected the NZ dollar to tentatively test topside trends today, but technical theorists thought resistance around US75.80c should remain out of reach with the release of Treasury's Half Year Economic and Fiscal Update at 1pm.

Yesterday Prime Minister John Key said today's data would show economic growth and the Government's fiscal performance in the current year to be a bit below what was forecast in the budget.

Rural broadband plan welcomed

14th December 2010

Source: The Southland Times

Milford Sound and parts of the Catlins would probably miss out on broadband under a joint Telecom and Vodafone bid to deliver the Government's $300 million rural broadband plan.

However, the plan was welcomed by business and local government leaders in Invercargill yesterday.

Vodafone wholesale and business development general manager Steve Rieger told about 25 people it was the first time the companies had partnered on anything.

"We have natural competition but we are the two largest infrastructure investors by a long way," Mr Rieger told the meeting yesterday.

The companies proposed putting in a further $100m each to the programme and including extended phone coverage.

Southland District Mayor Frana Cardno said it was exciting for rural New Zealand and she liked the fact that the plan ensured competing companies would be vying for rural business.

"Until now it's been take it or leave it," she said.

However, she was concerned that Milford Sound and parts of the Catlins would likely miss out.

Mr Rieger said Milford Sound was a difficult place to get to and make a profit from.

"Economically, we would never do it voluntarily. It needs the Government to give it a push."

Much of the Catlins would also fall outside of the coverage area and would be serviced by satellite.

Mrs Cardno said the Catlins was a crucial area with growing eco-tourism potential.

Venture Southland enterprise and strategic projects manager Steve Canny said he was pleased the companies had taken on board the organisation's suggestion that wireless broadband be delivered from hilltop sites.

"This is the only logical way for rural broadband communications to be deployed," he said.

Under the proposal Telecom would look after the proposal to ensure that 97 per cent of rural schools are connected to fibre and Vodafone would take responsibility for providing 80 per cent of rural households with broadband speeds of at least 5Mbps.

About 4500 km of fibre optic cables would be laid to community exchanges and schools while communities would be served by 154 new towers throughout New Zealand providing a wireless service.

Mr Rieger said households that wanted a wireless connection would be required to buy a modem and antenna. Integral to the initiative was open access for telecommunication companies and rural users would be able choose their provider.

Telecom representative Michael Gaunt said it planned to keep pricing the same for urban and rural users. Telecom was providing a state-of-the-art service, almost as good as Europe, he said.

"We're right up there with the best."

Also on the Government's shortlist to provide the services is a Kordia, Woosh Wireless and FX networks proposal known as Opengate and Torotoro Warea, a partnership between Maori and fibre optic and wireless network operator Opto Networks.

The Government is expected to sign a contract with the successful bidder next month.

Interest rates on hold

10th December 2010

Source: Stuff Business Day

The Reserve Bank is leaving official interest rates unchanged at 3 per cent, saying rates should stay low till the economic recovery is stronger.

Bollard pushed out the timetable for his return to tighter monetary policy, saying it was "prudent to keep the OCR low until the recovery becomes more robust" as the country’s economic recovery stagnates amid soft consumer spending and a depressed housing market.

That has analysts pushing out their forecasts for when Bollard will go again, scotching the likelihood of a March hike.

The central bank said rates will rise to "a more limited extent over the next two years" than signalled in September, after slower than expected economic growth recently.

"The pre-emptive rate hikes earlier this year, have in hindsight looked unnecessary," said Jane Turner, economist at ASB. "The RBNZ now wants to be more confident that the recovery is firmly underway and that inflation pressures are actually lifting."

Bollard began tightening monetary policy in June after taking the benchmark interest rate to a record-low 2.5 per cent to combat the worst recession in almost two decades against the backdrop of the global financial crisis.

Imre Speizer, market strategist Westpac said the outcome was more dovish than the market was expecting, and he’s picking Bollard will lift rates in July.

"The shift in stance is best illustrated by the 90-day bank bill rate projections which were revised around 30bp lower out to March 2013," he said.

KIWI DOLLAR FALLS

The statement knocked about half a US cent off the kiwi dollar, with Bollard again complaining about the strength of New Zealand’s currency. The kiwi recently traded at US74.56c from US74.94c immediately before the statement, and was at 67.54 on the TWI from 67.84. 

Dr Bollard pointed out that the New Zealand dollar had risen sharply since September, which was holding back a switch in growth to the export sector, holding back tourist spending and making it harder for manufacturers to compete with imports.

ECONOMIC ACTIVITY

The pace of economic growth had "moderated" with company investment plans lower than average. Firms were reluctant to borrow and invest, despite interest rates close to their historic average levels.

Household spending was weak and housing market activity was even slower than earlier in the year.

The central bank warned that house prices may fall "a little further" in the near term, which would be consistent with the current low level of home sales.

The household and business caution about spending suggested present low interest rates were having a less stimulatory effect on the economy than in the past.

On the plus side, New Zealand’s trade partners were growing, especially in the Asia-Pacific region. That meant commodity prices were still rising, from already high levels.

However, there was still a risk global growth would slow and prices fall back.

While the short-term outlook for growth was softer than earlier expected, rebuilding after the Canterbury earthquake in September and higher exports would lift growth in the coming year.

The recent rise in GST would see headline inflation spike temporarily, but there was little evidence that was likely to flow on into generally higher prices and wages the central bank said.

Steady times for house prices

8th December 2010

Source: Otago Daily Times

House prices are starting to steady after sliding back during most of this year, according to valuation group QV.

Nationally prices were up 0.3 per cent in November quarter compared with the same period last year, but remain 5.6 per cent under the property boom price peak in late 2007.

House prices fell after the recession and global financial crisis hit, dropping to a trough early last year before recovering ground till March this year. Since then prices prices have slowly fallen back again.

But the rate of decline has slowed and prices appeared to be stabilising, QV said, despite a low number of house sales.

Values in the Wellington region have dropped the most since March, down 3.4 per cent, and are now 6.5 per cent below the market peak.

But QV said in November "there are the first signs that values in Wellington are also stabilising."

"Securing funding from banks remains difficult for some potential buyers, while others are taking their time over purchase decisions" QV research director, Jonno Ingerson said.

QV Valuers in the main centres said high quality homes  in good areas were still selling quickly and for good prices.

"This is in contrast to the large number of properties that have now sat unsold for several months" Mr Ingerson said.

The average house sale price over the last three months has dropped to $397,805 from the $399,055 reported last month, though that is not related to the QV index and is seen as a less reliable indicator of the market, QV said.

Cows coming home in Southland

7th December 2010

Source: The Southland Times

Another 50,000 dairy cows were added to Southland's dairy herd last season, with the province now home to 10.4 per cent of the country's cows.

Figures released yesterday by Livestock Improvement and DairyNZ show there were 458,306 dairy cows in Southland in the 2009-10 season, up from 418,337 in the previous season. Cow numbers have increased by more than 100,000 in two years, from 353,323 in 2007-08.

A decade ago there were about 170,000 dairy cows in Southland.

The number of dairy herds reached 850, up 41 on the previous season.

The figures also reveal for the first time New Zealand has more dairy cows – 4,396,675 – than people – 4,390,294 – at 5.30pm yesterday, according to Statistics New Zealand's online population clock.

The average number of cows per herd was 539, up from 517 on last season. The conversion of Southland farmland to dairying has slowed, with just 14,313ha of extra land converted last season, taking the total land use to 169,749ha. In the previous season an additional 25,000ha was converted.

Southland dairy farmers increased their productivity, with the average milksolids per cow lifting to 376kg, up 2kg on the previous season. North Canterbury has the highest-producing dairy cows in New Zealand with an average of 384kgMS per cow.

The amount of milk collected in Southland in the past season rose by 200 million litres to 1.9 billion litres, or 172 million kgMS.

New Zealand dairy companies processed 16.5 billion litres of milk, containing 1.44 billion kgMS in the past season, up 3.3 per cent. There are 11,691 dairy herds in the country.

Housing Confidence Report

2nd December 2010

Source: asb.co.nz

Key highlights of the report:

• Housing confidence falls slightly, but is still relatively upbeat.

• Price expectations remain positive but fewer people expect price increases.

• Despite a fewer number of respondents expecting interest rate increases over the coming year.

Download a pdf of the full report.

Plenty of choice for home buyers

2nd December 2010

Source: Stuff Business Day

Home buyers have plenty of choice at the moment as a surge in new listings in late spring has lifted the number of residential properties on the market to its highest level in 2-and-a-half years, according to the latest New Zealand Property Report.

The number of new listings in November was up 7 percent, on a seasonally adjusted basis, falling just short of 13,000 new listings, according to the monthly report compiled by Realestate.co.nz.

"This puts listings at their highest level since June 2008, and is the highest level for a November calendar month since 2007," Alistair Helm, chief executive of Realestate.co.nz.

The expected selling price of new listings fell 0.5 percent $417,660 in November from a year ago.

"Vendors are eager to take advantage of the summer marketplace and are setting their expectations at realistic levels," Mr Helm said.

The overall market price is 2.7 percent below the peak of the market back in October 2007 on a seasonally adjusted basis.

"While these indicators show it's definitely a good time to buy, we'll need to wait and see how this trends over the next few months before we can fully assume that the market is regaining some buoyancy," Mr Helm said.

Hot and dry summer predicted as heatwave hits

30th November 2010

Source: Otago Daily Times

Otago's heatwave continued yesterday with many towns recording temperatures well into the 30s, prompting at least one meteorologist to predict a hot, dry summer.

The temperature at the Lauder Hotel yesterday afternoon reached "32deg in the shade, so you could add on about another 6deg in the sun", publican Gerald Patterson said.

Alexandra yesterday recorded a high of 33degC, the sixth consecutive day temperatures have been above 30degC.

Cromwell and Ranfurly recorded 28degC at 3pm, while Otematata reached 31degC and Twizel 27degC.

Veteran Queenstown meteorologist David Crow said Sunday in the resort was the hottest November day on record, with the temperature reaching 29.8degC - 0.4degC hotter than records temperatures in 2005 and 2008.

Mr Crow began taking Queenstown readings in 1962.

"We're going to get a very dry, hot summer.

Niwa predicts higher than usual temperatures and below average rainfall for the next three months and it's not even summer till Wednesday."

Sunday readings from private observers in Mr Crow's network around the Otago region all topped 30degC, with Wanaka and Arrowtown reaching 31.1degC, Kingston 30.7degC, Kinloch 30.1degC and Alexandra 30degC.

The MetService recorded Queenstown's maximum temperature yesterday as 26degC.

Fresh fruit and ice cream sales at the weekend were "huge", Cromwell's Freeway Orchard owner-manager Kristin Nolan said.

"We probably turned out about a thousand ice creams over the weekend."

Mitre 10 Alexandra co-owner Kerry McAuley said pedestal fans were "trotting out the door".

Swimming and paddling pools, sun umbrellas, gazebos, sprinklers and hoses were also in demand.

Temperatures were so hot in Balclutha yesterday the tarseal in Essex St, north of the town, was melting.

Rebecca McCabe, of the Balclutha Night'n Day store in Essex St, said ice cream sales were "massive".

The Telford Rural Polytechnic weather station website put Balclutha's temperature reading at 26.9degC at 2.45pm.

Olivia Lomas, of Night'n Day Milton, said the thermometer was at 27degC when she arrived at work at 3pm.

A moderate southwest wind in Wanaka meant yesterday was a slightly milder 25degC, following two days at 32degC.

A top temperature of 23degC in Dunedin was recorded by the MetService, which was predicting a cooler southwest change for the city overnight bringing cloud, drizzle, and a high of 17degC today.

Stadium rebuild gets council approval

30th November 2010

Source: The Southland Times

The replacement Stadium Southland will be rebuilt on a slightly bigger footprint to its predecessor, and with some improvements, Invercargill city councillors confirmed last night.

The council's infrastructure and services committee members voted unanimously to approve the stadium rebuild, as tabled in a report by McCulloch Architects.

The old stadium, considered the hub of Southland sport, collapsed on September 18 after heavy snow settled on its flat roof.

The roof height of the new stadium will be increased from 14.5m to 18m, which will allow for stronger, deeper trusses, while three walls would be extended.

Other proposed changes to the new stadium, as outlined in The Southland Times last week, include the installation of mobile seating on the south wall, more space between each of the community courts, the relocation of the climbing wall, new mobile seating and cantilevered seating and a store and plant area.

Southland Softball Association bosses, whose facility is beside the stadium, told councillors an expanded Stadium Southland would adversely affect its planned development of three new international diamonds that were to be centred on a central clubrooms.

But councillors agreed the changes to the new Stadium Southland were of a limited nature and Softball Southland could be accommodated.

Cr Alan Dennis said it was vital the council agreed to the new stadium proposal because it was the first step in getting work under way so the building could be completed by 2012.

The new design was stronger and better than the previous one and there was an expectancy in the Southland community that the rebuild would be bigger and better, he said.

Councillors voted to approve the first stage of the development, which centres on the seven courts, in a unanimous vote.

The design of the northwest corner of the new stadium is still progressing.

Mortgage Link News

25th November 2010

Source: Mortgage Link Newsletter Nov 2010

Interesting times ahead, all major lenders are trying to mix it up to gain market share and have belatedly introduced their traditional “spring campaigns” with carrots attached all aimed at enticing new business.

So in essence what sort of playing field have we got? Well first off most lenders are offering something towards professional fees, that may be valuation costs or legal fees. Amounts will range from $400 to $1,000 depending on loan size. Some lenders are shading interest rate which is also an indication that there is more margin available between cost of funds and retail rates than there has been for some time.

This has also coincided with a slight easing in the lenders credit policies with most now being prepared to consider the above 80% space, which until recently was the sole domain of Kiwibank and Westpac. It is interesting to see the variances that Banks are applying here, some are charging a lenders mortgage insurance and actually insuring the loan (cost is to the borrower), some are charging a low equity fee (cost to borrower) and some are adding a margin to the interest rate and reducing loan term (cost to borrower). End result is a higher cost of some description when borrowing over 80% and you really need to do a full analysis to ensure you are comparing apples with apples.

It is rather ironic that we have gone through a period of “credit crunch” where growth was thrown out the door to a period where “sales” becomes the catch cry to maintain or enhance market share or to read that more accurately "PROFIT". The irony of this is that throughout New Zealand property sales are at the lowest level they have been for the last 5 years!!!
 

Bikies roll into Oreti Park camp

25th November 2010

Source: The Southland Times

Oreti Park was rumbling with motorcyclist enthusiasts yesterday as they pitched their tents in preparation for one of the biggest motorcycling events in New Zealand.

Burt Munro Challenge organising committee chairman Wayne Affleck said the event this year would be one of the biggest.

"It is without a doubt New Zealand's national rally and something we are very proud of...I think Burt would be surprised and proud."

No matter how rough motorcyclists might look, they all had a story to tell, he said.

Matamata motorcyclist Garth Fowcett said he rode down to celebrate the challenge as a spectator and to support the people taking part.

"It's brilliant...this is my third one and it's the highlight of the year."

The two-day journey was an excuse to ride his BMW bike, which he started off sharing with his friend Max, who was travelling down to see good friend Mayor Tim Shadbolt.

On the trip down Max had taken a corner too fast and crashed his motorbike, breaking his leg, and was taken to Greymouth hospital, Mr Fowcett said.

Everyone who rode a motorbike had to admire Burt Munro, he said.

The challenge was also a good opportunity to catch up with friends.

Grant Catchpole rode from Christchurch and said this year would be the biggest event so far because the weather was good and there were more events.

Nelson 73-year-old Merv Lightfoot said the challenge was so significant to him that he had taken a fortnight off work for it.

Mr Lightfoot, who said he was crazy about motorcycles and owned 30 of them, had travelled down for the fourth year in a row to watch the events.

"There's so much happening all the time...it's so well organised and there are so many events."

Self-employed decorator and painter Darren Webb, of Motueka, said he had grown up visiting a farm and riding bikes, which sparked his interest.

This was the first time he had been to the Burt Munro Challenge where he would be watching and it was a good excuse to ride his newest bike, a Kawasaki ZZR 1200, he said. MotoSouth owner Greg Baynes said business picked up during the challenge with motorcyclists wanting their tyres changed after riding long distances and wearing them out.

People who took part in several events also required their tyres changed throughout the week before taking part in a new event, he said. About 20 extra tyres had been ordered in for the challenge to accommodate travellers, Mr Baynes said.

Staff members were racing in some of the events and Mr Baynes was the defending champion of the Beach Race, winning it in 2008.

"We're pretty excited about it. We have been looking forward to it all year. It's good for Invercargill."

Tax cuts make homes more affordable

18th November 2010

Source: nzherald.co.nz

The Government's package of income tax cuts helped improve home loan affordability last month by the most in nearly two years, a report shows.

But it's still not enough for a typical buyer, on a single income who has saved a 20 per cent deposit, to comfortably buy a home in New Zealand.

Houses are described as affordable when 30 per cent of an income is needed to repay a mortgage.

The affordability report, compiled by Roost Home Loans mortgage brokering group, shows it now takes 55.7 per cent of one median weekly take-home pay of $799.06 to pay the mortgage on a median-price house bought during October, down from 57.9 per cent in September.

This represented the biggest progress since a 6 per cent rise in affordability, from 60 per cent to 54 per cent, in January last year, when interest rates and house prices were falling sharply, the report said.

Home loan affordability is now back at levels seen in June 2004, before the housing boom.

Income tax cuts which took effect from October 1 improved median take-home pay by about $30 a week.

Margaret Smith of Roost said buyers had the upper hand in a market which had more choice for buyers.

"Home buyers have the wind at their backs," she said.

The national median house price was flat at $350,000 last month and is now down 3 per cent from a record high of $360,500 in March. The average two-year mortgage rate was flat at 6.73 per cent during October.

But there was no evidence that home buyers had taken advantage of the boost in home loan affordability last month, the report said.

The report shows it took 69 per cent of one median take-home pay of $847.75 to pay the mortgage on a median-priced house purchase in Auckland last month - making it the least affordable region in the country.

Based on current income and house prices it will take an individual 8.4 years to save the 20 per cent deposit required by most banks in New Zealand and 10.4 years in the Auckland region.

Dunedin keeps neurosurgery services

10th November 2010

Source: www.stuff.co.nz

Dunedin has won its battle to retain neurosurgery services after a long-running inquiry.

In a report today, the Director General of Health said the South Island would retain neurosurgery services in Christchurch and Dunedin but would look "radically different", including one board to govern the entire South Island service, headed by a world-leading neurosurgeon.

The service would eventually have seven to eight neurosurgeons with at least three in Dunedin.

Acting Director General of Health Andrew Bridgman said the new governance board would be chaired by professor Andrew Kaye, the head of department of surgery at the University of Melbourne and Director of Neurosurgery at the Royal Melbourne Hospital.

The new service's Dunedin node would have a heavy emphasis on academic neurosurgery, which involved both research and teaching.

The university would appoint and support a Professor of Neurosurgery and a Senior Lecturer in Neurosurgery to be based in Dunedin.

Christchurch would maintain at least four neurosurgeons with the opportunity to grow and develop as the service expanded.

The review of South Island neurosurgery services followed disagreement between the five South Island DHBs on their configuration.

The decision has been welcomed by the areas' health boards and mayors.

Southern District Health Board chairman Errol Millar said it was a ''common sense'' solution but the panel had done a fantastic job getting to grips with the issue.

Dunedin Mayor Dave Cull was thrilled with the inquiry's decision, which he said created a model for other South Island health services going forward.

''There will be other situations coming up like this, so this is a really great example of partnership and co-operation for the region. It's excellent news.''

An expert panel was set up to assess the best way to provide services.

Bridgman was satisfied from the panel's report that consolidating neurosurgery in Christchurch was not the best solution "either clinically or financially".

"The panel is clear that the impact on patient outcomes combined with the developments in neurosurgery and the ageing population mean consolidating in Christchurch is not the right decision.

"Nor is the idea of retaining two neurosurgeons in Dunedin - that's not a sustainable service."

Bridgeman said the panel's recommendation to establish academic neurosurgery in Dunedin and to work with orthopaedic surgeons in the region to extend the amount of neurosurgeon involvement in spinal surgery fundamentally changed the nature of the service.

"We can now establish the whole South Island service as a leading and growing service, one which will be attractive to neurosurgeons to work in and which offers training and career opportunities. The service can develop sub-specialities and still retain the reach it needs to be accessible for acute patients.

"This is an outstanding solution for South Island people."

Health Minister Tony Ryall said  the decision "shows the value of having clinicians involved in the planning of services".

"This outcome is something quite different to all of the speculation and discussion that had been aired, during years of uncertainty."

The National Health Board (NHB) said the solution to the South Island's neurosurgery problem was an innovative one that would ensure the South Island maintained a sustainable neurosurgical service.

NHB member Dr Jeff Brown said the academic neurosurgical component of the service had the potential to help the service become a leading centre of neurosurgery.

"This will greatly enhance the attractiveness of the service to top neurosurgeons and neuroscientists."

"As health services are increasingly provided by DHBs on a regional basis, this model demonstrates how improvement can be achieved by developing solutions based on greater collaboration, allied with visionary leadership. "

'FANTASTIC RESULT'

The Southland Times had been running a campaign to keep neurosurgery in Dunedin so Southlanders did not have to travel to Christchurch for essential medical treatment.

As part of the campaign more than 55,000 signatures were collected by Southland and Otago people for a petition delivered to Parliament.

"This is a fantastic result for the South and shows what people power can achieve," said Southland Times Editor Fred Tulett.

"We've forced Health Minister Tony Ryall and the Ministry of Health to back down on plans to shut down the neurosurgery unit in Dunedin by sheer weight of numbers."

"More than 55,000 southerners signed the Save Our Surgery petition organised by The Southland Times and the Otago Daily Times, a remarkable show of united protest in the two provinces.

"So we have won this battle, but the South needs to remain vigilant.  The Government is determined to review and centralise a wide range of specialty health services - we will need to be equally determined if we are to retain those services in Dunedin."

DECISION WELCOMED

Southern DHB chairman Errol Millar said the University of Otago had put in a big contribution to the overall proposal and the end result would be ''good for them and good for us''.

''The other thing I wanted to say was that the public campaign by The Southland Times and the ODT should get accolades for keeping this issue in front of people.

''To me, it helped the public understand the debate. Instead of anonymous gnomes making decisions, people understood,'' Mr Millar said.

He said it was a nice way to end his term as chairman of the board.

Southland District Council Mayor Frana Cardno said Southland and Otago people united in the fight to save the neurosurgery unit in Dunedin and this result showed the power of people coming together.

''It is fantastic news."

Mr Cull said the decision recognised the importance of the University of Otago to Dunedin's economy and social fabric.

''It's testament to people power, and good rational analysis. This decision is not based on the fact that a whole lot of people raised their voices. They have got the right people in, analysed it in the right way, and come up with the right decision.''

Otago Daily Times editor Murray Kirkness whose publication, along with the Southland Times, waged a public campaign to keep neurosurgery in the South said he was pleased with the outcome.

''I do think the public's voice counted because it made people sit up and take notice but I think this is clinical and financial decision rather than a straight political one.''

Mr Cull said the virtue of the inquiry's decision was that there were no losers.

''The whole region gets service. Christchurch gets really well serviced - at least as well as it is now. Dunedin continues to have a comprehensive full-time service, and the regions that are further away from both main centres have a better chance of receiving the type of service they should expect.''

DOWNGRADE REFUSED

Labour's health spokeswoman Ruth Dyson said southern communities refused to accept a downgrade of services and this resulted in a decision to continue neurosurgery in Dunedin.

"Southerners in their tens of thousands turned out, refusing to accept the National Government's decision... Today's announcement is a direct result of their protests, petitions and the pressure they placed on the Government," she said.

"Health Minister Tony Ryall had taken the coward's way out by refusing to intervene in the issue. Thankfully the people of the Southern regions displayed a lot more backbone than the Minister."

INTERNATIONAL EXPERT

The new head of South Island neurosurgery services is an international expert in the field.

Professor Andrew Kaye is the James Stewart Professor of Surgery and head of Department of Surgery at the University of Melbourne and the Director of Neurosurgery at the Royal Melbourne Hospital.

The Ministry of Health says Kaye's main clinical and research interest involves neuro-oncology and cerebrovascular disease.

In 1992 he was awarded the John Mitchell Crouch Fellowship by the Royal Australian College of surgeons and in 1997 was appointed the Sir Arthur Sims Commonwealth travelling Professor.

In 2003 the American Association of Neurological Surgeons honoured him with the Ronald Bittner Award for contributions to the treatment of brain tumours and in 2006 the Paul Bucy Award for his contribution to neurosurgery education.

In 2004 he presented the Sir John Eccles Lecture at the Australian Neuroscience Society.

In 2010 Kaye was awarded the Medal of Honour from the world Federation of Neurosurgical Societies for "outstanding contribution to neurosurgery".

In 2003 he was awarded the Commonwealth of Australia Centenary Medal and received the Order of Australia in 2004.

MAIN RECOMMENDATIONS:

* The South Island Neurosurgery Service is established as a regional, distributed service with nodes in Christchurch and Dunedin.  

* An independent Governance Board is established and given the delegated authority and support to lead the business and clinical development of the Service for the benefit of all South Islanders. This authority extends to all appointments and re-appointments of neurosurgeons and key clinical staff to the Christchurch and Dunedin nodes.

* The Governance Board be Chaired by Professor Andrew Kaye with the following additional membership: an independent neurosurgeon,  the Chair of Southern DHB, an expert consumer advisor; one of the Chairs of Nelson Marlborough DHB, South Canterbury DHB and West Coast DHB, on an annual rotational basis; a senior University of Otago nominee and a South Island Iwi nominee

* The  Governance Board have an initial term of three years, with review after two years and be responsible to the National Health Board, through its National Director It will be supported by a clinical director and manager.

* There will be  seven, then eight neurosurgeons, with a minimum of three neurosurgeons in Dunedin.

Mortgages easier to come by

10th November 2010

Source: Stuff Business Day

Banks are loosening the purse strings for mortgages at the same time that the Reserve Bank withdraws the last emergency funding facility put in place during the global financial crisis.

Mortgage brokers and real estate agents say most banks are again lending up to 95 per cent of a property's value for people on high incomes. Mortgage broker Jeff Royle said the banks were reacting to the market as houses were put up for sale.

"Most are increasing their LVRs (loan to value ratio) up to 95 per cent for strong income earners," Mr Royle said.

ASB lending general manager Mike Davy said the improving economy meant most banks had reviewed their lending criteria for customers with less than 20 per cent deposit.

First home buyers usually needed at least a 10 per cent deposit, Mr Davy said.

At the height of the financial crisis and recession, banks restricted nearly all lending to a maximum of 80 per cent of a property's value. During the property boom it was possible to get a loan with no deposit.

Westpac chief executive George Frazis said the bank was lending at up to 90 per cent of a property's value, but had not eased its lending requirements.

However, a small number of existing loans were being refinanced at higher than 90 per cent value of a property.

This was being done to reduce the repayments for some customers who had struck financial difficulty during the recession to help them stay in their homes, Mr Frazis said.

All new loans were being sold at below 90 per cent of the property's value, he said.

The Reserve Bank said it would remove the last remaining temporary liquidity facility put in place during the financial crisis as banks were able to access funding through normal money markets.

The Reserve Bank introduced temporary emergency funding measures for banks in 2008, but began withdrawing them from October last year.

The last to be removed is the Tuesday Open Market Operation which allowed banks to borrow from the Reserve Bank for terms up to three months to maintain liquidity after global money markets froze during the financial crisis. The facility will be withdrawn from December 1.

Reserve Bank deputy governor Grant Spencer said financial market conditions were continuing to stabilise and banks were making little use of the special facilities.

During the next few months the Reserve Bank would review the remaining supporting measures introduced during the crisis, Mr Spencer said.

Thousands take on Munro Challenge

9th November 2010

Source: The Southland Times

Anticipation is building for the fifth annual Burt Munro Challenge this month.

Organising committee chairman Wayne Affleck said the Southland motorbike bonanza which ignites on November 24 was shaping up as the best yet.

Entries were at least comparable with, if not better, than past years with expectations of more than 3000 riders and support crew to descend on the south, he said.

Competitor registrations for the challenge have closed but one week remains for people to pre-register for the rally.

There had already been more than 2000 people register for the rally which had become a "must-do" event, he said.

It had become the focal point of the social activity surrounding the challenge and was a favourite among visitors to the region, Mr Affleck said.

And visitors for this years' event are coming from further afield with more entries than ever from across the Tasman, for both the rally and competition.

"We're quite proud of the international reputation that has been built from the event."

Among the attractions for the 2010 challenge would be a new addition, the New Zealand Longtrack Grand Prix, which would be raced at Ascot Park on day one of the event, he said.

National titles will also be up for grabs for the Bluff Hill climb and beach races.

More than 600 riders had registered across all the competitive events, he said.

"It's a high quality field with competitors from all over the place. It's going to be good."

The challenge runs from November 24 to 28.

Property values still sliding

8th November 2010

Source: Stuff Business Day

Residential property values continued to gradually decline in October and are now 5.5 percent down from the market peak of late 2007, according to the latest QV Valuations report.

The report did not provide a measure for Canterbury, saying there were too few sales since the magnitude 7.1 earthquake on September 4 to generate a reliable index measure.

The property market in Canterbury was slowly beginning to recover. Sales slowed dramatically in the weeks following the earthquake, but are now beginning to pick up in the less affected areas, the report said.

It is taking longer for sales to go through because additional engineering reports are being required and there were delays securing LIM reports.

"We have seen a small lift in property values across Christchurch city over October, but only in suburbs where there has been little or no earthquake damage. In such areas, agents report demand for quality housing, with some healthy sale prices being achieved," said Melanie Swallow of QV Valuations.

The local economy was being stimulated by insurance and Earthquake Commission (EQC) payouts. This has helped kick-start the property market.

Nationally, after the peak of late 2007, values dropped during 2008 to a low in early 2009, before rising again until early 2010, then beginning to decline again.

Over the last 12 months values first rose 2.8 percent from October 2009 to March 2010, then fell back 1.6 percent since March. As a result, values were still 1.1 percent above last year, but that gap continued to close.

There were plenty of properties for sale but many had been on the market for a long time. The number of new properties was lower than usual for this time of the year.

"The low level of sales activity we have seen all year continued through October, with sales well below both last year and the long term average. There is no sign of the traditional spring surge in sales, and we don't expect any significant increase in sales before the New Year," said QV.co.nz research director, Jonno Ingerson.

NZ third best place to live - UN report

8th November 2010

Source: NZherald.co.nz

New Zealand is the third best country to live in the world, climbing 17 places in the latest United Nations' index aimed at measuring development.

The Human Development Report 2010 (HDR) was released today by UN Secretary-General Ban Ki-moon and UN Development Programme Administrator, and former New Zealand prime minister, Helen Clark.

The report, The Real Wealth of Nations: Pathways to Human Development, highlights countries with the greatest progress as measured by the Human Development Index (HDI).

The index calculates the well-being in 169 countries, taking into account health, education and income, which are combined to generate an score between zero and one. The countries are grouped into four categories: very high, high, medium, and low.

New Zealand was named 20th in the 2009 and this year is just behind Norway and Australia, first and second respectively.

The country's score has been rising by 0.5 per cent a year between 1980 and 2010 from 0.786 to 0.907 today, placing it in "very high" category.

New Zealand's life expectancy is 80.6 years, average number of school years is 12.5, and gross national income per capita is $25,438 ($32,046).

But the report's lead author Jeni Klugram warned not to compare the latest index to previous years because different indicators and calculations have been used.

The 2010 index charts national ranking changes over five-year intervals, rather than on a year-to-year basis.

"Annual changes in national HDI rankings don't tell us much about the reality of development, which is inherently a long-term process," she said.

Other high achievers are the United States (4th), Ireland (5th), Liechtenstein (6th), Netherlands (7th), Canada (8th), Sweden (9th) and Germany (10th).

Mozambique (165th), Burundi (166th), Niger (167th), the Democratic Republic of the Congo (168th) and Zimbabwe (169th) were at the bottom of the index.

The report, the 20th anniversary edition, also looks at HDI data available for the past 40 years in 135 countries and names the "Top 10 Movers".

Most developing countries made dramatic, "often underestimated" progress in health, education and basic living standards in recent decades, with many of the poorest countries posting the greatest gains, the report said.

Oman led the list, which invested energy earning over the decades in education and public health, and was followed by China and Nepal.

China was second mostly because of higher income per capita, but was not a top performer in school enrolment and life expectancy.

"One important finding from several decades of human development experience is that for lasting improvements on the quality of life of citizens, economic growth alone does not automatically bring improvements in health and education," Dr Klugman said.

Nepal did see an improvement in healthy and education. A child born today can expect to live 25 years longer than a child born in 1970, and more than four of every five children attend primary school, compared to just one 40 years ago.

Overall, the report shows over the past four decades, life expectancy climbed from 59 years to 70, school enrolment rose from 55 per cent of all primary and secondary school-age children to 70 per cent, and per capita GDP doubled to more than US$10,000 ($12,587).

Ms Clark said the report shows that people today are healthy, wealthier and better educated than before.

"While not all trends are positive, there is much that countries can do to improve people's lives, even in adverse conditions. This requires courageous local leadership as well as the continuing commitment of the international community," she said.

Top 15 countries

1. Norway
2. Australia
3. New Zealand
4. United States
5. Ireland
6. Liechtenstein
7. Netherlands
8. Canada
9. Sweden
10. Germany
11. Japan
12. South Korea
13. Switzerland
14. France
15. Israel

Top 10 Movers

1. Oman
2. China
3. Nepal
4. Indonesia
5. Saudi Arabia
6. Lao PDR
7. Tunisia
8. South Korea
9. Algeria
10. Morocco

Kiwi dollar at 30-month high

8th November 2010

Source: Stuff: Business Day

The New Zealand dollar rose to its highest level in 30 months against the greenback, which slumped broadly in response to the United States Federal Reserve's decision to buy $US600 billion of US Treasuries over the next eight months, hoping to spur growth in a disappointingly slow US economy.

The kiwi, also boosted by employment data yesterday that suggested this economy was performing better than expected, peaked around US79.75c early today. It eased to US79.57c by 8am, well up from the US78.49c at 5pm yesterday.

The NZ dollar also rose against other currencies, pushing to its highest level in more than seven weeks against the Australian dollar around A78.60c, from A78.06c at 5pm. By 8am the kiwi had fallen back to A78.36c.

At 8am the NZ dollar was also around its highest level in about seven weeks at 0.5599 euro from 0.5552 at 5pm, while against the Japanese currency the kiwi rose from 63.42 yen at 5pm to hit a three-month high near 64.40 yen before easing to 64.19 yen at 8am. The trade weighted index rose to 69.52 at 8am from 68.92 at 5pm.

BNZ markets strategist Mike Jones said that for the second day running the NZ dollar had been the strongest performing currency.

Yesterday's employment data had "lit a rocket under the currency," he said.

Overnight, the NZ dollar continued its path northward against the US dollar as surging risk appetite bolstered demand for growth-sensitive currencies such as the kiwi and aussie.

Meanwhile the Australian dollar surged above US$1 this morning. Shortly before 6am AEDT (8am NZT),  the Australian dollar hit a record high of US$1.0157 - one dollar and about one and six-tenths of a cent - as the greenback's weakness continued to bolster alternative investments.

Stock markets and commodity prices soared as investors bathed in the afterglow of the Fed's quantitative easing policy.

The Fed's commitment to open-ended purchases of Treasuries, implying low funding costs, also brings into focus an expected increased use of the US dollar in carry trades in which the US dollar is used to fund purchases in commodities, emerging markets and higher-yielding currencies.

"What you achieve with quantitative easing is that you signal to investors not to buy US government securities, take the money elsewhere, which in turn will weaken the (US) dollar and spur economic growth," said Axel Merk, president and portfolio manager at Merk Investments in Palo Alto, California.

Most city buildings safe: council

3rd November 2010

Source: The Southland Times

Nearly 1400 commercial buildings built and altered in Invercargill between 1993 and 2005, which have still not been signed off by building inspectors, will not be in a state of disrepair, says a city council boss.

Three city buildings in Dee St were this week declared dangerous and cordoned off by the Invercargill City Council, while a host more buildings in the city might also have to be checked for structural damage.

The city council is expected to know tomorrow how many more buildings in the city might need to be checked for structural damage.

Yesterday, council building regulation services manager Simon Tonkin said he did not believe the nearly 1400 commercial buildings still to receive a final inspection would be in a similar state to the three Dee St buildings.

This was because the three structurally damaged buildings were much older than the 1400 buildings yet to be signed off.

Also, those 1400 buildings had been inspected while they were being built, Mr Tonkin said.

Under government orders, the council was poised to prosecute the owners of the 1400 buildings yet to be signed off eight months ago. But that action was put on hold in April, again under government orders because it was revisiting the relevant section of the Building Act.

"It's still on hold," Mr Tonkin said.

Meanwhile, the council is expected to release a report tomorrow saying what caused the damage to the three Dee St Buildings declared dangerous at the weekend. The buildings, occupied by Red Cross, Pillz & Thrillz and Coco Bella, might have to be torn down because of large cracks and tumbling masonry.

When the cause of the damage was determined, the council would identify other buildings in the city that might also be at risk, Mr Tonkin said this week.

More buildings may face checks