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."   

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.

Construction on site will end eyesore

18th January 2012

Source: The Southland Times

Hendo's Hole, the eyesore that has blighted Queenstown's northern entrance for five years, could start being filled and built upon by halfway through the year, a developer's spokesman says.

The hole was colloquially named after its creator, bankrupt property developer David Henderson, when his Five Mile Holdings company went into receivership – leaving the gaping, unfinished 1200-space underground car park as the only physical evidence of grandiose plans for the site.

About 4.5ha of the 7.7ha, $11 million site can be used for commercial development, with retail development budgeted at $125m.

Queenstown Gateway spokesman Simon Holloway yesterday said resource consent issues were being worked through, and leasing agreements had almost reached the minimum mandatory percentage required to give the development the green light. "You've got to have a level of commitment from future tenants to back the deal, and we're pretty close to that," he said. Naming that percentage was commercially sensitive and could not be divulged, Mr Holloway said.

Progressive Enterprises secured a Countdown supermarket as anchor tenant through their partnership in buying the site, and were so far the only tenant publicly known, he said.

A multiplex cinema is also thought to be in tenancy negotiation.

In April 2010, Queenstown Gateway partner Tony Gapes said it was likely part of Hendo's Hole would be filled in while some would be retained for parking.

Naylor Love, a national construction company with a Queenstown branch, had been contracted for the build, Mr Holloway said.

Lakes Environmental manager of resource management services Brian Fitzpatrick yesterday said the resource consent application details being worked through were minor.

Resource consent setting out building and roading patterns, and an outline development plan had been approved.

"At that stage of things, when a consent is non-notified, only the applicant can object."

Lakes Environmental had been running three objections together until late last year, when one was resolved, "leaving two which are still being treated as live," Mr Fitzpatrick said.

HENDO'S HOLE, THE SAGA

December 2005: Approval is given for developer David Henderson to build a $2 billion village at Five Mile that will house 10,000 residents.

September 2006: Henderson turns the first sod.

May 2008: Creditors apply for the liquidation of development companies.

July 2008: Building site is abandoned as Five Mile Holdings put in receivership owing almost $80m.February 2009: Secured creditor Hanover Finance puts Five Mile land on the market.

November 2009: Stage one of the site sells to Queenstown Gateway Ltd, owned by Aucklander Tony Gapes in partnership with Progressive Enterprises, for $11m.

October 2010: Tony Gapes rebuts claims by some Queenstown retailers that Queenstown Gateway plans are "overblown".

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.''

'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.''

Higher numbers through Queenstown boost airport

9th January 2012

Source: Otago Daily Times

Higher numbers through Queenstown boost AIA

Queenstown Airport provides solid numbers for Auckland International Airport Ltd. Photo supplied.

A large increase in international passenger numbers passing through Queenstown Airport helped Auckland International Airport Ltd produce some positive statistics.

The figures are to the end of November 2011, but show that international passenger movements through Queenstown Airport rose nearly 62% on November 2010.

AIA said in a report the increase was driven by increased international routes to and from Sydney, Melbourne and the Gold Coast last year, and by more passengers.

The statistics showed that in November, 10,376 international travellers passed through Queenstown, compared with 6409 in November 2010.

More than 65,100 domestic passengers flew in and out of Queenstown in November, up 9.8% on the previous corresponding period.

International travellers flying in and out of Auckland airport increased 5% in November compared with the previous period.

Travel by New Zealanders bounced back in the month after the Rugby World Cup and was up 9.2%.

Travel from China remained strong in 2011. China Southern started daily services on November 1, 2011. Passenger numbers were up 25%.

However, Forsyth Barr has downgraded AIA from buy to accumulate as the shares are trading close to valuation at $2.59. Broker Peter Young said yesterday that, given the recent share price strength, it still had a positive investment view.

"AIA is a high-quality, high-margin business with a strong industry position that has improving earnings momentum. While there are near-term challenges given the global economic environment, we believe the New Zealand tourism outlook remains robust over the long term."

AIA had demonstrated its resilience through a challenging period and was a low-risk exposure to the New Zealand tourism recovery and growth story, Mr Young said.

The company was trading on high earnings multiples that were in line with historic averages, and those multiples reflected the quality of the stock.

The 5% growth through Auckland airport in November was in line with the rolling 12-month growth of more than 5% and slightly below the 2012 financial year growth to date of 6.6%, he said.

New Zealanders who travelled internationally increased 9.2%.

Mr Young had been encouraged by the focus on boosting air links with Asian carriers, tightening operation capital expenditure, leveraging its land bank and the success of its retail and parking strategies.

"AIA remains well positioned for any further recovery in passenger growth over the next 12 months to 24 months," he said.