Property info thread - ctd.....

[MotherBear]

Getting the best from your mortgage
Page 1 of 4 5:00AM Sunday June 17, 2007
By Stephen Cook

Homeowners are being warned to brace for more mortgage misery with predictions of a rise in interest rates to 12 per cent by early next year - the highest since the housing boom began.

With floating rates now in double-digit territory and fixed rates not far behind, the mortgage market is set for a bumpy two years, as the Reserve Bank tries to take some of the steam out of the overheated property market.

With $40 billion of new mortgages written last year alone, the stakes are high - especially with a third of those fixed-rate mortgages up for renewal in the next 12 months.

Add in the fact that household debt rose 3.7 per cent during the March quarter, outpacing gains in household asset values, and it's not surprising that economists such as Gareth Morgan are forecasting tough times for homeowners.

Morgan believes the Reserve Bank will continue increasing the official cash rate until the heat is finally driven from the housing market - which will lead to fixed mortgage rates of around 12 per cent heading into the March quarter next year.

The next rise in the official cash rate is tipped to be in September.

The Reserve Bank's decision to raise the official cash rate to 8 per cent - the third hike this year and the 12th since Alan Bollard started his credit squeeze at the beginning of 2004 - has already led to higher debt servicing costs, especially for those who have just managed to get a toe-hold on the first rung of the housing ladder.

More here .

[MotherBear]

Low wages blamed for house price crisis
1:35PM Monday June 18, 2007

Low wages are at least partly to blame for house prices becoming out of reach of many people, the Council of Trade Unions (CTU) said today.

In the three years to 2007, house prices increased by 38.5 per cent while wages went up by just 8.7 per cent, union economist Peter Conway said.

It is urging a parliamentary select committee considering housing affordability to look at New Zealand's low rates of pay as a key reason home ownership is being pushed out of reach.

Mr Conway said: "If house prices are outstripping wages by four to one, then it's no wonder that home ownership is increasingly out of reach for low and middle income New Zealanders."

Last week, in its submission to the commerce select committee, the Reserve Bank proposed introducing a capital gains tax on investment properties.

The bank's governor, Alan Bollard, has raised the capital gains tax issue several times recently in his monetary policy statements and in speeches when he has talked about the need to curb the boom in house prices, which he largely blames for rising inflation.

The submission suggested the Government should consider a policy more in line with Australia's, where realised capital gains on rental properties are taxed, but at half the normal rate.

Mr Conway said the CTU also supports a capital gains tax on investment housing.

He added that it "also suggests introducing stamp duties for higher priced houses and removing the offsetting of expenses for rental properties against income".

Its submission to the parliamentary committee also suggests more state housing and subsidised home lending programmes.

Prime Minister Helen Clark and the National Party have rejected the idea, but the suggestion has gained support from the Green Party.

The Green's co-leader Russel Norman said the party supported measures to stabilise the housing market such as a capital gains tax but said it would have to exclude family homes.

National's finance spokesman, Bill English, said his party did not support a capital gains tax and it was the wrong time to think about imposing it on investment properties.

To have an effect it would have had to be introduced when house prices started going up, not as they were flattening or dropping, he said.

Miss Clark said today the bank and its governors had been suggesting a capital gains tax for years, but the Government had continually ruled it out.

- NZPA

From here .

[MotherBear]

House prices: plea to unlock the land
Page 1 of 2 5:00AM Wednesday June 20, 2007
By Anne Gibson


Expanding urban boundaries is a common theme in submissions to the home affordability inquiry. Photo / Dean Purcell

"Buy land, they're not making it anymore," said writer Mark Twain.

Yet some submissions being made at Parliament this month are calling for councils to stretch city boundaries so more folk can live on the fringes.

Real estate investors want more land to develop, unions want higher wages so people can afford houses, builders say they're hamstrung by red tape when trying to build and the Reserve Bank wants a capital gains tax to cool the market.

These are some of the suggestions made in papers prepared for the parliamentary inquiry on housing affordability.

The Property Council, representing investors with interests worth $20 billion, wants zoning restrictions around city boundaries lifted.

The Council of Trade Unions, representing 39 unions with 350,000 members, wants higher wages and more state subsidies to help people buy their first homes.

Registered Master Builders, with 1780 member companies representing 65 per cent of the annual dollar spend in the industry, says chippies want more sections and less red tape.

The Reserve Bank wants a capital gains tax on rental properties when they are sold, and the Government to consider changing its management of immigration.

Demographia, which surveys housing affordability annually, wants land on urban boundaries freed up for housing, saying land scarcity is the single most critical component in the affordability crisis.

Hugh Pavletich, a Christchurch developer and co-author of the Demographia survey with Wendell Cox of Missouri, said he was heartened to see many of the submissions to the inquiry had criticised restrictive urban boundaries.

More here .

[MotherBear]

News mixed on housing
5:00AM Friday June 22, 2007

It became easier to buy a home in Waikato-Bay of Plenty, Southland and parts of Otago in the three months to May 31.

That's the good news for house hunters in the latest quarterly report on home affordability from Massey University's Property Foundation. The bad news is that in eight other regions houses became less affordable so the national measure of home affordability worsened by 4 per cent in the quarter and 11.9 per cent in the year to May.

Overall, an increase in the national median house price outstripped increases in the average weekly wage and mortgage interest rates to make homes less affordable in the quarter.

But fluctuations are emerging between regions. There was a 6.6 per cent improvement in the measure of home affordability in the May quarter in Central Otago-Lakes, while Southland improved 4.8 per cent, Otago 2.2 per cent and Waikato-Bay of Plenty 0.2 per cent.

By comparison, the regions to show an improvement in affordability in the February quarter were Otago (5.6 per cent), Nelson-Marlborough (5.4 per cent), Taranaki (2 per cent) and Wellington (0.4 per cent).

The declines in home affordability in the May quarter were: Northland (5.8 per cent), Auckland (5.2 per cent), Canterbury-Westland (4.9 per cent), Wellington (2.8 per cent), Taranaki (2.6 per cent), Manawatu-Wanganui (2.4 per cent), Nelson-Marlborough (2.2 per cent) and Hawkes Bay (0.6 per cent).

The largest decline in home affordability on an annual basis was in Southland (26.8 per cent), followed by Wellington (18.3 per cent) and Manawatu-Wanganui (16.9 per cent).

- NZPA

From here .

[MotherBear]

Auckland house prices overtake Australia's big cities'
5:00AM Sunday June 24, 2007
By Julie Jacobson

Median house prices in Auckland are now outstripping those in all of Australia's major cities, except Sydney and Perth.

Auckland's median of NZ$450,000 ranks ahead of Canberra on A$395,000 (NZ$436,000), Melbourne on A$380,000, and Brisbane on A$345,000.

And a new international housing affordability survey describes Auckland, Wellington and Christchurch as "severely unaffordable". Of 157 international locations, Auckland ranks 21st least affordable city in which to buy a home, with its median price almost seven times the median household income.

Melbourne ranks a few places behind on 23rd, with its median price 6.6 times the median income. Sydney, meanwhile, sits in 7th place with an affordability rating of 8.5. Its median house price is A$516,000. Christchurch is 31st on the list (with an affordability rating of 6) and Wellington is 47th (rating of 5.4). Los Angeles tops the list - with an affordability rating of 11.4.

Nationally, Australia and New Zealand have a housing affordability ratio of 6.6, compared with 5.5 in Britain and 3.7 in the United States. The internationally accepted standard for affordability is that the median house price does not exceed three times the median household income.

But though the figures might show Auckland is still more affordable than Sydney, it's not the whole picture.

Hugh Pavleitch, co-author of the Demographia survey, said Sydney's multi-million-dollar harbourside realty skewed median prices in that city and nationally.

Many houses in Auckland were now fetching considerably more than similar properties in the larger Australian cities. The NZ$535,000 median for Auckland's North Shore is comparable to the whole of Sydney median of A$516,000.

Author and media commentator Gordon McLauchlan said he had noted the diminishing gap between property prices in Australia and New Zealand on a recent visit to Sydney. "You can buy a studio apartment around the Cross and Potts Point [inner city] for about the same as you pay in Auckland."

Extra costs such as stamp duty (payable when buying a house) were offset by higher wages across the ditch - generally around 30 per cent more, he said.

Friends who had bought an inner-city apartment in Melbourne had paid considerably less than they would have for a similar property in Auckland.

In May, a survey by financial analysts JDJL showed it took nearly all the average weekly Auckland take-home pay (99.5 per cent) to make a mortgage repayment on a median house. For all of New Zealand the figure was 74 per cent, while Australians forked out just 34.5 per cent of their weekly earnings.

More here .

[MotherBear]

Home prices rising too quickly for buyers
By NICK CHURCHOUSE - The Dominion Post | Tuesday, 3 July 2007

A recent online survey shows house vendors are expecting 14 per cent more than at the same time last year, double the increase buyers want to pay.

The Nielsen NetRatings survey of 1161 people researching real estate showed that the mean selling price vendors were hoping for was $587,334, an increase of 14 per cent.

But buyers were expecting to pay a mean purchase price of $516,290, only 7 per cent up on last year. The figures were skewed upward by high-end properties, with half of all house sales going into the $250,000 - $499,999 bracket, but the report says sellers' expectations have been accelerating faster and leaving house buyers behind.

Harcourts Wellington managing director Marty Scott said price rises in Wellington in the past 12 months supported the expectations of the vendors, but that was getting harder to justify as the market slowed.

"Statistically, there is very little evidence of the market cooling off, but the stats are always reporting one or two months in arrears," he said.

Anecdotal reports of an expected flattening of real estate price increases were becoming more prevalent, but could be based on anything from a house taking a bit longer to sell to a mere feeling that the price curve was flattening.

Tommy Heptinstall of Tommy's Real Estate said the market would sort out the differential, and the varied expectations indicated the market would have to back off.

"If the buyer only wants to pay 7 per cent more and the seller wants 14 per cent more, the market will change - there's your answer."

But he said it was hard to trust statistics in such an individual transaction.

"I don't like graphs. Usually it's really simple: the vendor has an expectation and the buyer has an expectation, but common sense states that things don't always grow by the same amount."

House prices were increasingly being talked down by economic commentators and the lower expectation of purchasers was a reflection of that, while sellers were still buoyant from the recent market activity, Mr Scott said.

"There's a feeling around that there has been a frenetic vendors' market and buyers have been put under pressure."

From here .

[MotherBear]

New real estate rules 'will drive agents out of business'
Page 1 of 2 5:00AM Wednesday July 04, 2007
By Anne Gibson

Government reform and regulation of the real estate industry will increase charges and drive agents out of business, says an industry leader.

But Associate Justice Minister Clayton Cosgrove says the proposed new regime will better protect consumers and bring higher skill levels to the sector.

Paul Slatin, chief executive of the 105-agency First National Real Estate, said consumers would pay higher fees if proposals announced in May went ahead.

"The move to ensure that all individuals working in the real estate industry are employed on a fulltime basis as opposed to contract is ultimately anti-competitive and will mean higher fees for consumers," Slatin said.

Cosgrove said this was untrue. "The consultation paper proposes that the real estate industry be subject to the same employment laws as any other industry or business.

"In practical terms, this means real estate agents can choose whether to engage salespeople as independent contractors or to employ them. Such decisions will be subject to scrutiny from the courts as to whether a person is genuinely a salesperson or an independent contractor," Cosgrove said.

Slatin predicted a big drop in the number of real estate agents, saying many would leave the sector.

"The move will put a huge strain on smaller offices, particularly in provincial areas. It will make them less viable, meaning less choice and higher fees for consumers," he said.

But Cosgrove said the changes were far from anti-competitive and would improve the public's confidence in the sector, the transparency of discipline and the complaints procedure, so strengthening the sector.

More here .

[MotherBear]

Housing market cools with the winter weather
By EMMA PAGE - Sunday Star Times | Sunday, 8 July 2007

Winter could be having a chilling effect on the property market. Figures out this week will hint at a cooldown.

Real Estate Institute president Murray Cleland said the cooler months and rising interest rates would be reflected in the latest sales figures for June, saying "there is a slight slowing in the market".

"Unfortunately New Zealanders don't like to buy in the wind and rain."

Migration is also easing, with the latest statistics for May showing more people leaving the country than coming in, taking pressure off housing demand.

Rising interest rates could be having an impact - rising last month for the third time this year - but with many homeowners on fixed rate mortgages, it may take time to filter down. REINZ figures for this year show prices have remained strong. In May the national median hit a new record at $350,000 while the median Auckland house price dropped $2000 to $450,000 - suggesting it may have peaked.

While national sales numbers were typical for the time of year, properties took longer to sell on average - rising from 27 days in March to 30 in May.

Bayleys' communications manager Neil Prentice said sales activity had been slowing, but prices were still good.

And although the market was still strong, it wouldn't show the price increases of previous years.

Harcourts Team Wellington managing director Marty Scott said anecdotally people within the industry were beginning to think the heat had come out of the market.

Property was taking slightly longer to sell, there was a bigger gap between vendors' expectations and what buyers were prepared to pay and more conditional offers were being accepted. Spring and summer sales data would reveal if this was classic winter slowdown or a growing trend.

Christchurch-based auction specialist Roger Dawson said the market showed signs of easing and owners were having to adjust to a slightly less buoyant market. Buyers were also displaying some hesitancy. "They're not racing in with the same urgency as they were a few months ago."

Meanwhile, commentators said the collapse of finance company Bridgecorp could make it harder for property developers to get funding.

Brent King, former managing director of finance company Dorchester Pacific, said better projects could get funded at a lower cost while more risky projects would not get funded - making it difficult for them to happen. The company's failure could also prompt a shift towards more conservative investments.

From here .

[MotherBear]

Housing market powers on
Page 1 of 2 5:00AM Monday July 09, 2007
By Martha McKenzie-Minifie



New housing figures show interest rates hikes have done little to slow the property boom, with the average sale price in the Auckland region rising by more than $20,000 in the past two months.

Quotable Value statistics released last night showed average property values rose 12.2 per cent nationally over the past year to $378,672.

Spokesman Blue Hancock said the market in main urban areas - including Auckland, Wellington and Hamilton - reported higher growth in property values last month than in May.

It came despite the Reserve Bank raising the official cash rate to a record 8 per cent early last month.

The next official cash rate announcement is due on July 26.

Mr Hancock said anecdotal evidence of a slowdown in property had yet to show in the figures. He said there were fewer listings in many areas and an increasing gap between sellers' asking price and what buyers were prepared to pay.

"The vendors are still wanting that increase over and above, and now the buyers are saying, 'No hang on, we are not sure that the market is going to continue at this rate'," he said.

Speculation that the Government was considering toughening tax rules for landlords was "playing on the mind" of property investors.

Mr Hancock said winter market cooling was not evident last year but had returned this year.

"The market appears to be returning to the traditional pattern of slowdown over the winter months, in contrast to last winter when the market boxed on regardless."

In the Auckland region, property values grew by 11.2 per cent compared to June last year, to an average sale price of $492,857. In Papakura and Franklin, the growth rate slipped to 10.6 per cent and 9.8 per cent respectively.

Auckland property activity was highest for first-home buyers and at the top end of the market.

More here .

[MotherBear]

Credit agency warns homeowners
Page 1 of 2 5:00AM Tuesday July 10, 2007
By Audrey Young

Warnings of a potential collapse in the housing market in New Zealand have emerged in a banking report from Moody's Investor Services in Sydney.

A leading Auckland apartment realtor is also warning that "a chill" is about to descend on the market and is suggesting to homeowners that now might be a good time to sell "with our masters in Wellington hellbent on making you suffer".

Reserve Bank figures show that over half of the amount loaned in fixed-rate mortgages is up for review within two years, increasing repayments.

The stark warning of a possible collapse is contained in Moody's Banking system Outlook on the New Zealand banking system.

Among the problems the report lists is the cost of household indebtedness and debt-servicing costs in relation to interest rate rises.

It points out the Reserve Bank's official cash rate was having little effect on slowing economic growth due to competition in fixed rate mortgages.

"This could potentially lead to a collapse in the housing market should refinancing occur in a high interest rate environment."

Moody's told its global clients that the Reserve Bank has progressively raised the cash rate, the present 8 per cent being the third increase in 2007 - and the 12th since it started raising rates at the start of 2004 - in a bid to slow the growth in house prices.

But its monetary policy lever had a delayed impact due to the prevalence of fixed-rate mortgage loans.

The high interest rates had also underpinned demand for the kiwi dollar, adversely affecting export companies and raising the risk of an abrupt slowdown.

More here .