09 December 2011

Auckland’s property values are now above the 2007 peak, with growing numbers of property investors being attracted back into the market. QV’s residential property index for November stated that two well known property investment groups are back in the Auckland property market.

Glenda Whitehead from QV Valuations said “Investors are starting to come back to the market”. Regarding what action these investors plan to take, Whitehead said they are “looking to buy, upgrade and on-sell at a healthy profit”. The other majority “require a definite positive cash flow return”.

The current Auckland property market sits at 0.6% above the 2007 market peak which can be attributed to increased activity from first time home buyers, and property investors.

Old Auckland City has seen the greatest increase in value, which is up 4.7% this year (2.5% above the 2007 peak).

Jonno Ingerson, research director at QV emphasised that values have been increasing not only in Auckland but on a nationwide scale, “values have now begun to increase across the rest of the main centre’s, as well as in many of the provincial and rural towns. New Zealand’s capital city, Wellington has also shown growth and continues to show signs of positivity.

There are positive signs in both Hamilton and Tauranga in recent months, although still sitting below the 2007 market peak, the Christmas and the New Year surge should help build stability for these cities.

The demand for ‘undamaged houses’ in Christchurch has strengthened the property market, pushing values up 3.6% from last year, and only 1.7 below the 2007 market peak. Christchurch’s surrounding districts Waimakariri and Selwyn are well above the previous market peak, and have increased 6.9% and 5.3% in values respectively.

Ingerson also mentioned the encouraging activity due to happen over the month of December in the build up to Christmas. He also pointed out “the strength of this activity will depend to some extent on how economic events pan out in Europe”.

Nelson and Dunedin have also seen growth in the last three months, with Dunedin increasing 2.4% and Nelson 3.2%.

1 December, 2011

In the Mercer global quality living survey Auckland has moved up one spot, from fourth in 2010 to the world’s third most livable city.

Auckland was topped by Zurich and Vienna. Other large scale cities in the rankings included Sydney that came 11th and New Zealand’s capital city Wellington ranking a well deserved 13th in Mercer’s global survey.

Mayor of Auckland Len Brown is aiming for No.1 in future years, believing his city is ‘well on track’ to potentially becoming the world’s most livable city.

Mr. Brown was also pleased at the positive global profile that international rankings like this give Auckland and New Zealand. “This is a fantastic city to live in” said Brown.

Brown also emphasised the achievement of moving up on the scale, and that it was “no small feat”. Brown was positive Auckland has more room to improve, and will be “celebrating our place at the top” on the day Auckland reaches No.1.

The ranking system decided through Mercer’s global survey, is known as a thoroughly examined process of evaluating 221 cities by 39 categories. These include medical and health stability, political situation, socio-economical environment, transport, natural environment, education and housing among many. New York City was used as the ‘base city’ used to make comparisons.

This recognition paints a positive picture for the international sector wanting to live in New Zealand. It is also an indication of the growing property market with many foreigners investing in New Zealand property due to the increase in demand and the appeal of the country itself.

Ref: tvnz.co.nz

6 October 2011

New Zealand has the top ranking for protecting investors as a result of the ‘Doing Business Project’ by the World Bank in June 2010. ‘This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain’. From 183 countries in the study Singapore was ranked 2nd, and other major economies such as The United States was ranked 5th and our neighboring country Australia was ranked 59th.

This is just another reason why to choose New Zealand when thinking about your next investment opportunity.

ref: www.doingbusiness.org

5 October 2011

Latest research from Quotable Value has revealed that property values on a national scale have continued to increase with Auckland and Queenstown leading the way. New Zealand property investment opportunities should be taken advantage of with supply low in Auckland and Queenstown, pushing prices up in these cities.

Since January 2011 Auckland property values have increased 2.8% and are now 2.2% above the same period of last year.  Auckland City has shown the fastest increase, 3.0% in the last year. Since the market peak in 2007 Auckland City has seen a 1.5% increase in values since that period. The North Shore district of Auckland has seen a 2.4% increase over the past year, and other districts such as Waitakere and Manukau just over 1%.

Properties on the Auckland market are selling fast and for a good price, in many situations selling for the upper end of the value range and as we come into spring it will not be surprising to see more properties being listed. Central Auckland properties are selling strongly, with many also selling above expectation at property auctions. This is a result of a real estate market with high demand so any property opportunity whether it is investment or lifestyle, needs be snapped up quickly. In August the average property price in Auckland was $532,296 NZD.

Property values in Queenstown have increased 3.5% since this time last year, which is also having a significant impact on New Zealand’s increase in overall property values. With the Rugby World Cup currently in New Zealand, close to 100,000 international visitors are expected to arrive for this tournament alone. This will impact the national property market with an increase in demand for residential, lifestyle and investment properties for many of these visiting tourists. Opportunities in New Zealand should be seized with a growing property market, and what appears to be an even faster growing demand for this market.

ref: www.qv.co.nz

26 July, 2011

Crockers research said the market is stronger than it has been for some time, compared with 2010. At 11,311, sales numbers for the first six months of the year are at their highest since 2007, and the June 11 figure is 27% higher than the 10,305 sales closed in the same month last year.

Similarly, the median sales price is up 3.6% on last June, the strongest house price inflation since 2007.

The movement is greater in Auckland than the rest of New Zealand, where the median sales price is up 2.1% on last year (to $360,000) and the number of sales closed is up 14% compared to last year (to 5229), Crockers said.

Rentals in the Auckland two-bedroom market have been stable for the past three months at about $365 per week, just over 20% higher than the average for the rest of New Zealand.

The three-bedroom market has also stayed steady over the past three months, following significant rises in the earlier part of the year off a January low. In June the average rental price was $486 per week, 30% higher than the national average of about $350 a week.

Crockers suggests that with the Auckland property market strengthening this year, “it’s worth taking another look at Auckland versus the other metropolitan centres, in terms of the relative returns rental properties offer.”

ref: nbr.co.nz

6 April, 2011

The Auckland housing market moved further ahead of the rest of the country in March, with real estate company Barfoot & Thompson reporting its sales in the city rose the highest monthly level in nearly four years.

The company recorded 1070 sales last month, up from 927 in March 2010, figures published today show.

Goldman Sachs economist Philip Borkin said it was becoming clearer the Auckland housing market was outperforming the rest of the country.

“While the recent reductions in mortgage rates will be supporting activity and sentiment, we believe the outperformance is more fundamental in nature,” Mr Borkin said.

With historically low levels of new building and net migration, while not at strong levels, likely to be more supportive of Auckland housing demand than other parts of the country, he suspected demographic pressures were slowly beginning to surface.

That was also shown by increases in average rents, which were at a new record high of $434 per week.

The Barfoot & Thompson sales figures for March were up 11 percent from February on a seasonally adjusted basis, and up 15 percent from a year earlier, to reach the highest seasonally adjusted monthly level since December 2009, Mr Borkin said.

It was the fifth consecutive monthly rise in sales turnover by the company and followed an 8.2 percent rise in February.

Given the housing market was a good leading indicator, and with the Auckland region an economic juggernaut, the rising sales may signal the start of an improvement in the consumer spending backdrop, Mr Borkin said.

“We think it is too early to make a call on this yet given that household behaviour remains one of caution and deleveraging, but we are watching closely.”

Barfoot & Thompson said its average selling price reached an all time high $581,190 in March, with buyers of properties above $500,000 appearing to have decided now was the right time to buy.

The average price was $59,000 higher than that in February and $36,000 higher than in March 2010.

Barfoot & Thompson managing director Peter Thompson said the sales activity confirmed the Auckland market was reacting differently to that in the rest of the country.

“The formation of the Auckland region into one city has brought home to people the dynamic growth projected for the region, and the looming shortage of dwellings to house a future population in excess of 2 million people,” Mr Thompson said.

Ad Feedback “Combined with buyers reaching the conclusion that values are at the bottom of the price cycle, the economy looking likely to rebound in the next 12 months and interest rates at historically low levels, and you have the perfect conditions for people to commit to buying.”

The $434 average weekly rent was the highest on record, and the $32 rise from February was the biggest one month rise on record.

Ref: stuff.co.nz - NZPA

4 April, 2011

Within 15 years Auckland will have no room left for new housing according to a property analyst.

It will be impossible to build new stand-alone houses on more than 400 square metres of land as early as 2023 says Lisa Phillips, a director of Auckland-based company Erskine+Owen.

After that many Aucklanders will be forced to live in terraced houses and apartments with shared common outdoor spaces.

“Prices will surge as more and more people compete for an ever dwindling supply of dwellings,” she says.

And it is not just room to build that may cause a shortage of housing in Auckland.

Ms Phillips says fact is that red tape and restrictive rules on land use means that growing in as-yet developed areas is not as simple as it sounds.

“There is a ring fence around Auckland called the Metropolitan Urban Limit that separates the urban from the rural.

“To bust into the other side of the limit could take up to five years of applications and consents. Then there are issues around who owns the land and then they might not want to sell it.”

She says Christchurch’s earthquake and required rebuild could also compound the problems for Auckland homeowners.

“Construction activity is already at historic lows along with a down-sized building industry.

“There simply may not be enough capacity to go around. This may further hinder the speed at which Auckland can respond to its burgeoning demand for housing.”

It appears Ms Phillips warning is being echoed by many.

Public meetings are currently underway discussing Auckland’s major planning document, the Auckland Plan, which is set to be released in December.

A discussion document on the plan reveals Auckland had “already fallen short by approximately 10,000 new homes - the equivalent of a town the size of Blenheim” over the past three years.

It says the Auckland Plan needs to be “framed in a way that can cope with change and uncertainty”.

This is because of the projected need in Auckland for 330,000 new dwellings by 2040, and the possibility of falling short of meeting this target, together with the “very real prospect” that we may become more attractive to migrants than projected.

Ref: 3News.co.nz

17 February, 2011

Auckland’s rental crisis is worsening, with prices rising 7 per cent in a year and desperate tenants going to extreme measures including offering to pay six months’ rent in advance.

New figures show rents in the most desirable suburbs have jumped an extraordinary 24 per cent.

A lack of new construction and increasing demand from a booming population unable to get on to the property ladder are among factors getting the blame.

Last week, the Herald reported how 200 would-be tenants looked through one Kingsland rental property in just 30 minutes.

Real Estate Institute chief Helen O’Sullivan yesterday blamed the rental shortage on “pure demand and supply”.

She said very little building had been done in the past 18 months as developers struggled to find finance for developments that were traditionally sought after by first-home buyers or people looking for investment units.

“You look around Auckland and you’re not seeing major housing developments in rental pockets under way anywhere. The supply hasn’t increased and demand has indeed grown,” Mrs O’Sullivan said.

Nationally, rental prices have risen 3 per cent, according to Crockers Property figures released yesterday.

But in Auckland, the rise is more than double that.

It has been driven by rental prices in the desirable city-fringe areas such as Grey Lynn and Westmere where median rents for a three-bedroom house reached $675 a week in January - an increase of 22 per cent on the same time last year.

The median price for a three-bedroom house in Epsom, Newmarket and Royal Oak increased 24 per cent to $585 a week.

However, the soaring rents are doing little to deter would-be tenants who are increasingly desperate to find a place to live.

Harcourts Ponsonby property manager Sharon Ryan said it was not unusual for applicants to offer more than the advertised rental price for homes in Ponsonby, Herne Bay, Freemans Bay and Parnell.

She said some tenants were even signing tenancy agreements without viewing the property first - and in one case someone offered to pay a six-month block of rent up-front.

“You always get a bit worried when they haven’t seen it. I always say it is better to look first, but I had a girl who had missed out on quite a few properties before and she already knew the complex,” said Mrs Ryan.

Other tenants were willing to pay double rent - shelling out for a new property while still paying rent on their current place - to ensure they did not miss out while they gave the required three weeks’ notice.

“Sometimes it is really hard to decide, because you will get six applicants and they are all good. Sometimes what it comes down to is first in/first served,” said Mrs Ryan.

Yesterday, an open home for a three-bedroom townhouse in Grey Lynn advertised at $680 a week - $5 above the average price - attracted 12 people in half an hour over a mid-week lunch time.

Barfoot & Thompson property manager Maureen Kan said the shortage meant landlords had started to ask for more rent.

But she warned that even in a tough market, a property could sit vacant for the sake of $20 or $30 more a week.

“Basically the market is the market. Tenants know what is out there and they have seen enough properties to know when something is overpriced,” said Mrs Kan.

In some areas of Auckland, however, there has been a slight drop in the median rental price.

In Devonport and Takapuna, rents were down 4 per cent last month when compared to the previous January.

Geri Martin, of Bayleys in Takapuna, said it seemed landlords in the area were trying to cater to “fussy tenants”.

“Tenants are really fussy - if they don’t like something in the house they won’t pay as much, or won’t rent.”

Ref: New Zealand Herald

27 January, 2011

Demand for tidy, central rental properties in Auckland is reaching crisis point, with supply unable to keep up.

Listings on a top real estate site for the start of January show a 24 per cent decrease compared with the same period last year, with demand up 8 per cent.

With up to 60 people turning up to viewings, renters are resorting to extreme measures to beat the competition. Many arrive early to open homes, while others turn to bidding wars, say real estate agents.

“In terms of year on year, certainly supply is down in Auckland and particularly Auckland city,” said one leading real estate website spokesman. Supply for January was also down in the Bay of Plenty, 22 per cent; Canterbury,1 per cent; and Northland 14 per cent.

Agents are reporting that often up 30 people are turning up to open homes.

In Mt Eden, crowds of young professionals were snapping up three and four-bedroom villas for $500-$600 a week.

Agents received 90 calls about a recent listing for a two-bedroom home in Mt Eden and up to 60 people turned up to open homes for popular properties. One Auckland agent says “For some of the properties we get 100 calls a week - there’s just not enough properties.”

Keen renters are also offering more than the asking price.

“For one in Mt Eden the rent was $430 and someone offered $450. For a two-bedroom apartment in town one person offered $10 or $20 more,” she said. High numbers of Kiwis returning from overseas and new immigrants were pushing up demand for rentals.

“I think it’s also people who previously would have bought but banks require 20 per cent [deposit] now - it’s out of people’s reach.”

Housing Minister Phil Heatley said a lack of building activity was another problem, with building not keeping up with population growth.

Ref: NZ Herald

23 November 2010

An additional 100,000 rental properties will be required for Auckland at a cost of $31.1 billion over the next 20 years,and population growth will fuel demand for rental accommodation, the Centre for Housing Research’s says in its Auckland Housing Market Assessment.

The report assesses the current and future housing demand for the city with predictions that population growth, particularly from older, smaller and rental households, will drive demand for additional property.  “Demand for rentals will increase much faster than demand from owner-occupiers.  Between 2006 and 2026, Auckland will need an additional 95,980 private rental dwellings,” the report said.

Over that time the population of Auckland is expected to increase by almost 40%.  Households aged 65-plus are expected to increase by 78.8%, accounting for 32.7% of total growth in household numbers.  Couple-only and single person households are expected to increase by 33% and 29.25% respectively.

Another growing trend highlighted by the report will be an increase in financially stressed renter households - financially stressed being households that spend more than 30% of their total gross income on housing costs.  Renter households, older households and single-person households are the most vulnerable to increased financial stress and the report says that over the two decades the number of financially stressed renter households is forecast to increase by 66.6%.

Demand for rental accommodation is forecast to increase at a “significantly” faster rate than demand from owner/occupiers.

Ref: Landlords.co.nz