In yesterday’s weekly overview (attached below) Tony Alexander of the BNZ talks about dwelling shortage, rising rents and house price – has there ever been a better time to buy? Or do you still want to sit on the fence and wait for prices to rise further?
You don’t even need a huge deposit to buy this property at 1527 Great North Road, Waterview. The asking price is $369,000, the rental appraisal is $400 – $450 per week. That means that even if you have around $19,000 for a deposit you could secure this home for yourself and get a mortgage.
Your weekly payments, according to the Westpac mortgage calculator, will be $465.35 and if you are a couple with a help of a flat mate you will be doing better than when renting. Or have two flat mates paying $150 each per week while you pick up the rest – Imagine paying only $165.35 a week to own your own home only 10 minutes from Auckland CBD!
So what are you waiting for? Call me for an appointment to view, get on the property ladder now before it’s to expensive!
HOUSING MARKET UPDATE
Turnover is improving, construction falling, and prices essentially flat on average but veering toward the upside.
And So It Starts
If you have been a regular reader of the Weekly Overview you will know that our view on the housing market has been different from practically all other analysts for a number of years now – and we have been if not always right at least considerably less wrong. In particular we predicted only a 10% – 15% fall in average house prices as a result of the global recession and not the silly 40% falls some pretenders were forecasting. In the event house prices fell on average by 11% and now sit just over 5% away from the peaks reached in late-2007.
Our analysis has been based around the identification not of an oversupply of property as was and is the problem in many other countries, but an undersupply. Recently, in the WO of February 3, we discussed a recent report from the Department of Building and Housing which we utilised to estimate a 28,000 shortage of dwellings early this year. We have since lifted that estimate to 39,000 courtesy of the Christchurch earthquake and the simple passage of time bringing monthly consent issuance at less than half that needed to meet population growth.
Our view for the past couple of years has been that at some point probably this year we will see increasing pressure on rents as a result of this shortage. This pressure we opined would be greatest in Auckland because the housing cycle of the 2000s involved the strongest buying and excess construction happening in the regions and not in our biggest city. They had their boom in the 1990s. Our pick is that this cycle will once again belong to Auckland.
We have picked that the tightening of the rental market will translate into greater awareness of the shortage and discussion of a lack of property will become common.
And we have picked that from late this year house prices will be rising again because of the very simple interaction between this worsening shortage of property and not just economic growth but a potentially rapidly tightening labour market, especially over 2012.
And so how do we find ourselves now? First the awareness of a housing shortage is so great that the Minister of Finance has decided to duplicate the work already done by the Commerce Select Committee over 2007-08 and hold another enquiry into NZ housing costs, this time to be run by the newly formed Productivity Commission. We give our honest assessment of how productive this exercise will be at http://tonyalexander.co.nz/?page_id=43
Second, although we feel it is still early days for this as yet, there is growing evidence of accelerating growth in rents. This is one element strongly evident in the monthly BT report released yesterday. They note that in their sphere of activity – about one-third of the Auckland residential property market – average rents for newly tenanted properties in March came in at $434 a week from $402 in February. This is a large 8.2% rise from a year ago and the greatest one month increase on record. Source: http://www.bnz.co.nz/business-banking/business-help-and-info/economic-insights/weekly-overview