Many people wonder whether renting or buying a home is better decision. Most of the time, history has shown it is a smarter financial move to purchase a home than to rent. The final decision is unique to each situation of course. Here are a few points to note about both renting and buying.
Buying
- May require a larger initial investment – the deposit (usually a mortgage is 20% of the sale price)
- You must be responsible for all upkeep otherwise value is affected
- If you want to move, your home generally must be sold
- Equity may go up, down, or stay stagnant depending on the home’s value
- Over time, the mortgage balance decreases and equity builds
- The ability to remodel and redecorate the home to match your needs and desires
- There can be tax advantages attached to home ownership
Renting
- Smaller amount of “up-front” cash
- When the lease is up, you can just move
- Costs for the term of the lease are more fixed
- Not gaining equity, but not losing it either
- Generally less work in maintaining a home or apartment
- Even if the property goes up in value, you will never gain equity
- Limitations on what you can do to “make it your own”
- No tax advantage to renting
Today we live in a more transient society. People move around a lot more with their jobs, are getting married later and want more flexibility with their living arrangements. There also doesn’t seem to be as much emphasis placed on the importance of having your own home. Long term renting is becoming more and more common. A concerning reason for this trend is that it is becoming increasingly difficult to afford to buy a home, firstly save for the deposit and secondly be able to afford the mortgage repayments, especially in the major cities and more highly desirable and expensive areas. Housing affordability has increased from 2.1 times the average income to over 5 times the average income over the last couple of decades.
Under the cureent economic situation I have myself looked into buying another home. But for myself I cant get conventionally a 20% deposit as the eqity in my first home has fallen below the loan amount which I know has happened to many many people out there. Although this is not a problem for me bcause I do not intend to sell. The rent covers the mortgage payments and it works for me. But due to this I cant get another loan for another home to live in in Christchurch. So I have been forced with renting.
What I have found though is for my situation renting may not be the worst thing for me to do at the momen
t because housing prices are surely to come down further as this year unemployment and money problems worsen in this country. In saying that there has been some hugely increased sales volumes as of late. I am putting this down to the low interest rates where hungry cash ready investors see some good buys out there at a good interest rate. An investor friend of mine told me they were not worried if the price of the property dropped another 10% in value over the next year. They can see good returns at the current prices and the current interest rates to make it work. They also went on to say which is correct that the rice of property will go up again. A recession doesnt last forever.
If you are in my situation and find yourself unable to buy at the moment a house whether its your first or second or what and you find yourself haing to rent the best thing I think to do at the moment is find a relatively good priced property and cut your expenses down and save for a while. I believe the current cycle of good buying will not be over for some time. So if you sit down now and save you might be able to buy again when the horse is about to take off again. Thats what I am doing 
April 19 2009 | Buyers and The Market | 1 Comment »
Summery of New Zealands economy for the quarter March 2009
The NZ economy is yet to find a base. Business confidence surveys are either at, or near, historical lows. Employment intentions are tumbling and investment plans are being shelved. Corporate tax revenue – a key timely indicator of economic activity – has capitulated. Consumer sentiment is also very subdued despite falling mortgage rates, tax cuts and lower petrol prices. Car registrations are at their lowest level since 1994 and building consents in January fell to their lowest level since 1965. It is now likely that the recession, which began in the March 2008 quarter, will extend to five, possibly six, quarters as the full impact of recent financial market turbulence is felt. This has been exacerbated by the global downturn and follows a largely domestic and drought driven recession over the first half of last year. The last time NZ experienced such a string of negative quarters was during the oil shock of the 1970s.
Of course the positive spin on this is that we are close to the turning point, considering it is now the end of March. We have some sympathy for this view in terms of the pure numbers and the reality that the bungy-cord tends to come out, which is already manifesting in the housing market with reported uplifts in enquiries. But we also need to be realistic: 2008 was by-and-large a domestic induced recession in response to internal imbalances, a drought, and tight financial conditions. 2009 will have an added global influence.
On top of this, we would be inclined to throw some statistical quirks into the mix. Technically, NZ was in recession in H1 2008 but weakness was heavily concentrated so it didn’t really feel as weak as the normal recession. By late 2009, NZ’s GDP figures are likely to show a rebound into positive territory, but it will be out of sorts with other measures such as the unemployment rate, which is still headed higher. Hence, the H2 2009 rebound will not feel like a recovery at all.
The outlook for 2009 is dominated by four dynamics. These include:
- A credit centric shock. Despite signs that global credit spreads have eased and major central banks are embarking on quantitative easing to keep longer dated yields down, credit markets are still far from normal. It is no longer a question of price. We are in a world where capital is scarce, and this is not about to change for some time.
- A deep global recession, which started at the end of last year and is set to last throughout most of this year.
- A structural change in the pricing of risk, with a clear shift in the balance of power away from borrowers and towards savers and investors. NZ is already seeing this via changes in retail deposit rates, which now sit materially above the wholesale interest rate curve.
- NZ’s heavy reliance on offshore capital, which is evident via a large current account deficit and large net external liability position. The latter, at 93 percent of GDP, is a key source of vulnerability in the current global environment and needs to be reduced.
These issues above manifest in our forecasts via a number of avenues:
- A structural rebalancing for the economy away from debt-fuelled consumption towards more earnings centric growth (i.e. exports). This sees anaemic consumption growth for a number of years and a sharp improvement in the household savings rate.
- An elongated adjustment process, particularly with household balance sheets in most need of repair.
- A requirement for the currency to weaken markedly, and stay low for some time to assist in the rebalancing process.
- The economy to remain void of key engines of growth over 2009, as the combination of de-leveraging restrains the domestic economy, and the flow-on from a weak global environment restricts the earnings sector.
We expect the NZ economy to contract by 2.8 percent this year. By-and-large this reflects the big-picture forces noted above. Confidence remains weak, and we are only now starting to see the flow-on impact from the global scene. As these effects take hold via weaker export demand, falling tourism numbers and lower commodity prices, the recession naturally shifts from its urban focus towards the hinterland. We have already seen residential property prices fall by close to 10 percent from levels a year ago. This year will see much weaker rural land prices in response to a lower dairy payout. The lower payout and land prices will be the main transmission mechanism through which the global recession filters through into the rural regions.
Consumers are no longer the main driving force for growth. Consumption growth may be the weakest it has been since the early 1990s, but we fully expect more weakness to come in the near-term. Household cashflow may be improving thanks to lower mortgage repayments and tax cuts, but the deteriorating labour market and rising unemployment rate (we are forecasting close to 8 percent by the middle of 2010) increase the likelihood that households save any windfall gains, rather than spend them. Despite record low interest rates providing support to cashflow, the aggregate household debt servicing burden relative to income remains around 14.3 percent, well above its historical average of 9.6 percent. Improving this ratio towards historical norms has to come from a lower stock of debt. Negative wealth effects from falling house prices (we forecast a peak to trough decline of 25 percent in real terms) and tighter access to consumer debt are also acting to curb consumption growth, particularly for durables. But even when the economy starts to recover from 2010, we fully expect consumption growth to lag the overall economy. This is part and parcel of the rebalancing process, which sees consumption as a share of GDP fall from its current lofty 62.3 percent towards the historical average of around 59 percent. We are forecasting a 1.4 percent fall in consumption for this calendar year, and only a mild 0.7 percent growth next calendar year.
Businesses will do it tough, as both domestic and external demand wanes. Profitability is well down and firms have already responded by a freeze on hiring and investment at the end of last year. Firms exposed to domestic demand (e.g. retail and housing) have fared poorly as the recession intensified, but increasingly it will be exporters that will feel the effects of the global recession in the form of reduced or cancelled export orders. Thankfully, business sector balance sheets are healthy. But with topline revenues continuing to head backwards, the recession lasting longer than normal and balance sheet preservation becoming a priority, the onus will increasingly turn towards costs in order for firms to stay profitable. We foresee negative employment growth throughout 2009, and likewise for business investment. The latter will reduce the potential growth rate of the economy, and hamper the eventual recovery when it comes. Employment and investment intentions already sit at historical lows, and these are the next leg of the cycle to watch.
It’s not all depressing news. We are aware of certain pockets that continue to perform well. NZ’s macro framework has responded via interest rate cuts, expansionary fiscal policy and a lower currency. NZ’s financial system remains sound, a major differentiating factor from the United States and other nations. But all are within the context of the deepest global recession in half a century. NZ still stands out as being vulnerable given our reliance on exports and offshore capital. We are also mindful that monetary policy is rapidly losing traction given fierce competition for deposits and funding in general. And pressure on the Government to maintain our sovereign credit rating means they cannot simply go on an unfettered spending or tax cut binge.
Despite the pressure on businesses, we need to remain mindful that a household debt correction story is at the heart of this economic cycle. It is household balance sheets that need to be repaired. Household debt to income increased from 60 percent to close to 160 percent between 1991 and 2008. Debt servicing increased from 8 percent of disposable income to over 14 percent currently. Housing represents 75 percent of total assets. These dynamics were a reflection of the “old” macro environment where credit was cheap and freely available. This allowed NZ to run large current account deficits. In fact, when you overlay cumulative current account deficits over the past decade with home lending, the relationship is startling.
We are in no doubt that we will see the odd burst of activity, particularly in relation to the housing market, which seems to be occurring already (albeit off a very low base). But we struggle to see it taking hold given the global backdrop, turn in the labour market, and weaker appetite to lending per se. It is simply not credible for NZ to expect to borrow and spend its way out of the current jam.
The seeds of the long awaited current account adjustment have been sown. We see the 8.9 percent annual deficit recorded in December 2008 as the peak, with improvements to come from here on in. But rather than via better export performance, the improvement in the current account initially will be via lower profits generated by foreign owned firms in NZ and a lower overseas debt servicing burden, together with reduced import demand as a result of weak domestic demand growth.
A weaker currency is a prerequisite to the adjustment process and the improvement (and recovery) taking on a sustained look. With fiscal policy somewhat constrained in its ability to provide additional counter-cyclical support and monetary policy losing traction given the reality that borrowing rates are being determined by aggressive competition for deposits, the critical shock absorber that must adjust is the currency. Years of the currency remaining above its historical average has led to a deteriorating goods and services balance. We simply see the reciprocal going forward, as the currency follows its normal path of moving further than what is typically expected as the adjustment takes time. This has already occurred, and together with weak consumption growth curbing import demand, we envisage a return towards surplus in the goods and services balance by the end of this year. It’s essential for providing some much needed spine and balance to growth, particularly given the de-leveraging process we envisage for the household sector. We also should not forget that while commodity prices have fallen, the net effect has been muted via the terms of trade, and this is in fact giving us some comfort towards a better medium-term story for New Zealand.
We will be looking at a broad array of indicators over the coming months in terms of any recovery. We are in no doubt that we will see a recovery. Natural population growth, improved migration and easier monetary conditions are support factors that will gain traction as the global scene gradually improves. Business and consumer confidence, along with dwelling consents will be key to watch. But not until we see a sustained improvement in structural indicators; such as the ratio of consumption as a share of GDP, better mix to imports (more investment, fewer consumption goods) and improved savings rate; can we look towards any recovery taking on a sustained look. This looks a way off still.
The economy will come out of recession in the second half of the year, but a sustained recovery will be a mid-2010 story. Though we expect positive growth rates from the second half of this year, it will not feel like a recovery initially. Indeed, growth will be subdued heading into early 2010 as the economy remains in the de-leveraging process. It will not be until mid-2010, by which time the unemployment rate would have peaked and the global economy has started to mend, that the economy will embark on a sustained recovery and start posting strong quarterly growth rates. Pend up demand will fuel the initial rebound, as building consents play catch-up to underlying housing demand, consumers replace durable goods, and businesses upgrade their depreciated plant and machinery equipment. All are natural pro-cyclical forces that once unleashed will see the economy temporarily expanding well above its trend growth rate.
And let us not forget the Rugby World Cup being held in NZ in 2011. Preparations in the lead-up for the event will further add to activity, and we can expect a surge in visitors for the event, leading to a boost in services exports. We see the economy performing strongly in 2011.
Don’t forget the medium-term story. The sacrificial lamb in a de-leveraging environment is growth. Reality needs to set in as it’s a process that will take time. But the medium-term outlook remains strong. NZ still producers the goods (and services) that the world (increasingly Asia) demands and this sets us in good stead for the future. The rebalancing away from the spending towards the earnings sectors will put the economy on a firmer footing to grow at a more sustainable fashion. As firms get back to basics and focus on what they do well (and get assistance via small changes in the microeconomic arena) the seeds of better productivity growth are being sown. This is a dynamic we are already detecting and expect to become more pronounced as the year moves on.
source: National bank of New Zealand
April 02 2009 | The Market | No Comments »
The arts and crafts era (1880’s – 1920’s) takes a side step from the traditional New Zealand home. Recently I have spoken about The Modern Townhouse, The Transitional Home, The New Zealand State House, Art Deco Homes, Beautiful Bungalows and The New Zealand Villa. But both before and during the time of the Villa another style of house was built in New Zealand which is now dubbed the Arts and Crafts.
The Arts and Crafts architectural styles were being driven by British architects back in the years between the 1880’s and the 1920’s. The houses of the Arts and Crafts Movement were informal and unpretentious, sophisticated in a very subtle way and designs suggested handcraftsmanship and a “harmony with the setting”
Arts and Crafts homes were built in a time in New Zealand when there were a number of other styles emerging. Art Deco was a spring off from the Arts and Crafts home and also we saw the transitional time from the New Zealand Villa to the Bungalow.
The Arts and Crafts movement sought to reunite what had been ripped asunder in the nature of human work, having the designer work with his hands at every step of creation. These types of homes were built off ideas, they followed a trend which was followed by the British architects but there were a lot of variances depending on the person building the house.
This period of home was the first to use mass machined wood within the homes. The industrial revolution was changing the way homes were built and builders of this time were experimenting from traditional ways of building homes with at the time new and experimental ways of putting together the house. This resulted in simple, sturdy and functional furnishings. But there were still the elegant and grand designs that preceded this time as many designers were still holding onto these craftsmanship skills.
Good Points:
Usually large and grand designs in good areas of towns
Simple designs makes it easy to add own touch.
High pitched roofs allow good water runoff.
Large eaves so moisture doesn’t get into structure
Built with native timber and with larger than normal thickness of wood. usually by craftsmen
Rooms are usually large and have a high stud.
Not So Good Points:
Rooms are all built separate with no flow from one room to the next.
No thought for indoor outdoor flow.
Can be drafty and have little or no insulation.
Can be dark inside and rooms aren’t not positioned well for the sun.
It’s fair to say these homes are of a grand design. Built in a similar age of when the Villa and Bungalow were built all these homes are generally well loved by their owners and are well looked after. Maintenance can be high but the rewards for living in one of these beautiful pieces of history would be priceless.
November 28 2008 | Buyers and houses | 2 Comments »
Over the past few weeks we have been speaking about New Zealand houses and their designs.
We have covered The New Zealand Villa, The New Zealand Bungalow, The Art Deco Age, The New Zealand State House, The Transitional Period Home and we are onto the Modern Townhouse.
Modern Townhouses from the 1990’s to the early 2000’s are the houses of today. This is where modern architecture and trendy thinking comes into the picture of housing. There were many different types of designs that made it to play in New Zealand. Some were single level, some were multi level, some were made of permanent materials and some not. Houses were built to budgets in this age. The ones that were built with larger budgets were built with good standards and will generally last a good lifetime. But the downside is that many houses in this time are built with a developmental focus and on tight budgets which meant that in some cases the quality was sacrificed. Many of todays townhouse designs are built of the in the shadow of Joe Eichler who was in the 1970’s a revolutionary architect who designed houses that at the time were considered way before their time. But today these designs are now are much more seen, in different variances. The modern Townhouse is a good family home and is equally secure for the elderly or security conscious person.
Good Points:
· Very easy a functional designs to live in.
· Large open plan living areas with thought to sun positioning and indoor outdoor flow for entertaining.
· Further incorporation with internal access garaging for more security and comfort.
· Economical and dry to keep warm with most houses with full insulation.
· The modern building styles offer much greater scope house profiles and styles.
Not So Good Points:
· Multiple roof angles with multiple leak possibilities.
· Single sheet monolithic cladding, often poorly applied which when expands and contracts, leaks can form.
· Limited or no eaves and overhangs (excessive water cascading down exterior faces seeps in around windows and joins and cracks in cladding).
· Decks and parapets attached directly to exterior cladding can leak; framing can rot.
· Wide use of untreated timber framing (particularly houses built 1998 – 2004)
· Timber pile foundations in many free-standing houses where the exterior piles are subjected to constant wet and drying which can lead huge movements in the building.
· Insufficient “ground clearance”; concrete bases are built quite low and the cladding is very close to ground on many houses, this can cause water to seep in.
Although there were a number of building issues mentioned with these properties, it doesn’t mean they all have these issues. It is important, like with most properties to get a building inspection done. This will answer any questions you may have to do with the building and give you peace of mind in the buyingprocess.
These homes are very elegant and look the part for someone to live in. People who live in these homes usually take pridein them and the gardens and exterior of the houses kept in very good order.
November 26 2008 | Buyers and houses | No Comments »
In the Past four posts I have spoken about The New Zealand Villa, The New Zealand Bungalow, The Art Deco Era and the New Zealand State House. Now we move into the transitional era of housing for New Zealand (1960’s -1980’s). This is the time when we saw the beginning of the developer driven construction. Houses of this time we still built by qualified builders but there were some compromises the durability of materials used. For example pine or particle board flooring material was used instead of tawa or matai, window frames were made from aluminium and many buildings used artificial weatherboards.
Houses of this time were very much family orientated. This was the time when many of the baby boomers were in the prime of their child bearing ages. One of the major reasons of this time becoming developer driven was because of this huge demand for family homes to house the baby boomers families. There were a lot of homes all built in a very close time frame. The properties of this time had larger living rooms than previous homes and were more integrated into living areas.
These homes built in this era are considered by many to be the good ol kiwi family home. We all have at some stage of our lives lived in one. Here are a few points on these homes.
Good Points:
· Family orientated, often had larger living spaces for families to congregate in.
· Mostly northern facing and positioned good for the sun.
· The first homes to start having good indoor outdoor flow.
· Were cheaper to construct than all the previous homes, but are easy to modify if needed later in the years.
Not So Good Points:
· Was the first time pressed iron tile roofing was used. Was weaker than other materials but if fitted properly still had good durability.
· Some problems with condensation and insulation. Especially homes fitted with gas heaters.
· Homes were still plain in design and rectangle. Most had a similar floor plan with slight variances.
These homes are a good family home. Although not as grand as any of the previous homes and built with more of a budget in mind they still offer a good solid and fairly cost efficient home to own.
November 24 2008 | houses | No Comments »
In the previous posts we have spoken about The New Zealand Villas and Bungalows and Art Deco, now we get into the era of The State Home (1930’s – 1960’s).
The first state houses in the 1930’s were designed and constructed to the highest possible standard budgets permitted. They were built so that no two houses would be exactly alike, so that their occupants would not be identifiable as state tenants.
Similar sentiments guided the first Labour government’s scheme. State housing areas would contain both better-off and poor workers to avoid the creation of single-class neighbourhoods. As with the workers’ dwellings, each house would be constructed using quality labour and materials, and designed to last for 60 years and more if maintained.
Internal planning was important. Kitchens would face the morning sun and living rooms would form the centre of family life, arranged so that easy chairs could encircle the fireplace. This is the typical design of the New Zealand State House.
Good Points:
· The construction was always done by well trained people.
· Building material was strong, usually brick, matai and tawa – rimu was used as well.
· Eaves were still large which means the homes are very watertight.
· Mostly single storied with simple floor plans.
The Not so Good:
· Properties are usually small and not suited to larger families.
· Style and shape often don’t suit modern lifestyles – no indoor outdoor flow and spate kitchens and dining rooms.
· Bathrooms often face the road and are next to the front door.
These houses are easy to change and are made to last. A well looked after state home can be one of the smartest buys you can make as the costs involved with maintenance can be less than the previous styles of homes.
November 23 2008 | Buyers and Uncategorized and houses | No Comments »
In the previous posts I have spoken about The Villa and The Bungalow. Now we move onto the Art Deco (1920’s – 1940’s). This style of home originated in Europe in the early years of the 20th Century. It became widely known following the great Exposition des Arts Modernes Decoratifs et Industriels, held in Paris in 1925 and from which its name was ultimately derived. By the late 1930s it was in its streamlined phase and after World War 2, the International Style, devoid of all decoration, held sway. Many of them built for war people these homes are both built strong and built to last.
People built these homes to express themselves in one way or another. They have great artistic flares and a presence about them that no other home has.
Good Points:
· Mostly Rough-cast over native timber framing; well braced with solid diagonal. If over time the studs do rot the sarking will hold the house together.
· Usually coated with 4 coats of plaster for strength, so are very strong.
· Well detailed flashings and eyebrows over the windows.
· Flat roofs, but used full length industrial profile iron with good flashings, they are virtually leak proof if maintained well.
· Solid concrete foundations.
The Not so Good Points:
· Design not necessarily suitable for modern lifestyles.
· Exits are not well designed for having too many people over.
· Bathrooms are generally small.
Art Deco homes to me are one of the more character homes of New Zealand. There are areas close to where I live that have whole streets of these homes on them and these homes can be painted in very extravagant and bright colours and get away with it. They form a great part in any community and there are some people that really love them.
November 21 2008 | Buyers and Uncategorized and houses | 9 Comments »
The Bungalow (1930’s – 1940’s)
Yesterday I talked about the Villa. The Next to Come in New Zealands Housing History was the Bungalow. The evolution from villa to the bungalow was interesting. The ceilings were lower and double-hung windows replaced with casements, lead lights made an appearance, fretwork was phased out, the front door moved to the side of the home, the entrance adorned with a porch. The gable ends and the roofs over bay windows were shingled (timber tiles) and the eaves were exposed. Halls and lobbies were still panelled in Rimu or Kauri and a telltale sign of the bungalow is the old picture rails being replaced by a shelf.
For the first time the houses were oriented towards the sun and the floor plan more user friendly and for the first time New Zealanders could order window frames, doors and balustrades out of a catalogue.
Good Points:
· Solid Concrete Foundations and native timber framings firmly attached these houses together
· Strong level native timber tongue and groove floors, often separately constructed on spaced floor joists.
· Sufficient Roof Angles ranging from 12 – 15 degree angles. Usually iron or tiles
· Rain deflecting eaves and eyebrows. Window frames built to let wood expand and contract.
The Not So Good Points:
· Functional, but fairly standard floor plans.
· Can be very dark if not north or east facing.
The bungalow in my view is a great New Zealand home to get hold of. They have stood the test of time and if well looked after will last for a long time to come. They are of high demand by many. The people who love them think they are cute and for this reason most owner occupied bungalos are in very good condition and these houses look great with a nice garden.
November 20 2008 | Buyers and Uncategorized and houses | 1 Comment »
The Villa (1900’s – 1920)
The New Zealand Villa is probably the first English influenced home to arrive into New Zealand. These grand homes are set amongst the more older neighbourhoods of the cities they reside in. Many villas were built for the more dignified communities of their time. Many of the Villas we see today that have stood the test of time are very well loved and are homes the owners generally are proud to own. Today we see these areas still in good demand for housing in New Zealand as the area and location is generally a good one to live, and well established. Here is a quick overview of the New Zealand Villa
Good points:
· Durable native hardwood construction, usually built by craftsman.
· Wide construction with at least 600mm eaves over windows and doorways to defect rainwater.
· Wooden Weatherboards, durable and easily replaced individually.
· Pitched roofs of about 30% to deflect rain, made from sturdy corrugated iron. If painted would last approx 40 years unlike today’s thinner roofing iron which usually only give a 15 year warranty.
Not So Good Points:
· Draughty, but easily modified with modern insulation materials.
· Fairly compact, simple designs with little thought to indoor outdoor flow.
· Northern aspect placement was usually not considered. So be careful to know where its sun goes as it could get cold.
November 19 2008 | Buyers and Uncategorized and houses | 3 Comments »
The median sale price for a New Plymouth City house increased to $302,000 (September 2008: $285,000; October 2007: $294,000). 79 houses sold in October (September 2008: 81; October 2007:90).
19 houses sold in the Taranaki Country area in October (September 2008:20; October 2007:29). The median price rose to $250,000 from $226,500 in September (October 2007: $238,500).
Median Days on the Market have increased to 60 Days.
The New Plymouth market in my personal judgement is still ticking along fine. Vendors here are starting to be realistic about their property prices and this helps with keeping the sales numbers relatively steady. We have the best City in the World here and this shows by the enquiry number starting to peek. But vendors are needing to be realistic in setting prices for their properties. We may see some increased activity with the recent award we wont (I know my blog has in numbers into the thousands) but people will still not buy something if its over priced.
If you want to know anything more on the market in New Plymouth please contact me and I will help.
Regards, Deon
November 13 2008 | The Market | No Comments »
QV’s October statistics for the residential property market report a 6.8% decline in national property values over the past year (calculated over the three months ending October 2008 in comparison to the same period last year), down on the 5.8% decline reported in September. The average New Zealand sale price for October remained steady at $379,290.
“Property values have declined further in most parts of the country. Activity levels remain unusually low, especially considering that spring usually brings an upsurge in the number of house sales. Poor weather across most of the country, plus the school holidays, probably contributed to this” said Blue Hancock of QV Valuations.
“There appears to be uncertainty in the market, with many buyers and sellers waiting to see any impact from the financial crisis, dropping interest rates and the election before committing to property transactions” said Hancock.
Most of the main centres are showing further slight declines in property values. Across the Auckland area property values are down 7.7% compared to the same time last year, declining slightly from the -7.0% reported last month. Hamilton City’s values have also dipped slightly further to -9.0%, Tauranga to -7.9%, the Wellington area to -6.1% and Christchurch to -7.8%. Dunedin improved slightly to -8.2% compared to the -8.5% reported last month.
There is more variability in the change in property values across the main provincial centres. Whangarei (-8.5%), Rotorua (-9.4%), New Plymouth (-8.1%), Queenstown Lakes (-8.1%) and Invercargill (-4.6%) have all declined further. Wanganui (-6.0%), Palmerston North (-9.5%) and Nelson (-4.9%) also declined further, but only slightly. The year on year change in Gisborne remains unchanged at -10.1%, while Napier ( 4.3%) and Hastings (-5.0%) have both recovered slightly.
What’s happening in Taranaki/Taupo/Wanganui?
What does this all mean?
Well from my view the propert market is tough. Buyers are definately holding back from buying as many have been waiting to see what happens with the economy and the elections. This years general elections were held on Saturday just been and the country voted in a change government which saw National taking a comanding position in the polls. This generally has had a positive spin on the property market looking back in history. But we also have to take into account the present state of the economy not just here but all over the world.
There are good things coming out of this though. Property prices have come back coming back on from a massive increase over the previous 7 years which saw values multiply by 3 or 4 times. But now with the easing of prices this makes property just that little more affordable for the average person to buy – especially firts time buyers.
There are other factors that come into play which to me are going to have a positive spin on the housing market in New Zealand. These things are the interest rates dropping. The OCR has dropped 1.75% this year and is set to fall even more – although mortgage interest rates may stay steady for longer as the costs to the banks for borrowing overseas is still high. Fuel prices are coming down. Crude oil is the lowest its been for 3 years which has seen our petrol prices fall by 30%. Although they could be alot less our NZ Dollar is also low which has ofset some of this. But exporters are now making more money from the drop in the dollar which will stimulate our economy but there is also less demand for many products around the world as the global economy slows down.
Food prices are still high but in the last few weeks the price of milk and dairy products has dropped by 5% which is a direct saving at home. All these things are now letting families have a little more money in their back pockets. On top of all this we have seen the first round of tax cuts from the outgoing Labour Party and the National Party is promising more within the next 6 months. Thats great news for everyone.
I feel that the property market has still got a fair drop to go. Signals point to a smoothing out of the property market but we are not immune to whats happening around the world. We are not out of the dark yet. It will be some time yet before full confidence is returned to the market but if you are in a position of selling and want to move on this is as good a time as any to do it. Because what you have to remember is the capital loss you may have experienced in the last year have been felt all over and when it comes to re buying you will be buying for a less value. This is a time when you make your own destiny and many people are doing well. Its all about how you approach things and the motivated and forward thinkers are making the most of it. Sellers need to be realistic and price according to where the market is in your area. If you dont its a waist of time and money.
If you seriously need to move realise this and act accordinly. There is no point in holding out for a dream price as you may be waiting for a number of years. As an agent I dont like to see people losing but all you need to do is look at the statistics. Look at my recent sales catalogue and other things and this will compare and reassure you of whatis happening. The only thing anyone can hope for is to achieve a fair market price. And thats in any market.
November 10 2008 | The Market | 3 Comments »
