Interest Rates Around the World are tumbling down as the Reserve Banks of different countries are trying to stabilize their economies as one of the worlds harshest financial crashe
s crunches down on everybody.
The Reserve Bank of New Zealand was the first to kick of cuts in December with a massive 150 basis point cut which took OCR down to 5.0%. After peaking at 8.5%, this rate has been cut 350 basis points since June and reflects the extent of the credit crisis. Since June, the New Zealand dollar has fallen 32% against the US dollar.
The Swedish central bank cut interest rates 175 basis points and took the OCR down to 2.0%. This was 75 basis points more than expected which shows how important and extreme this problem is. The OCR in Sweden have fallen 275 basis points and the currency has lost 41% since June.
The Bank of England cut rates by 100 basis points to 2.0%. The BOE was cutting rates from the end of 2007. Since December of last year, the OCR has dropped 375 basis points and the currency has fallen 28%. Housing is the major reason why the cuts are needed. The UK nationalized some of their biggest banks as their financial sector got trapped in the global credit crisis. A few days ago an aggressive plan was announced that will defer some mortgage payments for up to two years to counter rising foreclosures. House prices fell 2.6% in November and a record 14.9% for the last 3 months.
The European Central Bank joined the party by cutting rates by 75 basis points which was more than was anticipated. After raising rates in June by 25 basis points, the ECB has now cut rates 175 basis points to 2.50%. The currency has lost 21% since late June. after initially believing they were going to avoid the fallout from the US credit crisis, Europe has seen their economies collapse and doubts have been raised over the European Union’s ability to put together comprehensive financial stabilization packages.
The US Federal Reserve isn’t cutting rates yet. I have read though the Treasury is looking at a plan to force mortgage rates down. While the plan is evolving and may not be ready before Obama takes office. The US Federal Reserve dropped it interest rate late in October by 50 basis points to 1% which is the lowest level it has been since 2004 when the economy was recovering from the dot com crash. House prices in the US have come back by up to 30% in some areas. In November over 500,000 jobs were lost in the US, this is due to cost cutting by all industries to try and stay operational through this credit crisis. This is a snapshot of whats happening if you want more go to the CBNC website
The interest rate cuts do have positive impact on housing. It makes money more cheaper t borrow and closes the gap between renting and a mortgage which will see some buyers take action. The rates also help corporate borrowers who have been cutting costs and causing many in the workforce to lose their jobs. There will be still a fair bit of correction to go with this credit crisis. The banks are starting to take drastic action which has stabilized many of the markets around the world compared to what was happening.
December 06 2008 | The Market | No Comments »
Google today announces the launch of Street View on Google Maps in New Zealand:
maps.google.co.nz/streetview.
Street View is a new feature for Google Maps that lets internet users view and navigate 360 degree street-level imagery of New Zealand’s cities, towns, regions and remote areas.
More than 100 metropolitan areas in six other countries around the world are presently visible in Street View, which first launched in the United States in May 2007.
It’s not just about the cities though, street view can take a virtual drive along Scenic Drive to almost any remote location in New Zealand. Tourism New Zealand has selected a gallery of Street View images, available at maps.google.co.nz/streetview that showcase some of New Zealand’s best tourist attractions and locations to the world. Many other organisations have already identified significant opportunities for Street View to be used in travel, tourism, house buying and renting, education, and helping make small businesses easier to find. So hopefully this may bring back some of the tourism to New Zealand.
What can you use Google Street View for? well to get directions, companies are integrating it with their websites, enthusiasts use it to create personalised maps related to their areas of interest, check out the house in the city you want to go too. See what your best friends street looks like. Let your family and friends see what the street looks like where you are living. There are just so many options.
Google has gone to great lengths to safeguard privacy while allowing all New Zealanders to benefit from this feature. Street View only contains imagery that is already visible from public roads, and blurs identifiable faces. Anyone can easily flag for removal images that they consider inappropriate by clicking on “Report a concern” at the bottom of the Street View image in question.
The Street View imagery was collected by camera-equipped cars that drove public roads in New Zealand over the past 12 months. If you notice the picture below you can see the Christmas tree still in the square from almost 12 months ago.
In the picture above I checked out my house and then took a screen shot as I went past the office and in the picture below I have been checking my new home out and the surrounding areas and decided to take a screen shot of one of the main monuments in Christchurch. As I just said I have been an early adopter of this application in New Zealand and have been actively looking around the streets of some of the houses I am interested in buying in Christchurch. Even though I am still in New Plymouth for a number of weeks more I can easily see without ringing and asking the agents what the neighbourhood is like. This is awesome and truely something that home buyers are going to find fantastic when looking at property in locations they aren’t sure of.
In Real Estate Street View offers a very interesting and new dynamic to the mix. Now there one can look at a property online with the photos and then go to Street View and look how it is placed amongst the rest of the neighbourhood. You can now check out the street before you go to the open home, this might save you time and gay money. Trademe being their innovative self have already placed Google maps into their tourism and property sectors so that now when you look at property on Trademe you can simply click a button that will let you look at the street as well. How cool is that. And also Realestate.co.nz have added streetview to their listings so that the general public can again look at the street they are interested in possibly living on.
I hope you enjoy Street View as much as I have this morning. It’s been great checking out all the places I used to live which has bought some great memories back. It is amazing the length Google are going to become the world’s best online place to go. What next…
Leave a comment and tell me what your views are on Google Street View
December 02 2008 | Buyers and Uncategorized | 1 Comment »
A million substandard homes are each up for a $22,000 bill to meet recommendations from a new national housing performance report.
This report goes hand in hand with the New Zealand Houses series I have been writing about and this is one of the major things factors about the older New Zealand House. Houses built before the 1970’s transitional period weren’t fitted with insulation when they were built.
The survey found one in four Kiwis say the poor quality of their home has made someone living in them sick, and indicated the severe cost of poorly performing homes. The survey of 3526 New Zealanders, conducted in October and November, is the culmination of a two-year $300,000 research project by the Business Council for Sustainable Development.
Council chief executive Peter Neilson said the country was paying $54 million to admit to hospital 50 people a day with respiratory illnesses, losing 180,000 worker days to illness, and spending $475 million a year more than it needed to on household power bills. Proposing a mandatory rating system to apply to all homes when they were sold or rented, the report estimates the cost of bringing homes up to minimum health and efficiency standards would be $20 million over a decade, or roughly $22,000 a household.
Two-thirds of New Zealand’s 1.6 million homes were built between 1900 and the 1970s, before insulation became mandatory in 1979, Mr Neilson said. Registered Master Builders Federation chief executive Warwick Quinn said the report wrapped up a widespread issue, but solutions were fragmented across disparate pockets of the community and industry and had little government support. “Having a consolidated approach would be very helpful,” he said.
Most homes built before 1979 would not meet current building code regulations, he said. “The [suggested] efficiency rating would help bring that to the surface.”
While there were 80,000 homes renovated every year, Mr Neilson said the odds were stacked against New Zealanders doing up their homes for their own good because the benefits were largely unknown.”Most people assume the cost is much more than it is and the benefits are much less,” he said.
The survey showed 69 per cent of people thought they could not afford to upgrade their home and half said they were too uninformed to do it. Mr Neilson said the residential real estate market did not v
alue “invisible” improvements like insulation and water efficiency, so house owners’ priorities lay with marketable benefits such as decorating, improving fixtures or adding a deck.
The estimated average $22,000 bill to make a home energy-efficient and warm was realistic, and might become more palatable if householders could see the long-term benefits as energy prices rose.
“There is a limited number of householders who are driven by eco-thoughts – pricing issues are a major motivator.”
The report was admirable but ignored the need to improve home-heating solutions to battle dampness, a greater health threat than cold, she said. Research showed the worst places for ill health caused by living conditions coincided with poor local populations who avoided using
electric heating because of the cost.
Source: Scoop.co.nz Stuff.co.nz
I believe this is a major issue that has now been bought up in a timely time. At a time when people pockets are being crimped this news from this survey is a real nail in the side. If you do own an older home in New Zealand look into putting insulation into your home or a DVS system or anything else instead of major flash renovations.
December 02 2008 | Uncategorized | No Comments »
Yesterday saw a historic day for Real Estate Auctions in New Zealand. What is said to be this countries largest ever property auction event Ray White of Auckland auctioned 100 properties at one event. As David Leggott said in his blog the event was major. With models, balloons and a DJ involved there was more than just properties on the show case.
There were properties of all sizes and shapes and of all ranges of price tags, the range was from $200,000 to 2 Million dollars. The event held at the Telstra Clear Pacific Events centre created a huge amount of interest and made buyers turn out in their droves.
On the day 8 sold under the hammer and 15 were negotiated after the auction. And a number were sold prior
to auction. In an auction you must remember that it is a 3 stage process. You have the marketing period, the auction itself and then after the auction with negotiations with interested parties. Quite often buyers cant bid at auction. To bid at auction you need to be unconditional in all respects. Some buyers aren’t so they wait to get the chance to voice their position after the auction. This gives added pressure to the people who can bid to bid so that they don’t have as much competition.
It will be interesting to see over the coming week how the properties stack up in regards to sales. There will be many busy sales consultants in the Auckland Ray White group at the moment.
On TV3 news tonight there was a story Falling prices make it a good time to buy a home. In this article they say that property is the most affordable it has been since May 2006 and it now costs 68% of the average wage to service the average mortgage. Prices of property are down but people are still not buying. Bryan Thompson says on his blog that people are hearing conflicting messages in the media and are uncertain whether it is a good time to buy now or whether to wait.
For someone looking to buy now there are some great deals out there. The people that are selling by in large are motivated to sell and move on. My personal observation is that I see quite a few buyers sitting on the fence and waiting to see what happens, but they are there ready to make a move. In the past few weeks there have been some very positive signals from the Housing market in New Zealand and it will be interesting to see how these pan out with home buyers. Interest rates have fallen, BNZ now offer a 6 month fixed rate of 6.99%, Fuel prices have come down and we are in the process of having nation wide tax cuts. All these factors are putting extra cash into the back pockets of everyone and will definitely help improve confidence within the market over the coming 12 months.
November 26 2008 | Buyers and Sellers | 2 Comments »
BNZ is throwing down the gauntlet to other banks in slashing its lowest mortgage rate today to below 7 per cent.
The ‘mortgage rates war’ was a key battleground four years ago when BNZ and ASB went at it hammer and
tongs in the spring of 2004.
That tussle over 2 year fixed rates gave the housing market a second wind that did not run out until the end of 2007 and hamstrung the Reserve Bank’s efforts to slow the economy.
The difference this time is that the battle is around the variable and 6 month rates and could restore some the Reserve Bank’s monetary policy powers and lift the economy as it heads towards a difficult 2009.
BNZ has announced a new 6.99 per cent 6 month mortgage rate that makes it the lowest in the market, beating even Kiwibank’s lowest rate of 7.29 per cent for one year and Westpac’s lowest rate of 7.19 per cent for 18 months. ANZ and National’s lowest rate is 7.3 per cent for one year, while ASB’s lowest rate is 7.35 per cent for 6 months.
BNZ’s new one year rate is 7.29 per cent, down from 8.29 per cent, while its 2 year rate is 7.35 per cent, down from 8.29 per cent.
This latest competitive first strike ahead of an expected 100 basis point cut in the Official Cash Rate next Thursday to 5.5 per cent has increased the competitive intensity that is likely to drag many 2 and 3 year fixed rate borrowers down towards a 6 month or variable rate as interest rates drop quickly. Most economists see the OCR falling as low as 4 per cent next year, meaning the variable and short term mortgage rates are likely to drop to 6-7 per cent.
Some economists, including Goldman Sachs and Deutsche Bank, are now forecasting a 150 bps cut on December 4.
Source: New Zealand Herald Online
What does this mean for us – the consumer?
Well the big thing is a saving in your mortgage which in the current economic times is going to help so many people in New Zealand. On top of falling mortgage rates we have falling petrol prices, falling commodity prices. But it doesnt just stop there. The total global downturn means the price of everything goes down such as our New Zealand Dollar which is hovering around the .50c USD mark. Our houseprices are no exception. With many houses dropping in value of up to 10% and some predict even more, some people are struggling to find the cash they once had to make the moves or fund things in the way they used to before.
This is a testing time for many people but the big thing today is that interest rates are falling. We will be recieveing more tax cuts from the national government and a big thing for many kiwis over the summer fuel is alot cheaper. Many people are sitting tight as interest rates are expected to fall further. Talk to a mortgage broker if your financing at the moment. They can offer great sound avice for the future. It is an interesting and will be a tough road ahead but I am sure if we remain smart we can ride this financial storm out alright.
November 24 2008 | Buyers and Sellers and The Market | No Comments »
This is big news for the real estate market in New Zealand. Especially for agents, vendors and purchasers. This is the official statement released by allrealestate.co.nz.
“In New Zealand, the REA Group plans to end operations of its residential real estate website, allrealestate.co.nz, on 30 November 2008.
The company will continue to operate its successful commercial real estate website, realcommercial.co.nz, which is the market leader by unique browsers. (Nielsen//NetRatings)
We are grateful to our residential real estate customers for their support and we wish them the very best in the future.”
The reasons being closing the New Zealand operations were the tough competitive market in New Zealand from the likes of trademe.co.nz and realestate.co.nz and the challenges that allrealestate.co.nz faced. My view is that the REA is consolidating like many businesses are. The economic downturn is making it tough out there for everyone and my take is that the REA is scaling down its business to focus on areas
it’s doing well in.
It is reported that at the end of June 2008, 527 agents used the site and listed 41,000 properties.
The REA Group entered the New Zealand market in mid 2005, initially by adding a map of New Zealand to the realestate.com.au site. In September 2005 it launched with a unique URL: allrealestate.co.nz.
In June 2008, there were 230,000 unique visitors to allrealestate.co.nz, a similar sized audience as its nearest competitor, the Real Estate Institute backed realestate.co.nz.
What does this mean for Real Estate in New Zealand.
For the buyers: It means that more stock will end up been listed on less sites which means a more comprehensive database of properties for you to look though. This will save you both time and effort in your property searches.
For the vendors: Two main things – 1. Less places to market your property which means that your marketing budget can be less. 2. On the remaining websites left to market your property there will be an influx of approximately 230,000 unique visitors looking around.
For us as agent: This means we can offer a more comprehensive view when coining to marketing plans. When it comes to marketing on the internet the industry owned website of realestate.co.nz offers a great package for sellers for exposure.
November 14 2008 | Uncategorized | 5 Comments »
Barack Obama will become America’s first black president after emerging triumphant from one of the most talked about elections I know of.
Obama made his vistory speech in front of 70,000 people at Grant Park in Chicago – and hundreds of thousands more outside – as TV networks simultaneously declared him the winner at exactly 11pm Eastern Time to bring an emphatic end to the Bush years
McCain congratulated Obama on winning what he called a historic presidential election. He spoke to supporters in Phoenix, saying that the election of the first African-American president shows that the U.S. has left behind the kind of bigotry that once stained its reputation. He also promised to help Obama lead the U.S. through the many challenges it’s facing.
Obama will be inaugurated the 44th US president on January 20, 2009, and inherit an economy mired in the worst financial crisis since the 1930s, two wars in Afghanistan and Iraq and a nuclear showdown with Iran.
This historic win is going to change the world. This is part of what Obama said at his victory speech.
“If there is anyone out there who still doubts that America is a place where any things are possible, who still wonders if the dream of our founders is alive … who still questions the power of our democracy, tonight is your answer,” he said.
He said his victory belongs “to you”.
He said the voters who turned out today did so because they believed this time “must be different and their voices could be that difference”.
He said America was not a collection of individuals, but “we are and always will be the United States of America”.
He said it was “a long time coming” but “because of what we did on this day” during this election, “change has come to America”.
He said despite the challenges ahead, including two wars and a financial crisis, he was hopeful for America.
“There will be set backs and false starts,” he said.
“I will always be honest with you about the challenges we face … “
He said Senator McCain had “endured sacrifices for America that most of us cannot begin to imagine”.
He congratulated Senator McCain and Governor Sarah Palin for all they had achieved and looked forward to working with them.
I am excited to see how this election result pans out. For us here in New Zealand we have our own elections coming up on Saturday November 8 2008. Decision 08 or the New Zealand General Elections on Saturday will be a changing point for New Zealand as well. The whole world is in a moot of change and the election in America today will change the way America goes forward and whatever the result from the New Zealand Elections will change the way we go forward.
John Key and National is looking forward to working close with the new American government in a new free trade deal. Labour and Helen Clark is looking forward to working with Barack Obama in finishing a free trade deal which has been started with the Bush government and is looking forward to seeing many troops pulled out of war zones and increasingly seeing a world full of peace. It’s very interesting times ahead but from where I am sitting I see the world is looking for positive in the future.
To view Obamas Victory Speech Click this Link
November 05 2008 | Uncategorized | 2 Comments »
At 4pm today New Zealand time work comes to a crash halt, the projector gets switched on, the beer gets cracked open and preparations for getting the mind in the right place for this year’s Melbourne Cup begin.
The Melbourne Cup Day almost stops Melbourne and practically halts the rest of Australia and New Zealand. The hype surrounding the event is massive. It is an event that so many people get right behind. Its not just about the horses as well. It’s the time that all the ladies can wear massive extra ordinary hats and show them off to the rest of the world. This tradition is firmly set in concrete and is a great show for anyone to watch (almost as exciting as the race itself).
This year’s Melbourne Cup is the seventh race in a 10-race program at Flemington Racecourse on November 4, the first Tuesday in November.
The Melbourne Cup, a Group 1 handicap race over 3200 metres, will be run at 3pm, Australian eastern daylight time. It has a total prize money of $5,650,000, including trophies.
The Melbourne Cup has been run each year without fail since 1861. The 2008 Melbourne Cup is the 148th in an unbroken series.
The 24 horses running in this year’s Melbourne Cup were made known after the running of the last race on Victoria Derby Day, the Saturday before Melbourne Cup Day.
Here is a breakdown of a few of them:
Septimus (IRE) – An undeniable class act in England and Ireland, and the winner of the Group I Irish St Leger by 13L back on September 13th, but RVL chief handicapper Greg Carpenter did not issue a re-handicap, and he is not having sleepless nights over it. Carpenter says that if Septimus wins then he will be great horse and it will be a ‘fantastic achievement’. Only two runs this year, and not one in Melbourne before the Cup.
Master O’Reilly (NZ) – 2007Group I Caulfield Cup winner, failed to stay in the Melbourne Cup, seventh in the 2008 Caulfield Cup 2 1/2L from the winner coming home well, not suited to weigh-for-age and 10th in the Cox Plate, carrying 55.5kg from good barrier position of six.
Honolulu (IRE) - Barrier 24, too hard.
C’est La Guerre (NZ) – Good barrier position at four, top international jockey Brett Prebble who knows Flemington. Has not won since the Group I NZ Derby (2400m) at Ellerslie in March. Fast closing fourth, under a length away from the winner in Group I WFA Yalumba Stakes over 2000m at Caulfield on October 11th, and noticeable closing sixth in WFA Cox Plate, drops from 57.5kg to 54.0kg. Trained to the minute, excellent
chance.
Nom Du Jeu (NZ) – Barrier one will mean he goes to sleep under Jeff Lloyd. Top rated lead-up form for the winner of the Group I AJC Derby winner last autumn, with a third in the Group I WFA Kelt Capital Stakes over 2040m at Hastings, and then second in the Caulfield Cup with 55.5kg. Drops to 54kg and will run the distance closing from the turn for the main straight again.
Yellowstone (IRE) – Not this race.
Zipping – Barrier 16, failed to stay last year when fourth 3 1/4L from the winner and no reason to think as a year older he will improve on that.
Mad Rush (USA) – The perfect storm of Luca Cumani, Damien Oliver, barrier four, 53.5kg. Last year Cumani came with Purple Moon and the same trainer/jockey combination fell short by just a half-length. Mad Rush was fourth in the Caulfield Cup, just 2L from the winner All The Good (IRE), after a blocked passage in the running, and with 55kg. Top pick.
Ice Chariot – Not on Tuesday.
Viewed – As much as it would be tempting to think of Bart Cumming’s 12th Cup winner, this chap will not be it.
Littorio – Barrier 17 which last produced a winner when At Talaq (USA) won. Has left his dash back at his Group I Turnbull Stakes win over 2000m on Ocotber 4th.
Bauer (IRE) – Top win in the Group III Geelong Classic over 2406m on October 22nd. Damien Oliver rode Media Puzzle (USA) to win the same race, and then the combination went onto win the Cup in 2002, but Bauer is not in Media Puzzle’s class. However, barrier 13 is not too much of a hindrance, 52kg and Corey Brown are certainly not, so combinations.
Boundless (NZ) – Barrier 20, another New Zealand-bred horse Empire Rose won from barrier 20, but that was in 1988.
Gallopin (NZ) – Barrier 21 is a definite problem, although the lead-in form is good with the last start Group II Cathay Pacific Gold Cup over 2040m at Moonee Valley showing trainer Danny O’Brien has the five-year-old peaking. 52kg a help for James Winks, but staying the distance might be a problem.
Guyno (NZ) – Not on Tuesday.
Newport – Not on Tuesday.
Profound Beauty (IRE) – Not in the class of some of the other international horses. Mark Weld, son of trainer Dermot, has commented that it might be a year too soon, not an unreasonable assumption.
Red Lord – Not on Tuesday.
Varevees (GB) – Not on Tuesday.
Prize Lady (NZ) – Not on Tuesday.
Alessandro Volta (GB) – Perhaps to lead out Septimus from the barrier alongside, but not tested at the distance and recent form not encouraging, notwithstanding the light-weight at 50.5kg. Might not stop though.
Barbaricus – Light-weight at 50.5kg barrier three, great up form, but the distance might be too much toovercome.
Moatize – Grand final was on Saturday winning the SAAB Quality.
Who will you be betting for.
November 04 2008 | Uncategorized | No Comments »
This evening I am just relaxing after a fantastic day in the sun down here in Sunny Christchurch. I cought up with a good friend of mine Brendan Burns who is running for the Labour Candidate Seat in the 2008 election for Christchurch Central. It was a cracker day and I think most of New Zealand experienced the same thing. Anyway I stumbled accross an article on 3 news online which speaks of the amount of people choosing to rent vs buying their own home. It says:
New figures have revealed a growing trend which shows more and more New Zealanders are choosing to rent their homes over buying them.
While many may be quick to point the finger at a slowing economy and the global credit crisis, it is a shift which has far deeper roots.
Andrew Schollum and Gemma Nissen are among one-third of New Zealanders who now rent their homes.
“We’re really fussy about the kind of house we want to live in,” Mr Schollum says. “And we can’t afford the type we want to live in. You know, can’t afford to buy it, but can afford to rent it.”
It has been revealed that the number of Kiwis choosing to rent property over buying has been consistently growing.
“The number of people renting has been increasing over the last five or six years,” Geoff Montogmery from the Department of Building and Housing says. “About a third of New Zealanders rent their homes and it is just a general change. We are aligning with the rest of the world where more people rend than own their homes.”
The Department of Building and Housing has been monitoring the shift and has seen close to a ten percent increase in the number of rental bonds paid over the last five years – which is good news for the property management sector.
“When the property market turns down Quinovic does very well out of it because people put their properties into the rental pool,” Stephen Dacome-Bird from Quinovic Property Management says. “When the property market picks up people start investing in property and Auinovic does very well out of it.”
However for home owners and prospective buyers the current climate is not so rosy.
Last week the Reserve Bank made the biggest cut to the official cash rate in New Zealand history in an attempt to stimulate the economy and help those with mortgages.
But despite the reprieve, the thought of the quarter-acre dream is more of a nightmare for some.
“We’d have a totally different life,” Mr Schollum says. “Like right here we can live in the centre of the city and we can do a lot of things really easily. That as well as having more disposable income means that our quality of life is much better.”
And Mr Schollum’s argument seems to be gathering momentum across the country.
To me this to some people is a justified argument as rents at the moment are cheaper than a mortgage and people have reason to not want to pay rent. But I just cant help but think going back to the line it says that because the rent is cheaper they have a better quality of life.
Is this a very short sighted thing to say, or is it just reality? Is the fact of life of what is happening causing the rich to get richer and the poor to get poorer. I think of it like this. If a third of us are renting our homes and this number is growing will supply for buying stop. Or is this just going to create opportunities for the investors to increase their portfolios to very large amounts.
It makes you think.
October 27 2008 | The Market | No Comments »
s crunches down on everybody.
