I have been reading a few things lately about the Real Estate prices in and around Christchurch and New Zealand. There seems to be much talk about the market prices climbing up and up and up in recent months and reaching what one is calling record prices. What the hell is going on. The country is still suffering one of the longest recessions in recent times and Real Estate companies across the board are spouting out that the housing market is in full recovery.
Here is what I read on stuff.co.nz http://www.stuff.co.nz/the-press/news/christchurch/3239911/House-prices-break-record
Christchurch house prices have hit an all-time high as a shortage of properties fuels a market recovery.
The city’s median house price last month was $347,250, up 12 per cent on a year earlier and beating the previous record of $340,000 set in November 2007, Real Estate Institute figures show.
There were 506 Christchurch house sales last month – about the same number as in December 2008.
Bank of New Zealand chief economist Tony Alexander said prices were rising as the low level of new-home building curbed supply, while a rise in immigration and lower interest rates boosted demand.
The market was playing “catch-up” after the recession kept buyers away, he said.
Cities were leading the market recovery, with export concerns and farm debt hurting rural areas.
“I’d expect that prices on average in many parts of the country will continue to rise by 5 or 10 per cent over the next year,” Alexander said.
Longer-term interest rates were rising, but he expected floating and shorter-term rates to stay low until next year, prolonging the market rally.
Real Estate Institute president Peter McDonald said house prices had “definitely stabilised” and were now rising, boosting optimism in the industry.
New homeowner Tania Power said competition from other buyers meant she and partner Marc Greenhill made their top offer to secure the Christchurch home they moved into last week.
The couple spent a year “saving really hard” and watched prices rise.
“There were definitely a lot of people looking when we bought ours,” she said.
“It went to a multi-offer, so we had to offer them the asking price, but it was worth it to get the one we wanted.”
Christchurch real estate agent Rob McCormack, co-owner of offices under the Harcourts Grenadier brand, said houses and sections were selling well.
“There’s a feeling of optimism out there, and I don’t think it’s a dead-cat bounce,” he said. “If we do have a problem it’s getting stock. We don’t have the supply, but there is certainly the demand.”
Rising prices made properties hard to value, and more sellers were prepared to auction their houses, McCormack said.
Statistics New Zealand figures show house-building has been at its lowest point for several decades. About 1500 consents for new homes are being issued each month by councils, half the number from six years ago.
The Real Estate Institute’s figures show prices rose in 11 out of 12 regions in the past year, with the national median price of $360,000 up 9.6 per cent on December 2008.
Of 4957 sales across the country last month, 58 per cent were under $400,000. Homes sold in a median 33 days.
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In the Canterbury-Westland region, December’s median priced matched the February 2008 high of $320,000 after rising 7 per cent in the past year.
Median house prices in other regions in the year to December were, with annual price growth in brackets: Nelson-Marlborough $343,500 (14.5 per cent), Wellington $400,000 (8.1), Southland $184,000 (10.84), Otago $230,000 (unchanged), Central Otago Lakes $432,500 (1.16), Auckland $470,000 (6.81), Northland $306,000 (minus 2.08), Taranaki $280,000 (7.69), Manawatu-Wanganui $230,000 (2.9).
Come on. Look at the bigger picture and look whats going on. Now I know I am not qualified to rattle off any official stuff. But you have to ask the questions that will this price recovery actually keep going. And when they talk about median prices. The reality is that more higher priced homes have been selling in the last 6 months than in previous homes comparatively to the lower priced homes. From my understanding of going to peoples homes the amount I have been most people who own homes under the 400k mark are finding the times tougher and arent moving.
Compare that to many people who are downsizing their homes at the moment. People in bigger houses in posh locations looking to downsize and have something with smaller mortgages. The reality is that people out there still worry about the prices of homes. Our home affordability allbeit better than previous years is rising fast and is one of the most expensive in the world.
On top of all of this you have to keep in mind we still have an extremely low OCR which is tipped to rise by June this year kissing good bye to the relatively cheap money we have had access to for the past 12 months. Bollard has tipped a mid-year increase in the official cash rate from its current record low 2.5 per cent but the market is anticipating he will start as soon as March and have hiked the OCR by 75 basis points by June 30.
I am sorry to say but if you look at the signs they do not paint a pretty picture. The average Kiwi is going to be priced out of buying a home. And if they do they most certainly will be stuck with a massive mortgage.
I feel the Real Estate industry shouldnt be telling the country that house prices are heading to an all time high. Its just not healthy to be doing this at this time. Sellers will start to expect higher prices. Great if your a home owner though. There is a drought of listings at the moment. A sure sellers market. So what the industry needs to do is attract more listings. Which is what the article above will most certainly do. Before you buy or sell right now make sure you do your research on true facts as there are too many conflicting opinions out there, including mine. But you need to look at cold hard numbers and look at the trends.
Good luck.
January 19 2010 | Uncategorized | 2 Comments »
I am not going to harp on about any statistics or any comments made by the so called experts. All I would like to see here is a real discussion on what you actually think and what your actually seeing out there on the streets. For several months now I have speaking directly to business owners and I have seen a very clear trend with most of them. The exceptions being liquor stores and video stores .I will explain soon.
In my time speaking to businesses there has been a very downward spiral in their sales. Since Easter there has been a drop off to very slim pickings in terms of sales. I have even noticed this within the business I have been working where I have noticed sales drop to half of what they were 4 months ago and we haven’t been alone in this. I have had almost all of the 400 businesses I am dealing with say the same thing except for those exceptions I said before.
You don’t have to be a rocket scientist to think that its hard out there now. Just drive down the main street of Christchurch or any City in New Zealand and see how many businesses are closed down and how many shops are closed.
Is winter going to be a downturn in the masses where we see much more the redundancies that we are already seeing. From what I see most business owners have less money. The waged people are safe until their employer can’t pay them anymore which is seeing most keep their hands in their pocket when it comes to spending and only spend limited amounts when they need to. This is why the liquor stores and video stores seem to be doing well as people must be staying home drinking and entertaining.
In your observation what are you seeing. Have you been in or are you in a situation that is causing you to budget. Please leave comments, let us know what’s happening out there on the ground.
May 13 2009 | The Market | 1 Comment »
Christchurch
This is the latest Press Release from QV.
Property values in Christchurch decreased by 9.7% over the last year (calculated over the three months ending March 2009 in comparison to the same period last year), deteriorating further from the 9.1% annual decline reported in February. The average sale price for the city increased slightly from $344,816 to $349,442.
Melanie Holcroft of QV Valuations said; “The Central and Northern suburbs are holding as the strongest areas of Christchurch City, with the Eastern suburbs mirroring the Canterbury market. The Hill suburbs have decreased from -8.1% in February 2009 to -9.9% in March 2009. The upper end of the market seems to be experiencing less activity compared to the middle and lower sections”.
“Property values since December 2008 continue to decline, although this appears to be at a slowing rate. Whilst the average sale price for Christchurch City shows a small lift, it must be kept in context as this data is easily skewed by normal market fluctuations and the mix of property being sold,” she said.
“The anecdotal signs of increased market activity with properties that are well priced continue on from last month, and buyers are showing plenty of interest in these. It should be noted however that the overall sentiment is still cautionary, with job security appearing to be the key driver affecting purchasing decisions. Local banks are also reporting a noticeable increase in pre-approvals, but this is still slow to filter through into market activity. We anticipate a slower market over the winter months, with current trends in line with seasonal behaviour,”Holcroft said.
Here is a snap shot of New Zealands Median Price for Property over the past 9 years.
Now here is the median for the same 9 year period in Christchurch.
The trend is very much the same.
Now the big change that agents have noticed is the drop in sales volume. Here is a graph from treasury that shows the drop in sales volume over the last two years and how it has changed.
As you can see there is a huge drop of with sales volume at about the time of the housing crisis in The United States which has evolved to the global credit crunch. But on the other side of this look at how steep the sales volume grew. This is post the 9/11 Twin Tower events which saw the number of migration of ex pats and new people to New Zealand grow at very fast rates as the graph below shows.
Now whether 9/11 was hoaxed by the Illuminati in a bid to change the world and protect certain people wealth or it was a real act of terrorism are still up for debate but the after effects have been more than anyone can detest. The jobs and employment from the upbeating of security was massive and in New Zealand the return home of thousands of New Zealanders pumped billions into the economy. But this caused the bubble that just kept getting bigger and bigger and created more and more debt. This debt is the real reason for the market the way it is. Now we have inflated prices with less capital and the same amount of debt.
When will the housing market start to move again.
Signs are already of more activity and there is a clear sign of migration numbers increasing as more people return home. These people have to live somewhere.
April 25 2009 | Buyers and Sellers and The Market | 1 Comment »
During the last few years the real estate market was rising all over and we were experiencing a sellers market. The media went wild over the frenzy and everywhere you looked there was someone or something telling you that real estate was HOT HOT HOT! Prices were going through the roof and there was unprecedented growth and people were becoming rich by simply buying and selling houses.
Now the market going through a correction because there was too much growth too fast. In some areas prices and inventory levels are going to decrease. Is that a good thing? Yes, it is. It’s healthy for each market to go through it’s cycle. This ebb and flow is good and allows each market to grow and then collect itself and catch up, and then eventually grow again.
What has happened over the past few years is prices have increased and increased and just keep increasing. But this prolonged spur of growth can’t be sustained forever and there then there comes a point when people are no longer able to pay the prices of the homes. During the boom times people begin to notice how much the neighboring homes are being sold for and they want in on the action. When a market heats up and prices begin to rise quickly everybody starts throwing their homes on the market and the market becomes flooded with property.
Eventually when the demand slows, but people are still wanting to sell for more and more, those home-sellers (who are always the last to accept the end of a growth period) will need to adjust for this and the market can correct itself.
Here below is a wheel with what I call the 4 seasons of any market. I will explain them below.
This boom or growth time is called the expansion. Expansion brings job growth, population growth and a high demand on the infrastructure of an area. Roads need to be built, restaurants open, hospitals expand and prices rise. This in the Real Estate market brings new construction, new sub divisions and more money. Property prices increase and demand for the property on the market increased. This was felt here in New Zealand around the years of 2001 to 2007.
In New Zealand what we experienced in the later parts of 2007 was equilibrium. Equilibrium is when things begin to slow and settle. Prices have reached their limits, or beyond, and this period of time brings high prices and as a natural consequence less businesses move into, or expand in, the area. In this part of the cycle prices usually slow to a steady lever but this time because of the Global Credit Crunch we have seen a very short time in this area and fast movement into the next step in the cycle which is Decline.
Decline occurs as the demand for housing decreases, job growth stops and businesses begin to relocate to save money. During this time, prices become stagnant or even decline as rents and occupancy go down. Usually this decline is merely a slowing of the growth rate, but in markets where the rise was too fast the decline must result in a correction (decline) of prices which is what we have seen during 2008.
The market will then move into absorption. Absorption occurs as the lower prices and occupancy levels fall below the national averages and/or the area becomes attractive again to businesses looking to relocate. Usually in this time incentives are introduced by governments to encourage growth within the community.
I like to think of the market as a natural and living cycle that has laws that it has to follow. The easiest way to explain this is by calling the 4 cycles in the market a season. Just as nature has it’s seasons, real estate markets have a healthy way of transitioning from period to period. Sometimes depending on external factors such as warmer sea temperatures a season could be more violent. In the real estate market the same principle will apply. If there is an unusually high turnover of volume or higher than usual debt in the market this will affect how the next season performs. Experiencing these transitions and understanding them is very important and if your serious on property this will give you a huge leg up and will also help you as a home buyer or seller understand how they work so you can weather out the storms and relax in the warmer and rosier seasons.
December 20 2008 | The Market | 2 Comments »
This makes for some interesting reading…
NEW Zealand’s economy has slipped into a recession for the first time in a decade, official data shows.
The decline in second-quarter gross domestic product data signalled further aggressive interest rate cuts by the reserve Bank in coming months.
Statistics New Zealand said production-based gross domestic product shrunk 0.2 per cent in the three months ended June 30, after it contracted 0.3 per cent in the first quarter.
“The last time there were consecutive quarters of decline in economic activity was the three quarters ending March 1998,” the statistics bureau said.
The quarterly figure compared with the 0.5 per cent contraction forecast in a Dow Jones Newswires poll of 12 market economists. The Reserve Bank of New Zealand had forecast the economy would contract 0.2 per cent.
The statistics bureau said GDP grew 1.0 per cent on the year, compared with the 0.6 per cent expected by economists and the first quarter’s 1.9 per cent growth on the year.
While the data is slightly better than most economists were expecting, it still shows a contraction and confirms that the economy has been squeezed by a combination of high interest rates and rising food and fuel prices crippling consumption. Drought conditions and a sharply slowing housing market added to the misery.
The weak economic picture, coupled with offshore financial turmoil, should keep on track market expectations for the Reserve Bank to continue its aggressive easing cycle.
Earlier this month the central bank slashed the Official Cash Rate by a bigger-than-expected 50 basis points to 7.50 per cent in a bid to engineer a quick recovery from the recession.
High interest rates and the rising cost of living continued to cool private consumption expenditure growth, which contracted 0.2 per cent, compared with a 0.4 per cent decline in the previous quarter.
The Reserve Bank and most economists are tipping the economy to show a further contraction in the third quarter.
Several economists are now expecting the Reserve Bank to ease by another 50 basis points at its October 23 Official Cash Rate review.
Sourced from The Australian Business
But this does not mean the end of the line by no means. We are still in a relatively good space at the moment and as the OCR continues to fall and world markets start stablising we will be back on a high.
September 26 2008 | The Market | No Comments »
