Archive for April, 2014

Complaints about Real Estate Agents

The Real Estate Agents Authority receives about 800 complaints a year, and about 56% are referred to the Complaints Assessment Committee (CAC).

The others are dealt with by consumer information, compliance advice or mediation.

Of the 56% that go to the CAC, 64% require no further action, and 30% are taken further with a finding of unsatisfactory conduct or a charge is laid with the Real Estate Agents Disciplinary Tribunal (READT), and not all of these go against the Agent.

In rough terms there are about 80,000 residential properties sold per annum through Real Estate Agents. In addition there are Lifestyle, Rural, Commercial and Industrial properties sold and leased, and Businesses sold. I don’t know the total number of transactions handled by Real Estate Agents, but it must be in the order of 100,000 per annum.

There are about 139 findings per annum of unsatisfactory conduct, or charges laid with READT. This represents about 0.14%, or one problem per 719 transactions. For every 718 transactions with no problems, there is 1 with a problem.

These figures are approximate only, but demonstrate that most transactions are carried out by reputable, competent and ethical Real Estate Agents, with good outcomes.

Kind regards

Michael Ford

Land Covenants – The devil can be in the detail!

A covenant is a provision on the certificate of title of a property which limits the owner and future owners in respect of the use of the land.

It may prohibit pig farming, or create a maximum building height to protect a neighbour’s views. Common covenants cover the quality of new building required in a new subdivision, and may prohibit certain building materials, second hand houses etc etc.

Covenants generally last forever, and are difficult to change without the approval of all parties to a covenant, which may be 100 Buyers of sections in a new subdivision, as well as the Developer.

Bad covenants can reduce the value of property, and good covenants can increase the value of property. It is a good idea to include your Real estate Agent when you are creating covenants with your Surveyor and Solicitor.

Some covenants restricting the further subdivision of land might be appropriate today, but totally inappropriate in 15 years time. You can add a sunset provision to such a clause which puts a time limit on such a covenant.

Proceed with good advice, and ask questions.

Kind regards
Michael Ford

LVR’s Skew Median House Price Statistics

Feilding’s median residential house sale price calculated over 3 months has increased to $244,000, after being at $220,000 last November. It is actually at $268,750 for the month of March alone. It appears that with a shortage of first home buyers because of the Reserve Bank’s loan to value ratios,  less lower priced homes are selling, and this is distorting the median sale price upwards. Palmerston North’s median rocketed up from $285,000 to $306,250 for the month of March alone.

The number of Feilding house sales was modest at 24 through all Agencies, which I was a little surprised at. The market felt busier to us. The number of sales has been low from November.

Comparable medians in the region calculated over 3 months are:

Feilding                                 $244,000
Palmerston North               $285,000
Levin                                     $171,000
Whanganui                           $180,000
Pahiatua                               $157,000
Rangitikei                             $150,000
Eastern Suburbs Ak        $1,070,000
New Zealand                       $420,000

Kind regards
Michael Ford

Most Socially Advanced Country – NZ

Feilding is one of the best towns to live in New Zealand, and New Zealand is ranked number 1 out of 132 countries for social and environmental performance, according to a US based non profit, the Social Progress Imperative. This measure excludes GDP (gross domestic product).

The top 5 countries are New Zealand, Switzerland, Netherlands, Iceland, and Norway. Not bad company!

Social progress is defined as “The capacity of a society to meet the basic human needs of its citizens, establish the building blocks that allow citizens and communities to advance and sustain the quality of their lives, and create the conditions for all individuals to reach their full potential.”

It is considered a more wholesome way than GDP to measure national performance, and includes 12 components and 54 indicators.

We can argue about the merit of such a measure, and the accuracy of the calculations, but we can’t get away from the fact that comparatively, New Zealand is a very good place to live. We already knew that, but we do forget it from time to time, so it is good to have an international agency remind us. The grass is not greener on the other side of the Tasman Sea! We live in one of the best country towns in the world.

Kind regards
Michael Ford

 

LVR Speed bumps reviewed?

The Reserve bank gave the first indication late last week that it may relax or remove the current restrictions on banks around low deposit lending.

This can’t come soon enough, as first home buyers are conspicuous by their absence in the market.

The restrictions limit new lending by banks to 10% of total new lending, where the house deposit is less than 20%. Previously that type of lending represented about 25% – 30% of new lending by banks.

Many buyers have just given up, which is unfortunate for them, as there a number of ways to still be able to borrow a 90% loan, or similar. Firstly, banks will still lend up to 10% of their new loans where their clients have less than 20% deposit. There are other ways that we can assist buyers if they ask. Bankers and Brokers are keen to lend.

The LVR restrictions were introduced to slow house price rises, and they have had an effect. Rising interest rates are also quelling house price inflation. The rising house price problem was really only in Auckland and Christchurch, and many commentators including myself considered that the rest of the country should have been exempted. New house building lending was exempted sometime after the LVR restrictions were implemented on 1.10.13.

Kind regards
Michael Ford