Monthly Archives: December 2008

It wasn’t like that last week?

What’s the traffic like in Nelson / Tasman at present?

Traffic was a lot more hectic today & yesterday than most “normal days” in Nelson. Why, well this might have something to do with it.

Tahuna Beach Holiday Camp, the southern hemispheres largest motor camp, reports that they are “already stretched at the seams, despite having a capacity of almost 3500.”

The camps manager Carol Wood said in the Nelson Mail that “she had noticed there were not as many backpackers traveling around in campervans” and “…that bookings were down on previous years, but those who had booked were staying for longer.”

She also added “we are usually able to offer people lots of choice for camp sites before Christmas, but on Christmas Eve had been scratching to find six places”

Mapua Leisure Park reports in the local Nelson Mail that 1500 of its 2000 plus places are taken.

Kaiteriteri Motor Camp was getting there, sooner than last year and its booked out for longer. They have a capacity of 1800, but at this stage its only 70% full at present.

Motueka Holiday Park was already full, was “flat out” and much busier than normal earlier.

Pohara Beach Top 10 Holiday Park reported that they can hold 1200 campers, & are full through to mid-January 2009.

Nelsons Brook & Matai camps report they are busy too.

And even our dog friendly camping ground, at Quinneys Bush reported as very busy. Its a great place to visit that I remember fondly from many childhood visits. There big claim to fame is the selection of multiple flying fox’s, plus that great river right on the edge of the grounds.

Although being filled by others glad to find a vacancy at this time of year, there are anecdotal reports that there’s been a few more than usual Xmas cancellations this year, many citing a desire to stay closer to home. On top of Xmas costs, issues like petrol prices & future 2009 job security have had such a wide coverage in the media that its only normal to be top of many people’s mind, and affects things like extra discretionary Xmas spending. eg a summer family holiday

I guess the photo on the front page of last Saturdays Mail expresses it best though………captioned next to the photo  “..reckons he has a million dollar view for a handful of coins. With fishing rod in hand, and a beachfront camping spot Mr D said it was a holiday that he always found rejuvenating.”

Here’s an idea of some more things to do while in town [although the Chez Elco is not open any longer]

Its not surprising that many have their first experience of our region while on holiday, and one common outcome results in many forming a desire to move here when they can.

And just in case the present traffic situation seems a bit off normal, on the 2nd Jan the 18th annual Jazzfest starts in Nelson, NZ’s best summer Jazz festival, comprising 70 events over 5 days scattered in venues all around the town, with International & local artists.

Example… how about visiting the local ASB Aquatic centre [its covered year round obviously] to enjoy ….“Splash out on Jazz”…and you’ll hear “Breez’n from 3:30pm to 6pm on 3rd January, and then if you aren’t too wrinkled, stay on for “Mahdu” from 5:30 to 8pm. Actually I know of Mahdu and their sound is fantastic for such a young group of folk, now only if I can find those togs…

So from Sunny Nelson to you, have a HAPPY NEW YEAR.

Immigration – could 2009 surprise?

One of the last of 2008’s WBC’s weekly commentaries makes some predictions about migration for 2009.

And as the chart shows when we are at such a low figure it doesn’t ordinarily stay that way for long, and usually pounces one way or the other quite a bit. Very possibly other economic and related fundamental’s come into play in affecting this.

“We expect November 2008 to be the low-point for annual net migration. For the past 18 months migration figures have been dominated by a large outflow of NZers to Australia. Inflows from other countries to NZ barely exceeded the outflow to Australia, keeping the overall net migration figure low but positive.”

“…and one of the dream employment fields for many younger Kiwi’s, mining jobs in Australia, may be impacted…..”

  • We forecast net migration of 15,000 in 2009, much stronger than 2008. The pull-factor from Australia’s mining regions is waning as world commodity prices fall. And we fully expect an influx of Kiwis to return home from countries that have been hit harder by the credit crunch, such as UK.

They also go on to say…

“…… as we head into 2009 a housing shortage could develop. Building consents indicate that very few houses will be built over the next six months. But New Zealand might experience an increase in net migration as the economic slowdown in Australia reduces the flow of Kiwis across the Tasman and the parlous economic situation in the UK sends Kiwis there scurrying home (which is what happened during the last global slowdown).”

In ANZ‘s year end commentaries they say….

“Net Migration – October. For the second month in a row, net migration was effectively flat. A net 10 people permanently migrated to New Zealand in October, and this fully offsets a net 10 people who permanently left the country in September – the first monthly net fall in migration since July 2005. On an annual basis, net migration sits at 4,329 and although positive, is far from a level that will be overly supportive for the local housing market.”

NAB‘s December 08 view is longer term…[more of the economy, NAB doesn’t appear to have stuck its neck out on immigration figures, maybe relying on relaying its parent ANZ’s info]

“The economy is reflating, both via aggressive loosening in financial conditions such as interest rates and the currency, but also – and critically – through a much stronger focus on productivity growth across the business sector. A stronger global economy is a critical part of any recovery, with the holy grail of economics for the economy to be built around earning as opposed to spending our way to growth. This is looking like a late 2010 story. The Rugby World Cup is also around the corner, and a weaker global scene looks set to turn New Zealanders back home (or at least keep a few from departing!). When combined with a degree of pent up demand – which is typical when the economy wraps itself in cotton wool in response to global developments – we fully expect 2011 to be a boomer of a year with 4 percent growth.”

But balance that by saying ………..

“All the bad news can become overpowering but we need to be mindful of the trend. Stepping beyond the business cycle, we need to appreciate the strong medium-term story for the economy. The massive wealth shift occurring around the globe that is seeing Asia grow in importance, can only be good news for NZ. While commodity prices are going through a corrective phase at present, we remain long-term commodity bulls. Asia looks set to remain a key engine for global growth over the next decade and given NZ’s close proximity (and an exporter of products that Asia is increasingly demanding) we stand to benefit. Throw in water’s ever increasing importance, a natural resource base, and there is huge potential for NZ to leverage; just not in our usual borrow and spend sense.”

And as for the BNZ, they had this to say…[BNZ Strategist 18-12-08]

We’re still of the view that the global economic shakedown could fuel an influx of new arrivals (and fewer departees) over the coming period.

I’ve highlighted with a chart in a previous post the dramatic effect a short term increase in migration has on the Nelson / Tasman region, so it will be a trend to watch with interest in 2009.

Rugbys start in NZ, in Nelson

You could call this Part III, but I have finally managed to get a photo of the new signboard, as in….

To their credit, the citizen’s of Nelson, particularly Alan Turley, have erected an excellent signboard at the venue of the first game, Botanical Reserve, and a memorial at Nelson College….”

And perhaps its a good place for a rugby primer with these excerpts from a talk stored at the Palmerston North library….

“…a background of early sports should be given. In Britain organised sports was not part of the education in schools until about the 1840s. Many schools did not have grassed playing fields, boys kicking a ball about on the cobblestone courtyards. These schools played a style of football which today we know as soccer.

At Rugby School the large playing field allowed a more aggressive form of football with frequent contact with the ground.

Early immigrants to NZ brought with them the style of football they had learnt in Britain. Other early settlers came via Australia where they had learnt a different variation of football now known as Aussie Rules.

So in early NZ there were many forms of football being played the rules varying between each region, some playing the games of the old English public schools, others adopting the Australian version.

Many wealthier early settlers sent their sons back to England for education. Prominent politician Sir David Monro sent his son Charles to London and when Charles returned home to Nelson in 1870, the 19 year-old Monro suggested to the Nelson club to try the rugby rules.

After establishing rugby in Nelson, Monro organised a game in Wellington later in the year and the game spread rapidly over the following years.

The game’s founder, Charles Monro, came to Palmerston in 1888 and from 1890 until his death in 1933 lived at the home he built, Craiglockhart, which still stands out at Massey.

While rugby was born in Nelson, the three leading figures, the secretary, captain and coach later moved to Manawatu. Although Monro spent his youth in Nelson, Palmerston Nth was to become his home-town for much of his adult life and he became involved in several local organisations including golf, polo, croquet and opera.”

Photos [large size versions Photo 1 ~ Photo 2 ~ Photo 3 here]

And here is a close up of the actual signboard featuring in Photo 1 above, at the Nelson Botannic Reserve

NZ Real Estate Commissions – just how do we compare?

Much print media column cm’s this year have been devoted to how much selling commission is paid by a vendor in the NZ marketplace. And certainly more per year in the preceding 5. Ninety five percent of the time the linguistics behind any print article have swayed to the “too much” side.

Well then, how do we compare? Larger Chart here.

Overall it seems we are somewhere about middle ground if my observations are correct. The chart shows what commission would be paid on a $330,000 property.

Of course there was up & down moments in 2008, but most credible research on any 2008 whole year patterns hasn’t really been published yet, so some of the data here is from past studies.

There’s a couple missing, like Hong Kong, whom those cognizant with this new China region, will quickly highlight only has a standard published 1% commission. However there isn’t always 4 cut sandwiches in the lunchbox, and this is definitely the case here where on top of the 1% commission, there’s usually a 3.75% transfer tax.

In this case Hong Kong is not unlike Finland, where on top of the commission there’s a VAT of 22%.

Denmark¹ is another one, where the standard commission works out at 3%, but the buyer also pays a transfer tax, usually 25% of the property purchase price.

One wonders whether having such a high VAT / transfer tax deters or negates many of the advantages that property speculator’s usually have, or contributes to an environment where locals decide to stall moving decisions and are more stimulated to place their asset base elsewhere.

As most astute observers are well aware most GDP figures typically do not include property purchase costs. That said, the sheer fact that generally speaking, housing is as a percentage of most expenses, the highest,  its affect on the whole weekly expense budget would more than likely have some effect on monies remaining for all other expenses.

Would be interesting to see some studies on the issue of indebtedness / personal savings / individual wealth, in say Finland or Denmarks case, and compare that to the Kiwis mindset² that shows most Kiwi’s asset base is reflected in our nations absolute love affair with property.

A characteristic of New Zealand household indebtedness is the concentration of debt to large financial institutions, secured against housing. Almost 90 per cent of total household debt is owed to large financial institutions, and of that over 90 per cent is for mortgages

RESERVE BANK RESEARCH BULLETIN Volume 68, No. 2, June 2005

And as the last 5 or so years has demonstrated, our preparedness to move sometimes just because a decent profit is available, underlines that. [further RBNZ Financial Stability reports here]

I am led to believe Denmark implemented a 80% loan to valuation limit on mortgages long before many other countries. And as a result of their own banking crisis in the early nineties conducted serious sole searching of their own to aid local banking liquidity & stability.

Out of major OECD countries, obvious by its non-inclusion above, is France, where according to the Delcour and Miller study, only 50% of property sold is listed with a real estate agent, and real estate transactions are kept very private [not enough verifiable figures] , mainly on account of the fact that the other 50% of the real estate is sold by owner.

One particularly interesting trend to note on the second chart is that its pretty obvious that where the availability of information, perhaps courtesy of more available access to internet/ broadband in most homes, reflects itself generally in the lower commissions charged.

An exception here is the USA, however with the buyer agent / listing agent situation and the pretty much nationwide use of the MLS, it’s a pretty hard one to comment on, or without direct experience of the US system which I don’t have, to debate on.

“However the chart does seem to illustrate the trend that where more information is freely available to the consumer, the end result is generally lower commissions.”

Interestingly enough if you click through to the report and go to Appendix 1 you also see in the table there a corruption index added, and its quite interesting to see how this relates to countries that charge the higher commissions. I leave you to make your own conclusions here.

NB: I have not converted $$$ to the home currencies, related costs to basic average incomes in the countries mentioned, certainly nowhere near as detailed as the Big Mac type comparisons, nor have I looked at the average price of homes in the countries mentioned. Purely this has been charted on a NZ dollar median priced home.

SOURCE FOR CHART ONE / TWO: Delcour and Miller Report – INTERNATIONAL REAL ESTATE REVIEW  2002 Vol. 5 No. 1: pp. 12 – 39 – I have updated some figures where this data is available.

¹ Denmarks mortgage debt was high though at equivalent to 95% of GDP

² THE VOICE BEHIND CHOICE: UNDERSTANDING KEY MOTIVES THAT DRIVE CONSUMER HOME CHOICE    –  CATHERYN KHOO-LATTIMORE and MAREE THYNE  University of Otago see also Pacific Rim Property Research Journal, Vol 14, No 1 pages 81 – 94 and  related article from Catheryn here.

How about a “Sleepover” Buyer Inspection?

SOURCE - JENNIAN HOMESEither he was just trying to think outside the square or perhaps visited NZ on a holiday and saw the Jennian Homes TV add. You know the one where a family arrives, while the Display Home salesperson is hammering in the sign, with the intent to camp out in a Jennian Showhome for the night, but Pat in Orlando thinks it’s a good idea.

As American reality shows including TLC’s “Date My House” and HGTV’s “Sleep on It” show buyers spending a considerable amount of time — and sometimes an entire night — in homes they’re considering, some buyers who aren’t in TV-land are getting the chance to do the same.

It’s not something being agreed to by droves of sellers, but it is a new tactic that some are considering, said Pat Skiffington, of Keller Williams Classic Realty in Orlando, Fla. He’s arranging for a prospective buyer to stay overnight in a downtown Orlando condo.

It certainly elicited a mixed response.

One thought…… “Sheer lunacy. I will only let someone do that if they leave a 450,000 deposit in cash.”

Another suggested it a good idea… “NOISE is the only reason anyone would want to sleep over. Most single-family homes don’t have chronic noise problems.”

And some were just plain silly “…. I will sell my house and go to the US and tour the country pretending to buy a house and ask to sleep overnight to try it out.”

Maybe there is something here¹,  for those many many apartments for sale in places like Queenstown or Auckland perhaps it might not be such a bad idea.

In fact after paying for a weekend trip to one of these locations, and conditional upon them purchasing an apartment, the new buyers could receive a refund from the seller on the expenses of their original scouting trip & overnight stay. Obvious the developer would need to set one up as a live-in, but it could work.

¹ currently I’m not aware of anyone doing this already in NZ, but let me know if you are

SOURCE – Marketwatch.com

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