Archive for May, 2009
Deal or no Deal?
No, not really.
Surely to enable you to sleep at night it should only ever be a decision based on your own current or foreseeable fiscal situation.
What wasn’t surprising in the report today, was that the usual suspects, Central Otago Lakes (aka Queenstown), BOP / Tauranga, etc, and Nelson were back again. (The report said it took 33.4%, 25.2%, and 26.4% respectively of a monthly income to service their quoted mortgage.)
The article also quoted the big smokes of Auckland and Wellington as places were they thought it was still better to rent than buy.
Why do I get the feeling the media seem to be treating this like its a game, take a bet one way or the other.
Its definitely not.
Speculation is still out there no doubt, but with so many players, bargains are certainly thin on the ground in the places mentioned above. And there might be other factors at play.
After looking at the below chart for our region, you might be interested in revisiting this piece (& comments here) of a more general NZ nature penned back in March this year.
In all of this we only get snippets or minor comments about observations re the social or psychological effects instead of just the more obvious financial ones.
In that vein, in the article today Bob Hargreaves, the resident property expert over at Massey University in Palmerston North touches on it by saying that overseas studies indicated the stability of living in one place appeared to benefit youngsters of home owner’s more favourably than renters.
Whats he talking about?
Well in a nutshell, studies like this indicated that academically math achievement scores of owners’ children were about 9 percent higher than renters’ children, while reading achievement scores were about 7 percent higher.
Controversially back in 2003 Harkness and Newman’s study for the Journal of Housing Research demonstrated that renters’ children are 40 percent more likely to give birth as an unmarried teenager than owners’ children.
And as The Economist ( Shelter or Burden? April 16th 2009 Edition ) put it recently
Still, on balance, home ownership gives people a stake in the state of their surroundings. Thriving streets increase the value of properties, giving owners incentives to improve them further. Renters get no such benefit; they may even have to pay more if the neighbourhood improves.
And back in 1987 sociologist George Galster published this, “Homeowners and Neighborhood Reinvestment.” Amongst other things George contends that owned homes are likely to be in better physical condition, one of the reasons being its more probable that home owners will invest in the quality of their dwellings.
Another US study showed children of homeowners (US study it was) were 116 percent more likely to graduate from college (University in NZ).
So its would appear there is quite obviously a lot more to it than just rent or buy, especially in terms of family or lifestyle.
Could underlying social and family reasons be perhaps one of the reasons why certain parts of NZ are dearer to purchase a home in than other, and therefore, based on the articles assumptions, remain cheaper to rent in than to buy.
Food for thought?
A contrarian view can do great things for your comment stream?
May 31 2009 | Nelson | No Comments »
Well, courtesy of the internet and the Trademe auction site , it could be said we town folk have got more of an idea these past 2 weeks of the value of a tractor, surely more than its start price of $1 though.
Growing up the only name I knew was Massey Fergusson.
Those cold hard tractor seats at the local playground had the name mentioned around them. Even in its infancy, and even in provincial NZ, corporate sponsorship was making inroads then!
Today, courtesy of things like Discovery Channel we learn about the others, names like CLAAS, IHC John Holland, some big CASE units, John Deere, amongst others.
And so it was, last week the NZ media did have a bit of a field day when an auction was held as follows…
Buy a Tractor and get a 20 acre (or 80937 m2) farm for free…
with the following result…..
which, surprise, surprise (well its not everyone that places a bid for $250k is it?, last time I looked that wasn’t the available credit balance in my bank account anyway) eventuated in the buyer not being able to complete the sale.
In fact it was almost pretold here on this website that this sort of outcome was the most probable, and not exactly unexpectable (even though, after 2 confirming phone calls from the auction site representatives to the leading bidder thought otherwise…..pertinent piece mentioned here in the last comment of this article).
So guess what happens the next week …..deja vu!
Only this time, its in our region, the Top of the South, and a local entrepreneur decides to follow up the idea by going down the “tried and tested” tractor path, only this time, as you can see from the photo, the tractor pictured looks just a bit different.
Well there’s no reason to give away a full blown real tractor now, is there?
The result so far…….
With the developer turning a Nelsonians Eye, and much to the ???? of previous purchasers in this same subdivision who originally paid amounts over $100,000 for their similar sized sections, it looks like the new buyer will, on current bids, quite possibly bag a bargain. All I can say is, Good Luck in the bidding.
May 29 2009 | Nelson | No Comments »
Statistics NZ have just published the latest housing consent numbers, up to April 2009.
Although Napier & Northland seem to be on a bit of a roll, all other regions in the main have reported much lower consents than 12 months ago.
Although noting that the overall declining trend is abating, they point out that consents approved for April 2009 (excluding apartment units) show the number of new housing units to be at a very low historical figure.
You’ll notice that the above graphic excludes apartment sales, and even though this part of the mix was a standout compared to the 2008 consent numbers it wasn’t really that relevant in provincial regions.
Statistic NZ said as much in the article…
Movements in the regional results for the monthly series should be treated with caution.
There were a high number of apartments authorised in April 2008, which was the highest monthly total since March 2005. The regions most affected by this were Auckland and Wellington.
The low levels reported today are the lowest since they began tracking dwelling consent approvals back in Jan 92, and furthermore, that since mid 2007, they have overall fallen back by about half.
SOURCE – Statistics NZ
May 29 2009 | General and New Zealand and Stats / Sales Data and The Market | No Comments »
Knight Frank have just released their latest Global House Price Index, this one covering Q1 2009.
It shows NZ’s performance in the house price movement as about middle of the pack and certainly not as volatile as others.
In fact if you go to the report on their site here, you’ll see the Qtr on Qtr figures and in many cases they make for somber observations.
For many ex-pat Kiwis they may reconsider their current property investment strategy, and ponder whether the home grass is definitely greener than where they are now.
In slightly related news, Australian serviced office company Servcorp has just published the results of a survey 7500 international business folk from 24 nations. They asked them to identify which countries they believe are surviving the crisis the best, with the outcome that our cousins across the ditch topped the poll. NZ was 9th.
And as a Nelsonian…..well in Nelson, we too are middle of the pack as far as NZ is concerned. The latest REINZ compiled data shows that our region has tracked closer to the NZ median for the past 12mths than any other region in the country….more evidence of our stable local regional market I would say.
KNIGHT FRANK SOURCE DATA Nick Barnes, Residential Research, Knight Frank / Niki Riley, Press Office, Knight Frank
May 28 2009 | New Zealand and The Market | No Comments »
As can be seen from the below graphic Baby Boomers will continue to make up a larger percentage of our population for the next two decades at least. (Data from 2006 Census)
On the whole our population is not expected to grow by more than 30 ~ 40% (in a best case) or by no more at all in a most bearish view forward.
With the amount of boomers retiring, normally or earlier, and alongside the growing movement towards seeking out a fulfilling lifestyle pre-official retirement age, I for one find it hard to believe that locally our population won’t increase considerably, and spill over into the neighbouring Tasman District also.
Take for example the Ernest Rutherford retirement home which started selling its stand-alone 2 bedroom brick townhouses (still part of the overall complex) at the beginning of 2008 and now just over a year later is nudging the order book on number 90 of those units. (original plans were for just 64)
As can be seen here, the overall trend is towards an aging population locally, although as the top chart shows, the 40-54yr category also displays an increase, although not as prominent as the more senior 55yr+ age group sector.
One could suggest that after recent events of the past decade or 15 years, the Share Market, Internet, and Property bubbles so to speak, that an aging population have decided to consolidate their wealth in property, and certainly there’s no shortage of anecdotal evidence in NZ that may suggest just that.
In fact after reading that potentially 30% of retirees from certain countries have no nest egg left, and have everything tied up in their personal home, is it any wonder the continuing fascination with property. And for many, they may just find that the grass is no longer greener financially offshore.
Continuing in the theme of many NZ provincial towns, we see an exodus of young folk either just entering the workforce, or those moving away to attend university / higher educational institutions, and in many cases then going on to seek work in the bigger cities here and overseas. However one thing that is quite apparent on the above graphic is the reasonably large percentage of our local populace in that 40 year old age group category.
For many in this age group (40’s category) the realization of life values, whether because of their older siblings / parents or children of their own, starts to become a more important element of their human makeup. I believe this goes partly to help explain our regional populace age makeup, and certainly partly explains why our region is a drawcard for those seeking to discover those values.
Further on the exodus of younger folk, examine and compare the chart above to this one of Auckland below.
Good thing is, courtesy of Statistics NZ you can visit the site mentioned in the SOURCE link below, download the excellent Excel spreadsheet and conduct data analysis on your own region of NZ if you want.
SOURCE DATA – courtesy of Local Population Trends Spreadsheet here at Statistics New Zealand
May 28 2009 | Nelson | No Comments »
Will migrant growth be the panacea to get growth back into the property market?
Commenting in an article in the NZ Herald last week, Goldman Sachs JBWere’s Bernard Doyle said the increase in migration numbers was continuing to be impelled by a tumble at the other end, a reduction in the number of permanent departures
“no doubt indicative of the lack of pull factors in international labour markets currently.”
He went on to express optimism if these levels were maintained.
Backing this up in the same article was Jane Turner economist with ASB Bank who said the turnaround in migration over the past few months had been swift and was likely to continue to rise. She noted…
“The rapid pick-up comes as departures have fallen dramatically, in particular, departures to Australia”
And looking forward Darren Gibbs, from Deutsche Bank stated
“we continue to think that New Zealand will experience sustained and strong net migrant inflows over the next three years.”
I have just glanced at a piece over at the population.govt.nz website, countering what many have previously held up as reasoning for unseasonal upswings in immigration numbers. The contention was that the 9-11 attacks had a dramatic effect, prompting, amongst others, returning ex-pats.
They believe and the chart above tends to support this trend, that after a sustained period of increasing numbers (PLT’s) leaving the country, an swing to the upside appears as good percentages of those PLT’s decide to come back.
Here is a longer term charge courtesy of Dept of Labour site here.
Busted they say under the heading – “Myth: New Zealand’s population is only growing because of migration” too. Read the summary here.
And when it comes to this one – “Myth: There are at least 1,000,000 New Zealanders living overseas” it would appear the jury is still out, rather in plain English, not enough currently reliable data to make any realterm statements other than predictions, etc. Although they do state that a recent Aussie census found 477,000 Kiwis residing across the ditch.
Another local perspective here.
If you are interested you can visit here for the 3 million Kiwis and 60 million sheep myth, alongside others.
SOURCE ARTICLE – NZ HERALD 21st May 2009
May 26 2009 | General and New Zealand | No Comments »
One particularly noticeable aspect coming out of Nelson /Tasman region in the last few weeks is the amount of out of town buyers fronting up, but not just that….because in a way that’s always been the case……its more telling how far out of kilter their offers have been compared to local buyers.
Its got to be one of two things.
1] Either they think they can get a “steal” in Nelson.
Let me say here….funnily enough we actually do have local buyers too.
or
2] it would, at least on the surface appear that they have suffered in their previous market, selling for either a price lower than they brought, or selling for an amount tens of thousands below what they expected (….could even be as a result of their local agent not being 100% up front about the real selling price?….possibly buying the listing)…..and thought that the idea of reciprocity was timely.
Either way, twice in the last week I have had two out of town buyers miss out to local buyers who are aware of the local market. Why?
If you have read some of my posts here, you should by now know we have one of the most stable markets in NZ, in fact for the last 2-3 years Nelson/Tasman have tracked the closest to the NZ median than any other of the 17 (I think that’s right) NZ regions that REINZ report for.
On top of that, we have a region that for many decades now has been an emotional choice NOT a logical choice.
Whats the difference?
Well as an example many Kiwi’s, even if not directly involved would be aware of family members or friends who have been tempted to visit Auckland or Wellington, the “big smoke”, generally courtesy of vocation choices.
Overall, I ask you, an emotional or a logical choice? Remember selling school 101?
Nelson, well….. many more move here for a lifestyle choice….just like the few extra friends I had over for my 5-O this weekend. One from Oz couldn’t get over the place, and trying to put it into perspective after his worldly travels, likened our town to “Switzerland meets Sydney Harbour.” Obviously I’m not to deny his conclusion, but I’d also love to hear any other parallels that Nelsonians, or even new Nelsonians would term appropriate as well.
So back to my point, to be a successful local property owner, out of town buyers need to be cognizant of the fact that it does sometimes “help their hand” with their property search when a reputable and reliable local agent is “onboard” with them, advising them in advance of new listings, etc.
The other side of this…..well just imagine yourself being the Real Estate agent visiting their vendors with multi-offers and upon breaking the sealed envelopes, finds that one is miles….and I mean miles off the pace…..below a local offer……and who finds this scenario repeating itself on different properties too.
What I am pondering loudly here is that perhaps it should never have even got to the multi-offer stage. After all one or two were genuine offers the other …well….
The law says we have to present the offer. Unfortunately we are usually the messenger/passenger at this early presenting stage (certainly not the same as when it come to the negotiation stage, but hopefully you get my drift here) ….keep in mind we have signed an agreement to do our best for the vendor.
When presenting an offer that is so low….do you think the vendor feels or thinks that we, as the agent, are working for their best interests and conducting ourselves 100% perfectly?
Let me tell you, in 2009 a vendor, and even a Nelson one too, does not take being insulted by such low offers lightly. Perhaps I can ask you, as an out of town buyer, a question?
Would you like to be kept informed and up to date with the latest hot listings relevant to your search in our region?
If your last 2-3 offers have been “low-ball” then do not be surprised that your phone has gone quite, and you no longer seem to be one of the first to be advised of the latest new listings.
May 25 2009 | Buyers and General and Nelson | No Comments »
Just recently there has been a “re-fresh” of media coverage of the “mortgagee” topic.
So I thought I’d just pop off and update my previous posts here on the hot topic.
Today there is 720 total listings all up in our region, so that by itself is down on February’s 915 odd.
A search of our region on realestate.co.nz tells me….
…zero for sale.
Next lets check Trademe….
…surprise, surprise….exactly the same number of mortgagee sales, 0.
So fully expect to see an explosion of 100-200 % if any new mortgagee sales come on to the market in our region.
May 25 2009 | Buyers and Nelson and New Zealand and Sellers | No Comments »
In Business Day & the Dom Post on Thursday morning, David Hargreaves puts forward a couple of interesting observations regarding the Kiwi psyche in an article headed “Everythings on the House”.
Hargreaves noted that “house prices have been knocked backward by around 10 percent from their peak.” and…
“But this has been a much more resilient response than in many countries.”
He also states his belief by saying…..”I never thought house prices would fall as much as historical studies of economic relativity (ratio of income to price of house etc, etc) suggested they needed to fall by.”
Much of this is in stark contrast to the “30-35%” figure we have been continually reminded off by certain quarters.
In attempting to explain even further why, David puts forward the following argument…..
Do you know why not?
Because Kiwis were never going to let it happen. The house as the number one (if not the only) means of investment is so ingrained in this country that you get the impression some people might have been more prepared to Bungy jump nude from the Auckland Skytower during rush hour than to take a loss on their house. Now, obviously some people were ultimately forced to take losses, but there’s been a battle to keep prices up that goes somewhere beyond normal economic ebb and flow. The price of houses has become more discussed, arguably, than it was in the gloating “how much is yours worth” days of 2005-06.
Where this leads us I believe is to a situation in which housing will be even more of a national obsession than it was before. It will be the number 1,2,3 and 4 investment option. And that’s bad.
In perspective we know that Real Estate watching is Kiwi’s second most popular spectator sport so they are interesting comments.
Now the reporter ends this comment above by saying “that’s bad.” And he goes on further in this article to mentioned the dreaded 3 word combination , Capital Gains Tax.
Too that I say bad on him, (bad as the item above) instead of adding his support to that arena, how about looking into the indebtedness of ALL Kiwis, and perhaps look to abolish tax on interest earned in a bank account (that you have, in most cases, already paid tax on to earn!) or at the least have a tax free $20-30K limit or similar threshold (100% non taxable limit) after which tax is then calculated on the rest.
Across the board.
It’s just that I really haven’t seen many things lately that give me the appearance of encouraging money in the bank. In fact far from it, and even touched on in the above mentioned article is the total disappointment from those whom are reliant on interest from their savings to provide a steady income.
Food for thought?
SOURCE INFO – STUFF.CO.NZ – “Everythings on the House” – By David Hargreaves – The Independent
May 21 2009 | Buyers and Nelson and New Zealand and Sellers | No Comments »
To the tune of 500 more permanent arrivals per week than departures in April.
Not a big number you might say in US or English terms, but remember our little part of the world accounts for something like 0.064% of the planets population, so in light of the current climate, even a number like this is notable.
I have contended for a while now the two real dynamics over the next few quarters will be the ongoing immigration & unemployment situation.
Statistics NZ report today that on
A seasonally adjusted basis, PLT arrivals exceeded PLT departures by 2,200 in April 2009, up from 1,700 in March 2009 and 1,600 in February 2009. These figures are all well above the average of 400 recorded for the 25-month period from January 2007–2009.
And as a result they state there was an annual net gain of 9,200 in the April 2009 year, up from 4,700 in the April 2008 year.
Contrary to what was earlier anticipated, they report that there wasn’t much variation to numbers of returning NZ citizens. By mentioning no perceptible difference on this front it is still a bit of an unknown.
Why do I say unknown, simply because of the fact that NZ has such an incredibly high percentage of its citizens in an ex-pat capacity offshore at any one given moment in time.
Should, in light of global fiscal eventualities, or other local or world event, a percentage of them consider to want to move back home, then a different outcome than that which normal economic forecasting would more than likely result.
So I will be anxiously awaiting further Immigration updates from Stats NZ as the year progress.
May 21 2009 | New Zealand | No Comments »
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