Welcome to our latest Property News report below or click this link to access downloadable Market Reports in PDF Format. Thank you for your interest in our reports, any commentary contained in these reports is subject to the conditions stated in our Legal Disclaimer posted on this site.
As we draw to the end of yet another year, it's a good time to reflect on what an interesting year 2014 has been in the property market.
Following the introduction of Loan to Value Ratio (LVR) restrictions by the Reserve Bank in October 2013, 2014 has seen a significant shift in the market activity, certainly in the large property markets of Auckland and Canterbury. This shift has largely been a change in the type of purchaser remaining active, namely first home or low equity buyers have been mostly excluded from the market, to be replaced by investors (both local and overseas based) now looking to expand their portfolios.
This has done little to halt the rise in values in both Auckland and Canterbury, which are both being driven by supply issues, but has largely dampened the market for provincial towns and outlining areas.
It has been our view for several years now, that there will be little change to the Auckland market until we see a large increase in the availability of property. With a growing population due to migration to the region, a number of investors land banking (especially in the fringe rural areas of Auckland such as south, west and north of the city) and the council slow to process large developments, this leaves little housing stock available, pushing up values due to a lack of supply - this is Economics 101.
Without the supply of new subdivisions, those who are already in their first home waiting to trade up cannot do so, therefore limiting the availability of cheaper housing for the first home buyers, and so the circle is broken.
Furthermore, the expectations of many first home buyers has changed compared to say the 1960's - 1990's, with many of these purchasers looking for larger homes, complete with all the features and fixtures, that would historically have been a second or even a third home. Have people forgotten the concept of the property ladder, building value up over time adding equity by renovating etc, or are they more focused on reaching their dream home from the outset? Much of this change is largely because it is becoming more acceptable to take on debt, some of it frighteningly large in value as well as long in length, to achieve the dream from day one. This was also highlighted in a recent article by Dr Susan Flint-Hartle in the New Zealand Herald.
This is not the only anomolie in the New Zealand property market. Property has for too long been considered the prime investment sector, at the expense of other investment options. Tax advantages, such as largely tax free capital gains, is a sensitive topic, and whilst we agree with many commentators that applying a capital gains tax will not effect values, without this tax it does distort the market by attracting a large number of investors into this sector rather than more productive sectors like the equity or venture capital markets. Buying existing property does little to boost the economy of New Zealand, perhaps this country needs some similar restrictions as in Australia where overseas investors can only purchase new developed property, therefore supporting the building industry, and putting pressure on councils to release developments quicker.
What we also have looming during the next two decades is the Baby Boomer generation moving into retirement. Many of this generation are asset rich, particularly in property, and will be looking to liquidate these assets, increasing supply of existing property stock, however with little respite in the growing greater Auckland population, this is unlikely to have any significant effect on values over this period.
Improvement in infratructure, especially transport and roading, will see some of the more distant towns surrounding Auckland and Christchurch gaining in popularity as home owners compromise travel to work time for a cheaper property. Areas such as Pokeno to the south of Auckland, and Warkworth to the north are typical of this shift in the market.
2015 looks to be pretty much more of the same as 2014, with little change to the OCR rates signalled by the Reserve Bank and the market, continued supply pressures in Auckland and Christchurch, and a generally positive economy with a good employment outlook.
Nationally the median house price was $455,750 in November 2014 as reported by REINZ. This represented a 6.0% increase on October, and a 7.2% increase on November 2013. We saw a welcome increase in the number of sales compared to last year (up 6.5%) driven by the seasonal spring surge of listings with a total of 7416 dwellings sold for the month.
Auckland's median price for November was $670,000 (a new record), which is 8.9% up on a year ago (seasonally adjusted median price), followed by Canterbury recording a 6.5% increase to $417,000. Sales of properties under $400,000 fell 3.8% compared to a year ago whereas properties with values greater than $400,000 grew 26.8%. "This suggests that the top end of the market is driving the overall rise in the national and some regional median prices, while those dwellings in the lower deciles are seeing less price growth and a lack of buyer capacity which may be related to the LVR restrictions currently in place" said REINZ Chief Executive Helen O'Sullivan.
New listings were higher than a year ago, especially in Canterbury (up 16.8%) however this has failed to keep pace with sales as we see total inventory of houses available for sale fall to 26 weeks stock, and well below the long term average of 36 weeks.
Sales volumes across Auckland for November were 19.9% higher compared with October, and 5.5% higher on November 2013 with 2947 sales recorded. All districts recorded sales higher than a year ago except Auckland City which was only 6 down on a year ago.
Median prices were higher across all districts, with Outer Auckland leading the way with a 6.2% increase on October. Compared to a year ago, districts recording the greatest increases in median prices were Waitakere (up 12.5%), Outer Auckland (up 11.1%), and Auckland City (up 9.9%) to record an overall increase for the Auckland Region of 8.1% compared with November 2013.
As reported by unconditional.co.nz, the number of new listings for Auckland were 0.2% up on a year ago maintaining pressure on available stock to sell. This has translated into an increase in asking price of 4.6% as supply concerns continue to dominate the market.
The key issue for the policyholder however is establishing a rebuild cost and the online calculator provided on the website may not suit all properties or situations. A good example is properties with extensive landscaping, expensive or complicated foundations, additional buildings and quality chattels, fixtures and fittings. Just as rating valuations are averages for specific areas, the online calculator cannot compensate for all the variety of properties we see daily, and we urge caution when using this to calculate your specified replacement cost.
As property valuers, we can provide a more accurate assessment of rebuild cost and an Insurance Certificate to assist you with this process - please contact us for more information.
These rating valuations are not an individual assessment of each property - with over 500,000 properties in the greater Auckland area doing individual valuations on each is an impossibility. Instead, a mass appraisal approach is used, using statistical methods as approved by the Valuer General, to assess a value for apportioning rates and levies as determined by the Auckland Council.
Unfortunately, New Zealander's have a tradition of relating the market value to the rating value (or CV as it used to be known) when in most cases there is little correlation. Take a look at some of the differences between sales prices and the RV's to see just how wildly they can differ.
Again this is because each individual property is not assessed for it's own particular benefits, features, quality and condition, or may even be based on inaccurate council records regarding dwelling size, renovations and/or other improvements. Movements in sales value in an area or suburb are also mass applied to other properties in the same locality that in reality may not share in the same gain or loss in value.
So putting this in context, Rating Valuations are for rating purposes only - with the only risk being one householder may be paying more or less than their fair share of rates.
A market valuation by a Registered Valuer will provide more certainty when determining a market value for selling, purchasing or financing purposes.
Our valuation reports are accepted by all financial institutions - including the second tier lenders, and we are also on the Genworth panel of approved valuers, and on the preferred list of many of the country's leading financial institutions. Some of our competitors are not.
We pride ourselves on our service. Employing the latest web-based technology and access to a variety of property databases enables us to complete many reports within hours not days of the inspection. You have secure access to your report through our Property Indepth website, and we keep you updated on the progress of the valuation via email or text message. Our systems won the Property Institute "Innovation in Property" Award.
Plain English explanations and definitions for each section so you can understand the technical talk
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