August’s Property Report in (not as) short (as usual)

We know what you’re thinking: “August is so last month, dudes”. There was, however, some very interesting news coming out of winter’s final month. This should come into play in what is now officially spring, but so far resembles something the Mayans might’ve dreamt up while especially grouchy.


Strong end to winter suggests strong start to spring, funnily enough

The always-superb NZ Property Report from reminds us that the peak property season is here. If August is any indication of what’s to come, it’s gonna be busy.

The truncated mean asking price rose slightly to $430,443 – just a 1.7% increase from August 2011. Twelve out of 19 regions recorded increases, with Auckland hitting a new high of $585,482. It might have been higher still if listings hadn’t also risen; the 10,365 new properties on the market is the highest increase since May.

As for sales figures, at 6035 this was up 16% on last August according to the Real Estate Institute of New Zealand. They also report a 4.2% increase in the median house price on last August, with the figure now reading $370,000.

To avoid confusion, this differs from’s figure in that the truncated mean is the asking price from new listings only – still a very useful way of determining how the market’s trending. For the stats geeks, here’s a little more info on how this figure is arrived at.

Overall it’s looking like a ‘sellers’ market’, but for reasons outlined below there’s plenty of reason for buyers to get in on the action:

Mortgage wars and home affordability

The Roost Home Loan Affordability Report for July, released last week, shows home ownership becoming ever-so-slightly more attainable. It takes 52.3% of a single after-tax income to service a typical mortgage – down from 54% in June. Conditions for first home buyers are the best they’ve been in eight years; to service a lower quartile home loan it’ll take 21.4% of one’s median after tax income.

So, why? The drop in the median price helped (down $11,000 to $361,000) but perhaps the most important factor, in the medium to long term, is that the banks are all locked in a crazy mortgage rate war.

Their prize is your custom, and they’ll use any weapon at their disposal to win you over. These include, says Bernard Hickey, “a variety of discounted fixed mortgage deals that include discounted legal fees, lower interest rates for borrowers with high equity and, in some cases, the discounting of break fees.” As Roost’s Colleen Dennehy observed in the same article, banks’ offers to borrowers aren’t as ‘one size fits all’ as they used to be.

One very interesting outcome from this is the movement of many customers from floating to fixed mortgages. The value of fixed mortgages has jumped $8.3 billion in the three months to July, while floating mortgages have declined by $6.6 billion. That’s because, if you sign up for a fixed rate for two years or less, you can get often get a rate lower than the floating one.

How long will all this last? Well, most experts’ projections suggest the Official Cash Rate – the force that drives interest rates up and down – isn’t going up until at least mid 2013. Maybe even the year after, if the economy doesn’t get its A into G. Mortgage rates will likely, although, not definitely, remain low if this is the case.

Good news for Canterbury

One more interesting development to keep an eye on: last week Statistics New Zealand announced a 7.1% increase in residential building activity in the June quarter – much improved on the previous quarter’s 1.4% decrease. A great deal of this new activity is taking place in Canterbury where it is, obviously, sorely needed. Long may this trend continue.


If you’re thinking of listing and haven’t yet, you oughta. Prices are good, listings – although on the increase – are still low and demand is high.

As for buyers, the banks will be fighting for your love for some time yet, which makes it a pretty exciting time to be a house buyer. Just don’t go over committing yourselves!

Finally: while listings could be higher, they are on the increase, which means there’s more variety available to choose from. And of course – and give us points for saving the plug until the end – you can find all the best properties on our website!

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