What do Barack Obama and Mitt Romney have in common with many New Zealanders? They’re all paying big bucks to score a house.
Here are the biggest pieces of real estate news from October, complete with topical (at least, until tomorrow) subheadings:
Property market: Fired up, ready to go
Realestate.co.nz’s October NZ Property Report represents the midpoint of the ‘spring surge’. This is not some Afghani military plan but rather the big influx of listings that always follows winter.
Do the figures ever reflect that: October had 12,688 new listings – up 14% on September and, more significantly, 12% over last October. The sharpest increases were in Taranaki (up 68% on last October) and Hawkes Bay (+34.1%).
So more supply should mean lower prices, right? Not so much. The national mean asking price reached $445,529, up four percent on September and five percent on a year ago. That’s the highest price since realestate started collecting this data in 2007.
On the inventory front the market is heading back toward its long-term average of 39 weeks; right now it sits at 33 – nine percent over September. This is still 19% lower than last year but, with November being one of the biggest listing months, we can hope for a big bunch of new properties on the market soon – which would be good news indeed for buyers.
The big centres: Our blue and red states
Auckland and Canterbury are in a world of their own thanks to limited housing supply and plenty of demand.
Look no further than the asking price for proof. Last month Auckland passed the $600,000 mark for the first time and Canterbury broke the $400,000 barrier.
Listings are rising slower than the national average; Auckland and Canterbury went up by 5.6% and 8% respectively. Inventory levels sit at 19 weeks up north (12 weeks below the long term average) and 23 weeks down south – 10% down on this time last year. Very much a sellers’ market then.
Now for some better news for buyers: building consents in September, says Statistics New Zealand, were up by 22% over the same time in 2011 and 45% over 2010.
Most new dwellings were approved where they are needed most: Canterbury – and mainly Christchurch city – with 174, followed by Auckland with 152. While this number could always be higher, it is trending in the right direction.
Housing New Zealand has just released a plan which might help further still. Their plan for a medium-density apartment block on Manchester Street, to be one-third owned by HNZ, could be rolled out in other areas if successful. The plan, as reported in the NBR, is definitely worth a look.
A detailed analysis of the ‘battlefield states’
Housing affordability: Yes we can!
Meanwhile, last week the Government announced its response to the Productivity Commission’s home affordability investigation. Their proposal includes the following wishlist:
- Fewer costs and delays – medium-sized housing consents are to be processed by councils within six months
- More land supply – councils are to make more land available for housing both inside and outside city limits
- More construction – government will investigate ways to increase productivity in the construction sector by 20% by 2020
Reaction has been lukewarm. TV3’s Duncan Garner calls the changes “underwhelming”, while Hugh Pavletich, who co-authors the excellent Demographia housing affordability survey, is most frustrated at the lack of concrete ideas. Our friend Alistair Helm, on his new and excellent Properazzi blog, has some thought-provoking ideas on this issue.
Government needs to be careful; to do anything that would cause a price crash, leaving mortgage-holders with their heads under water, is too reminiscent of 2008 to dare contemplate.
Many would like an economy that isn’t all about property – but that doesn’t mean killing real estate as an avenue altogether. After all, what are the alternative investment options? Finance companies?
The plan must be to increase supply to satisfy demand. If politicians try to assist home buyers without improving the supply side then nothing will change; prices will still rise as buyers uses the extra money to outbid each other.
In the meantime people are taking the situation into their own hands. Kiwisaver withdrawals for first home purchases quadrupled in the year to 31 March. And in a remarkable success story, this 22 year old Nelson landlord has just bought his second property.
And let’s not forget this point: low interest rates are bringing more and more first timers into the real estate market.
What all this activity shows is clearly the American New Zealand dream is still within reach. We’ll be watching to see if these home affordability measures will – in time – help even more kiwis step onto the property ladder.
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