This house belongs to Richard and Sarah, contestants on the 2012 series of The Block NZ. They put what they learned to excellent use, and if you get along to the auction on 10 July at 12.30pm it could all be yours.
We mentioned last month that winter is often a time of hibernation for real estate. Judging by the latest data, sellers have taken their temazepam, drunk their chamomile tea and headed off to Slumberland.
Sellers don’t seem to know it’s a sellers’ market
Their NZ Property Report from Realestate.co.nz tells us the “inventory of unsold properties in New Zealand has fallen to the lowest point in six years, reporting just 24.9 weeks nationwide.” This was driven by the lowest number of new listings in a June for seven years (9082).
Despite this, the mean asking price fell slightly to $450,178 – one percent down on May, but still 5.7% higher than this time last year. Auckland dropped 1.3% to $623,471.
Some commentators say the price increases is filtering down to regions outside Auckland and Christchurch. Does this report support this? Let’s have a look-see:
When you have five regions recording drops of 5+ percent then it’s hard to argue this convincingly.
Even more telling, figures released yesterday by the Real Estate Institute of New Zealand show that, of the $22,000 increase in the national median price they’ve recorded over the past year, 99.6% of that comes from Auckland and Canterbury. Price rises in other regions, they say, “have been minimal, with the median price for the rest of New Zealand $2300 lower than November 2007.”
Meanwhile, Barfoot & Thompson have recently reported some crazy stats. For the first time in 11 years their end of month listings have gone below 3000 properties. It is also the first time in that timeframe their listings for the month (1189) has come this close to their sales (1059).
Are they just becoming less popular? No, it’s just that potential sellers are becoming even more nervous than we’ve seen since we started these reports last June.
One theory why supply is in short, er, supply
Tony Alexander, Chief Economist for the Bank of New Zealand, writes a lot worth reading. The fact he looks a lot like Larry from Perfect Strangers is just a bonus. Check out his website – we don’t always agree with what he says but he always provides an interesting and insightful read.
Lately he has had some good theories on why supply isn’t picking up. For instance: with interest rates so low, fewer people need to sell their old home to help finance their new one. More buyers, therefore, are keeping their old homes as an investment.
Makes good economic sense: rentals are sound investments, and if you can buy without selling, and you don’t expect prices to drop, it’s a good time to get in.
It’s Survey Time
Tony also runs the monthly BNZ Confidence Survey, which reported back with its June figures last week. The relevant-to-us figures show 36% are happy with house prices rising, compared to 29% unhappy and 35% indifferent. The happy figure is 7% higher than in May.
The significance? As Tony explains, “this question now in order to get an understanding as to whether societal attitudes toward house price rises are changing in some way which might give the government greater, or lesser, scope for more interventionist policies aimed at influencing house prices and mitigating the deleterious effects on certain groups. In a nutshell, do we really care?”
The short answer is we do, but perhaps not as much as first thought. Another, quite simple, explanation is that those who own houses won’t mind a jot that their assets are increasing in value. Those who don’t own and want to are, of course, a different story altogether.
Hone’s housing policy: Man(n)a from heaven
Meanwhile, during the recent Ikaroa-Rawhiti by election, Mana Party leader Hone Harawira announced their housing policy. This consists of 10,000 new state houses a year – with 500 immediately in Ikaroa-Rawhiti, conveniently – and special low interest rates for Maori to buy a house, no deposit down.
Off the top of our collective head we can see a few problems. House prices have been rising, once again, because the supply is not there. If you suddenly increase the number of buyers in the real estate market, sellers will simply put the price up out of their reach. So that won’t help one little bit.
Or perhaps it’s doing them a favour. Helping low-income people – assuming Mana would assess eligibility by income as well as race – to buy a house carries good intentions – but not everyone can pay off a mortgage at the best of times. That’s why we have state houses and private rentals, and a good thing too.
At a time when the Reserve Bank are treating mortgages with a loan to value ratio of 80+ percent as ‘high risk’, we’d hate to think how badly they’d freak if houses were being bought with zero deposit by people with similar savings.
We emailed Hone Harawira’s office to ask if they had costed the policy, if they were concerned about pushing house prices up, and whether their proposed lower interest rates would rise in line with others’, but alas received no reply.
What do you reckon?
Will sellers finally start selling? Will rising house prices keep rising? And is Hone right, or just too far left? Share your thoughts below or over on our Facebook page.