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Welcome to Valu in Review for November 2004.
This is a summary of news articles in the press over the last month. We hope you Read, learn, enjoy .... and happy investing!
Home Ownership.
Following on from last months article, the Government has announced that three options are being considered to increase home ownership and to help first time buyers. The first is for the government to pay the interest for a set period on the loan taken by those on a low income. This is similar to a scheme in Britain.
Australia has a scheme to assist first time homebuyers. There have been a number of calls not to follow the Australian model, as it has been open to abuse. In addition the scheme had tended to increase the base purchase price of houses, by the amount of the $7,000 grant, thereby disadvantaging the very people it was supposed to be assisting.
The Government is not disclosing the other two options at this time. However the objective is to assist 7,000 - 10,000 households with any scheme and to lower the initial purchase price and assist with the serviceability of the loan.
Unit Titles Act.
This Act is under review, as it is believed that it does not meet the requirements of developers, owners and tenants who live in modern dwellings such as apartments, terraced housing etc. with common property or utilities.
The main short fall is believed to be the ability of the Body Corporate to carry out its task adequately.
Submissions should be made to the Department of Building and Housing and close on 28 February 2005. www.dbh.govt.nz
Residential Tenancy Act.
This Act is also under review. The Department of Building and Housing has issued a discussion paper entitled - Getting the Balance Right-. It notes that - the government wants to make sure the Residential Tenancies Act strikes the right balance between the tenants' need for affordable and stable rental housing, and the commercial needs of landlords to manage their properties efficiently.
Submissions close on 18 February 2005.
The housing market.
Some of the statistics point to a slowing down in the housing market (such as the number of sales per month), continuing the gradual slowing down in the market over the last couple of months. Economists do not expect to see a significant increase in sales despite coming into spring when sales volumes traditionally increase. It is believed that the general increase in interest rates (6 increases in the Official Cash Rate this year) and income levels lagging behind house price increase are leading to the decrease in demand. For the year ended June 2004 the annual house price increase was 22%. The same figure as at September 2004 was a 16% increase according to QV Valuations.
As the sales volume has decreased, the banks have entered into an interest rate war, with the main target being the 2 year fixed rate (as reported last month). It is not expected that this war would greatly increase the sales volume either. Its primary objective is for banks to hold customers by locking them into fixed term mortgages.
Other factors that have been driving the housing market, Labour and Wages, have remained relatively stable in the September quarter when compared to the June Quarter according to the Department of Labours Quarterly Employment Survey. However on an annual basis the gross earnings are up 7.1%. On an annual basis the number of jobs filled increased 4.7% (reflected in a 5.4% increase in full time workers). Note that industries where there is a severe shortage of labour (such as construction) are seeing record increases in wages.
The PMI Residential Property Overview predicts an overall small decrease of just 4% (compared to an average price increase since mid 2001 of 56%) in the market prices with the bottom of the market being later next year. It is predicted that in 3 years time the house prices will be up 13% in Auckland.
Auckland.
Chemical contamination from orchards and the like many years ago has been the hot topic. Most council's have now released reports detailing zones that are potentially contaminated with pesticide. The approach to dealing with the issues seems to differ between the councils.
Aucklands sprawl is not slowing down despite measures introduced to slow down the use of bare land such as the Regional Growth Strategy and the emphasis on high-density housing. The 50-year plan for expansion and associated research shows that there could be less than 15 years of household capacity left within the ARC boundary. This is a concern as the population is expected to increase to 2.3m by 2046 (up from 1.2m in 2001).
Hutt Valley.
The area is becoming popular with commercial/ industrial and residential investors. It has large blocks of land available for development for commercial premises that are not available in Wellington. This in turn attracts a labour force and the need for residential investors. The demand for places such as Petone has increased as the area has become increasingly popular and trendy to live in.
Christchurch.
The increases in the property market has seen the total value of Christchurch property increase to $47.3m (up 50%) in three years as measured by QV.
On average a residential property in the city is now worth $259,948 ($169,447 in 2001).
West Coast of the South Island.
Two big mining projects are starting next year at Paparoa and Reefton. There is expected to be a labour shortage as a result of the two mines recruiting staff at similar times. One company is recruiting staff from the UK. The upside to this is that there will be an increased need for rental accommodation and housing in general in the area.
Dunedin.
The Council is considering changes to the district plan in an attempt to combat the tension between inner city residents and the noise from commercial premises such as bars and clubs. The proposal is to include a requirement of developers for more soundproofing, and on bars and clubs, a reduction in the decibels of bass sounds (although general noise levels will see an increase in the maximum amount). Any changes would not be retrospective.
This is a summary of news articles in the press over the last month. We hope you Read, learn, enjoy .... and happy investing!
Home Ownership.
Following on from last months article, the Government has announced that three options are being considered to increase home ownership and to help first time buyers. The first is for the government to pay the interest for a set period on the loan taken by those on a low income. This is similar to a scheme in Britain.
Australia has a scheme to assist first time homebuyers. There have been a number of calls not to follow the Australian model, as it has been open to abuse. In addition the scheme had tended to increase the base purchase price of houses, by the amount of the $7,000 grant, thereby disadvantaging the very people it was supposed to be assisting.
The Government is not disclosing the other two options at this time. However the objective is to assist 7,000 - 10,000 households with any scheme and to lower the initial purchase price and assist with the serviceability of the loan.
Unit Titles Act.
This Act is under review, as it is believed that it does not meet the requirements of developers, owners and tenants who live in modern dwellings such as apartments, terraced housing etc. with common property or utilities.
The main short fall is believed to be the ability of the Body Corporate to carry out its task adequately.
Submissions should be made to the Department of Building and Housing and close on 28 February 2005. www.dbh.govt.nz
Residential Tenancy Act.
This Act is also under review. The Department of Building and Housing has issued a discussion paper entitled - Getting the Balance Right-. It notes that - the government wants to make sure the Residential Tenancies Act strikes the right balance between the tenants' need for affordable and stable rental housing, and the commercial needs of landlords to manage their properties efficiently.
Submissions close on 18 February 2005.
The housing market.
Some of the statistics point to a slowing down in the housing market (such as the number of sales per month), continuing the gradual slowing down in the market over the last couple of months. Economists do not expect to see a significant increase in sales despite coming into spring when sales volumes traditionally increase. It is believed that the general increase in interest rates (6 increases in the Official Cash Rate this year) and income levels lagging behind house price increase are leading to the decrease in demand. For the year ended June 2004 the annual house price increase was 22%. The same figure as at September 2004 was a 16% increase according to QV Valuations.
As the sales volume has decreased, the banks have entered into an interest rate war, with the main target being the 2 year fixed rate (as reported last month). It is not expected that this war would greatly increase the sales volume either. Its primary objective is for banks to hold customers by locking them into fixed term mortgages.
Other factors that have been driving the housing market, Labour and Wages, have remained relatively stable in the September quarter when compared to the June Quarter according to the Department of Labours Quarterly Employment Survey. However on an annual basis the gross earnings are up 7.1%. On an annual basis the number of jobs filled increased 4.7% (reflected in a 5.4% increase in full time workers). Note that industries where there is a severe shortage of labour (such as construction) are seeing record increases in wages.
The PMI Residential Property Overview predicts an overall small decrease of just 4% (compared to an average price increase since mid 2001 of 56%) in the market prices with the bottom of the market being later next year. It is predicted that in 3 years time the house prices will be up 13% in Auckland.
Auckland.
Chemical contamination from orchards and the like many years ago has been the hot topic. Most council's have now released reports detailing zones that are potentially contaminated with pesticide. The approach to dealing with the issues seems to differ between the councils.
Aucklands sprawl is not slowing down despite measures introduced to slow down the use of bare land such as the Regional Growth Strategy and the emphasis on high-density housing. The 50-year plan for expansion and associated research shows that there could be less than 15 years of household capacity left within the ARC boundary. This is a concern as the population is expected to increase to 2.3m by 2046 (up from 1.2m in 2001).
Hutt Valley.
The area is becoming popular with commercial/ industrial and residential investors. It has large blocks of land available for development for commercial premises that are not available in Wellington. This in turn attracts a labour force and the need for residential investors. The demand for places such as Petone has increased as the area has become increasingly popular and trendy to live in.
Christchurch.
The increases in the property market has seen the total value of Christchurch property increase to $47.3m (up 50%) in three years as measured by QV.
On average a residential property in the city is now worth $259,948 ($169,447 in 2001).
West Coast of the South Island.
Two big mining projects are starting next year at Paparoa and Reefton. There is expected to be a labour shortage as a result of the two mines recruiting staff at similar times. One company is recruiting staff from the UK. The upside to this is that there will be an increased need for rental accommodation and housing in general in the area.
Dunedin.
The Council is considering changes to the district plan in an attempt to combat the tension between inner city residents and the noise from commercial premises such as bars and clubs. The proposal is to include a requirement of developers for more soundproofing, and on bars and clubs, a reduction in the decibels of bass sounds (although general noise levels will see an increase in the maximum amount). Any changes would not be retrospective.