By Bernard Hickey
Real estate agency group First National Group has reported its offices saw a pickup in sales volumes in November, with a surge in activity noticeable in the second half of November after a loosening of bank lending criteria.
“Sales volumes in November were more positive than September and October, although they are still bumping along the bottom of the historic barrel," First National General Manager John Stewart said.
“Several areas commented that from the middle of the month 'someone turned the light switch on' and listing and buyer activity hit record levels for the past two years. Sun, less stringent loan criteria and pent up need to relocate were cited as reasons by both groups," he said.
Reserve Bank figures show the value and number of mortgage approvals hit their highest weekly totals since May, in a sign of an uptick in the housing market in the last week of spring. See more here. See the mortgage approvals interactive chart below.
Banks have been reducing some fixed mortgage rates in recent weeks in efforts to spark the dormant housing market, which is supposed to be in its busiest season, back to life. The latest moves by ANZ, BNZ, National and ASB to cut their 18 month and two year rates followed moves by Kiwibank, Westpac, TSB, SBS and others.
There were 5,596 mortgage approvals in the week to November 26, valued at NZ$742.9 million. Both are at their highest since the week to May 21.
“Employment worries of the previous few months appear to have eased, leaving prices and general confidence as the main reason buyers have their hands in their pockets," Stewart said.
“The year-long standoff between vendor expectation and buyer bargain-hunting is settling in some areas. Some of this easing could be driven by the fact that there are more well-presented homes coming onto the market,” he said.
However, demand in holiday home markets remained quiet, he said.
There was demand for large three and four bedroom homes, with prices firming in the four-bedroom sector.
“Interestingly there are fewer buyers for two-bedroom properties and this appears to be driving prices down in that sector," he said.
Banks, flush with invested funds from the Government-guarantee payouts, had loosened their criteria with loans up to 95% of value now widely accepted, he said.
“While this recent flurry in some markets is exciting for those vendors and buyers involved, other areas remain flat. Perhaps the advent of more accessible mortgage finance at low rates still will see activity spread and settle into some sort of stability. Late January and February will provide that answer.”
Realestate.co.nz noted a surge in new listings in November, but a fall in listing prices. See more here.
Here are more details from First National's November Survey highlights:
Contracts signed: Up on last two months but down on last year
* Number of contracts signed slightly up on September and significantly up on a very quiet October.
* However, 76% of offices signed either the same number or fewer contracts than November last year, and 24% signed more. Prices: Continuing to trend down compared with October
* 54% of offices reported prices in their regions still trending down month on month
* 38% reported prices in their areas as stable
* 9% reported price increases in at least one type of property.
* Four-bedroom properties continue to hold prices best across all regions with 43% trending down in price, 49% stable and the remainder trending up in price on October.
* Two-bedroom properties continued to lose value in more areas than other types of property (ie 3 or 4 brm) with 68% trending down in price, 26% stable and the remainder up (the latter in Auckland and Tauranga only).
* In the three-bedroom property market 41% of regions reported prices as stable, 51% were trending down in price, and 8% trending up since October.
Greatest influence on Buyers:
* 40% of agents said the main reason holding back buyers is vendors not pricing to the market
* 37% blamed a general lack of confidence
* Remainder included natural disasters hampering buyers (mainly recovery from Christchurch earthquake and floods in the North Island) 6%, and employment worries (9%).
Mortgage approvals
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28 Comments
"There were 5,596 mortgage approvals in the week to November 26, valued at NZ$742.9 million"
From the above figures the average mortgage is $132,755. I would suggest that the vast majority of these mortgages were either re-finances or homeowners borrowing against their current equity. It would seem that there are relatively few new first time buyers.
"Banks, flush with invested funds from the Government-guarantee payouts, had loosened their criteria with loans up to 95% of value now widely accepted, "
What happens if house prices go down by 10%? A Gov't bailout I assume.
As a good a thread as any!
"New Zealand’s economic prospects are improving despite some risks, according to the BusinessNZ Planning Forecast for the December quarter.
But wild swings in results suggest official data may not be very reliable, the business organisation said"
http://www.nbr.co.nz/article/economic-stats-dont-match-reality-businessnz-134153
Now who would have thought the official data might not be very reliable.....
As a R/E agent that saw the light dimming 12 mths ago, I moth-balled my business in the Waikato and am taking a year, or so, off, now living in southern France observing, first hand the strains and pressures, being brought to bear on the EU nations. As we live in a global community we all are now paying for the follies and greed of the Pollies and financial bandits who are now wriggling like hell to claw back as much as the they can. Be aware.....very aware
I spent 10 weeks in Europe mid-year. We need to realise that NZ is doing not too bad. I know the old knocking syndrome is alive and well in NZ and one sees it all the time on this site with some doom and gloom protangonists, and although there are negative factors at play, there are a number of positive ones too for NZ. We are doing ok and should continue to do so
Look I'm all for being optimistic, but the two of you are clearly not factoring in such trivia as, Leaky Homes, Student Loans, Billion per month borrowings, billions lost to financial companies collapse. All these are putting huge pressure on, and the impact of the GST & ETS have not come through. Can't imagine what might happen when the inevitable exchange rates rises happen, and those who are over-extended now begin to break.
I want NZ to be heading in the right direction as much as anyone, but I think there is some star gazing going on in this instance... Horizon indeed, I live in the UK, and you can smell the festering sores opening up. NZ will not be immune!
These are the kind of people that Ponzi schemers dream about. Suckers who are willing to convince themselves that "she's all good!" when even a drooling idiot has doubts and intelligent people are shrieking away in the opposite direction.
The housing bubble formed on the backs of clowns such as them. In their world "you can't lose with houses!" so it confuses them when they see others who aren't willing to borrow themselves into the debt pits of hell in order to buy overpriced dungpit "investment" properties.
Now they think that all they have to do to make the good times return is to "think positive" and not be "negative". And most of all, exist in a state of utter denial.
Optimistic....I wish...
The things you mention are minor NZ based events, and dont get wrapped up in a political outlook that blinkers you.
Whats un-folding around the world is staggeringly bad......The USA is out of control....many of its states are bankrupt and look to default next year, and/or shutdown. Its entire mortgage industry looks like its fraudelrmt with the RICO act being used/enacted, many state prosectors are now joining in the fun, the "investors" who bought the CDS junk off the banks now want it returned that estimate alone runs from 30billion to 180billion.....Congress is now Republican and will probably lock up the Govn next year...the debt is spiraling, real unemplyment is close to 20%....they will print to de-value....
Then we move onto the EU....its insolvent....Ireland got bailed but wont be able to pay. The two really nasty ones are Spain and Italy....but also Belgium and Portugal.....they will print to de-value....
China looks to pop and when it does so does OZ's mineral boom....
To me the optimists right now are the cashed up ones looking for the double dip and to buy up cheap, not the ones hanging on to massivley over-valued everythings...
regards
Signs are there the banks are not making the %s they want....everyone is waiting....and when your biggest income sector looks ready to implode....and you have a decent % of mortgagee sales backed up......for me it looks like them starting to panic.....the rural has turned nasty....if residential follows....
regards
Im sorry, but I lol at this, so because the past couple of weeks have been better than usual, all of a sudden the light has been turned on and we are now in a bull market? These RE people need to get a life, one not based around property. Fools and their money are soon parted.
It is an interesting situation at present, almost like 2 scenarios at play. On the one hand all the problems mentioned, on the other hand that manufacturing is in growth phase in USA and Europe and economic growth predicted for 2011. Balance sheets of companies are evidently good. There is more on this in NZ Herald today.
So who would really know? All one can identify is a mixture of factors at work, some bad, some good, and that is certainly the case in NZ. I believe the best approach is to take a steady as it goes one and keep debt levels low - if down the track there is significant inflation due to all the quantitative easing, real assets will be the best hedge, and with property will be best to have no mortgages to service in case interest rates get too high.
Rob note the recent comment from a banker about increased funding costs due to the Euro mess plus banks are having to raise more money on the domestic market due to new RBNZ rules and are competiting agressively to do so.
Another factor could be yesterday i heard an inside comment from a large NZ Bank saying they are now facing a huge increase in the numbers of defaulting mortgages. Bad debt provisioning ? Watch this space.
sorry, team, but those answers don't cut it.....if the banks are paying more for their "hot money" and they're holding back room mortgagee sales dead stock, then why would they be making it MORE attractive to lend on housing, thereby negating these factors...i.e having to borrow more to lend and increase their risk to mortgagee sales exposure down the track...i think i know the answer but i wonder if anyone else does.?
ou est la gumbo?
O>K C/stove..can't have you whinging and hanging around over you cucumber sandwiches on a hot day!
it's because ralph norris has shorted the australian mortgage mkt with double up rate increases and they need a quick burst of lending to shore up the losses they've made when the Oz lower end mortgage holders got highly pissed off and left CBA in protest to other banks...this gave ralph what he needed which was to blitz out the future mortgagee sales that would be coming through when the Oz ( tired yet?) housing bubble explodes..ergo CBA mortgagee stock down, other banks up causing a hot money ripple effect.
in a nutter shell..this is only a temporary, lower housing socio, idiot gathering exercise by the outposts here of the big 4...other than that; mum said not to tell ya!
Thanks Robo..... I shall digest your post with my sandwiches and iced tea.....as to "whinging" well I must say........either turn the heat lamps off or get out of the glass house.
Thank you again for your response...it was both interesting and informative. A Merry day to you Rob o the Glen.
C'mon everyone! Do you honestly believe that the so called upturn in mortgages and house sales is a prelude to "better times"
Wake me up, the increase in house sales isn't a surge but a trickle, and you would expect nothing else than to see the housing market experience an up-turn at this time of the year when the sun comes out to shine.
The banks will always mitigate their risk, and although some are now ending up to 95% of the value of the property, they still have excessively tight lending criteria that makes it impossible for the average mum and dad to get a loan. Like others have already commented on the $132,755 average would only cover a very small percentage of new or first home buyers, with the majority of these mortgages being renewals or re-financing packages.
Churr churr
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