A big shortage of houses available for sale is looming again after Realestate.co.nz reported a 10.4% seasonally-adjusted fall in the number of new listings in February.
The latest fall, with figures down 7% compared with the same month a year ago, comes after there had been signs recently that the number of new listings was picking up.
In the hugely influential Auckland market, the number of listings in February was down 5.7% compared with the previous month - again on a seasonally-adjusted basis. Compared with February last year, the latest Auckland number of listings - at 4098 - is down 5%.
Nationally the inventory of houses available for sale expressed in number of weeks equivalent sales, slipped to 25.9 weeks compared with 26.8 weeks in January. The long-term average is 37 weeks.
In Auckland the figure slipped to just 12.7 weeks worth from 13 weeks in January.
To put some historical perspective on the figures, at the height of the previous housing boom in February 2007, the national inventory was as low as 18.4 weeks, but little more than a year later as the market went into a freeze it had soared to 60.2 weeks. In the latest housing cycle the figure has been as low as 23.4 in August 2013.
However, Auckland has been pushing historical lows with its numbers of available houses. Back in February 2007 when national figures were at the 18.4 level, Auckland's figure was 14.6. As of August last year it was actually down much lower than that at 11.1 and now it's falling again after showing some signs of picking up.
ASB economist Daniel Smith said the latest monthly figures from Realestate.co.nz showed that the number of homes coming on to the market "remains at a low level".
He said the lift in listings that had been seen in the lead-up to the start of the Reserve Bank's limits on high loan-to-value lending was short-lived.
"The low level of listings is keeping the market tight, especially in Auckland. That is likely to maintain upwards pressure on house prices, especially given strong inwards migration (again, especially in Auckland) and the tentative rebound in sales activity seen since the turn of the year," Smith said.
He said, however, that ASB expected house price inflation [which peaked at around 10%] would ease during 2014 as interest rates rise and more supply started to come online.
"The closing of the supply-demand imbalance in Auckland and Christchurch will take several years to address, though, and will require continued growth in construction activity. In the meantime, we continue to expect the RBNZ to lift the [Official Cash Rate] gradually from [this month] onwards."
The new listing figures were released in Realestate.co.nz's latest monthly NZ Property Report.
The report showed that along with the decline in the number of new listings, average asking prices for New Zealand homes were rising - hitting a new record of $483,099, up from $476,797 in January.
Auckland was a big driver of the rise, with its average asking price rising to $677,370 - also a new record, and up from $663,372 in January.
Paul McKenzie, National Marketing Manager for realestate.co.nz, said buyer interest was "at an all time national high", with more than 1.7 million visits to realestate.co.nz sites in the last month (source – Google Analytics).
"While this high level of buyer interest is underpinning seller confidence, buyers will be disappointed with the higher average asking prices and relatively low levels of new listings," He said.
February saw 12,167 new properties come to the market, up 31% on the prior month (due to seasonality) "but this did nothing to ease the market pressure, evidenced by a fall in inventory", McKenzie said.
He said asking prices were higher in February across more than half of the country with 11 regions reporting a rise. Apart from Auckland, big rises were also seen in Wairarapa, up 24% year-on-year to $329,396, Marlborough up 16% to $418,945, and West Coast up 8% to $320,245.
Housing inventory
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58 Comments
wierd.
Funny thing but the piece says that they want to make things easier and cheaper for developers. "In an attempt to make it easier for landowners to redevelop post-earthquake the council is tossing up whether it should reduce the parking requirements in the District Plan for residential units."
So on the one hand you whine the councils reg demand regs which means more expensive houses and on the other you whine when they, uh dont...
Or like the rest of the developed world NZ is seeing a decline in miles traveled....hence less of a need for cars....and spaces for them.
This doesnt of course mean that developers dont have to exceed the minimum and offer 2 or even 3, just now they are not compelled to. So you have been given a choice but now complain about having a choice...
wierd.
Of course the bad aspects are,
"Since the quakes the amount of retail and office activity located outside of the city's traditional commercial centres has increased as businesses have been forced to relocate, but the council is keen to coax them back by reducing the opportunity for them to locate within industrial areas."
Trouble is the businesses may simply say **** you Chch we'll move away altogether.
regards
That article is so misleading "required to provide fewer car parks under a planning rule change being considered by the city council."
They are not requiring any such thing. They are removing a requirement, and leaving it to the buyer and seller to decide how many car parks to provide.
If a developer wishes to provide the number that was previously required, then they can. There is no requirement to provide less.
They are reducing minimum requirements, not introducing maximum requirements.
You may have noticed that the structural steel frame of the 5 level parking building on the corner of Harman and Grove Rd is well underway?
Also, most of the parkers in the area are workers trying to avoid paying for parking! Which combined with existing residents parking on the road leaves only shorter term parking available on road. With the introduction of p120s in the area, workers will need to walk further, or pay for parking. There is plenty of land available for parking in the area.
As an owner of over an acre of land (a number of individual parcels both commercial and residential) all within 150m of the prime stretch of Lincoln Rd, I don't have a real concern about parking apart from the all-day parkers occupying the side streets which is now corrected by the p120s.
The last thing we need is stricter planning rules on parking. However the relaxing of parking requirements in the new RMD zone is a concern. As is the intensification of zonings around several areas including Papanui, Merivale, Bishopdale, Riccarton and Spreydon.
Can you imagine 3 storey tilt slab flats with no garages appearing in Eastling St Bishopdale or Hawthorne St Strowan or Office Rd Merivale? If you can't, then make a submission to the new city plan because that is what the planners want!
I'm afraid i am not familiar with Lincoln Rd in CHC, currently residing in AKL.
In general though it's not surprising we have the highest congestion as NZ cities have some of the highest car ownership rates in the world, along with the highest peak travel modeshare for private cars. Everyone trying to drive to the same place at the same time in their own car = congestion. We simply can't afford to build enough road capacity for everyone to travell at the same time in this manner.
People are sick of the congestion and most want better public transport options to solve it (in AKL at least), rather than the 11 lane motorways the central government is currently building for us.
Not those clever folks who are waiting on the sidelines for the bargain prices to come when the market falls.. They tell me it's coming you know.. any day now.. any day.. soon.. not long now.. any time soon...
Olly N must be laughing at the way this is playing out.
Yes it is hilarious to see SK gives a few trinkets to the City Mission and on the other hand gloats at how wonderful the current capital gains in housing are. If he or she actually exists which I doubt as his or her mean spiritness is so cruel when you see capital values running away from the less fortunate such as those on minimum wages for no reason other than they were born with less grey matter than SK. One can only presume SK gave to the mission last week whatever trinkets he or she no longer needed. With such a mean spirit when it comes to housing it surely could not have been a substantial gift. When one is so mean in one area you would have to be mean in all areas of life. Housing is such a basic need for families and alike. If you really love your neighbour you would be willing prices to come down in Auckland not gloat when they go up. How would you feel SK if you were born in say 1985, were on the minimum wage and had no ability to be educated from a tertiary point of view.
thanks CM. I only had my doubts because when SK talks about how the auckland property market is increasing in value I wondered whether a human being could be so cruel and jubilant about that fact. There are so many people who will never be able to get a home in auckland and it is not their fault. Some people are born without the necessary to get ahead in life . For our childrens and grandchildrens sake we need prices to come down. Just how much money do you need to live comfortably?
Some basic sums and a dose of commonsense will tell you where this is all going .
With fewer houses for sale , and with 1,730 new migrants arriving EVERY WEEK over and over and over and over , and over ....................52 times this year , prices can only go where ?
Yes , the answer is UP .
And as the prices go up relentlessly , fewer and fewer ordinary Kiwis in our low-wage economy will ever own a home .
We really need a multi-pronged approach to all the issues causing this:-
- Reduce inward migration while we sort out the housing backlog
- Carry out a proper survey about householders intentions to buy/ rent/sell , etc
- Increase Interest rates
- Make more land available for development.
- Get rid of DC levies and other rortious council fees , the Councils will be getting Rates and Taxes from subdivisions for the rest of eternity
If they work 8h/day and 52weeks/year then an extra $4160 before tax. Assuming they have a 20% (unlikely given the low absolute income) deposit the bank will lend at most 6*income (unlikely given the low absolute income) giving an extra $24,960 to put towards a house. Or about the price goes up in Auckland in 2 months.
Or from an affrodability standpoint. Current wage of $13.75 is $23,291.93 per year after tax, ACC and kiwisaver at 3%. Raise it to $15.75 and you get $26,537.30 per year. A difference of $3,245.37per year. On a 30-year mortage at 6%, this would allow you to service an extra $45,000. Just hope that rates don't go up.
Hear a story about a slighly cunning way of working around the LVR rules the other day. Vendor gifted 10k to buyer in exchange for a 30k increase in purchase price (to get it to price that was agreed). This was done outside of the sale and purchase agreement, and outside of any formal contact from what I am aware, so risking the 'buyer' running off with the cash which isn't ideal.
The extra 10k gave the buyer another pontentially 50k from the bank (of which only 30k was needed), 10k directly back into sellers pocket, plus the extra 20k needed to get the deal across the line.
Property valued at bank at purchase price, so buyer still has the 20% equity in the property to take advantage of the better rates.
Re Fiddling the LTVR rules
I am astonished at the slack approach by the banks to actualy valuing thier security on new lending .
The intenral Bank valuations appear to be done "desktop" ie using a computer box tick , a cursory look at comparative values in the vicinity , estimated replacement cost and the GV .
If its anywhere close to the loan application amount , its gets the green sticker .
Well as long as the loan is covered and bank has superior mortgage, the security is only an issue if there's a default, which no-one wnats.
Beyond that it's only what is require for repackaging in the asset books for banks borrowing purposes and individual property paperwork isn't really much use there and even more remote from reality and default.
Most banks who do high LVR, only do part themselves and onsell the more riskier parts anyway. That's is why the whole LVR cap was a bit daft.
Sure, there are some instances...eg: farmers and swap rates.
These should be, and are being addressed, but are very small in number.
But that is very different to giving everyone the right to mail the keys back to the bank without recourse.
If the market crashes the first responsibility is with the homeowner I believe.
The OBR transfers risk down through shareholders, bondholders, to depositers.
Full recourse transfers risk to the borrower.
actually I think the farmers one was a bit of a stretch. They're businessfolk making business calls, they have due dilligence duties that go beyond what a salesperson is telling them.
In that specific case I'd say if they couldn't follow it then the correct decision is step away - not to believe the salesperson, or follow the lead, or accept what the other party has said based on previous relationship. This was new to the area and big, it deserves high risk examination.
in that case and others similar, only falsehoods and deception (as was done with some sharebroking and investment portfolio brouchures) is exemption to caveat emptor.
OTOH, the libel laws in NZ are too tight around such cases. There should be protection to post facts with sources even if it discredits a specific party, as this is a public good...as long as it's to inform not to degrade.
The US has non-recourse loans and it helped create the term jingle mail and probably played a big part in their economy falling as hard as it did. I don't think it's the answer as too much responsibility is removed from the individual. The banks need responsibilty too but that can be forced through regulation, like LVR ratios, capital adaquacy requirements, etc.
Oh dear.
Zz....extra homework needed for you.
Also, there are many many bondholders apart from covered bondholders.
"The OBR policy is designed to ensure that first losses are borne by the bank’s existing shareholders. "
www.rbnz.govt.nz/regulation_and_supervision/banks/policy/4368385.html
Lets play "spot the troll"...
their shares go down...ooooo .
but if they don't cash out they don't lose anything!!
if fact that's a good opportunity to buy in.
Then divvies get paid, and long standing shareholders it isn't relative to their initial investment, and for those who Buy/Hold through the value downturn..the yields are good. Good yields, secure business able to weather downturns... that's an increase in share value.
Bond holders might sweat a bit, but most will get paid (eventually).
Leaving only, as always, the unsecured creditors, swinging. But that's why they get 1-3% p.a. lol.
With shares, if they're fully paid up, then legally (special cases excepting) the company can't demand more from them, as that is the point of the share face value. More shares or bonds can be sold, but it's quite the performance and cost so not for small sums like paying loans/debts.
"their shares go down...ooooo .
but if they don't cash out they don't lose anything!!"
Not true.
DILUTION.
The shares plummet.
Trading halt.
Rights issue.
If they don't take these rights up their holding is massively diluted.
New capitial is raised at the same time from new investors.
If they do take up their rights, they have still lost value when compared to before the failure.
To suggest otherwise is nonsense.
Disregarding covered bonds, most other bonds are also unsecured the same as deposits.
These bonds are either subordinate to deposits or pari-passu to deposits.
Certainly preference shares and reset perpetuals are subordinate.
I repeat.
If depositors lose money, others before them have lost a great deal more.
no, the shares only dilute if a new issue is made (rare in the case of a bank).
Banks tend not to do issues when funds are tight, although they do transfer debt to equity which causes some upset, but always less than the alternative.
Either way they holding is still the holding, and doesn't go away until cash out, even if the market price says they're different rates.
preference shares get treated as secured debtors. sup to normal shares (which don't get affect except to ride the wave) but sub to other _secured_ holders. either way they still don't lose until the bank folds. The trickiness with p/shares is that they're often from associated parties, which makes for all sorts of problems, often to do with parcel sizes, so they can be a bailout but often the associated debt cost tends to fail to stop any slide with momentum.
You post as if you believe the bank management is still making the decisions .
They are not, it is operating under the OBR format.
The person appointed by the RBNZ will make the decisions on rights issues and new funding under guidance from the RBNZ
Name me a Bank reset perpetual, trading on the NZDX that ranks ABOVE deposits.
My understanding is that the OBR would only kick in if a Bank becomes insolvent.
In that senario Shareholders would/should lose everything..
If the Govt/Reserve bank has any negotiating bollocks ...they will not let the shareholders off the hook..
Deposit holders would take a haircut and the Govt would become the owner of the Bank.
( after all.... who else could afford, or even want , to take over the Banks liabilities..??)
for a NZ Bank to become insolvent.... it would mean we would be in Dark, depression like, times..
just my view...
For anyone wanting detail on how the OBR might work, should it be implemented, this might help - http://www.interest.co.nz/bonds/64411/if-bank-failed-and-open-bank-reso…-
With home ownership rates declining and the average age of the first home owner now at 36 ,with a deposit save time of eight years on the median wage, the ability to house New Zealand's populous and as commented earlier larger amounts of immigrants is looking increasingly difficult.
1, home construction rates are still anaemic , maybe 12000 this year, plus the stat guys have roped in apartments and retirement units into the new numbers. Where as in 2007 the number was 23600 homes constructed, without plumping it with apartments etc.
2, with the introduction of the builders ticket many of the maturer builders close or in some cases beyond retirement age, threw in the towel, what many bureaucrats didn't know is most of those builders employed 3 to 6 labourers and hammer hands. New Zealand does not have the capability to build at present the number of homes required. Especially when factoring in the tragedy of Christchurch.
3, councils lavished fee after fee onto developers,delaying projects, costing money( costing houses) to the point most mature developers now are only mopping up their holdings
4 the main banks do not like to fund residential developments, risk blah blah blah, show me empty abandoned subdivisions in Parnell , Thorndon or in the Hutt Valley, show me them, seas of unsold sections, very little risk I say, Meeting the supply of a product is massive supply.
5, government can kicking, 2010 Home and Housed report $2.million, great document no follow through, no one hired to implement it? Next up Productivity Commision official enquiry into Housing Affordability great report , very little to fall from it. The vast amount of government owned housing stock is coming to the end of there lives, mass building of 52000 homes was between 1945 and 1954 so at best 60 years old wooden homes, the cost of these homes now to replace even over another 20 year period at $400,000 each will cripple NewZealands Economy,
6 as home ownership rates decline, I keep hearing from mainstream media 'well there is going to be a renting generation", ok this must have been well planned out, our entire country is going to go through a transition of home owners into tenants, my one blinding question is " who is building th is generation of Rental Stock, brand new rentals , I have asked several developers if they know of any purpose built rentals they said all of their current customers seem to be building owner occupier homes.
7. The primary purpose of housing is a human fundamental need for shelter from the elements, 2nd to that is to store our belongings and food, it also provides a sanitation system to get rid of waste. Lately the economists have been strongly promoting the Home as the primary asset, true if you have more than one asset but most don't, it's their family home. The family home provides security to those that live inside it, banks also prefer this word security but obviously in a different format.
example , first question that will come up within 60 seconds of presenting a business plan to any mainstream bank" do you own a house?how much equity do you have in house? You could float in using an anti gravity belt and this question will be the same. Could I use my stock portfolio as leverage, not really could be wiped out, gold bullion, fluctuate to much.
Business succession , the sale of a business is going to be difficult to a renting generation, business loans to a renting generation but I guess the powers at be have thought of this over the past years as we have all seen the low supply of new housing stock effect the demand, plus they must have a plan to house not only our own children but more renting generations after that?
I personally believe that the actual physical capabilities of the building industry will not be able to construct (meet the current demands of population growth+ immigrants) for over a decade and that's if as a country we start building today, no more reports, no more consultants, it's house building time, after all there is a generation of renters on its way.
I wouldn't build for rental until IKEA style boxes become available, with reduced consents. I havea friend looking it such projects (with some twists of course). The damage a tenant can do to a property, vs the cost of a new home? Just not worth the risk.
I remember the new student flats built when O'Rorke house at Auckland Uni was rebuilt (no longer the old War Hospital and earlier transportables and hostel). Brand new flats, 4 rooms each. 2 had to be fumigated and have all soft materials replaced. 2 were so damaged from smashed walls and fittings that they had to be relined with new Gib & stud repair. Others suffered everything from new toilet/shower systems (an all female flat), refinished (smell of tobacco, weed, and curry), repainted (condensation and mildew damage), or carpet replaced.
That is for flats let in August holidays until mid-Nov exams
The market tells us that prices are not high enough yet. If they were we would see developers recruiting builders from around the world, throwing up house after house to make profits. Ireland had this occur. Then all the workers left and they found out they had built too many houses...
It will probably take a couple of years of consolidation at current auckland prices, and help from a land and councnil fee cost point of view before developers crunching the numbers think its worth while.
As for secondary cities, or wellington even; expect prices to have to climb the at least 30% as has already occured in auckland before the numbers start making sense for developers.
The best thing to help lower this 'point of breaking even' for a developer is make developing cheaper; cost of building materials, cost of council dealings, COST OF LAND. Unfortunately, the cost of labour is not going to be going down at all, and this is a significant contributor to overall cost.
http://www.barfoot.co.nz/515812
Here's a beauty - sold a few hours ago - what would you pay?
How to get rid of Hobbits with deep pockets. Attention FHB hire the neighbours of this house.
http://www.stuff.co.nz/life-style/home-living/9792474/40-000-house-sold
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