In a surprising move the Reserve Bank kept New Zealand official cash rate at 1% this week – many had expected the rate to be reduced to 0.75%.

The RBNZ’s Monetary Policy Committee says employment remains around its maximum sustainable level while inflation remains below the 2 percent target mid-point.

However, it conceded that economic growth continued to slow in mid-2019 reflecting weak business investment and soft household spending.

The Reserve Bank expects economic growth to remain subdued over the remainder of the calendar year.

Be prepared for rate cuts in the New Year.

While some pundits have labelled the Auckland housing market as ‘cooling’, property data analysts, CoreLogic have revealed there is still significant opportunity for growth – you just need to know where to buy.

Examining growth of each Auckland suburb from November 2007 (the pre-GFC peak), its data shows a significant variance, suburb to suburb. Over the last decade, all suburbs in the Auckland top 50 have increased by more than 100%, markedly higher than the national average of 67%.

CoreLogic also looked at growth from November 2016 to today. Topping both the Auckland and New Zealand wide rankings for property growth is the East Auckland seaside suburb, Wai O Taiki Bay which has seen an increase of more than 150% since 2007.

This is followed by the surrounding suburbs of Glen Innes and Point England, with a percentage change of 134% and 132% respectively.

Trade me says the New Zealand property market is heating up for summer with ten of New Zealand’s 15 regions hitting record average asking prices in October.

Head of Trade Me Property Nigel Jeffries says the total number of views on property listings climbed 12 per cent on September’s figure as buyers hit the market in October.

The number of properties for sale on Trade Me rose 9 per cent on September. However, despite this increase, demand is still outstripping supply which means prices are climbing.

“The Bay of Plenty, Canterbury, Hawke’s Bay, Manawatu/Whanganui, Nelson/Tasman, Northland, Otago, Southland, Waikato and Wellington, all saw record high asking prices in October while the national average asking price rose 1.2 per cent year-on-year to $672,600.”

According to lobby group the real estate institute median house prices across New Zealand increased by 8.2% in the year to October to a new record high of $607,500 – the first time the median house price for the country has crept over the $600,000 mark.

Median house prices for New Zealand excluding Auckland increased by 8.6% to a new record high of $520,000, up from $479,000 in October last year.

Median house prices in Auckland increased by 0.8% to $868,000 – up from $861,000 at the same time last year – the highest price in 19 months.

• Northland up 9.4%

• Waikato up 9.6%

• Bay of Plenty up 7.8%

• Hawke’s Bay up 16.3%

• Manawatu/Wanganui up 20.9%

• Otago up 15.8%

The institute says the government’s foreign buyer ban is having an impact on sales. The number of residential properties sold across New Zealand in October decreased by 4% from the same time last year to 6,801.

On the home loan interest rate front; no change this week. Most major high street lenders are offering 3.45% for two years. But as always; shop around and haggle for a better rate or cash back. Threatening to take your business elsewhere normally helps them focus.

First-time home buyers struggling to save a 20% deposit to put down on a home were thrown a lifeline this week with the launch of a website called Levridge.

The Auckland-based company acts as a gateway for investors and home-buyers to help each other. In essence, the investor pays the 20% deposit and the home buyer pays the mortgage and everything else. They jointly own the property under a co-ownership agreement.

When the property is sold the owner and investor share any profits (capital gain) 50-50 and the investor get their stake back. But there is no guarantee of any capital gains.

However, there are a few catches that might make home-buyers think twice before locking themselves into the minimum 5-year agreement. The home buyer must have medical insurance, income protection and life insurance. And these don’t come cheap. Plus they need to make the mortgage payments, pay rates and maintain the property.

As for the investor they become 2nd mortgagee on the title so the home can’t be sold without them knowing. However, things could become sticky if one party needs to sell before the 5-year agreement is completed.

To organise this financial marriage Levridge charges an upfront fee of $7500 plus 5% of the capital gain when the property is sold.

If the idea of co-ownership appeals then consult with a lawyer before paying the upfront fee.

Industry lobby group the Real Estate Institute says there are now 70 organisations supporting its plan to have the property management industry regulated by the government.

Bindi Norwell, the institute’s CEO says regulation is required to create an industry where all property managers operate ethically and with honesty and transparency, where tenants are looked after, and where landlord’s assets are protected.

Kiwi property seekers across the country were squeezed for choice with fewer listings to choose from says Vanessa Taylor of Real Estate It reports that new listings were down nationally in October by 17.1% when compared to October 2018 and the total number of houses for sale were also down by 13.1%.

In Auckland, October listings were down almost 20% with 3,566 new properties coming onto the market.

Wellington was down 8.4% in Wellington (to 757 listings) and down 21.6% in Canterbury (to 1,393 listings).

It’s a different story in the Central Otago/Lakes region, where the total number of homes for sale was up 9.6% (to 628 homes) compared to October 2018.

Average asking prices were up across the country in October with the Bay of Plenty, Wellington, Nelson & Bays, Wairarapa and the Central North Island all hitting 13-year highs.

However, Taylor says it looks like high-priced properties are taking longer to sell.

Taylor also says that the majority of those looking at property in the Wairarapa region are located in the Auckland and Wellington regions. She says it seems city dwellers are seeking a lifestyle change.

The Overseas Investment Office has approved 249 applications from people with residency visas to buy homes since restrictions on overseas ownership were introduced in October 2018.

Since the rules were changed the O I O has received 276 applications from permanent residents to buy a home to live in. More than 90% of applications were approved, with 27 being declined or withdrawn by applicants. The total value of the homes that have been consented is $165 million to date.

Auckland was the top region for consents (74), followed by Canterbury (25) and Wellington (20).

If you have ever felt as if you have lost out financially due to the poor conduct of a real estate agent then you might be interested in a change to the real estate agents act this week.

Buyers and sellers can now apply for compensation of up to $100,000 if the conduct of a real estate agent has been found to be unsatisfactory by The Real Estate Agents Disciplinary Tribunal.

The Real Estate Authority’s (REA) chief executive, Kevin Lampen-Smith says the introduction of compensation for unsatisfactory conduct will improve the ability for consumers to seek redress for losses suffered.

Unsatisfactory conduct that may be considered for compensation could be licensees not disclosing problems with a property or misleading advertising that causes a consumer to suffer loss.

Last year 296 complaints about estate agents were received and findings of unsatisfactory conduct have reduced by 35 per cent over the last three years to 102.

The 2018 Census results showed that almost 319,000 homes were affected by damp. In figures just released Census results show that more than one in five homes were damp some or all of the time, and for renters, dampness was more than twice as common than for those who owned their home. Of those homes affected by damp, 44,520 were damp all the time (3.0 percent of all homes) and a further 274,371 were sometimes damp (18.5 percent of all homes). Compared with homes that were owned or held in a family trust, the homes of renters were about seven times more likely to be always damp.

In the September quarter almost 190 homes were sold to people who didn’t hold New Zealand citizenship or a resident visa. The figure is much reduced from the June 2018 quarter when it was 1,100.

The government’s property statistics manager Melissa McKenzie says Home transfers to overseas people have fallen significantly since changes to the Overseas Investment Amendment Act came into force. She says Home transfers to overseas people are unlikely to ever reach zero because of exemptions for Australians, Singaporeans, and some property developers and overseas-based apartment investors. New data shows that overseas investors are selling more property than they are buying. In September overseas owners sold 309 properties.

The ANZ bank has announced its annual profit and I hope you’re sitting down. While it’s 8% less that a year ago, it made a profit in the year to September of $1.8 billion. So its double and triple all-round.

The number of newly consented high-density homes grew 22 percent in the September 2019 year, reaching almost 14,500, says Stats NZ. High-density or multi-unit homes include apartments, townhouses, flats and units, and retirement village units.

Growth of these outpaced that of stand-alone houses, which grew 6.1 percent. Helping to drive this change is the country’s population growth. Up from 3 million in the mid 1970s to almost 5 million today. September’s dwelling consents are up 31% on a year ago.

Interest rates. Plenty of people are predicting the Reserve bank will cut the official cash rate on 13 November to 0.75% from its current 1%.

There’s even talk of the OCR going down to zero percent. A sure sign of an economic slowdown; 2021 could be a tough year for some. Following the GFC some countries had a negative OCR – forcing savers to pay their bank to look after their cash.

Fixed rate home loans will follow the downward trajectory. So don’t rush to fix if you don’t have to, and haggle to get the best rate when you do. How low can they go? Time will tell.

The amount of real estate sales are stable and with average values going up.

Kelvin Davidson, CoreLogic Senior Property Economist steady positive rises should continue but cautions there are some important milestones to watch out for in the final few months of the year.

These include another potential cut to the official cash rate (OCR), a possible loosening of the loan to value ratio (LVR) speed limits, and the final decision on bank capital requirements.

He says that in the macro economy news remains supportive for the property market with GDP growth likely to stay above 2% annually, full-time employment is still rising, and the unemployment rate is very low.

Davidson says net migration is high – providing support for property demand.

A record number of state houses are under construction says the Government. Housing Minister Megan Woods says 3,402 homes are being built across New Zealand of which 2300 are state houses. She says that if the previous National government had been building at that pace, rather than selling state houses off, we wouldn’t have a state housing waiting list.

According to TradeMe Property tenants around the country are facing tough competition and increasing rents. It says the number of enquiries on rental listings rose 17 per cent nationwide in the past 12 months.

Trade Me Property’s Aaron Clancy says with rentals in hot demand, the national median rent rose 3.1 per cent to $495 a week. Clancy says the strongest demand increase was in Gisborne where the number of enquiries jumped 54 per cent on the year prior. Otago saw demand for rental properties spike 44 per cent while enquiries on rentals climbed 41 per cent in Bay of Plenty.

Clancy says the New Year would likely bring more record-breaking rents across New Zealand.

Median rents in Wellington are $530 per week. Auckland the median is $550.

Small houses (1-2 bedrooms) across New Zealand saw the largest rent increase of any house size in September after a 7.9 per cent increase to $410 per week.

TradeMe property has also released its property price data. It says Auckland property prices slumped in September after the average asking price fell 3.7 per cent on the year prior to $882,850, the largest decrease in ten years.

Head of Trade Me Property Nigel Jeffries says this is the sixth consecutive month the region has seen a year-on-year decline.

“It’s hard to say how long it will be before we see the Auckland market bounce back but for the next little while lower prices appear to be the norm,” he says.

Meanwhile Wellington property prices gained momentum; 8.7 per cent or $51,000 on this time last year to $644,750.

Mr Jeffries said property prices in Wellington took off in mid-2016, a few years later than the Auckland market, and have been gaining momentum ever since.

New Capital Values have been released in the Far North District with the median CV up 30.4% from 3 years ago to $365k.

Kawakawa’s CVs increased 45% and Kerikeri, had a median CV increase of 25.9%.

Accessible Properties, the social and disability housing provider, is to build more than 400 new townhouses and apartments in Tauranga.

The homes will be designed for first-home buyers, retirees and renters in its proposal to the Tauranga City Council, which would replace 140 former state homes. The first development of six homes was opened this week.

Accessible Properties CEO Greg Orchard says housing wellbeing has become an urgent issue for Tauranga and the Western Bay of Plenty;...

Auckland landlord Lachlan Chung has been fined more than $5000 after renting out a damp and mouldy flat to a mother and 16-month old baby.

When the mum moved in she became unwell and had an air test carried out at the Mt Eden property. Biodet Services found the property had dangerous levels of penicillium and aspergillus mould according to a Tenancy Tribunal hearing.

The mother and child moved out of the property for the sake of their health; breaking a lease agreement. A tenant can terminate a fixed term tenancy if the home is uninhabitable according to the Residential Tenancies Act.

Andrew McIntyre of Forensic Building Services told the tenancy Tribunal bedrooms at the property should not be used until the damp subfloor under the house was fixed and said the flat is not suitable for human habitation.

Chung told the Tribunal underfloor insulation couldn’t be installed due to there being a concrete floor; but the Tribunal later heard there is no concrete floor under the property. Chung was ordered to pay the woman $2858 in compensation for the false insulation statement and refund her $2200 bond.

Median values up Median house values across New Zealand rose 6.6% in the year to September to $597,000 according to industry lobby group the Real Estate Institute. Take Auckland out of the equation and values were up 6.8% to a record high of $500,000.

Median house values in Auckland increased 0.2% during the past 12 months to $848,000. According to figures supplied by the institute record median prices were seen in Manawatu, Southland, and Taranaki. Hawke’s Bay saw its median value up by more than 13% to $500,000. There were some value drops though; namely the West Coast: -7.5% to $185,000; Northland: -5.5% to $477,000 and Nelson: -5.4% to $560,000.

Fletcher Building Fletcher Building has opened a home building factory in Auckland and plans to build 500 homes a year. The factory cost $15 million and will employ 35 people.

Fletcher Building says using the Clever Core facility means it can build the main elements of a new home in 6 weeks. The sections – such as walls, floors, roof and partitions – can then be delivered to a building site and be bolted together. Things such as bad weather won’t affect construction times. The company will use the facility for its own Fletcher Living housing developments, but may decide to take orders from other firms down the track.

Fletcher is working with Auckland Council to streamline the consenting process.

Red tape to be cut

The construction sector is being freed up to allow more homes to be built more quickly as the Government plans to cut through some of the red tape of the Building Act next year.

It wants to make the building of prefab homes easier with a streamlined consenting process and reduce the number of building inspections needed.

Prefabrication and off-site manufacturing are the future of construction says the government. Among those welcoming the change is Tranzasia Corporation.

The company says it has orders for modular homes but the problems of gaining consent have held up sales and marketing for months.

Kiwisaver First-time buyers are often advised to buy a property somewhere other than where they want to live and rent it out as a way of getting on the property ladder.

But Kiwisaver can only currently be used toward buying a home to live in. However, this may be about to change.

Interim Retirement Commissioner Peter Cordtz says the rules should be relaxed.

Shelley Bay – Wellington

Anyone living in Wellington will know of the controversy around the proposed Shelly Bay housing and retail development.

Developer Cassels has had a survey carried out in the Capital and says 57% of those questioned support the development. 24% said they were against it.

Wellington City Council gave the Shelley Bay plan the go-ahead two years ago but the project has been delayed.

The housing plan includes 250 homes with a starting price of $800,000 each.

Privacy Commissioner

The Office of the Privacy Commissioner (OPC) has produced a new set of rules for landlords and rental property managers outlining the information they can requested from people applying for a tenancy. There are new rules on collecting personal information including taking photographs; the storage and security of personal information, tenants’ rights to access their personal information and request corrections. In addition, any information that becomes unnecessary should be deleted by landlords; and the use and disclosure of personal information to third parties has been updated. The privacy commissioner advises landlords and property managers to keep up to date with privacy commissioner rules.

Letting fees banned Recent changes to the Residential Tenancies Act 1986 include banning charging tenants letting fees, the introduction of the Healthy Homes Standards and the Residential Tenancies Amendment Bill (No 2) – which addressed tenants’ liability for damage and contamination. A change to the residential Tenancies Act in August means landlords cannot double-dip when making an insurance claim. Landlords can’t make the tenant pay for damage they caused to a property while also claiming on their landlord insurance policy. The law also says tenants are liable to pay the insurance excess or up to 4 weeks’ rent – which ever is lower.

Housing crisis Following the government announcement of a $7.5 billion surplus the Public Service Association says the cash should be used to end the housing crisis. “Too many New Zealanders are fighting to keep their heads above the water, and more of the status quo is not enough,” says PSA National Secretary Glenn Barclay. The PSA says New Zealand has around 130,000 fewer affordable homes than are needed, and with a growing population this problem is likely to get worse.

Construction industry New Zealand’s construction industry needs to change quickly to address the country’s housing and infrastructure deficit, and the Construction Industry Council is the organisation best placed to lead this change, say incoming Chair Graham Burke and Deputy Chair Malcolm Fleming. Mr Burke said while there were some good initiatives underway, such as the Construction Sector Accord and introduction of new procurement rules, the industry was hard to penetrate because it had so many parts and so many small businesses.

Robots at open homes A survey carried out for the Real Estate Institute shows that the use of drone video footage in property marketing has risen to 66% this year – up from 51% in 2017. Sixty percent of respondents use social media as an un-paid marketing tool while 58% pay to advertise on social media platforms. The 2019 survey result also points to the increasing popularity of smartphone apps, allowing agents, vendors or buyers to communicate with each other.

And one percent of agents surveyed say they use robots in open homes – although the survey didn’t specify how robots were used.

Your own island – just $3 million

Inchmarnock, an uninhabited island in Scotland, is now on sale for £1.4 million. FYI,

The Property Report for Week ending Sunday 6 OCTOBER 2019

Property data firm CoreLogic is helping home buyers find property in suburbs that fit their budget with its Mapping The Market online tool.

Visitors to the CoreLogic website can click on coloured areas on a map of New Zealand to see the median values of homes in any suburb.

The firm says that drawing on millions of data-points users can get an instant snapshot of the market and find locations with homes that fit their budget; as well as see how prices have changed on a year ago.

The New Zealand Green Building Council wants the Government to stop the use of gas and coal in the construction of new buildings.

The Green Building Council’s 500 members say that without these measures the Government will fail  to reach net zero carbon emissions  by 2050. Council chief executive Andrew Eagles also says energy efficiency labels should be mandatory on existing buildings of more than 1000 square metres.

KiwiBuild’s plan to build homes in Queenstown has been welcomed, but the town’s mayor says they need to be made cheaper for local people to afford.

Housing Minister Megan Woods says 105 homes are to be built there and will cost $650,000 to buy. Queenstown Lakes mayor Jim Boult wants to see homes priced at $350,000. The average price for a home in Queenstown is $1.2m.

Auckland Council is turning its attention to property owners who are not connected to the city sewer system. The council wants property owners with their own stage systems to provide inspection and maintenance records to them. Inspections have started on Waiheke and the Waitakeres.

Ever wonder where the money comes from when you apply for a mortgage? The Social Credit Party conducted a face-to-face survey with 400 people in main centres across the country and asked where New Zealand’s money comes from.

Twenty percent thought it came from the government, and a similar number thought it came from overseas; 17 percent had no idea, and 44 percent thought it came from commercial banks — but didn’t know where those banks got it from.

Amanda Vickers of the Social Credit Party says the way money is created continues to surprise people. She says banks create money when they make loans by entering amounts into computers. According to the Social Credit Party’s survey just 2.8 percent of respondents knew this.

A report from property valuation firm QV.co.nz says the first month of spring hasn’t brought about the lift in real estate activity many people were expecting. QV General Manager David Nagel  says September normally brings about a surge in market activity as vendors decide to list their properties.

He says many parts of the country are still short of property listings and this has contributed to the September results which show limited property valuation growth in the major centres.

According to QV the average value nationally has increased 2.4% year on year to just over $691,000.

David Nagel says the residential markets of our main cities continue to struggle with Auckland, Hamilton, Tauranga, Wellington and Christchurch all showing a three month value changes of less than 1%.  Dunedin is the only exception with 2.9% quarterly value growth.

Industry lobbying organization the Real Estate Institute wants the property management industry to be regulated.

The RBNZ left the official cash rate at 1% when it announced its review of the OCR on Wednesday. But there’s still plenty of talk of it reduced in the months ahead. Prepare for the OCR to be a quarter of one percent by May 2020.

Landlord fined almost $25,000

Auckland landlord Rinal Kumar, also known as Danny, has been ordered to pay $24,754.08 by the Tenancy Tribunal for failing to lodge tenancy bonds as a result of 33 applications brought by the government’s Tenancy Compliance and Investigations Team (TCIT).

Steve Watson, National Manager Compliance and Investigation, Housing & Tenancy Services, says” “The legal requirement to lodge tenants’ bond money with the Bond Centre is a fundamental responsibility landlords have under New Zealand’s tenancy law.”

Kumar was the sole shareholder and director of Hope’s Management Limited when the rental agreements started. The company was removed from the Companies Register in January 2019, but the Tribunal found that it was still Mr Kumar who was ultimately responsible for lodging the bonds.

5G leading to trees being cut down?

Are trees being cut down in your neighbourhood? Critics of the new 5G wifi system claim authorities are removing trees that could interferer with 5G signals – which are known to be capable of high data transmission speeds, but have low power making it difficult for 5G signals to penetrate trees and foliage. Let us know if trees are being cut down in your neighbourhood – go to stevehart.co.nz

Wellington prices

The average asking price in Wellington has risen $52,550 in the last 12 months to $632,300 as the Wellington property market continues to boom, according to the latest Trade Me Property Price Index.

Head of Trade Me Property Nigel Jeffries said Wellington property prices have experienced some rapid growth in the last three years and there are no signs that they’ll be slowing any time soon.

However, according to Homes.co.nz the median price of a home in Wellington is $779,000 with first home buyers picking up property for around $623,000.

It’s first-time home buyer estimate for Auckland is $682,000; Christchurch, $350,000 and Dunedin, $343,000.

Real estate data experts at Homes.co.nz say that September is red month across the country with the median HomesEstimate decreasing slightly in all New Zealand main centres with the exception of Dunedin, which saw prices rise by 0.9%.

Tom Lintern, chief data scientist at Homes.co.nz says it is too early to tell if the sluggish Auckland market is feeding through to the rest of the country, or if this is a short-term impact of winter sales activity.

“The plus side,” he says. “Is that the First Home Buyers HomesEstimate has also decreased in most areas, which is keeping the property ladder in the sights of first home buyers.

Housing NZ is no more; it will be dissolved and replaced with a new government housing agency.

The change brings together all the Government’s major housing entities – Housing New Zealand (HNZ), its development subsidiary HLC, and the KiwiBuild Unit – into one department.

Urban Development Minister Phil Twyford; he of the failed KiwiBuild programme – says the new unit will be a “world-class public housing landlord”.

Low number of new listings impacts sales volumes in August, says REINZ.

The number of residential properties sold across New Zealand in August dropped 6.1% from the same time last year to 5,959 (down from 6,346), the lowest level of sales for 7 months.

For New Zealand excluding Auckland, the number of properties sold dropped 6.9% to 4,198.

In Auckland, the number of properties sold in August dropped 4.1% year-on-year (to 1,761 down from 1,837) the lowest in 4 months.

Bindi Norwell, Chief Executive at REINZ says the latest numbers are “a bit of a surprise given the strength of July’s figures”.

She blames the wet winter weather for a lack of listings. She also says there have been 3,624 fewer new listings in August than at the same time last year.

Feedback from agents is that sellers are waiting to buy before agreeing to selling their home – not wanting to be forced into a hard-to-come-by rental.

Norwell hopes confidence will improve over the coming months.

According to REINZ data Median house prices across New Zealand increased by 5.5% in August to $580,000 but prices in Auckland fell by 3.5% on a year ago to $820,000.

Days to Sell has also increased on a year ago. Reinz says that in August the median number of days to sell a property nationally increased by 2 day to 39 when compared to August last year.

Auctions were used in 10.9% of all sales across the country in August. Gisborne had the highest percentage of sales by auction across the country with 31.5% (or 17 properties) in the region sold under the hammer.

Auckland saw the second largest percentage of sales by auction on 18.8% (331 properties) down from 22.0% in August 2018 (404 properties).

Landlords have woken up after their winter slumber and re-entering the market according to CoreLogic. It says the share of property purchases made by mortgaged investors has returned to the 26% mark, the highest since the introduction of a 40% deposit for this group (LVR III in October 2016).

Auckland has been a key part of the upturn from investors, even though this is where rental yields are lowest.

Property values in the city have fallen by about $36,500 from the peak so investors are sensing bargains.

However, anecdotal evidence relayed to this reporter indicates that some investors are off-loading properties they do not want to bring up to code – preferring to sell than make them warm and dry for tenants.

NEWS

The High Court in New Zealand has ordered property investment advisory company Ronovation Ltd to pay $400,000 for price fixing.

Ronovation, trading as Ronovationz, was set up by Ron Hoy Fong to train property investors.

Investors who signed up for the company’s services were required to abide by a set of rules which prevented them competing against one another to acquire specific properties, which the Commerce Commission maintained breached the price fixing provisions of the Commerce Act.