Archive | Residential

Big change in 2 price brackets’ shares of housing market

The 2 most striking factors in the Real Estate Institute’s monthly residential statistics, out on Wednesday, are that the national median has continued to rise despite a slide in Auckland, and despite a switch between shares of the 2 middle price brackets.

The gulf between Auckland & ex-Auckland medians is still wide – $410,000, compared to $473,000 a year ago.

When you look at the 4 price brackets the institute uses, you’ll see both the top & bottom shares of the overall market have shrunk, but the middle brackets have swapped places – the share of the $750,000-$1 million bracket dropped about 11% while the share of the bracket below it, $500-750,000, rose 15%.

That conforms to indications in auctionrooms that vendors are having to cut their reserve to attract any interest, and likely cut again to achieve a deal. Auction transactions are generally taking far longer while those negotiations take place.

Median house price in October (October 2016 in brackets):

National: $530,000 ($510,000), up 3.9%
National excluding Auckland: $440,000 ($405,500), up 8.5%
Auckland: $850,000 ($878,500), down 3.2%

The breakdown of sales in price brackets and their share of the market in October 2017 & October 2016 (in brackets):

$1 million-plus: 726 (974), 12.8% (14.4%)
$750-999,999: 773 (1643), 13.6% (24.3%)
$500-749,999: 1567 (850), 27.5% (12.6%)
Under $500,000: 2623 (3292), 46.1% (48.7%)
All properties sold: 5689 (6759), down 15.8%

Compare those October market shares with those in September, this year & last (2016 in brackets):

$1 million-plus: 715 (1020), 13.2% (13.9%)
$750-999,999: 749 (967), 13.8% (13.2%)
$500-749,999: 1419 (1855), 26.1% (25.2%)
Under $500,000: 2545 (3510), 46.9% (47.7%)
All sales: 5428 (7352), down 26.2%.

The Real Estate Institute said median prices rose in 14 of its 16 regions from October last year, lifting the median outside Auckland to a record $440,000. The falls were in Auckland & Nelson. The big contributors to the rise were:

Waikato: up 9.9% to $500,000
Manawatu/Wanganui: up 11.5% to $290,000
Canterbury: up 4.7% to $450,000
Otago: up 14.4% to $412,000.

The institute said Auckland’s median price fall was its biggest since December 2010, while Nelson’s 6.8% fall to $447,500 was its biggest drop since April 2012.

Institute chief executive Bindi Norwell said the Auckland fall was largely the result of a large number of apartments being sold on the isthmus (the old Auckland City – the institute still hasn’t updated its boundaries), which took the median price down for the entire region.

On those old boundaries, Auckland City’s median fell 17% to $850,000, the lowest it’s been for 16 months, Franklin rose 16% to $737,000 and North Shore City remained New Zealand’s only million-dollar plus city.

“Looking at the institute’s house price index for the legacy Auckland City, it only decreased 0.8% year-on-year, whereas the median for the same period fell by 17%, highlighting that the drop in median price is not as dramatic as a first glance would suggest. This is because the index considers the mix & value of the property sold, not just the sales price.”

Auctions

The number of properties sold by auction continued to decline – 869 in October, down 42% from a year ago but up 4% from September. Auctions now represent 15% of all sales nationally.

In Auckland, where the proportion of sales by auction has traditionally been higher, 464 sales (28%) were by auction, down 44% from a year ago but up 8% from September.

Inventory

The number of properties available for sale nationally increased by 4% (from 23,385 to 24,307) compared to 12 months ago, and by 17% in Auckland (from 7214 to 8465).

Attribution: Real Estate Institute.

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Auckland house price index falls, still up nationally

A slowdown – but still rising. That’s the national picture of house price movements from Quotable Value Ltd.

In Auckland, where prices soared ahead of the less meteoric rise in rest of the country and began to slow down sooner, QV’s rolling monthly index has, at best, been stalled this year but otherwise in slight decline.

For the last 3 months, the Auckland index fell 0.5%. From a year ago, it was down 0.6%.

QV said the average value in Auckland was still above $1 million – sitting at $1,038,722 in the 3 months to October – and values on average were 90.1% above the previous peak at the end of 2007.

Adjusted for inflation, Auckland values fell 2.5% over the last year and were 58.6% above the 2007 peak.

Nationally, the index rose 3.9% over the last year – the slowest rate since 2012 – and rose 0.9% over the last 3 months. The national average value for the last year months was $646,807, up 56.1% from the 2007 peak. Adjusted for inflation, the national increase was 2%, and the rise from 2007 30.3%.

QV national spokesperson Andrea Rush said: “The CoreLogic buyer classification data is showing the nationwide share of sales to investors has dropped back to 38.5% from a high of 40.5% in 2014 in favour of first-homebuyers, whose share has risen to 21.6%.”

Auckland market adjustments

In Auckland, QV senior consultant James Steele said: “While the rate of value growth remains subdued, values are relatively stable and there is still strong competition for well presented & located homes, which continue to achieve strong sales prices.

“It appears market activity has returned to more normal levels in outer suburbs, with more properties having asking prices, and there’s more time for buyers to carry out due diligence or get valuations & building inspections.

“Listings levels have also not experienced the usual spring surge, and only those who need to sell appear to be listing properties.

Developers dropping prices

“Some developers who need to sell sections & homes in larger scale greenfield developments are finding they having to drop their prices to achieve sales.

“Examples of this are being seen in Flat Bush, where prices for vacant fully serviced sections that were selling in the high $700,000s last year are now selling in the early $600,000s.

“This drop in land value in the area has also seen the sales prices of completed new homes drop back, and these new homes are also taking longer to sell.”

“It appears the difficulty in gaining finances to purchase due to retail banks’ stricter lending criteria is a contributing factor in this, as well as lower demand for this type of housing product and an over-supply of sections & new homes in the area.”

Below, the dollar figure is the average value for October. The first percentage is for the 3 months to October, the second is for the last 12 months and the third is the change since the 2007 peak. For Auckland, QV still works on the old council boundaries:

Auckland region, $1,038,722, -0.5%, -0.6%, 90.1%
Rodney, $933,909, -1.7%, 1.6%, 59.2%
North, $954,769, -1.8%, 1.5%, 59.0%
Hibiscus Coast, $913,845, -1.5%, 1.9%, 55.6%
North Shore, $1,201,452, -0.1%, -1.6%, 86.2%
Coastal, $1,362,746, -1.3%, -2.0%, 80.8%
Onewa, $981,196, 3.0%, -0.9%, 97.8%
North Harbour, $1,168,764, -1.0%, -0.9%, 92.3%
Waitakere, $818,706, -0.1%, -2.2%, 93.1%
Auckland City, $1,223,913, -0.9%, 1.2%, 96.6%
Central, $1,079,721, -0.3%, 3.8%, 89.6%
East, $1,534,549, -0.7%, 2.5%, 92.6%
South, $1,090,843, -1.4%, -2.0%, 102.6%
Islands (low volume), $1,114,609, 0.8%, 7.9%, 74.4%
Manukau, $893,580, -0.5%, -1.4%, 95.2%
East, $1,151,198, -1.3%, -1.9%, 93.1%
Central, $690,284, 0.5%, -1.2%, 83.6%
North-west, $764,261, -0.4%, -0.6%, 106.9%
Papakura, $684,268, 1.3%, 0.2%, 90.2%
Franklin, $665,843, 1.1%, 3.8%, 68.3%

Northern border, down country & national:

Whangarei, $495,464, 0.3%, 9.6%, 25.0%
Kaipara (low volume), $505,010, -3.2%, 15.8%, 27.3%
Hamilton, $688,533, 0.9%, 0.2%, 53.1%
Tauranga, $687,241, -0.6%, 5.4%, 42.7%
Wellington region, $738,742, 2.0%, 10.0%, 38.8%
Christchurch, $490,429, -0.9%, -1.6%, 29.3%
Queenstown-Lakes, $1,092,736, 0.0%, 12.1%, 58.9%
Invercargill, $247,823, 2.1%, 8.1%, 12.4%
Total NZ, $646,807, 0.9%, 3.9%, 56.1%

Link: QV house price index for October 2017

Attribution: QV release.

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Barfoots study finds residential rents up average 4.7%, double that in central areas

The average weekly residential rent in Auckland has risen by 4.7% in the last year, from $520 to $542/week for a 3-bedroom home, according to Barfoot & Thompson’s third quarter figures.

Director Kiri Barfoot, who oversees the company’s property management division, didn’t put a figure on how much landlords’ costs had risen, but did list several: “We are just coming out of winter, which is a maintenance-heavy period for rental properties. Add to that uncertainty around rates increases, increased insurance costs due to the fire service levy and the incoming Earthquake Commission levy, compliance costs for smoke alarms & insulation, and you can understand the context of rent increases.

“Many owners will be relieved at recent forecasts indicating that interest rates are likely to remain flat in the near future.”

She said the biggest average rent rise was in the central suburbs, up 6.2% in a year from $550 to $584/week.

“Demand for rentals in Ponsonby, Grey Lynn, Mt Eden, all the old Auckland City suburbs west of the Southern Motorway, is strong. The area boasts short commutes into the city, and the properties often have outdoor space, parking, and are close to shopping, dining & entertainment areas. At the same time, fewer new properties are being built because of high land costs when compared with other areas where denser residential developments can be constructed, or where land costs are lower.”

Ms Barfoot drew a distinction between movements in house prices & rents: “I wouldn’t expect rent to flatten out as house prices in Auckland have. Just as Auckland rents didn’t increase at double-digit rates along with house prices last year, or the year before.”

Would-be home buyers pushing up one-bedroom rent prices

In a comparison of the number of bedrooms, Ms Barfoot said the biggest suburban increase had been for one-bedroom homes, up 6% from $339 to $359. In the central suburbs, the average rise for one-bedroom rentals was 9%, from $339 to $370/week.

“Almost 60% of renters plan to buy a home in the next 2-5 years, but we know that saving for a 20% deposit and tough lending restrictions are delaying people from buying. In the meantime, people are taking an interim step – choosing to rent on their own in between flatting and the traditional first-home buying stage. They are prepared to pay a little bit more for privacy, and are fortunate to have plenty of new developments to choose from.

“In Auckland Central, where a large number of apartments have become available in the past couple of years, rent for one-bedroom properties has increased at the same rate as the city-wide average, showing that the demand is there. Many of these new apartments have been in the higher end and will appeal to people moving on from a flatting situation, but who are yet to buy a place of their own.”

Attribution: Agency release.

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Quietest September in 6 years for house sales

House sales nationally fell to their lowest September level in 6 years, from 7352 a year ago to 5428, the Real Estate Institute said yesterday.

Auckland sales fell 31.5% from a year ago but it wasn’t the quietest region – Southland sales fell 34% and Tasman 37%.

However, median sale prices rose 1.2% nationally, and 5.7% nationally excluding Auckland. Auckland’s median was unchanged from a year ago at $845,000, and rose by $10,000 (1.2%) from August.

The Real Estate Institute’s house price index, which gauges sale prices against council valuations, rose 0.7% in September to a new high of 2699 points.

The auction decline continued, down 54.5% from a year ago nationally, and down to 14.9% of all sales. In Auckland, auction sales fell 57% from a year ago and represented 26.5% of all sales.

The breakdown of sales in price brackets and their share of the market in September 2017 & September 2016:

$1 million-plus: 715 (1020), 13.2% (13.9%)
$750-999,999: 749 (967), 13.8% (13.2%)
$500-749,999: 1419 (1855), 26.1% (25.2%)
Under $500,000: 2545 (3510), 46.9% (47.7%)
All sales: 5428 (7352), down 26.2%.

The number of properties available for sale nationally fell 2.6% to 21,727 (22,311), but rose 14% in Auckland to 7429 (6513). Excluding Auckland, the number of properties for sale fell 9.5% to 14,298 (15,798).

Attribution: Real Estate Institute release.

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Few shifts in QV house price indexes

Quotable Value’s monthly house price indexes for Auckland are mostly stuck in the ±1% range for the last 3 months, already evident from a tighter auction market, and in today’s monthly index release the government agency looks forward to changes that might arise from the negotiations to secure the Government benches.

“What will be most interesting will be whether a new government supports the relaxing of the Reserve Bank’s loan:value (LVR) restrictions as well as what support policies get rolled out to help first-homebuyers get onto the property escalator.”

There is an expectation in that “property escalator” terminology that buying a house is to buy an investment which will rise in value.

It remains a fact of life that up is good, down is bad. At the same time, the clamour continues for more housing that is cheaper.

The pause in price rises in most of Auckland this year tells you that rises aren’t automatic or continuous, but the conclusion is inescapable that, without firm action to provide far more housing at the bottom of the price scale, escalation is inevitable.

Outside Auckland, the catchup continues, although outliers like Invercargill will never catch up (its index is up 10.9% in the decade since the global financial crisis began, compared to 104% in the southern suburbs on Auckland’s isthmus & 109% in the north-west of the old Manukau City). Even further behind Invercargill in the catchup stakes, Opotiki’s index is down 4% over the last decade and the West Coast is generally down, Greymouth by 14.6% over the last decade.

Around Auckland, the central city & central Manukau were out of kilter, both rising 0.6% over the last 3 months, and the Onewa area on the North Shore rose 0.5%.

Rural Rodney fell 3.9% over the last 3 months but was up 3.7% over 12 months.

For most of the region, shifts for the latest quarter were within a range of 1% up or down.

QV said its national index rose 4.3% over 12 months, reduced to 2.5% when adjusted for inflation, and reduced from 56% to 30.2% net of inflation since the 2007 peak.

In Auckland, the 0.8% gain over 12 months turned into a 1% decline net of inflation. The 90.1% gain since 2007 was reduced to 58.7% net of inflation.

Reductions spread around country

QV national spokesperson David Nagel said in today’s release: “The reductions in quarterly value growth have extended from just the main centres last month to almost all the 15 major urban areas we track, with the exception of Rotorua, Palmerston North, Dunedin & Invercargill.

“The year-on-year growth is still showing double digit gains in many of New Zealand’s provincial towns. However, the quarterly change shows a gradual slowing of the property market in almost all city locations.

“Values are reflecting small decreases in all but a few isolated pockets of Auckland, while Tauranga & Christchurch have also shown a small decline over the past quarter.
“The normal spring surge in property listings still hasn’t eventuated throughout most of the country, and this lack of supply has helped insulate the market from more significant falls in values.

“While the property markets appear to have run out of puff in the main urban areas, there’s still plenty of activity in the smaller provincial towns which were slower getting started.

Policy impacts awaited

“While there is uncertainty around who will govern the country in the coming weeks, there are policies that, if agreed upon under a coalition government, could influence the property market.

“These include a gradual reduction on immigration numbers which has previously helped fuel the property market, particularly in Auckland and the increase in housing supply.

“What will be most interesting will be whether a new government supports the relaxing of the Reserve Bank’s loan:value (LVR) restrictions as well as what support policies get rolled out to help first-homebuyers get onto the property escalator.”

Below, the dollar figure is the average value for September. The first percentage is for the 3 months to September, the second is for the last 12 months and the third is the change since the 2007 peak. For Auckland, QV still works on the old council boundaries:

Auckland region, $1,039,066, -0.6%, 0.8%, 90.1%
Rodney, $939,955, -1.7%, 5.0%, 60.3%
North, $946,744, -3.9%, 3.7%, 57.6%
Hibiscus Coast, $937,359, 0.9%, 6.9%, 59.6%
North Shore, $1,195,052, -0.7%, -1.1%, 85.2%
Coastal, 1,363,735, -0.9%, -0.9%, 81.0%
Onewa, $961,224, 0.5%, -1.5%, 93.8%
North Harbour, $1,167,255, -2.0%, -0.9%, 92.1%
Waitakere, $816,408, -0.9%, -1.0%, 92.5%
Auckland City, $1,226,375, -0.1%, 2.7%, 97.0%
Central, $1,079,348, 0.6%, 5.7%, 89.5%
East, $1,532,259, -0.2%, 3.3%, 92.3%
South, $1,099,479, -0.4%, -0.3%, 104.2%
Islands, $1,088,716, -1.0%, 5.6%, 70.3%
Manukau, $897,957, -0.3%, 0.2%, 96.2%
East, $1,158,720, -0.9%, 0.3%, 94.4%
Central, $688,487, 0.6%, -0.3%, 83.2%
North-west, $771,872, 0.0%, 1.0%, 108.9%
Papakura, $679,072, 0.3%, 1.7%, 88.8%
Franklin, $663,080, -0.6%, 5.4%, 67.6%

Northern border, down country & national:

Whangarei, $500,801, 1.7%, 13.5%, 26.4%
Kaipara (low volume), $515,516, -1.0%, 19.1%, 29.9%
Hamilton, $546,402, 1.3%, 3.2%, 51.1%
Tauranga, $686,759, -0.1%, 6.6%, 42.6%
Wellington region, $606,322, -0.5%, 9.6%, 33.1%
Christchurch, $491,626, -1.0%, -0.8%, 29.6%
Queenstown-Lakes, $1,079,748, 0.7%, 12.6%, 57.0%
Invercargill, $244,691, 1.2%, 6.4%, 10.9%
Total NZ, $646,378, 1.1%, 4.3%, 56.0%

Link: Full QV house price index for September 2017

Attribution: QV release.

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House sale statistics wander around

The nearest thing to a trend in house sales is that the under-$500,000 price bracket remains a few points below 50%, but even that’s wobbled a couple of times over the last year.

The Real Estate Institute’s statistics showed the median sale price in August around the country compared to both August last year & July this year, but down in Auckland compared to a year ago.

Sales were down compared to a year ago but up compared to July.

The bottom price bracket used to be under $400,000 and its share of the market was declining rapidly. But the bracket marker was lifted to $500,000 early this year and, although it’s still falling, it’s in the mid-40% region.

The institute view

Real Institute chief executive Bindi Norwell said: “Banks’ lending criteria & loan:value ratios (LVRs) are still impacting first-homebuyers & investors. If you looked at the number of properties sold, without looking at the bigger picture, one might assume that the market was showing significant signs of slowing. However, as prices are holding up, and even increasing, then it suggests that people may be holding off from selling their property unless it’s absolutely necessary.”

Median house price this August compared to July 2017 & August 2016 (in brackets):
National: $530,000 ($518,000, $490,000), up 2.3% in month, 8.2% in year
National excluding Auckland: $428,000 ($417,500, $386,000), up 2.5% in month, 10.9% in year
Auckland: $840,000 ($830,000, $850,000), up 1.2% in month, down 1.2% in year

Sales by auction nationally fell 55% from a year ago to 799, representing 14% of all sales. In Auckland, auction sales fell 61% to 418, representing 23% of all sales.

Sales nationally fell from a year ago in all price brackets, but were up from July in all but the $500-750,000 bracket. The breakdown of sales in price brackets and their share of the market in August 2017 & August 2016:

$1 million-plus: 787 (964), down 18%; 13.3% (13.1%) of all sales
$750-999,999: 790 (941), down 16%; 13.4% (12.8%) of all sales
$500-749,999: 1614 (1717), down 6%; 27.4% (23.3%) of all sales
Under $500,000: 2705 (3746), down 38%; 45.9% (50.8%) of all sales
All sales: 5896 (7368), down 20%.

In last month’s item on the housing figures I managed to present you with an Auckland sales graph twice, omitting the price brackets. Here’s that breakdown of sales in price brackets and their share of the market in July 2017 & July 2016:

$1 million-plus: 708 (1002), 12.9% (13.8%)
$750,000-999,999: 674 (925), 12.3% (12.8%)
$500,000-749,999: 1478 (1741), 27.0% (24.0%)
Under $500,000: 2615 (3583), 47.8% (49.4%)
All properties sold: 5475 (7251).

The institute’s house price index, which measures the changing value of property in the market, showed a 0.5% increase nationally. Excluding Auckland, it rose 7.0%. The Auckland index fell 2.9%.

Housing stock available:
Nationally: 21,555 (21,462), down 0.4%
National excluding Auckland: 15,389 (13,825), down 10.2%
Auckland: 7731 (6073), up 27.3%

The Auckland view

On the Auckland market Ms Norwell said: “The Auckland market is stable but improving, with house prices in Auckland increasing $10,000 from July, with much of this activity being driven by school zones, age of homes & location. LVRs & the banks are still impacting the market & first-homebuyers, leading to a reduction in investors in the market. Similarly, clients are still cautious as the political parties continue to announce their policies, but post-election the market is expected to lift.

“Compared to August 2016, the median price decreased $10,000 (-1%). However, most of the territorial authorities [on the old boundaries] within the region saw increases in their median price over the same time period, with Franklin District leading the way with a 9% increase. It was Manukau City & Waitakere City only that saw decreases in their median price since August 2016, the latter most significant at -5%.

“Compared to July 2017, the overall region median increased 1%. The performance of the territorial authorities was largely positive, with only Manukau City experiencing a decrease (-3%).

“Sales volume in the Auckland region increased 7% compared to July, with large boosts in sales numbers in Manukau & Waitakere (24% & 15% respectively). Compared to August 2016, sales fell 22% with volume decreasing in all territorial authorities, most notably in Rodney (-30%), North Shore (-28%) & Auckland City (-26%).”

Attribution: Institute release.

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National says rent & homebuying subsidies are good, I say they’re pure inflation

Prime Minister & former Finance Minister Bill English said it last Monday and his party came it again yesterday: the Government is propping up the rental market and, yesterday, it would make more money available to first-homebuyers so they can pay a deposit.

The Stuff website took the first story from one side, leaving the further consequences alone.

Image above: Prime Minister Bill English during TV3’s leaders’ debate.

Subsidies flow straight through

Both policies are widely acknowledged ways of feeding landlords & home sellers – though ostensibly supporting impecunious buyers & renters. I wrote in 2009 that Australia’s Housing Industry Association criticised that country’s first-homebuyers’ grant – introduced in 2000 to overcome the impact of GST – because it reduced affordability because it flowed directly through to the property seller’s bottom line.

Mr English said in the second televised leaders’ debate on TV3 that the Government spent up to $6 million/day propping up New Zealand’s private rental market. The $2.3 billion/year in rent subsidies supported 60% of private tenants, and Mr English argued it was helping to keep many Kiwis out of poverty.

Social Housing Minister Amy Adams said the Government supported 320,000 of New Zealand’s 550,000 rental households.

Look at these subsidies another way: What would happen if they weren’t paid? Beyond the initial assumption that all those no-longer-subsidised tenants would be evicted, who would pay the rent? Their places would not be immediately filled.

The argument here is that it is not the tenant being subsidised, it’s the landlord. The consequences of ending the subsidy would, in due course, be that rents would fall so landlords could get tenants. That, in turn, would affect rental yields and, again in due course, would tell both prospective landlords & banks that the prices of houses intended for rental were too high.

All round, in due course, adjustments would be made.

Homebuyer support runs same course

Yesterday, Ms Adams and Building & Construction Minister Nick Smith (now spokespersons in the election campaign period) said National would double the financial support available to first-homebuyers when buying an existing house, and increasing it for new builds.

Ms Adams said of the measure to make it easier for first-homebuyers to get a deposit: “National believes every New Zealander should be able to buy their own house if they want to – so we are building on our existing suite of measures to support first-homebuyers.”

National would raise the Government HomeStart grant for a couple by $10,000 to $20,000 for an existing home, and to $30,000 for a new-build.

“The additional grants mean there is funding to help a further 80,000 people into their first home over the next 4 years, on top of the 31,000 people the scheme has already helped,” Ms Adams said.

Building and Construction spokesperson Dr Nick Smith says HomeStart Grants complement other Government measures to support first home buyers, including:

Welcome Home Loans allow first-homebuyers to access Government-backed mortgages with a 10% deposit, and KiwiSaver FirstHome withdrawals allow them to access all of their KiwiSaver funds to put towards a deposit.

Dr Smith added these available funds together: “Take a couple on the average wage in Auckland who have been in KiwiSaver for 5 years and are looking to buy their first home. Between the $20,000 HomeStart grant and their KiwiSaver withdrawal, they will have around $60,000 for a deposit for an existing home.

“Add in a Government-backed Welcome Home loan, which means they only need a 10% deposit, and they have enough for a house worth up to $600,000 – the Auckland HomeStart cap for existing homes – without needing other savings.

“That’s significant support for those New Zealanders, particularly given 18% of home sales in Auckland in the past year were below $600,000.

“If that couple lived in Palmerston North, they would have enough for a 20% deposit on a $300,000 house, without the need for a Welcome Home loan.”

Ms Adams said National would also simplify the process for borrowers, combining HomeStart grants & Welcome Home loans into one HomeStart product, so first-homebuyers could get all the support available to them from one place.

“We will simplify the application process for Welcome Home loans to allow accredited banks to approve these 10% deposit, Government-backed loans on the spot, rather than going through an often time-consuming process with Housing NZ,” Ms Adams said.

Dr Smith said National’s policies would help 200,000 new houses be built over the next 6 years – the equivalent of 4 extra Dunedins.

“We are increasing our support for first-homebuyers and making it easier to access, to further help young New Zealanders achieve their dream of owning their first home.”

The changes would come into force on 1 January 2018 and have been priced at $74 million/year, to be met from the 2018 Budget allowance. Costs in 2017-18 would be met from the between-budget contingency.

If – as Australia’s housebuilding organisation believes, and I understand numerous NZ Treasury recommendations have agreed (sources to come) – feeding the borrower or prospective tenant actually feeds the seller or the landlord, what is the outcome? Higher prices.

The Government has been feeding inflation via subsidies – and National intends to lift that inflationary input.

Links:
Stuff, 6 September 2017: PM Bill English says Govt spends billions propping up the private rental market

Earlier stories:
12 October 2016: First-homebuyers hit KiwiSaver for over $500 million in deposits
25 August 2014: National promises easier access to first-home money, Pavletich says it’ll fuel housing inflation
1 October 2013: Housing NZ offers first-homebuyers deal to buy empty old provincial stock
22 May 2015: Smith launches fund to build houses on Government land
27 March 2015: Parliament passes KiwiSaver HomeStart Bill
29 July 2013: Shearer says Labour will block overseas speculators; plus some extra statistics
23 October 2009: Australian incentives boost construction, hurt affordability

Attribution: Ministerial/party releases, Stuff.

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Wesley College developer selects build partners & new subdivision name

The Wesley College Trust Board & the developer of its subdivision on the college farm at Paerata, Grafton Downs Ltd, announced 12 build partners & a new name for the project last week.

300ha around the college was approved as a special housing area in 2015, with plans for up to 5000 homes in 10 stages.

Grafton Downs sales & marketing manager Shaun Millar said: “We have chosen the build partners because of the outstanding quality of their workmanship. In the interests of creating equal opportunities for builders in the community, we selected to work with large franchisee companies & small family businesses, all of whom are local.”

The build partners named last week are 4 widely known businesses – GJ Gardner, Jalcon Homes, Jennian Homes Ltd & Signature Homes Ltd – and local builders Capital Homes Ltd, DW Homes Ltd, Emandee Homes Ltd, Mark Price Builders Ltd, Navigation Homes NZ Ltd, Nick Bosanac Builders Ltd, Palladium Homes Ltd & Precision Homes NZ Ltd.

Grafton Downs executive director Chris Johnston said the development would be named Paerata Rise, after initially proposing to call it Wesley. That had upset residents of the isthmus district of Wesley in the Mt Roskill suburb, which doesn’t have a postcode but does have primary & secondary schools and a community centre bearing the Wesley name.

Grafton Downs applied to the NZ Geographic Board to disestablish use of the Wesley name in Mt Roskill so it could be used for the new town being built on the college farm, but withdrew the application in May last year.

Mr Johnston said of the new name last week: “As well as acknowledging the existing Paerata community, the name is a nod to the meaning of Paerata in te reo, that is, ‘horizon of the rata’. It was important to those involved in the development that the name was in keeping with, as well as inclusive of, the area’s heritage.”

The new development is 20km south of the Auckland cbd and 4km from Pukekohe, the main centre in Auckland’s Franklin ward. The development company is owned by the college board & 2 Methodist Church trusts, the Pact 2086 Trust and Te Taha Maori Property Trust.

Mr Johnston said: “We will be working closely with approved build partners to create, as prescribed under the Paerata Rise design guide, a new unique place to live where homestead architecture is envisaged. Homes will be carefully placed on their sites to maximise the natural landscape settings, creating comfortable living environments & quality streetscapes.”

Plans for the development site were designed by San Francisco-based Surfacedesign Inc, co-founded by Kiwi urban designer & sustainable landscape architect James Lord. The company is responsible for the abstract landscaping at Auckland Airport.

“Surfacedesign Inc are a great firm to work with. James Lord & his team grasped our vision to create a development that embraces the environment and creates a good relationship between sections, houses & green space.”

Stage 1 earthworks are complete, waste & water pipes are being laid and the onsite civil work is underway. The 12 build partners will have access to roads in mid-December and the first residents are expected to move in by mid-2018.

Earlier story:
15 July 2015: 300ha Wesley special housing area approved

Attribution: Company release.

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3 Kings quarry plan change almost in place

Fletcher Residential Ltd’s proposed private plan change for the Three Kings quarry precinct ran into a minor timing hiccup yesterday on its way to being adopted by Auckland Council as if it were a council plan change.

Council plans & places general manager John Duguid told the council’s planning committee that, because of Housing NZ’s application for court costs against the 2 local societies which had opposed the quarry subdivision, as of yesterday the council couldn’t adopt the plan change.

That position was expected to change within days after Housing NZ withdrew its costs claim. The societies withdrew their appeal against the subdivision in May and, with the costs issue out of the way, the court could finalise the hearing.

The council committee unanimously approved a course to completion of the agreed plan change process.

Puketapapa Local Board chair Harry Doig said the challenge had cost the community “something like $200,000”, but it had achieved a better outcome and the local board now supported the council taking over the plan change.

The committee chair & deputy chair have delegated authority, along with an Independent Maori Statutory Board member, to approve adoption of the plan change once the precinct provisions have been made operative.

Fletcher Residential owned 15.2ha of former quarry, and the council owned about 6ha of former quarry, some of it used as sportsfields. In a change from some of the proposed land swaps, Fletcher wants to acquire council depot land instead of the sportsfields and intends to build up to 1500 new homes, plus a whare manaaki (a community educational & cultural facility).

Much of the development will be apartments, up to 5 storeys, with a minimum average apartment size of 55m² in buildings of 20 or more units. 30 garage lofts known as “Fonzie flats” are also planned, with a minimum size of 30m².

The development will also have cascading apartments built above the quarry rock faces and cascading over them.

Link:
Agenda item:12, Auckland unitary plan (operative in part) – private plan change request by Fletcher Residential Ltd – Three Kings 

Earlier stories:
6 September 2017: Council starts public process for city centre & waterfront planning refresh, plus 3 subdivision plan changes
2 February 2016: Minister takes Fletcher side on 3 Kings, and local politicians cry foul
25 November 2015: Three Kings development protest continues
Propbd on Q Th11Jun15 – Auction result, 3 Kings land exchange, decisions on plan changes, council model for elderly housing
14 November 2014: Three Kings debate goes to & fro, council to continue negotiating just with Fletcher
22 September 2014: Fletcher adds detail to 3 Kings plan change proposals
12 September 2014: 3 Kings plan changes approved for notification
4 May 2009: Winstone applies to cleanfill 3 Kings quarry

Attribution: Council committee agenda & meeting.

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Barfoots chief says most home buyers & sellers being realistic about changed market

Barfoot & Thompson managing director Peter Thompson reckons most home buyers & sellers have been realistic over the last few months, when sales have dropped away.

He said yesterday sales by the agency were down by two-thirds compared to a year ago, but buyers & sellers who accepted that change were still doing deals.

“For the past 6 months there have been only minor variations in the pattern of lower sales numbers & prices remaining firm. Both average & median sale prices were up from July but down from the average of the previous 3 months.

“Those who are looking to get a bargain, or selling at way above market, are missing out.

“The current market is having only a modest impact on the top & lower ends of the market. In spite of claims that there are few homes for sale in Auckland at under $500,000, in August we sold 90 properties in this price category, representing 11.6% of all sales for the month. High-end properties continued to sell well with 276 sales, or 35.5% of all sales, being for in excess of $1 million.

“There was no shortage of new property reaching the market, with 1260 new listings in August. While down 15.5% on the average number for the previous 3 months, this is not unexpected one month out from a general election.

“At month end we had 3993 properties on our books, the lowest number for the past 6 months but still more than a quarter higher than at this time last year. It means we enter the general election month with the highest number of properties at the start of a September for 6 years.

“It provides a good platform for the market to operate from once the election is behind us. With a well performing economy, relatively low mortgage interest rates & strong population growth, there is every reason to anticipate over the medium term the housing market will retain people’s confidence.

Rural activity

“Prices for rural property in Warkworth & Wellsford to the north of Auckland and in Drury & Pukekohe to the south remain stable, with limited listings holding back sales numbers. The normal spring demand for rural properties is anticipated to return once the election is over. Demand remains from active, well financed investors for rural development land.”

The figures, with the percentage change to August in brackets:

Average price: August $918,926, July $908, 319 (1.2%), average over 3 months May-July $921,547 (-0.3%), August 2016 $906,560 (1.4%)
Median price: August $820,000, July $810,000 (1.2%), average over 3 months May-July $832,000 (-1.4%), August 2016 $850,000 (-3.5%)
Sales: August 777, July 747 (4%), average over 3 months May-July 829 (-6.3%), August 2016 1003 (-22.5%)
New listings: August 1260, July 1173 (7.4%), average over 3 months May-July 1492 (-15.5%), August 2016 1706 (-26.1%)
Month-end available stock: August 3993, July 4088 (-2.3%), average over 3 months May-July 4227 (-5.5%), August 2016 3151 (26.7%)

Attribution: Agency release.

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