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Microsoft throws $US500 million at Seattle unaffordability, and mayors vow to cut red tape

Tech giant Microsoft Inc said last Wednesday it would throw $US500 million at reducing housing unaffordability around its hometown of Seattle, and mayors around the region listed ways they’d make development easier.

In short, Microsoft president Brad Smith & chief financial officer Amy Hood said in their corporate blog, too few houses had been built to meet Seattle’s growth: “Since 2011, jobs in the region have grown 21%, while growth in housing construction has lagged at 13%.This gap in available housing has caused housing prices to surge 96% in the past 8 years, making the Greater Seattle area the 6th most expensive region in the US.”

[According to the Demographia survey of affordability out today, Seattle’s median multiple – median house price divided by median household income – was 5.6 in 2018, compared to Auckland’s 9.0.]

“Median income in the region hasn’t kept pace with rising housing costs, increasingly making it impossible for lower- & middle-income workers to afford to live close to where they work.”

The Microsoft duo said the company had worked with housing statistics business Zillow and the Boston Consulting Group & Challenge Seattle to learn more about best practices. They said the gap between job growth & housing growth had been even greater in the suburban cities around Seattle than in Seattle itself.

“We’ll put this money to work with loans & grants to accelerate the construction of more affordable housing across the region. We will invest:

  • $US225 million at lower-than-market rate returns to inject capital to subsidise the preservation & construction of middle-income housing. These investments initially will be made in 6 cities east of Seattle & Lake Washington: Bellevue, Kirkland, Redmond, Issaquah, Renton & Sammamish
  • $US250 million at market-rate returns to support low-income housing across the entire King County region, and
  • $US25 million in philanthropic grants to address homelessness in the greater Seattle region.

The Microsoft duo added: “We believe the state government has an important role to play as well. In the state legislative session that began this week, we’ll encourage the legislature to support the private sector by making additional housing investments and through policy changes to preserve & develop affordable housing.

“These recommendations include a $US200 million appropriation to the Housing Trust Fund to expand support for very-low-income individuals & families, which would almost double the investment from the last budget cycle. In addition, we will support condominium liability reforms, extending the multifamily tax exemption (MFTE), and new incentives for local communities to enact more efficient land use policies.”

The mayors’ support list

9 mayors in King County, representing communities outside Seattle, issued a statement in support: “To address this problem, we intend to do our part to break down barriers and provide incentives to substantially increase the supply of quality housing for all households in our community. We will consider opportunities to advance housing affordability in the region, including but not limited to:

  1. Making available at no cost, at deep discount, or for long-term lease, under-utilised publicly owned properties
  2. Updating zoning & land use regulations to increase density near current & planned public transit
  3. Reducing or waiving parking requirements in transit corridors to help reduce overall development costs
  4. Reducing or waiving impact & other development-related fees
  5. Streamlining & accelerating the permitting process for low- & middle-income housing projects to improve developer certainty
  6. Providing tax exemptions & credits to incent low- & middle-income housing development, and
  7. Updating building codes to promote more housing growth & innovative, low-cost development.

“We believe that these efforts, combined with the support of the greater community, will make our region more affordable for all households and will advance quality of life throughout the region.”

Link:
Microsoft blog, 16 January 2019: Ensuring a healthy community: the need for affordable housing

Attribution: Company release.

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Auckland & Tauranga rank among internationally least affordable again in Demographia housing survey

Auckland has again ranked among the least affordable cities internationally in Demographia’s annual international housing affordability survey, out today, but Tauranga again beats it to take the rap as least affordable of the 8 New Zealand centres in the survey.

7 of the New Zealand centres grew less affordable – Christchurch was unchanged.

Auckland’s median multiple was 9.0 at the survey date of September 2018, compared to 3.9 for the whole of the US, 4.3 in Canada, 4.6 in Singapore and 4.8 in Ireland & the UK. The 5 major markets of Australia averaged out at 6.9 and Hong Kong was on 20.9.

The median multiple Demographia authors Wendell Cox (US) & Hugh Pavletich (NZ) use for their survey of middle-income housing affordability is the median house price divided by the median household income.

The authors wrote that prices in some of the most unaffordable markets had moderated, prices had stabilised in some and declined in others, but none of the price declines had been sufficient to materially improve housing affordability: “These developments could, in the long run, simply be further indication of the price volatility exhibited associated with stronger land use regulation.”

Demographia ranked 29 major markets as severely unaffordable, including Auckland, all 5 in Australia, 13 of the 55 in the US, 2 of 6 in Canada & 7 of the 21 in the UK.

9 major housing markets, all in the US, were ranked as affordable.

I’ve had malware issues this morning in accessing the Demographia website, leaving you with this one table.

New Zealand markets with median multiple (2017 in brackets), median price, median household income and their rankings – international affordability, major market ranking (Auckland only) and NZ ranking:

Auckland: 9.0 (8.8), $845,000 ($836,700), $94,400 ($94,800); rankings 301 (281), 85 (84), 7 (7)
Christchurch: 5.4 (5.4), $447,000 ($448,300), $83,300 ($83,700), 240 (226=), 2 (2=)
Dunedin: 6.1 (5.4), $412,000 ($363,300), $67,100 ($67,400), 264 (226=), 3 (=2)
Hamilton-Waikato: 6.8 (6.5), $551,000 ($530,100), $81,400 ($81,800), 278 (257), 6 (6)
Napier-Hastings: 6.7 (6.1), $449,000 ($409,100), $66,700 ($67,000), 274 (253), 5 (5)
Palmerston North-Manawatu: 5.0 (4.5), $310,000 ($278,000), $61,700 ($62,000), 224 (181), 1 (1)
Tauranga-Western Bay of Plenty: 9.1 (8.9), $623,000 ($617,000), $68,800 ($69,100), 302 (282), 8 (8)
Wellington: 6.3 (5.5), $577,000 ($508,700), $91,700 ($92,100), 268 (231), 4 (4)
Median market: 6.5 (5.8)

Link:
Demographia

Earlier stories:
22 January 2018: After 14 years, 3 more years’ income needed to buy same house in Auckland
23 January 2017:
Auckland still near top of Demographia’s international unaffordability table
25 January 2016: Demographia ranks Auckland severely unaffordable

Attribution: Demographia.

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Auckland house price chart turns from just-positive in November to just-negative

Quotable Value Ltd’s monthly chart of house price movements, out today, shows Auckland going from a just-positive 0.4% shift over the 12 months to November, to a just-negative 0.4% shift for the December year.

Nationally, the picture remains more positive than in Auckland, as it has been for the 2 years since the Auckland charts stalled (with the exception of the southern suburbs on the isthmus & the north-west of old Manukau – QV still works on the local government boundaries abandoned in 2010).

QV’s average residential value for the Auckland region in December 2018 was $1,048,145. Back one year it was $1,050,647. Back 2 years it was $1,047,179.

In the north of the region, prices in Rodney, and the more rural north of Rodney, have held up, while pricing on the Hibiscus Coast remains weak, declining in the last 3 months. That weakness is also apparent on the North Shore (but not North Harbour) & the isthmus, but not the Hauraki Gulf islands (on the usual thin results). Prices in the south of the region have stayed positive over both 3 & 12 months.

Outside Auckland, the catchup continues – Dunedin’s QV index has risen 11.2% over 12 months, Invercargill’s 11.6%, Gisborne’s 10.7% and, on the northern border, Kaipara’s has risen 10.8% (on low numbers, as usual).

Nick Goodall, head of research for CoreLogic NZ Ltd, which contributes analysis for the QV reports, said: “Responsible bank lending standards remain and have been a defining factor of the property market in 2018. However, solid market foundations also continue, both of which shape our outlook for the market to perform similarly to last year.

“These foundations include low mortgage interest rates and a relaxation of loan:value ratio (LVR) rules for both owner-occupiers & investors, still-high (albeit slowing) population growth, a strong labour market & a remaining deficit of new properties being built, despite very encouraging consent figures.

“Counteracting these factors are proposed tax changes for investment property, potentially an increased requirement for banks to hold greater capital against their loans, and the elimination of foreign buyers in the New Zealand property market.

“These all contribute to our expectation of growth rates remaining constrained, while not necessarily doing enough to see values drop.”

“In Auckland in particular, there’s still a deficit of supply from years of under-building, which is likely to guard against a significant drop in values, given still-strong population growth.

“The lending environment will remain another key market fundamental. We’ve just seen a loosening of the LVR restrictions and, with interest rates likely to stay low, certainly in the short term, we’re in a relatively accommodating position, which will allow for a continuation of modest property growth.”

Below, the dollar figure is the average value for December. The first percentage is for the 3 months to December, the second is for the last 12 months (QV switches those around in its tables) and the third is the change since the 2007 peak. For Auckland, QV still works on the old council boundaries (councils marked in bold); Kaipara & the Hauraki Gulf Islands, as usual, have low counts:

Auckland region: $1,048,145, 0.1%, -0.4%, 92.4%
Total NZ: $682,938, 1.2%, 3.2%, 65.1%

The Auckland region:
Rodney: $950,940, 0.1%, 1.1%, 62.1%
North: $973,800, 0.6%, 1.3%, 62.1%
Hibiscus Coast: $929,006, -0.4%, 0.8%, 58.2%
North Shore: $1,212,664, -0.3%, -1.1%, 87.9%
Coastal: $1,383,491, -0.4%, -1.6%, 83.6%
Onewa: $969,252, -1.1%, -1.3%, 95.4%
North Harbour: $1,194,389, 1.0%, 0.2%, 96.6%
Waitakere: $822,906, -0.2%, -0.2%, 94.1%
Auckland City: $1,233,311, -0.1%, -1.0%, 98.1%
Central: $1,082,656, 1.1%, -0.2%, 90.1%
East: $1,547,702, -1.1%, -1.7%, 94.2%
South: $1,095,532, -0.4%, -0.5%, 103.5%
Islands: $1,166,500, 6.5%, 0.5%, 82.5%
Manukau: $906,658, 0.9%, 1.2%, 98.1%
East: $1,156,353, 0.3%, 0.5%, 94.0%
Central: $707,726, 1.2%, 1.7%, 88.3%
North-west: $784,662, 1.3%, 2.0%, 112.4%
Papakura: $701,230, 0.2%, 0.6%, 94.9%
Franklin: $673,679, 0.5%, 1.1%, 70.3%

On the borders & down country:
Whangarei: $563,201, 5.3%, 12.8%, 42.1%
Kaipara: $550,378, 1.3%, 10.8%, 38.7%
Waikato: $486,980, 1.8%, 6.0%, 60.9%
Hamilton: $570,886, -0.2%, 5.0%, 57.9%
Tauranga: $720,645, 1.6%, 3.9%, 49.7%
Gisborne: $324,691, -0.2%, 10.7%, 9.2%
Wellington region: $688,074, 3.2%, 7.8%, 51.0%
Christchurch: $496,562, 0.5%, 0.6%, 30.9%
Queenstown-Lakes: $1,193,225, 2.0%, 7.3%, 73.5%
Dunedin: $434,903, 3.5%, 11.2%, 51.9%
Invercargill: $286,275, 3.2%, 11.6%, 29.8%.

Attribution: QV & CoreLogic releases.

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Broadway office & retail building sells

Barfoot & Thompson Commercial agents based in Takapuna have sold a Newmarket Broadway building on a 6.46% yield.

Isthmus east

Newmarket

131-151 Broadway:
Features: 2408m² site, 4734.67m² net lettable area, fully tenanted 5-level retail & office building, adjacent to Rialto, 87 parking spaces
Rent: $1,801,127/year net + gst
Outcome: sold in November for $27.9 million at a 6.46% yield
Agents: Elaine Tutty & Bruce Jiao

Attribution: Agency release.

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Auckland house values at standstill, catchup continues strongly elsewhere

Auckland house values remained at a standstill in the 3 months to October, while the catchup being played out around the rest of the country was strong in several centres, according to Quotable Value Ltd’s monthly update.

Averaged over the whole region, Auckland’s value growth rate for the 3 months was 0.1% – up in 4 of the pre-2010 council areas, down in 3, but none of those moves by very much.

Places where housing inflation wasn’t rampant for the 9 years from December 2007 – starting with the trough during the global financial crisis and much slower climb out of that than occurred in Auckland – included Gisborne, still up on the QV count by only 8.9% since 2007, Whangarei up 42.1%, Invercargill up 28.2% and Dunedin up 50.8%.

Those cities’ most recent rolling 3-monthly gains are 1.5% in Gisborne, 6% in Whangarei, 3.6% in Invercargill, 3.8% in Dunedin.

On Auckland’s borders, Kaipara has risen 2.3% over the last 3 months and 11.5% over the last year, while Waikato has gained 1.7% in 3 months, 5.3% over the year.

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 (QV switches those around in its tables) and the third is the change since the 2007 peak. For Auckland, QV still works on the old council boundaries (councils marked in bold); Kaipara & the Hauraki Gulf Islands, as usual, have low counts:

Auckland region, $1,050,647, 0.1%, 0.4%, 92.9%
Rodney, $943,053, -0.7%, 0.8%,
60.8%
North, $965,739, -0.1%, 0.6%, 56.9%
Hibiscus Coast, $921,316, -1.3%, 0.6%, 56.9%
North Shore, $1,215,601, 0.1%,
0.2%, 88.4%
Coastal, $1,381,946, -0.5%, 0.1%, 83.4%
Onewa, $979,159, 0.9%, 0.5%, 97.4%
North Harbour, $1,194, 0.9%, 0.3%, 96.6%
Waitakere, $826,280, 0.6%,
0.6%, 94.9%
Auckland City, $1,239,592, -0.1%,
-0.2%, 99.1%
Central, $1,090,427, 2.3%, 0.4%, 91.5%
East, $1,558,780, -0.1%, -0.7%, 95.6%
South, $1,097,192, -0.9%, 0.3%, 103.8%
Islands, $1,171,450, -1.1%, 1.4%, 83.2%
Manukau, $906,928, 0.9%,
1.7%, 98.1%
East, $1,159,206, 0.9%, 1.3%, 94.5%
Central, $706,492, 0.9%, 2.8%, 87.9%
North-west, $783,961, 0.8%, 1.8%, 112.2%
Papakura, $698,825, -0.6%,
1.0%, 94.2%
Franklin, $671,732, 0.4%,
1.8%, 69.8%

Northern border, down country & nationally:

Whangarei, $563,312, 6.0%,12.7%, 42.1%
Kaipara, $548,740, 2.3%,11.5%, 38.3%
Waikato, $484,170, 1.7%,5.3%, 59.9%
Hamilton, $565,859, 1.2%,4.0%, 56.5%
Tauranga, $713,859, 1.2%,3.9%, 48.3%
Gisborne, $323,702, 1.5%,11.3%, 8.9%
Wellington region, $685,387, 4.0%, 8.1%,50.5%
Christchurch, $495,742, 0.3%,0.4%, 30.7%
Queenstown-Lakes, $1,174,167, 1.1%,6.2%, 70.7%
Dunedin, $431,665, 3.8%,11.7%, 50.8%
Invercargill, $282,705, 3.6%,12.2%, 28.2%
Total NZ, $681,545, 1.3%, 3.5%, 64.8%

Attribution: QV.

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Barfoot & Thompson wins “best in world” title

Barfoot & Thompson won the award for best real estate company in the world at International Property Media Ltd’s awards in London on Monday.

The agency also won the New Zealand categories for best lettings agency, best in marketing for the Nugent Rise project in Auckland, best agency over 20 offices and best agency website.

The awards are open to residential & commercial property professionals around the globe.

Other best in category & award winners (runners up) in the New Zealand section were:

Property consultancy: Best, CBRE; award, JLL
Real estate agency: Best, Bayleys Realty Group; award, JLL
Marketing: Awards, Bayleys, Prestige Real Estate International Ltd
Agency over 20 offices: Award, Bayleys

Harcourts takes Reader’s Digest award

Meanwhile, back home, Harcourts International Ltd has won the Reader’s Digest quality service gold award in real estate sales for the second consecutive year.

The Reader’s Digest awards are decided through a survey by Catalyst Market Research Ltd. 1500 respondents were asked to nominate a service provider in up to 41 categories, including real estate sales. To qualify to vote on a category, respondents must have used a service provider from that industry.

Harcourts clients gave the agency an average star rating of 4.7 out of 5. Harcourts has also won the Reader’s Digest most trusted award every year since 2013.

Attribution: International Property Media, agency releases.

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Pt England house & Landings apartment sell after heavy bidding

Heavy bidding saw a Pt England house and a leasehold apartment in The Landings at Quay Park (pictured) sold at Ray White City Apartments’ auction today. An Aucklander apartment was passed in, also after heavy bidding.

Bidding on the house at Pt England opened at $900,000 and finished with a sale at $1.4 million.

The Landings property was a more complicated proposition. It was taken to market by the liquidator of NZHB Properties Ltd, Brenton Hunt (Insolvency Matters Ltd, Christchurch), with a number of clauses relating to vendor liability crossed out.

NZHB, formerly NZ Home Bonds Ltd (director Peter Judkins, of Christchurch) went into liquidation on 5 June.

Bidding on the 8th floor apartment opened at $100,000 and escalated quickly. It sold for $350,000. Auctioneer Ted Ingram said the Landings had recently received a council code compliance certificate after a big remediation project. Next up for owners, however, is negotiation of the 7-yearly review of the Ngati Whatua o Orakei Trust Board ground lease, which came up for renewal on 1 August.

CBD

Learning Quarter

The Aucklander, 25 Rutland St, unit 7D:
Features: 27m² studio
Outgoings: rates $1130/year including gst; body corp levy $3644/year
Income assessment: $400-420/week furnished
Outcome: passed in at $250,000
Agents: Dusan Valenta & Jasmine Chote

Quay Park

The Landings, 8 Ronayne St, unit 811:
Features: leasehold, 71m², 3 bedrooms, 2 bathrooms, parking space, code compliance certificate issued for remediation works
Outgoings: rates $1357/year including gst; body corp levy $10,431/year ($5685 operational levy, $4746/year ground rent); the ground lease review began on 1 August
Income assessment: $640/week
Outcome: sold for $350,000 by the liquidator of the owner, NZHB Properties Ltd; conditions removed from the sale contract included vendor default, late settlement or failure to give possession, vendor warranties & undertakings
Agents: Mitch Agnew & Ryan Bridgman

Isthmus east

Pt England

The house at 5 Riki Rd, Pt England.

5 Riki Rd:
Features: 812m² section, 127m² 3-bedroom house, garage
Outgoings: rates $2841/year including gst
Outcome: sold for $1.4 million
Agent: Adam Pearce

Attribution: Auction.

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Updated: 13 sold in Bayleys’ Total Property auction

8 of 16 properties on Bayleys’ Total Property commercial auction list were sold under the hammer on Wednesday, but by the end of the week the sales had climbed to 13, including one prior & another 4 post-auction. The auction for another 4 properties was postponed.

CBD

Learning Quarter

42 Airedale St:
Outcome: passed in at $2.4 million
Agents: Millie Liang

Isthmus east

Newmarket

142 Broadway, unit 1A:
Outcome: no bid
Agents: Luke Carran & Owen Ding

Penrose

10 Walls Rd:
Features: 584m² warehouse, showroom & office building, split into 2 tenancies, on 825m² corner site with dual access
Rent: $36,000/year net + gst from one tenancy
Outcome: passed in at $1.1 million, sold post-auction for $1.15 million at an 8.4% yield
Agents: James Valintine & James Hill

352-354 Remuera Rd, Remuera.

352-354 Remuera Rd, Remuera.

Remuera

352-354 Remuera Rd:
Features: 339m² 2-storey building in heart of Remuera Rd shopping strip, anchor tenant the Phoenix Tree Garden Restaurant plus a clothing store & travel agency
Rent: $131,460/year net + gs
Outcome: sold for $2.86 million at a 4.6% yield
Agents: Quinn Ngo, Owen Ding & James Chan

Isthmus west

Grey Lynn

Updated: 20 Newton Rd:
Features: 303m2 site in mixed-use zone, 450m2-level building with A grade seismic rating, ground-floor workshop & showroom leased to auto interior business, vacant 225m2 upper level fitted out to high standard offering residential use options
Rent: $33,642/year net + gst (under-rented) from short-term ground-floor lease
Outcome: passed in at $1.35 million, sold post-auction for $1.375 million
Agents: James Were & Scott Kirk

Mt Albert

88 Hendon Avenue:
Features: 71m² shop in suburban retail strip occupied by dairy on 3-year lease from April 2013 with one right of renewal
Rent: $16,800/year net + gst
Outcome: sold for $340,000 at a 4.9% yield
Agents: James Appleby & William Coates

North-east

Albany

14 Corinthian Drive, units 3 & 4:
Outcome: auction postponed
Agents: Eddie Zhong & Damian Stephen

270 Oteha Valley Rd, units 6 & 7:
Outcome: auction postponed
Agents: Quinn Ngo & Eddie Zhong

Glenfield

560 Glenfield Rd:
Outcome: passed in at $2.75 million
Agents: Simon Aldridge & Michael Nees

Milford

1 Shakespeare Rd:
Features: 556m² corner site on intersection of Shakespeare, East Coast & Kitchener Rds, 290m² vacant building formerly used as fitness complex
Outcome: passed in at $1.2 million, sold post-auction for $1.3 million at land value of $2338/m²
Agents: Simon Aldridge & Michael Nees

North-west

New Lynn

2 Crum Avenue:
Features: 400m² warehouse, showroom & office building on 696m² dua- access corner site
Rent: $14,000/year net + gstar from short-term lease on first-floor offices
Outcome: sold for $1.275 million
Agents: William Coates, Mike Adams, James Appleby & Cameron Melhuish

3102 Great North Rd:
Features: 160m² 2-storey retail & office building on 152m² site in established shopping strip, 2 tenants on short-term leases
Rent: $24,000/year net + gst
Outcome: sold prior for $450,000 at a 5.3% yield
Agents: Quinn Ngo & Katie Wu

404-406 Titirangi Rd, Titirangi.

404-406 Titirangi Rd, Titirangi.

Titarangi

404-406 Titirangi Rd:
Features: 575m² retail complex on high-profile 2664m² site in tightly held Titirangi Village, 3 tenants plus 237m² of recently vacated ground floorspace
Rent: $133,570/year net + gst
Outcome: sold for $3.9 million
Agent: Mike Adams

South

Manukau

Update: 333 East Tamaki Rd, unit G:
Features: 529mindustrial unit – warehouse 362m2, office 90m2, mezzanine 76m2, 8 parking spaces
Outcome: passed in at $640,000, sold vacant post-auction for $650,000
Agents: Clint Barber & John Bolton

792 Great South Rd, unit 7:
Features: 87m² retail premises in Pacific Square retail complex, 10-year lease to Vista Cafe from May 2006, 2-yearly rent reviews to CPI plus one 8-year right of renewal
Rent: $48,975/year net + gst
Outcome: sold for $580,000 at an 8.4% yield
Agents: Tony Chaudhary, Janak Darji & Amy Weng

Papakura

32 Broadway:
Features: 382m² corner site, single-level retail block, seismic rating 70% new building standard, 3 established tenancies
Rent: $66,890/year net + gst
Outcome: sold for $725,000 at a 9.2% yield
Agents: Tony Chaudhary & Jamak Darji

79-85 Great South Rd:
Features: 1123m² medical centre on 2185m² site with redevelopment potential under its proposed unitary plan zoning of metropolitan centre, occupied for nearly 20 years by Counties Accident & Medical, whose lease expires next year with no right of renewal
Rent: holding income of $196,577/year net + gst
Outcome: sold for $1.815 million
Agents: Tony Chaudhary, Shane Snijder & Janak Darji

2 & 6 Railway St West (pictured at top of page):
Features: 3118m², 2-building bulk retail complex on 6319m² site in 2 titles, 68 parking spaces, 7 tenancies including Noel Leeming plus other national retailers
Rent: $497,573/year net + gst
Outcome: sold for $6.175 million at an 8.05% yield
Agents: Peter Migounoff & Piyush Kumar

Attribution: Auction.

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