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Mortgage Advice Blog

Get the latest news and tips about mortgage finance and the property market. Scott Miller, mortgage broker from Advanced Mortgage Solutions comments on housing and lending.

~March’s Property Newsletter

Published by Scott Miller on Monday, March 15, 2010 in
Blog

Welcome to my newsletter for March 2010.

The response to Advanced Mortgage Solution’s new referral programme released last month has been over whelming. We have been able to help 4 couples into their first homes and helped half a dozen investors purchase further investment properties. The good news doesn’t stop there – because of these referrals $1,820.00 has been paid in commission to the referrers, our way of saying thank you for supporting AMS.

There seems to be a vacuum of property related news around New Zealand as many analysts and investors take a collective breath on hearing John Keys pre-budget announcements last month. It appears many people are waiting to hear confirmation of what exactly is going to become law on May 20th Budget.

Please click on the links below for this month’s points of interest:

1 – OCR remains unchanged

Yesterday the Governor of the Reserve Bank left the official cash rate (OCR) unchanged at 2.5%. The reasons for this are that the economy remains subdued, unemployment is at a 17 year high, building consents are down and credit card growth is sluggish.

Business confidence appears to be improving but for all intents and purposes we are still in a recession. What is unusual is that we are a full 1.5% below Australia’s overnight cash rate of 4.0%. This is why our exchange rate has been depreciating against their currency. This is positive for those exporting to Australia as still remains our largest market. The earliest the commentators are suggesting that rates will start to rise is around the middle of the year. We believe, due to the state of the market, that it may be later than this - around September.

This is positive for those with mortgages, as each month more and more people are coming off expensive fix rate mortgages and getting the benefits of lower rates.

2 – Opposition to tax announcements finds voice

Finally there is some real noise being made from property groups, property educators, solicitors, and accountants about the dangers of proposed tax changes outlined by John Key last month. As I indicated in last month’s newsletter I believe there are some real downsides to the proposed changes.

3 - House prices continue to increase but at a slower rate

QV figures out on Wednesday show that although house prices have continued to raise they are doing so at a slower rate. They go onto say…….

“Property values are above the same time last year according to the QV residential property indices for February released today. While the year on year change has increased further to 5.5 percent, values in the last few months have flattened in many areas. Nationally, values are now 3.9 percent below the peak of the market in late 2007.

The National average sales price also increased to $416,074 in February, up from $409,807 in January. While roughly indicative of value, the average sales price is a less reliable measure of change than the QV index as averages can be biased depending on which part of the market is active.

Glenda Whitehead of QV Valuations said “the annual change in values across New Zealand has continued to increase from last month, but this is masking what has happened in the most recent months. In the main urban areas, values have grown since mid 2009, but that rate of growth has recently begun to slow. In the provincial areas, this growth has slowed even more, and across the rural residential areas house values decreased slightly over the last month”.

Whitehead said “after a relatively quiet January, things seem to be returning to normal. Sales activity picked up over February and is back to similar levels to that observed throughout 2009. There has also been a significant increase in new listings, and we would expect this to convert to higher sales numbers in the coming months. The increase in sales and listings are both to be expected as February and March are typically the busiest months of the year”.

“The market remains patchy and buyers cautious. Well presented, good quality properties are continuing to sell quickly and at healthy values, whereas those with less desirable attributes are proving hard to shift. There is activity at the lower end of the market, driven mostly by first home buyers. Fewer investors are actively buying, and some are selling their investment properties now rather than waiting for the changes in property tax to be announced in the May budget” said Whitehead.

“The banks continue to take a cautious approach to lending, with property valuations required where the borrower has a relatively low deposit” said Whitehead.

Whitehead said “there is an increase in the number of new houses being built, but many of these are for clients under contract. Builders are still struggling to secure finance if they do not have these underlying sale agreements. Demand for new houses is steady but still nowhere near the boom levels of a few years ago when they couldn’t be built quickly enough”.

“We expect values to stabilise over the coming months reflecting the ongoing uncertainty around economic factors such as employment, pending interest rate rises and continued tight lending criteria. We may see more certainty in the market after the May budget announcement when personal tax cuts are known, changes to property taxation are specified, and interest rate changes are clearer” said Whitehead.

Values in the Auckland Region have continued to increase in recent months and are now 8.7 percent up on the same time last year. The Wellington Area is 6.7 percent up, and Christchurch 6.9 percent up. Values in the other main centres have been stable in recent months, but still remain above last year by 4.3 percent in Hamilton, 1.0 percent in Tauranga, and 6.2 percent in Dunedin.

Unlike the main centres, values in the provincial centres have been more variable over recent months, although values are still above the same time last year in almost all areas. Rotorua is 2.5 percent up, Gisborne 2.6, Napier 5.9, New Plymouth 7.9, Wanganui 1.1, Palmerston North 6.1, Nelson 5.5, Queenstown Lakes 0.8, and Invercargill 4.3 percent. Whangarei is the only centre still below last year at 1.8 percent although this has improved since last month.”

4) Aussies – coming then going

Here’s a boo hoo story about poor Aussie who feel they are being overcharged for accommodation when coming to New Zealand to watch the Rugby World Cup.

Source: ONE News

An Australian travel agent is accusing Auckland hoteliers of being greedy in their pricing for the Rugby World Cup.

Australian Sports Tours says hotel rates during next year’s World Cup will be about three times what they’re during the Bledisloe Cup.

General manager Sam Harrison says a night at the Hilton Hotel could set people back by $1700 and he says this is pushing people to consider alternatives like travelling early or flying in and out on the same day. He says even some two and three star hotels are tripling their prices, believing demand will outstrip supply.

Harrison says hotels in cities not hosting the cup could offer competitive prices, but they are jacking their prices up too. He says there’s a danger of alienating markets like the United Kingdom, which has been hit hard by the global recession. Harrison says staying on a cruise ship looks like a good value option compared to the Auckland hotels.

5) Phoenix - two to go

Being more of a traditional rugby union fan I have not really followed the progress of how the Phoenix has got on during the season. But since they made the play off I’ve been hooked. Just this weekend’s game against Sydney and we are in the final.

Go the gold and black!!


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