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Rents rise in Auckland

Wednesday October 21st, 2015

Auckland rental properties with an asking-rent of less than $400 a week have all but dried up, even for a unit or a small one-bedroom home, according to Trade Me.

Trade Me's latest rental market data shows an 8.4 per cent year-on-year increase in Auckland rents.

That is the second-highest annual rent increase in five years, after a 9 per cent jump in the year to September 2011.

Head of Trade Me property Nigel Jeffries said even the smallest unit or one-bedroom home would cost a typical Auckland tenant at least $400 a week.

"You're now looking at $499 per week for a typical property, taking annual rent costs close to $26,000 – about $2000 more than a year ago. It piles more pressure on to the cost of living for tenants," Jeffries said.

Trade Me's data was released amid warnings that a top academic ranking for Auckland University was likely to at least double its number of international students, putting further pressure on the rental housing market.

The university's position in the latest QS World University Rankings has improved to 92, from 94 last year.

It is the only New Zealand university ranked in the top 100.

New Zealand posts budget surplus for 2014/15

Wednesday October 21st, 2015

The New Zealand government has posted a budget surplus for the first time since 2008, fulfilling the governing National Party’s 2011 pledge to balance the books in the 2014/15 financial year.

Government financial statements published on 14 October recorded an operating balance before gains and losses ‒ or Obegal ‒of NZ$414m in the fiscal year to June 30, in contrast to a deficit of NZ$2.9bn reported in the previous year. In 2010, in the wake of the financial crisis and the major earthquakes that hit the Canterbury region, New Zealand reported a NZ$18.4bn deficit.

The government had forecast a small deficit for the year in May 2015, but thanks to “careful stewardship over day-to-day expenses”, greater than expected gains in tax and less spending than projected, the slim surplus ‒ amounting to 0.2% of GDP ‒ was achieved, finance minister Bill English said.

“The government has continued to restrain growth in spending while focusing on getting more effective results from existing spending, particularly for the most vulnerable New Zealanders.”

He added that it was an approach that was working well for the country’s citizens.

While recognising the surplus as a significant milestone, the minister said the government remained committed to “prudent management of public finances” and “steady and ongoing reductions in public debt over the medium term”, especially as the global outlook was still uncertain.

NZ houses for sale drop to new low

Tuesday October 20th, 2015

Fewer residential properties are for sale nationwide than at any time since 2006, according to the latest Realestate.co.nz data.

The real estate website’s data shows there was only 30,988 properties for sale across New Zealand in September.

Realestate.co.nz CEO Brendon Skipper said that when they first started keeping records in early 2007, there were 43,000 residential properties for sale.

“We can safely assume that the current number is the fewest homes on the market in New Zealand for a much longer time, possibly a decade.”

The number of homes for sale reached its high point of 58,137 in April 2008 and it remained around the 50,000 level for the following three years.

In the years since, there has been a slow decline in the amount of stock on market to reach the present level.

Skipper said the September figure meant there was only 16.3 weeks of inventory for sale compared to the long-term average of 35 weeks.

“In our main centres, the situation is even more extreme. In Auckland, the inventory is only 9.6 weeks and in Wellington 11.1 weeks.”

Market demand, which is also pushing up prices, is fuelling the high turnover.

Skipper said the low inventory level was despite an increase in listings in most regions - especially in Auckland, Waikato and Bay of Plenty – as compared to this time last year.

“The simple truth is that these properties are now spending less time in the market, suggesting that market pressures will remain high while the current rate of turnover continues.”

NZ on top of Rugby World Cup house price rankings

Tuesday October 20th, 2015

As Rugby World Cup fever heats up, the All Blacks continue to compete as favourites – and a new analysis has found that New Zealand’s housing market would come out on top of the RWC contestant countries markets too.

In the spirit of the Rugby World Cup 2015, international property consultancy Knight Frank analysed the housing markets of the twenty teams competing for the Webb Ellis cup.

Knight Frank residential research analyst Kate Everett-Allen said they were interested to see who came out on top when it comes to house prices, affordability and home ownership rates.

The results are likely to come as little surprise to avid property and rugby fans alike.

Southern Hemisphere teams have dominated the tournament in previous years with Australia, New Zealand and South Africa together responsible for six of the seven tournament wins to date.

Everett-Allen said their analysis of the latest housing market indicators for the participating teams shows a similar trend.

“The Southern Hemisphere nations are also dominating when it comes to house price inflation.”

Knight Frank’s latest data shows that house prices in New Zealand, Australia and South Africa increased by 10.9%, 6.9% and 5.4% respectively year-on-year.

In comparison, the performance of house prices across Europe’s participating countries is weak - with the exception of Ireland (10.7%) and England (6.1%).

Everett-Allen said that, with the All Blacks once again the favourites to win and also the current title holders, it’s worth noting no team has ever defended the title.

Of the RWC competing countries, New Zealand also holds the highest rank (5th) in the latest Knight Frank Global House Price Index.

In this index, its closest competitors are Ireland in 6th place and Australia in 10th.

More Official Cash Rate cuts likely - NZ

Tuesday October 20th, 2015

Global economic concerns mean more “easing” of the OCR is likely, even though this could further fuel the already-hot housing market, the Reserve Bank Governor has said.

In a speech to the Institute of Finance Professionals conference today, Reserve Bank Governor Graeme Wheeler said central banks were operating in a turbulent and uncertain world.

Global economic growth is the weakest since 2009 and inflation has also been below target over the past few years in the economies that target inflation.

Despite a significant slowdown in China’s economy, recent economic indicators [for New Zealand] have been more encouraging, Wheeler said.

“Some further easing in the OCR seems likely, but this will continue to depend on the emerging flow of economic data.”

However, with annual house price inflation in Auckland reaching 26% and house-price-to-income ratios double those in the rest of New Zealand, the RBNZ was concerned about how an OCR cut could affect the housing market.

“We remain conscious of the impact that low interest rates can have on housing demand and its potential to feed into higher price inflation,” said Wheeler.

“It is important also to consider whether borrowing costs are constraining investment, and the need to have sufficient capacity to cut interest rates if the global economy slows significantly.”

The RBNZ has already cut the OCR three times since June this year and it is currently sitting at 2.75%.

Meanwhile, the latest house price data shows that Auckland house prices continue to rise – although price growth is now spreading to nearby regions.

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