Low mortgage interest rates, house traders on the prowl and swelling numbers of first-home buyers could be about to fire up Auckland’s housing market.

QV valuations spokeswoman Glenda Whitehead said Auckland might be showing signs of a resurgence as buyers hunted around the western areas, Mangere Bridge and South Auckland generally.

‘‘I don’t want to play it up too much because we see mini-trends as well. But we’ve noted a few investors being a little more active around those areas, simmering away. Afew people are buying at mortgagee sale and doing a quick flick.

‘‘These buyers are traders and when we follow up on the deals, that’s their business and they’ve learnt to do it cheap, buying around $250,000 in the Mangere area and then doing a quick flick. They take advantage of situations,’’ she said.

‘‘The indication is that buyers, perhaps because of low interest rates, are stepping into the market more seriously in some areas. First-home buyers have been spotted in the more affordable suburbs of the region.’’

Onehunga and Pakuranga were also drawing first-home buyers.

ASB is offering mortgage finance at 6 per cent fixed for 18 months. Kiwibank is lending at 5.65 per cent on a floating rate but borrowers seeking longer-term stability are paying 7.6 per cent for a five-year mortgage.

Ms Whitehead said Auckland houses had generally maintained value.

‘‘Overall, the underlying statistics indicate a relatively stable market in the Auckland region. An increase in March sales volumes compared to previous months suggests a pick-up in activity.

‘‘There are areas in Auckland that are performing better than others. The suburbs are typically in close proximity to the CBD, and many offer character homes, or favoured school zones,’’ she said.

‘‘The general feeling is the market still lacks any urgency due to a prediction of limited short-term value growth. Many [buyers] only act if a property meets the majority of their criteria.

‘‘If a property has a number of features considered negative by buyers, these are being factored into offers and affects the length of time for the sale to be completed,’’ Ms Whitehead said.

Realestate.co.nz listed 12,288 Auckland properties for sale up to $2.5 million. Barfoot & Thompson announced a big pick-up in sales activities during March when 1070 places sold for an average $581,190, compared with February’s 619 sales for an average $521,887.

Nationally, QV said values stayed relatively stable.

• Article
• 13 Apr 2011
• The New Zealand Herald

Auckland’s notoriously unaffordable house prices will be a key area of research for the Government’s newly formed Productivity Commission, which is already under fire for advancing the interests of developers and the political right.
Finance Minister Bill English and Regulatory Reform Minister Rodney Hide said yesterday that the commission’s first inquiries would be into housing affordability and international freight services. The commission is one of the fruits of Act’s confidence and supply agreement with National.

Mr English said housing affordability was selected as an initial area of focus because New Zealand was ‘‘paying the price now for a housing boom that got out of control’’. ‘‘We need to learn some lessons from that and to take the opportunity to lock in more affordable housing.’’ It was critical to efficient allocation of capital in the economy, he said. ‘‘If we want to have more investment into the export part of the economy we need the right kind of rules that don’t drag that capital back into housing.’’
The commission’s terms of reference require it to identify and analyse all components of the cost and price of housing, giving particular attention to ‘‘factors influencing the supply of land and basic infrastructure for residential construction’’ and the effect of regulations on productivity in land development and construction industries.

This year the Demographia Inter-
MODERATELY UNAFFORDABLE
United States
SERIOUSLY UNAFFORDABLE
Canada, Ireland, United Kingdom
SEVERELY UNAFFORDABLE

New Zealand, Australia, China national Housing Affordability Survey found New Zealand houses were among the world’s most expensive and Auckland homes were less affordable than those in New York.
The co-author of the survey Hugh Pavletich, a Christchurch-based property developer, argues that urban planning restrictions have driven up house prices by starving the market of land available for residential development.

Yesterday, Mr English said the supply of land for housing in Auckland was ‘‘certainly part of the discussion’’ the commission would undertake. ‘‘On the international rankings, Auckland housing is pretty expensive and it would be good to understand why that is. ‘‘I would hope the commission would produce analysis that is useful to local councils.’’

The commission is modelled on the Australian Productivity Commission whose head, Gary Banks, has been advising on the set-up of the New Zealand version, said Mr Hide, who believed the structure meant productivity issues could be discussed in a non-political way. But Auckland Councillor Mike Lee said the commission’s terms of reference implied ‘‘politics as usual’’. ‘‘This would be about placating vested interests who happen to be party donors [who are] especially important to Act. The Government is, of course, incessantly lobbied by its supporters and donors to step in and override council ordinances designed to contain urban sprawl— the current pretext being housing affordability.’’

National Distribution Union general secretary Robert Reid said any discussion about housing affordability should consider implementation of a capital gains tax ‘‘on all properties except the family home’’. Meanwhile, Mr Lee was also concerned that the commission’s work on international freight services ‘‘will inevitably be about privatisation of our ports, especially our publicly owned port which is 100 per cent owned by the people of Auckland’’.

Mr English said the Government believed international freight services was ‘‘an area that needs to be tested and it’s a long time since we deregulated ports and transport— 25 years or so — and no one’s really looked at it that hard’’.

• Article rank
• 1 Apr 2011
• The New Zealand Herald

AUCKLAND IS facing a major housing crisis if current development trends continue. Local officials predict that, at the current rate of development, there will be a shortage of 50,000 homes in 30 years — equivalent to all the homes in Hamilton.

Auckland Council chief planning officer Dr Roger Blakeley warned that Auckland needs to be proactive by subdividing smaller properties and expanding into semi-rural areas if it is to avoid a major housing crisis.

‘‘The question is, how do we accomodate those 50,000 dwellings?’’

Although the council would focus on more intensive development within the city limits, there were plans to expand development west of Massey, west of Manukau, and south of Papakura and Karaka. More development is likely to include rezoning existing land and changing regulations to allow subdivision of smaller sections. But Blakeley could not comment on what would be changed until Auckland’s major planning document, the Auckland Plan, is released in December. A discussion document on the plan, released last week, said over the past three years Auckland had ‘‘already fallen short by approximately 10,000 new homes — the equivalent of a town the size of Blenheim’’. It also said that renters would leap to 40 per cent of households — either by choice or because they could not afford to get on the property ladder.

Lisa Phillips, director of property strategy company Erskine+Owen, said Auckland would be at capacity in 15 years, and some areas could be full in as little as seven years. ‘‘The concern is how we’re going to address this,’’ she said. Many people would be forced into terraced housing and apartments, causing flowon effects for housing costs. ‘‘Prices will surge as more and more people compete for an ever-dwindling supply of dwellings,’’ said Phillips.

Auckland mayor Len Brown said high-density housing would certainly become a more prominent feature of the urban landscape in the future. ‘‘The answer certainly isn’t more urban sprawl. We know we’ll face a crisis in coming decades if we do nothing. The signs are already out there.’’ Brown said the first thing he did in council was to halt the sale of council housing stock and he had already announced plans to clear the red tape for people wanting to build new houses.

Registered Master Builders Association chief executive Warwick Quinn said there would not be enough builders in the coming years to build all the necessary houses, because of the demands posed by the Christchurch rebuild and leaky building repairs in Auckland. ‘‘The industry is continuing to shrink but we can see the looming shortfall will hit us sometime next year. We may have to look at bringing tradesmen over from China, Philippines or Malaysia — but it’s likely Japan and Australia will be trying to attract them as well.’’

• Article rank
• 3 Apr 2011
• Herald on Sunday (New Zealand)

Police say the seizure of weapons at a rural Waikato property during a P-lab bust highlights the worrying link between drugs and illegal firearms.

Waikato detectives and members of the Waikato Armed Offenders Squad swooped on the rented Ohinewai property on Tuesday afternoon and found a methamphetamine laboratory in its ‘‘preliminary stages’’ and significant quantities of chemicals used to manufacture the drug. Police would not reveal what quantity of the drug was in the laboratory nor would they say what weapons or ammunition were found, confirming only that a silencer equipped firearm had been recovered.

Two people were arrested with one charged in relation to drug manufacturing and Detective Sergeant Rod Carpinter said more people were to be interviewed.

Mr Carpinter said the bust highlighted the risk to the public and police from links between the illicit drugs trade and illegal firearms. ‘‘More often than not we are finding it necessary to deploy armed police in support of such investigations as offenders involved in the drugs trade or dishonestly offending to pay for their drug habits take to arming themselves,’’ he said.

‘‘Waikato police are conscious of the effects drugs like methamphetamine have on our community from the need to fund drug use through the proceeds of burglary through to the risks associated to properties from explosion or chemical contamination and we hope results such as this will go some way to disrupting the drugs [supply].’’

Waikato police communications manager Andrew McAlley said that the recovery of firearms at clandestine P laboratories was becoming a ‘‘far more frequent occurrence’’. He said that because criminals needed to interact with organised criminal groups, such as gangs, to maintain their activities, this often resulted in to stand overs or intimidation, leading to some arming themselves for protection. ‘‘This proliferation of illegally held firearms presents a risk not only to our staff but to the public and even to the offenders themselves.’’

Mr McAlley said the arrests were not related to last month’s drug-related raids across the North Island in which police seized expensive cars and motorbikes, guns, drugs and more than $ 120,000 in cash.

• Article
• 31 Mar 2011
• The New Zealand Herald

A man died in an explosion at a P-lab in a house south of Auckland yesterday afternoon.
Emergency services were called to the property, on Mckinney Rd at Glenbrook, near Pukekohe, after reports of a blast shortly before 6pm.
Neighbours said ‘‘everyone knows’’ the house was used to cook methamphetamine and it was not surprising that it blew up.

One man said it had been only a matter of time before an accident like that happened.
‘‘In the community, we know it as ‘the P house’.’’ Children did not go near it ‘‘for that reason’’, he said. It is understood the man who died was a friend of the man who lives at the house.
Neighbours said the armed offenders squad had been called to the address more than once in relation to firearms offences. ‘‘You don’t have to be Einstein to work out what was going on,’’ one said.

A woman who was returning home with her daughter after netball practice said it was ‘‘very upsetting’’ to turn into her street and find it filled with police.
Another neighbour said he had heard the explosion but did not think too much of it at the time because of the steel mill nearby.

Counties Manukau police, emergency services and hazardous substance advisers were working at the site last night. The scene was cordoned off. Police find 200 homes a year on average where P is being made.
The Insurance Council says the number of insurance claims being made for property damaged by methamphetamine is increasing.
‘‘Property losses from P labs are becoming more significant and insurers are becoming increasingly concerned about the extent of these losses,’’ council spokesman Terry Jordan said.
He estimated that methamphetamine damage had cost the insurance industry $5 million to $10 million over the past 12 months.

Insurance companies covered the losses caused by P contamination, he said, but the onus was on property owners to properly vet tenants and carry out regular inspections.

• Article
• 25 Mar 2011
• The New Zealand Herald

The median price of $350,000 was unchanged from February last year but was up $10,000 on January. A total of 4502 unconditional sales were reported, up 38 per cent on January and up 45 per cent when the Canterbury/Westland region was excluded.

But the number of properties sold is down 4.3 per cent compared with February last year.

Economists were not wild about the numbers.

Phillip Borkin of Goldman Sachs said the market would stay flat for a while. ‘‘We are not yet becoming housing market bulls and continue to see median house prices remaining under modest downward pressure until the second half of this year.

‘‘However, we are starting to see the beginnings of a possibly better backdrop for the nationwide housing market,’’ he said.

Chris Tennent-Brown of ASB said the market remained subdued.

‘‘Buyers will feel in no rush, given the lack of price appreciation in the market over the past year. The market remains tipped in the buyer’s favour, evidenced by the long number of days to sell a property at present,’’ he said.

‘‘We expect prices to remain down around 5 per cent to 6 per cent from the 2007 peak over the coming months. We also expect prices to hold up better in the regions with stronger population and wage growth over the year ahead.’’

The Real Estate Institute said the earthquake had affected the volumes for Canterbury and the national total, so caution was required in analysing the data.

Some sales reported as going unconditional last month might not complete if there has been substantial property damage and future sales are likely to be conditional on structural and geotechnical assessments, which will take time to complete. Inability to procure insurance cover was currently the single biggest impediment to transactions in Canterbury.

The institute said that a recovery in transaction volumes in Auckland and Manawatu/Wanganui in February was encouraging and Auckland’s transaction volumes were marginally higher — by just one transaction — than in February 2009.

Buyers were still being cautious, the report said.

• Article
• 15 Mar 2011
• The New Zealand Herald

Mautua Latu died at her family home in Porirua one month before her third birthday in a fire started accidentally by her older sister. Mautua’s parents and eight siblings all survived the 2008 fire.

The inquest was told Mr Latu had left for work and Mrs Latu was sleeping when the early morning fire broke out. Four of the eight children had left for school when Mrs Latu’s 13-year-old daughter woke her, saying there was smoke in the house.

Mrs Latu called the Fire Service and managed to get all her children out of a window except Mautua, whose body was found by firefighters after the fire had been put out. The coroner found she died of smoke inhalation.

Almost one year after the fire, the oldest Latu child admitted she had been playing with matches that day and had flicked them on to a bed. She then left the room and fell asleep.

The police were satisfied the fire was an accident.

The three-bedroom one-storey house had no smoke alarms, the landlord said in his evidence to the coroner’s court.

According to the Housing Improvement Regulations there was no mention of the compulsory installation of fire alarms.

The Ministry of Housing needed to amend the Residential Tenancies Act to ensure landlords installed fire alarms in all rental properties and checked batteries on a regular basis during property inspections, the coroner recommended.

- NZPA

• Article
• 14 Mar 2011
• The New Zealand Herald

]]> http://www.rer.co.nz/blog/smoke-alarms-responsibility-of-landlords/feed/ 0 http://www.rer.co.nz/blog/reserve-bank-of-nz-has-just-cut-the-ocr-by-50-basis-points/ http://www.rer.co.nz/blog/reserve-bank-of-nz-has-just-cut-the-ocr-by-50-basis-points/#comments Thu, 10 Mar 2011 00:21:32 +0000 Les http://www.rer.co.nz/blog/?p=656

Auckland faces a rent shock as the Christchurch earthquake diaspora, rising insurance premiums and the loss of a landlords’ tax break all affect demand on already scarce stock.

David Whitburn, president of the Auckland Property Investors’ Association, and Andrew King, vice-president of the NZ Property Investors Federation, predict Auckland rents will spiral by $100 to $150 a week in the next year.

That will put many three-bedroom eastern suburbs homes and city-fringe properties in the $700 to $800-a-week bracket — about $38,000 a year. The average wage is just under $1000 a week.

The two men said the earthquake and demand for rental housing would propel prices upwards. Severe underbuilding in the past decade would exacerbate the shortage. Big insurance rises after the quakes and the loss of depreciation tax breaks from the start of next month are other factors cited for the rent shock.

Mr Whitburn, a lawyer formerly with Russell McVeagh who owns 11 rental homes in Auckland, cited one landlord who will lose $23,000 annually in tax breaks as a result of last year’s Budget changes. Already tenants in the city are complaining of queues, picky landlords, being forced to lengthen fixed-term contracts and simply not being able to find a house or flat.

Mr Whitburn and Mr King said five-year fixed term rental contracts were not unknown and would become increasingly common. Mr Whitburn predicted rents would rise most sharply in suburbs surrounding the CBD, particularly Parnell, Ponsonby, Kingsland and Remuera.

‘‘Rents which are now $650 to $700 a week will go to $750 to $800 a week by this time next year,’’ he said. ‘‘Rents in outer areas like Arch Hill and Epsom will be up $80-$100 a week.’’

Mr King said monthly Tenancy Services Bond Centre data showed a new national rental of $325 a week, the highest recorded. ‘‘National rental prices increased by 3.8 per cent in the year to February 2011. Despite a supply shortage and increased demand, Auckland’s rental price has only increased a little more at 4 per cent. Mind you, last month the annual increase was only 2.7 per cent so it looks like the market is starting to take off in Auckland,’’ he said. Mr Whitburn said thousands of Christchurch earthquake victims were more likely to seek rental accommodation in the less expensive Auckland areas, citing one property manager who covers Titirangi, Green Bay, Te Atatu South and West Harbour who was getting inquiries. Three-bedroom houses in those areas were likely to be $300 to $400 a week or more, he said.

About 10,000 Christchurch people are thought to have moved to Auckland so far.

The Department of Building and Housing has also forecast rent rises. But property management business Crockers released information this week saying rents were not always rising and in some brackets had fallen.
Mr King said: ‘‘Despite news footage of Auckland would-be tenants queuing for rental properties, rental prices appear to be holding steady, rather than leaping skywards. In the two-bedroom market, January’s average national rent was $348 per week’’

Mr King said rents were still cheap and while inflation rose 4 per cent last year, rents rose only 3 per cent.

The Centre for Housing Research has released an Auckland Region Housing Market Assessment showing Auckland will need almost 170,000 new houses and flats in the next 15 years. Strong population growth will fuel big housing demand, creating the need for 169,530 new places.

In a radical departure from the current supply, many of these will need to house older people who are either couples or single so one and twobedroom places will be in biggest demand.

• Article
• 9 Mar 2011
• The New Zealand Herald

BOGUS: A listing for a non-existent flat that Trade Me says was a scam.

Trade Me yesterday warned tenants hunting in the crowded Auckland rental market to be on guard against bogus property listings.

During the weekend Trade Me contacted users who had viewed a listing for a one-bedroom apartment on Princes Wharf, telling them it was a scam.

The non-existent property — listed for $250 a week by first-time trader ‘‘susan4141q’’— was described as a one double-bedroom, one bathroom furnished apartment and came with photos showing an exposed wooden floor kitchen, a modern bathroom and an outdoor entertaining area. A similar, genuine apartment in the same complex is advertised on Trade Me for $520 a week.

The scam was discovered after the Herald revealed Auckland’s worsening rental market— prices have increased up to 24 per cent in some city-fringe areas and demand is outstripping supply. That has forced some desperate tenants to resort to extreme measures, such as offering to pay six months of rent in advance, to secure a property. A lack of new construction and a booming population unable to get on the property ladder are among factors getting the blame.

Trade Me trust and safety manager Chris Budge said the bulk of fake property listings were listed by overseas scammers who were trying to lure tenants into giving away their personal details or paying an up-front fee. He said scammers would often offer incentives, such as a reduced weekly rate in exchange for three months rent up-front, on properties they had no right to rent or properties that did not exist.

Mr Budge said: ‘‘Unfortunately this is a worldwide issue. Usually the scammers come from overseas.’’

Renters should not make any tenancy arrangements or payments without going through Trade Me procedures, as scammers would often offer to reduce the rent to conduct business outside off the website. Renters should also be extremely wary of sending money through overseas transfer agencies such as Western Union or Paypal, he said. ‘‘Normally, it’s ‘please send $1000 through Western Union because I’m currently overseas on holiday or my mum looks after my property in New Zealand, I look after the finances in London’,’’ Mr Budge said. ‘‘What happens is that within eight hours organised crime with stolen passports has gone in, picked up the money and it’s disappeared never to be found again.’’

Last month, the Herald reported the case of renter Muhammand Nadeem, who was left $1300 out of pocket after he responded to a listing on Trade Me for an apartment in central Auckland.

• Article
• 7 Mar 2011
• The New Zealand Herald