(WELLINGTON) Fewer New Zealanders want to sell their homes and the average asking price is falling as the property market slows, according to an industry website.

The number of properties listed for sale fell 2.3 per cent in July from June, according to a report on realestate.co.nz on Sunday. The average asking price dropped 1.1 per cent.

The weak housing market adds to signs of slow domestic demand which may prompt central bank governor Alan Bollard to pause his interest-rate rises later this year. Last week, he raised the official cash rate a quarter point and said the pace and extent of further increases is ‘likely to be more moderate’ than he previously expected.

The level of unsold houses in the market rose 3 per cent from June and would take 46.8 weeks to sell, based on the current pace of completed sales, the report showed. — Bloomberg

Source: Business Times, 3 Aug 2010

(WELLINGTON) New Zealand house prices fell for the second month in a row in June, according to official data yesterday, offering further evidence that the central bank can afford to be gradual in raising interest rates.

Quotable Value (QV) said its residential house price index rose 5.2 per cent in the year to June, slowing from a 5.6 per cent rise in May.

Although the index is still up on a year ago, the gain is mostly due to a big rise late last year and the recent decline indicates that prices have effectively been falling for the past two months, the government agency said.

It added the market has retreated with fewer properties up for sale and buyers being cautious and selective.

‘There are still sellers who have unrealistic price expectations in the face of present slow market conditions,’ said QV valuation manager Glenda Whitehead.

She said properties seen as being poorly maintained were also being bypassed, while forced or mortgagee sales were weighing on prices as well.

The softness in the property sector, once a key inflation concern for the central bank when it raised rates to a record high, is now seen as one factor why it will be cautious as it raises them.

‘I think house price growth will flatline for some time and for the Reserve Bank it will be a factor in them pausing eventually in their tightening,’ said Goldman Sachs JBWere economist Philip Borkin.

The Reserve Bank of New Zealand (RBNZ) last month raised its cash rate to 2.75 per cent from a record low 2.5 per cent where it had been held for a year.

Financial markets are pricing in an 84 per cent chance of another quarter percentage point rate rise to 3 per cent on July 29. In the latest Reuters poll 19 of 20 economists expect a rise this month, with the cash rate seen at 3.75 per cent by year’s end.

QV said there was no sign yet that a pending clampdown on the favourable tax treatment enjoyed by rental property outlined in the May budget is having any impact on the market.

‘Any changes . . . will likely take effect over the next twelve months as the various tax changes are implemented, and will also depend on whether investors decide to sell as a result of the changes,’ said Ms Whitehead.

The national average sale price in June rose 0.4 per cent to NZ$404,715 (S$395 860), against a 0.5 per cent rise in May.

House prices in Auckland, New Zealand’s biggest city, were 7.9 per cent higher compared with 8.8 per cent in May. — Reuters

Source: Business Times, 13 Jul 2010

Focus on capital gains intention test, loss from rental

New Zealand’s government may tighten existing rules around capital gains as part of a review of the taxation of property investment, according to Finance Minister Bill English.

Part of the government’s focus will be on the test used to assess whether a purchaser intends to be a long-term owner, Mr English said in Wellington yesterday. The government will also review whether losses from rental properties be ‘ring fenced’ so they can’t be used to offset other income for tax purposes.

Prime Minister John Key on Tuesday said that the government will announce a package of tax reforms in the May 20 budget that will buoy investment, savings and economic growth. He said that the government will make changes to the way property is taxed while ruling out recommendations for a tax on land and returns from investment property, and a ‘comprehensive’ capital gains tax.

‘What’s on the table is a discussion about the detail of the existing taxation of capital gains and whether there is more clarity and enforceability around that,’ Mr English told the finance and expenditure select committee in Wellington yesterday. ‘A good example is the intention test around the purchase of residential property.’

Mr English refused to provide further details on what form new property taxes may take.

‘We’ll have to be fairly sure about how much revenue will come from changing the taxation of property,’ he said. ‘That will take some pinning down because it’s a sector if, where you shift the rules, the behaviour shifts and you could end up not getting the revenue you expected.’

Mr Key on Tuesday said that the government’s tax reforms may include cuts to personal tax rates, and will pay for them by raising the rate of sales tax to 15 per cent from 12.5 per cent.

Mr English yesterday said that the intent of the tax changes is to encourage people to work harder and buoy economic growth.

‘The package is designed in the longer term to lift our economic performance by giving people the incentive to do the things we think are important for the economy,’ he told reporters after his testimony.

‘When you’ve got an economy where we generally do spend more than we earn, where we need more investment and savings, then we want to reduce the tax on those things that are going to help us develop better balance in the economy, and that’ll be paid for by taxes on things like consumption where we’ve had a bit of a binge,’ he said.

Source: Business Times, 11 Feb 2010

No of properties sold in Dec drops to 4,957 from 6,056 in Nov

New Zealand house prices fell for the first time in six months in December as the number of properties sold declined for a third month.

Prices fell 0.9 per cent from November, the Auckland-based Real Estate Institute of New Zealand Inc said yesterday in an e-mailed statement, citing an index. The number of properties sold dropped to 4,957 from 6,056 in November.

New Zealand lenders have been raising interest rates on fixed-term home loans as their funding costs increase, curbing demand for property. Falling house prices add to signs the economy’s recovery from recession may be only gradual in the first half of the year, making it unlikely the Reserve Bank will raise interest rates anytime soon.

‘The market has started to lose momentum,’ said Nick Tuffley, chief economist at ASB Bank Ltd in Auckland. The Reserve Bank ‘won’t be uncomfortable with the trends that they are seeing’.

New Zealand’s dollar fell to 73.39 US cents at 10:55am in Wellington from 73.64 cents immediately before the report was released.

The average interest rate on a three-year-fixed home loan was 7.93 per cent in November from 7.06 per cent in July, according to central bank figures.

Mortgage rates are rising even as Reserve Bank governor Alan Bollard keeps the official cash rate at a record-low 2.5 per cent. He said on Dec 10 he didn’t expect to raise borrowing costs until the middle of the year.

Mr Bollard expects the economy will grow 3 per cent this year after contracting 1.4 per cent in 2009.

House sales slumped in 2008 amid a deepening recession, and only began rising on an annual basis in March last year. Sales in December increased 15 per cent from a year earlier. Sales in November were 42 per cent stronger.

‘It’s an appreciating market fuelled by a shortage of properties for sale,’ Peter McDonald, president of the institute, said in the statement. The decline in sales is ‘concerning’, he added.

Sales traditionally fall in December and January because of the Christmas break and summer vacations.

Source: Business Times, 19 Jan 2010

New Zealand’s house values ended 2009 just 4.9 per cent below the late-2007 peak, having been as much as 9.6 per cent below the peak last April, Quotable Value’s (QV’s) residential index for December showed yesterday .

While the recovery was led by the urban centres, QV is now seeing signs of confidence returning to the provincial markets.

For the whole of 2009, New Zealand house values rose 2.8 per cent, with an average sale price of NZ404,671 (S$416,390) in December, up from NZ$393,373 in November, when prices were 5.9 per cent below the peak.

The year 2009 had shown a dramatic and somewhat unexpected level of turnaround in house values, QV said in publishing the December figures yesterday.

After reaching their peak in late 2007, house values dropped steadily throughout 2008.

At the beginning of 2009, two camps developed – those that considered the market had much further to fall, and those that considered it was near the bottom, and perhaps heading towards a good time to buy.

The property market was strongly influenced by consumer confidence, and as consumer confidence began to grow in 2009, so did property values in the main centers, QV valuation manager Glenda Whitehead said.

Driven by the main centres, nationwide values rose 5.1 per cent between the market bottom in April and the end of the year.

For the main urban areas, the rise since April was 6.5 per cent, taking values in those areas to just 3.9 per cent below their peak.

Source: Business Times, 12 Jan 2010

Price index up 0.2% from Oct and 6.6% from a year ago

New Zealand house prices and sales were flat in November as the property market consolidated its gains of recent months after a sharp slump, the Real Estate Institute of New Zealand (Reinz) said yesterday.

Sales by the industry group’s members were 0.6 per cent lower from October but were up 41.5 per cent on a year ago.

The national median house price was NZ$355,000 (S$358,600), unchanged from the previous month but up 5.2 per cent on the same month last year.

The housing market has been improving over recent months, albeit at lower levels, after its sharp decline in the past year.

‘The market appears to have retained the momentum gained over the last few years and median prices this month mirror the all-time highs experienced in October,’ Reinz President Peter McDonald said in a statement.

The Reinz’s house price index, compiled in conjunction with the Reserve Bank of New Zealand, rose 0.2 per cent in November and was 6.6 per cent higher than a year earlier.

The median number of days to sell a house was 33 compared with 31 in October and 44 a year ago.

On Dec 10 the Reserve Bank of New Zealand held interest rates unchanged at 2.50 per cent, with the recovery in the housing market one factor in an improved economic outlook. The RBNZ said that at the current rate, the market peak of 2007 would be regained in early 2010.

In a survey released on Dec 7, government agency Quotable Value said house prices rose one per cent in November, with a reduced supply pushing up prices.

Source: Business Times, 15 Dec 2009

(WELLINGTON) New Zealand’s home-building approvals rose for a fourth month in October, signalling that lower interest rates are kick-starting demand for property.

Permits increased 11.7 per cent from September, Statistics New Zealand said in Wellington yesterday, citing seasonally adjusted figures. Excluding apartments, approvals rose 11.2 per cent to a 16-month high.

Reserve Bank governor Alan Bollard last month said he is unlikely to raise borrowing costs from a record low until the second half of 2010 to help the economy emerge from its worst recession in three decades. The average variable home-loan interest rate fell to 6.02 per cent in September from 7.2 per cent in January, according to central bank figures.

‘Things are looking a lot better than they did six months ago,’ said Stephen Walters, chief economist at JPMorgan Chase & Co in Sydney. ‘That’s pretty important for what the Reserve Bank of New Zealand is going to do with interest rates next year.’

Mr Bollard on Nov 11 said a return to riskier home lending of the past must be resisted to ensure there is no return to a debt-fuelled housing cycle.

Economists monitor approvals excluding apartments because apartment consents are volatile. There were 103 apartment approvals in October, down from 155 in September and up from 50 in October last year.

Excluding apartments, approvals in the three months through October rose 22 per cent from the three months ended July 31, yesterday’s report showed.

Economists expect building approvals will keep pacing gains in house sales, property prices and immigration.

Home sales rose 36 per cent in October from a year earlier, the Real Estate Institute reported this month. House prices increased 1.3 per cent from September. The number of permanent migrant arrivals exceeded departures by 18,560 in the year ended Oct 31, the most since 2004, the government said last week.

Property construction has slumped from a year earlier amid a recession, which began in the first quarter of last year, and as a credit crisis curbed development projects. In the 12 months ended Oct 31, approvals fell 31 per cent from a year earlier. — Bloomberg

Source: Business Times, 1 Dec 2009

(WELLINGTON) New Zealand house prices rose for the third month in July, signalling the property market is recovering and may help the economy emerge from a recession.

(WELLINGTON) New Zealand’s home-building approvals fell for the first time in three months in June, signalling that lower mortgage rates are yet to kick-start sustained demand for property.

Permits declined 9.5 per cent from May, Statistics New Zealand said in Wellington yesterday, citing seasonally adjusted figures.

Second-quarter approvals rose 16 per cent from the first quarter and the trend in approvals is rising by about 2 per cent a month, the agency said.

Reserve Bank governor Alan Bollard cut the benchmark interest rate to a record-low 2.5 per cent in April and will probably leave the rate unchanged at his review today to help the economy recover from its worst recession in more than three decades.

Economists expect building approvals to keep pacing gains in house sales and prices and eventually lead the economy out of recession.

‘We expect core consent issuance to start to improve with the lift in housing demand, as indicated by the rise in house sales,’ said Jane Turner, economist at ASB Bank Ltd in Auckland.

‘We expect consent issuance to pick up off its lows over the second half of 2009.’

New Zealand’s dollar bought 65.57 US cents at 11.55 am in Wellington from 65.65 cents immediately before the report.

Home sales rose 40 per cent in June from a year earlier, the Real Estate Institute reported earlier this month. Second-quarter house prices increased for the first time since late 2007, according to a government report published on July 6.

Excluding apartments, building permits rose 3 per cent in June and were down 27 per cent from a year earlier, yesterday’s report showed.

Property construction has slumped amid the recession, which began in the first quarter last year, and as a credit crisis curbed development projects. Second-quarter approvals fell 39 per cent from a year ago, yesterday’s report showed.

The value of home building and renovations approved in June plunged 18 per cent from a year earlier, the agency said. The value of non-residential approvals declined 7.4 per cent. — Bloomberg

A disgruntled buyer of a New Zealand waterfront property has moved to wind up the company that sold it to him.

Mr Roy Titchmarsh, 58, who bought the apartment a year ago when it was marketed here, said he is owed about $70,000 in guaranteed leaseback returns.

The Briton noted that the company, Wensley Developments, returned to Singapore two weekends ago to market yet another Queenstown property, The Marina.

Mr Titchmarsh, who is chief operating officer of a ship management company, said he bought a Wensley property called The Club in Queenstown. He did not want to say how much he paid.

He added he had a deal with a sub-company called Wensley Developments The Club which agreed to lease the apartment from him for two years and guaranteed him a 13 per cent annual return. ‘I received the first payment, but soon after that, the payments stopped. The name Wensley Developments The Club was also changed to New Zealand Resorts,’ he said.

‘Because I had an agreement only with Wensley Developments The Club, I had no guarantee under the new company name,’ he added. He said that Wensley Developments The Club went into liquidation last November and he was told he could not claim any money.

He got lawyers in New Zealand to send Wensley Developments two statutory demands for payments. When it missed the deadline of the second, winding-up proceedings were lodged against the company.

Contacted by The Sunday Times, the New Zealand-based Wensley Developments said it started suffering financial difficulty when the recent credit crunch hit. According to Mr Greg Wensley, one of the directors, the company has ‘experienced trouble arranging enough funding for normal needs’.

Mr Nic Soper, Mr Titchmarsh’s lawyer, said six other clients have issued statutory demands against another sub-company, Wensley Developments The Shore. All the clients are from outside New Zealand.

He added: ‘Winding-up proceedings have been lodged against Wensley Developments Limited and Wensley Developments The Shore in respect to unpaid guaranteed rental.’

An online article last month in a New Zealand paper, The Southland Times, said Wensley Developments is NZ$23 million (S$21 million) out of pocket after buyers reneged on payments for apartments in Queenstown.

Mr Wensley said that along with ‘our financiers, we are committed to honouring our commitments’.
He added that Mr Titchmarsh is ‘one of two that we have not been able to reach agreement with at this stage, although negotiations are ongoing’.

‘We owe him three months of rental payments. He now receives directly the income that is earned from the sub-lease of the apartment,’ he said.

Mr Titchmarsh claimed he is not getting this payment at all.

Mr Wensley added that new customers will receive their guaranteed returns or leaseback payments upfront in full.

Wensley Developments marketed five developments here in the last eight years. It is not known how many apartments were bought by Singaporeans.

The apartments cost between NZ$350,000 and NZ$3.45 million.

Source: Sunday Times, 21 June 2009