Local Bagpiping Talent

To be successful in any business the support & encouragement from your entire family is so very important. Yet this works both ways and this weekend my son Cameron played for a local wedding in Palmerston North what a wonderful job he did. He made a Dad very proud

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Getting the engine warmed up…

By ANZ chief economist Cameron Bagrie

Confidence continues to build especially in the metropolitan centres. Weighing against this is a further lift in fixed mortgage lending rates, with the likelihood of more to come.


Mortgage rates are heading up the higher way, with the mortgage curve continuing to get steeper, and it’s not hard to see the positive slope continuing. Three to five year mortgage rates are now above their decade averages, and it would be surprising to see too many people at all going into that part of the curve. Those who fixed two years ago at 9.1 percent and one year ago at 8.2 percent who are coming up for renewal will still be looking at decent savings even at the two year part.

What is clear is that more and more people will be heading into floating and fixed short term mortgages, giving the RBNZ the kind of traction they have not had in years. How long before the current mortgage curve starts to weigh on the housing market?

Household lending growth rose 0.3 percent in the month, which is still quite soft considering the pickup in the housing market. This suggests while new lending growth for housing is rising, a lot of people are paying down their existing debt. Confidence may be picking up, but it is certainly not translating into enough of a conviction to get out and invest just yet.

House sales rose 2.7 percent in September, to be up over 43 percent a year ago. Sales have more or less held on to this level of activity over the past six months, albeit with still an upward trend. In saying this though, the number of sales is still well down from the peaks experienced between 2002 and 2007. This better illustrated once house sales are adjusted for the size of the housing stock, which shows turnover still below historical averages.

However, putting this aside, it is still clear that a shortage of listings is continuing to support prices and ensuring a reasonably quick time to sell. The REINZ median house price rose to $350,000 in the month – up 6.1 percent a year ago. The median number of days to sell held constant at a reasonably low number of 34 days. Auckland still appears to be leading the pack in terms of price growth, with the regions median selling price rising 8.3 percent compared to a year ago.

Building consent issuance is now beginning to stabilise, although at this stage the pace of recovery is nothing to right home about and we need to remember that the level remains extremely low. Never the less, we are expecting further rises over the coming months.

With the housing market turnover improving, it is not at all a surprise to see the residential consent issuance begin to rise. There has been a strong historical relationship in the past, and we see little reason to why it wouldn’t continue in the future. The rebound in housing has a course seen wholesale swap yields rise, necessitating an upward re-pricing of mortgage rates, and it looks to be a case of the chicken and the egg between the two.

Residential property prices in NZ cities rise above last years values

Ray Clancy Emerging - Emerging Property Markets

A shortage of properties for sale has pushed real estate prices in many parts of New Zealand higher than they were a year ago, according to the latest published figures.

Values in the main centres have recovered since earlier this year and most are now above what they were the same time last year.

Auckland's residential property values for October were 2.5% higher than they were a year ago, up from the -1.1% the previous month, the data from QV shows.

In Wellington values were up 1.6%, Christchurch saw an increase of 1.3% and Dunedin was up 4.3%. Only Hamilton and Tauranga failed to improve on last year's values, down 0.1% and 1.4% respectively.

Provincial values have faired less well. With the exception of New Plymouth, Palmerston North and Nelson, all the centres are down on last year's prices.

QV valuation manager Glenda Whitehead said a shortage of properties, especially in urban areas, had led to more buyers than available properties, meaning many sold for well above expected values.

While it is clearly a good time to sell, especially in the main centres, needing to buy again in a market which has a shortage of available properties for sale will also be putting some people off,' she explained.

She added that overall market activity remained below normal spring levels. Sales numbers had remained relatively static in the past few months, and there was little evidence of a rise in new listings in most areas.

'The continued shortage of properties, especially in the main urban areas, is leading to a continued imbalance in the market with more buyers than available properties. As a result our valuers are seeing many properties sell for well above their expected values. These demand-based price increases are likely to continue until the balance in the market changes,' Whitehead said.

Meanwhile there has been a lacklustre response to the government's shared equity pilot scheme, a free financial top up scheme for modest income earners to buy properties in more expensive locations that they might not otherwise be able to afford.

Official figures show that only $1.6 million of the allocated $18.4 million has been used so far in the programme which is due to end next July