Spending up in Palmerston North, but down in Manawatu District

By GRANT MILLER - The Manawatu Standard

Spending in Palmerston North is up, but down in Manawatu District after a dairy payout drop.
Core retail spending in the city was up 5.5 per cent in the July quarter against the same quarter last year.
In the Manawatu District, it was down 7.1 per cent after low international prices and the exchange rate pushed dairy company Fonterra to forecast a reduced payout ahead of this season of $4.55 per kilo of milksolids.
The spending difference is also marked in the total spending measure, which includes motor vehicle sales and servicing, according to statistics supplied by Palmerston North City Council.
Total retail sales in Palmerston North were up 0.5 per cent in the quarter, compared with the same period last year, but down 13.1 per cent in Manawatu District.
Total spending in the city and district was $475.9 million in the quarter, down 1.3 per cent on last year.
The most recent figures for Palmerston North show buyers are picking up properties quicker. The median number of days to sell a property dropped below 50 in the three months to April, falling to just 26.
However, the number of sales fell from 425 in the May quarter to 380 in the August quarter, according to the Real Estate Institute.
City council economist Peter Crawford said house sales volumes had been slowing since a burst of activity in March and May. The market could be constrained by lack of supply.
According to the Real Estate Institute, the median price for a farm in the Manawatu and Wanganui region in the August quarter was $1.275 million down from $1.86 million.
The median price for a lifestyle block in the region dropped from $345,000 to $330,000.
However, farm and lifestyle block prices appeared to have increased in the past month.
Median prices in the August quarter were higher than for the three months to July this year.
Motor vehicle-related spending in the city and district was down 11.7 per cent.
More guests were staying longer in Palmerston North commercial accommodation, but there was a decline in Manawatu District.

Is the first offer the best?

Often we hear the first bite of the cherry is the best, and this can be true on many occasions. However reading the market and taking advice from your trusted agent is crucial.

At present the Palmerston North Real Estate Market is really humming along in all price sectors so being hasty may not be the best strategy.

Exposing your property to a good solid and well prepared marketing campaign could mean the difference to thousands of extra dollars in your pocket. With a little patience allowing time for all prospective buyers both passive and active to be view your home will create competition should there be multiple interest.

The extra time with the marketing of your property exposing it to these passive buyers will pay off - these are the people who are not in market to purchase but fall in love with it at an open home and just have to have it - Generally they pay the most.

Marketing is like fishing with a net, the bigger the net the more fish you catch.

My advice is to at a minimum have a least one open home before accepting offer.

Barry McKean
Bayleys Residential Specialist

UK Preview a great place to market

The Palmerston North property is attracting a high number of ex-pats and new immigrants. The large employers such as Massey University and Mid Central Health are some of the key components for these people deciding on good old Palmy as their new home base.

Bayleys have recognise that in the current work climate, these many ex-pats are planning to return to New Zealand and in addition, British citizens are now an increasing proportion of our immigration population.

Bayleys have invested considerable resources in promoting our publications and website in the UK, by both hosting and attending expos and farming seminars within the UK and recently through the opening of our Bayleys office in London.

As a result, Bayleys have a major presence within the UK market and subsequently have had many successful sales from this exposure. Bayleys can also provide clients with access to our unique resources through our international alliance with Cushman Wakefield.

Our next UK Preview magazine is released on the 10th October with 5000 copies being distributed to those attending the opportunities expos in London and Manchester.

If you would like your property exposed to the world at a very affordable marketing investment ie Eight Page is just $150 plus gst either call me at Bayleys Palmerston North or Email

Barry McKean

Bayleys Residential Specialist

Do you buy or sell first?

Wow you thought buying your first home gave you a workout, wait until you buy your secondhome! There’s twice as much to think about, this time round as you’re not just buying but also selling. To make matters alittle more interesting, matching those possession dates so that all parties involved moving schedule coincide can also add to the complicity.

You only have two options – buy first or sell first. Both scenarios have pros and cons.

Selling first has lots advantages. For starters, you’ll know exactly how much you’ll net after your sale is complete which will help determine the price range you reinvest into. Selling first will also enable you to make a much stronger offer as you won’t have to make it conditional upon selling your current home.
On the downside, you will only have a limited amount of time to find your next home unless you decide to rent. As a result, you may settle for something that’s less than perfect or paying a premium for a property that has everything you want but that’s over priced. You may also have to be flexible when it comes to moving dates.

If you’re buying a very specific property that only comes up once in a while, you may want to consider buying first and arranging a longer settlement so that you have lots of time to sell your home. Of course the pressure well be on so you’ll want to price your home at a price that will attract lots of buyer interst immediately. Arranging some additional finance can also give you a bit more flexibility for the settlement.

The market will help you determine whether buying or selling first is your best option. In a buyer’s market when there’s lots of selection, people generally prefer to sell first so that they have a bit of breathing space. In a seller’s market when homes are harder to find and go quickly once they become available, it’s preferable to buy first. One thing’s for certain though, get some professional advice from the team at Bayleys real estate before you make the decision.

Barry McKean
Bayleys Residential Specialist

Preparing For a Successful Open House

When you’re preparing your home for an open house, do a walk-through each room. Place things such as photos and items that have sentimental value but don't add to the decor out of sight of buyers. Reading material and other things that tend to make the room look cluttered are also better kept tucked away.

This will also make prospective buyers feel less like they are intruding into someone else's home. Rather, they’re more likely to feel as though they are going through THEIR new home. Shallow, wide boxes that fit under the bed are great because they can be stored out of sight. Items placed in them are easy to locate: there's no need to dig through a deep box to find what you are looking for once your home has been sold.

If the plants in your garden aren't flowering at the time of the open home, go to the supermarket and purchase enough flowering annuals that can be set among the greenery of your flowerbeds to give the impression of a blooming garden. It may just be that the open home falls at a time when your plants are not at the right stage to bloom. Flowering annuals are just a suggestion but set the stage well for first impressions. Of course, make sure the grass is cut the day before the open house.

It’s amazing what a difference a coat of fresh paint can make to improve the appearance of a room. It will not only look better but it’ll smell better too. Some strategic painting outside can also make a difference far beyond the effort and expense involved.....something to think about.

Baking bread or biscuits just before the open house will leave a pleasant aroma that will remind people they are in a "home" rather than a house. Remember, the sense of smell is a powerful tool which can work for or against you.

Finally, you may choose to have on offer some tasty treats while prospective buyers are viewing your home. It's surprising how your property will stand out with this point of difference if buyers are looking at a lot of other properties on the same day.

Barry McKean
Bayleys Residential Specialist

A shortage of houses?

By ANZ chief economist Cameron Bagrie

There’s no shortage in housing across the country. Rising migration and population growth mean current consent issuance isn’t keeping pace with demand, but there is enough excess supply from previous years to cover the imbalance.

Regional data reveals excess demand intensifying in Auckland, but areas outside of the main centres have an overhang of supply. There is widespread talk of a shortage of housing, and this has been used as one justification for house prices moving up. ANZ believe that much of the commentary in relation to the housing supply misses a key point in terms of the housing market correction. This cycle is concentrated as a land price adjustment as opposed to a physical housing story. The majority of the price appreciation of the boom appeared in the former, and while land may be in a limited supply in Auckland, this is certainly not the case nationally.

But, ANZ nonetheless feel the need to respond to the analysis presented in relation to the housing supply, particularly to it driving up housing prices and creating a “mini-boom”. Building consents have collapsed to levels last seen in the 1960’s. The number of dwelling consents issued in the last three months ran at a rate of 14,000. Yet, net migration has accelerated to an rate of 26,400. Throw in a population growth of around 35,000 a year and applying the average household size, suggests there is a demand for over 20,000 new dwellings over the next 12 months.

Based on this it’s easy to see that an excess demand situation for housing. On the face of it, it would apply an upward pressure on house prices. Indeed there have been anecdotes lately that new listings have been getting scarcer. The rebound in the number of house sales has resulted in a lower market ‘inventory’ from the equivalent of over 12 months sales at the end of last year to less than 8 months currently.

So are we really heading for a housing shortage crisis? To answer this, it’s important to distinguish between the flow and the stock. Based on recent flows, there is no doubt that excess demand exists, but we need to take into account the fact that this comes after several years of excess supply.

The upshot - there is no housing shortage nationally. A simple snapshot of one year of demand relative to supply is too simplistic; you need to look at the cumulative picture over several years. There has been enough excess supply in the past few years to absorb the rising demand for housing in the short term.

So what about the limited number of listings? We suspect this is due to the broader de-leveraging dynamic across the economy. When you buy a property, the tendency is to trade up and typically take more debt. This is where altered lending appetites and reduced job security could be playing a role. In this environment, the bias is to stay put. In practice this should influence supply (listings) and demand (the decision to buy). Hence, we shall be paying close attention to prices, which should remain capped if this dynamic is at play.

Bary McKean
Bayleys Residential Specialist

Mortgage borrowing strategy

by ANZ chief economist Cameron Bagrie

While the housing market is recovering, it is off remarkable lows, and in itself is insufficient to alter our favoured borrowing strategy – which is being patient and taking advantage of low six month rates.

Our view is that aggressive competition for deposits is keeping pressure on borrowing rates. With the Rerserve Bank of NZ ‘telling’ banks to get more funding in place, there will be two broad consequences.
First, competition for deposits will remain intense, particularly for term funding. This will keep the curve steep. If depositors are being rewarded, then of course, the borrowers have to pay.

Second, this will remove the temptation for banks to fund aggressive demand for credit by issuing short-term debt, as was the case during the previous upswing. Reduced fuelling of the housing market via aggressive credit demand (and supply) should reduce the need to raise the Official Cash Rate as aggressively over the next cycle.

Collectively, these are key structural issues that impact heavily as we weigh up the relative attractiveness of different borrowing rates.

In this environment, coupled with intense political pressure that is being placed on the financial services industry, we maintain our bias towards short-term rates, the six month rate in particular.

Barry McKean
Residential Specialist