NZ Property Investor May 2017

FINGER ON THE PULSE Over the past few months, commentators have been certain that March’s market data would finally reveal whether we are seeing either a sustained slowdown or a speed bump before further value increases. Many pointed out that it was March last year when the market started to pick up following the last round of LVRs in 2015. But the March data is in and the answers we were hoping for haven’t transpired; listings are up, but so are prices and sales. The data suggests complexity in the market – particularly in Auckland. Consequently some commentators are suggesting that the lack of definitive answers means the market has changed direction. But many investors probably aren’t too fussed by the confusion – there are so many different data providers…

Developed in partnership with the Reserve Bank, it is already being used by the Reserve Bank’s forecasting and macro financial teams plus the major banks. The HPI aims to provide a greater level of detail about housing activity and values over time to a higher standard than anything else available in New Zealand. It does this by analysing how prices in a market are influenced by a range of attributes. These include land area, floor area, and number of bedrooms. The HPI also uses unconditional sales data (when the price is agreed) rather than settlement data which often comes weeks later. REINZ CEO Bindi Norwell says the HPI is “the gold standard” in New Zealand house price analysis tools. “It takes many aspects of market composition into account, and thus…

Auckland mayor Phil Goff established a Mayoral Taskforce on Housing Supply earlier this year in a bid to find solutions for the Super City’s housing crisis. But the workings of the Taskforce have largely been behind closed doors - until a panel of experts, including two Taskforce members, was recently convened to lead a discussion on the relevant issues. Despite divergence on some points, the panel agreed that central government involvement and infrastructure funding solutions will be critical to ensuring the Taskforce is more than just a talkfest. However, the discussion also revealed that for any proposed solutions to prevail there needs to be a widespread change in attitudes – towards Auckland, medium density housing, infrastructure thinking, and the design of neighbourhoods. Ockham Residential chief executive Helen O’Sullivan, who is…

The agency’s latest Auckland Residential Development Report has found that 2770 apartments are due to be completed in 2017, which is the most since the 2005 peak. Another 3840 apartments are set to be finished next year. Colliers International spokesperson Alan McMahon says the peak comes despite constraints on the sector, which include increasing building costs and a tight labour market. “There’s no doubt it’s a challenging time for residential development, but confidence within the sector also remains high.” He says the biggest headaches for developers are project costs and construction industry capacity. “Building prices are up and projects are being pushed out in duration. There’s talk of easing those pressures with prefabrication and the large-scale use of imported skills, but so far no significant improvement is evident.” One solution…

It is widely accepted that the dictates of Australian parent banks have already led to a tightening up in the lending of their New Zealand subsidiaries. But it is likely that further tightening is yet to come in certain lending areas. One such area is interest-only loans. Australian banking regulators recently limited the flow of interest-only lending by Australian banks and experts believe there could be a knock-on effect on interest-only lending in New Zealand. Massey University banking expert David Tripe says the New Zealand banks tend to take their cue from their Australian parents. “As they have been told to tidy up their act, there is likely to be some implications from that here.” While Tripe doesn’t believe interest-only lending in New Zealand is the problem it is in…

1 Market slowdown different this time Interest rate movements mean that this time round the post-LVR cooling of the property market is different, ANZ economists say. We examine ANZ’s latest Property Focus report which takes a close look at the potential longevity of the current slowdown in the property market. 2 When to worry about meth Landlords are being told they need to be careful what they believe when it comes to meth contamination of rental properties. For example, there are widespread concerns the new health and safety legislation means landlords will need to do meth tests between tenants – or they could be accused of renting an unsafe property. 3 Bright line test dents flipping Big profits are still being made by flipping properties but commentators say the bright…