CoreLogic link on property

http://www.corelogic.co.nz/news-research/item/goodbye-election-hello-new-government/

Good reading from this link

Another happy client

Another happy client...Chris Turner, and this is the link to his business. 

www.balancedsuccess.co.nz

New Trustee legislation

Follow this link for the latest news on Trust legislation

https://www.stuff.co.nz/business/money/95426589/Trusts-Act-will-leave-trustees-with-no-excuse-for-ignoring-their-duties?cid=app-iPhone

House price changes

Read the latest news on CoreLogic HERE    

New Meth contamination levels revealed

New meth decontamination levels revealed
Thursday 29 June 2017

NZPIF executive officer Andrew King

It's been a long time coming but the much anticipated new meth testing and decontamination standard is finally here – and it's good news for landlords.
By Miriam Bell
Standards New Zealand released the new testing and decontamination meth standard, which covers properties used as meth labs as well as properties where meth has been used, today.
The most significant change in the new standard is that a new contamination level of 1.5 micrograms per 100cm2 limit has been set.
Under the old guidelines, the limit was 0.5g micrograms per 100cm2.
While the draft standard released in December last year proposed a three level approach to contamination limits, the new standard sticks to a single level approach.
But it establishes clear methods for sampling and testing and competency requirements for samplers and decontamination contractors.
This is considered critical given ongoing reports of inconsistent tests and excessive decontamination costs.
The standard will also require accreditation for people carrying out testing for detailed assessments and recognised training courses for testing and decontamination operators.
Fuelled by regular horror stories about meth contaminated properties, public concern about meth contaminated properties continues to run high.
But Standards New Zealand manager Carmen Mak said the new standard will address concern on the safety of occupants in houses where meth has been detected, as well as providing a benchmark to those in the industry.
"Application of the standard will provide assurance that activities such as screening, sampling, testing, assessing, and decontamination of contaminated properties, and disposal of their contents, are carried out in accordance with good practice."
The new standard is a huge step forward and will allow New Zealanders to better manage the risks of meth in residential properties, Building and Construction Minister Nick Smith said.
"It will give people greater confidence and certainty, will result in hundreds fewer properties having to be vacated and save millions in unnecessary decontamination work."
Smith added that the new standard is also an important part of the Residential Tenancies Amendment Bill (No 2), which is currently making its way through Parliament.
The bill, which is intended to allow better management of meth contaminated properties, would give landlords the right to test for meth and enable tenancy agreements to be terminated when levels are unsafe.
NZ Property Investors Federation executive officer Andrew King said it is great that meth contamination limits have been increased to more realistic levels in the new standard.
He hopes the new levels will help to calm the fear surrounding the spectre of meth contaminated properties, but said that there is still a widespread lack of understanding of the whole issue.
"For many people, including Tenancy Tribunal adjudicators, any level of contamination is toxic. That is not the case. The new 1.5 level is conservative – and it is safe. There are likely to be higher levels on bank notes."
"But the government should run a public education campaign on the new standard so that people learn how the levels are established and what they mean."
King, who was a member of the meth standard committee, said the fact that testing accreditation will be required should address concerns about inconsistent tests and cowboy operators.
"The new standard means everyone will know what they have to do and how to do it. It provides greater clarity, more consistency and more reassurance to what has been a confused area."
In a statement, the Real Estate Institute of New Zealand (REINZ) said that the lack of a national standard has led to scaremongering and mis-information for members of the public around testing and decontamination processes.
"The new standard will give property owners, landlords and property managers more confidence around test results which will help protect the health and safety of occupants.
"It is a big step in the right direction towards gaining certainty around whether a property is contaminated and, if so, how it should be decontaminated."

CoreLogic house price update May 2017

    Click the link to YouTube                       https://youtu.be/B0mfO5bIcfI

Welcome back - Paul Tozer

Tauranga Real Estate and local real estate icon Paul Tozer are now up and running.

www.taurangarealestateltd.nz

Auckland house prices

Auckland values no longer dropping
06 April 2017

Jonno Ingerson, Head of Research, CoreLogic NZ Ltd.

I'm surprised.

I'm surprised because the latest monthly QV house price index shows Auckland values rebounding ever so slightly. After peaking in November at an average value of $1,051,387 they then dropped 0.7% over the next three months to $1,043,680 last month. I expected that gentle decline to continue, instead values bounced back fractionally.

Why am I surprised? I have been talking about how any decline is likely to be shallow and short-lived thanks to continuing low interest rates, a desire of investors to keep investing, and high net migration keeping pressure on the growing under-supply of housing in Auckland.

I am surprised because other measures of activity in the Auckland market have dramatically slowed over the past couple of months.

Our measure of buyer demand has been very weak ever since the RBNZ's announcement of more lending restrictions hit the streets last July.

That low buyer demand translates into fewer sales, and in February the number of sales in Auckland was the lowest for any February since 1993! Lower than in the years following the GFC in 2008 – 2010.

Lower sales activity is almost always joined by values slowing considerably or even dropping.

Then there is the growing number of listings. While new listings in Auckland have been at about normal seasonal levels, the low number of sales in recent months has meant that the total number of properties for sale in Auckland has grown to the highest level for three years. More choice for buyers also tends to mean less upward price pressure.

Furthermore our buyer classification data has shown a dramatic drop in first home buyer activity in Auckland. First home buyers usually pay a premium over other buyers as they fight hard to secure a property they love. Fewer first home buyers, along with the cash investors who remain in the market and tend to pay under the odds, should be causing prices to fall if the market was following the rules.

Adding to the strain, some of the bigger banks have also tightened their lending criteria far beyond what the RBNZ is requiring of them, making mortgages much harder to get for many buyers.

I had also expected that buyers would be starting to sit back and wait a bit – what with autumn now upon us and the heated policy debate around housing and migration ahead of the spring General Election.

But despite all those things that I thought would have caused Auckland values to keep sliding, they have instead held firm. I was confused and I live and breathe property.

This needed a bit more digging.

I was probably premature in suggesting that the impending election will give home buyers and home owners the jitters. I still think that will happen, but probably only once the election campaigns really ramp up in a few months. We will be into winter by then, which is typically a quiet time anyway.

There are also different patterns emerging across Auckland. The most recent data has seen North Shore and old Auckland City bounce back up, while Manukau and Waitakere continue to slide. Meanwhile, the fringe areas - Rodney, Papakura and Franklin - have just slowed their rate of increase rather than showing any sign of dropping.

Manukau and Waitakere have tended to be stronger first home buyer areas, so with those buyers less active declines in those areas are therefore not unexpected.

North Shore and Auckland City, especially at the mid-range of $800k to $1.5m, have shown more resilience than the top and bottom ends of the market. Likely the buyers active in these markets are less impacted by lending restrictions.

Across the rest of the country, the lending restrictions have not hit as hard as they have in Auckland.

Values in Hamilton had fallen 3% since late last year, but like Auckland, that decline has halted. Part of that initial decline will have been due to a reduction in the number of Aucklanders investing in Hamilton. That had reached a peak of 17% of all sales in the city in late 2015 but with increasing values in Hamilton making the investment equation less attractive, plus added difficulty in securing mortgage funding, that proportion of Auckland investors has fallen back to 11% of all sales.

Tauranga went from rapidly increasing values last year to being flat for the first couple of months of this year, and has now begun to creep back up again. Again there is a high percentage of Aucklanders purchasing in Tauranga, some for investment, but more for moving there. That has not eased, but the ready supply of money for those Aucklanders will have slowed a little.

Christchurch dipped in the latest month but it is too soon to tell if that means anything. The market there is more finely balanced than the other main cities following a period of strong value growth after the 2010 and 2011 earthquakes. A reduction in demand and mortgage credit may well lead to slowly dropping values in Christchurch in coming months.

Wellington and Dunedin are still increasing, just ever so slightly slower than previously. Wellington is experiencing a housing shortage, both for owner occupiers and renters. First home buyers are also very active in the more affordable fringe areas.

All this begs the question as to whether the Reserve Bank's lending restrictions have either not worked, or have worn off already.

Bear in mind that the Reserve Bank is not specifically trying to lower house prices. They are trying to protect the banks and the wider economy against any potential significant correction in house prices. Making sure that borrowers have larger deposits, and that lending is more prudent are two ways of achieving that. The Reserve Bank's own stats show that lending to investors has dropped by 35% since the introduction of the restrictions. Job done there.

As for house prices dropping? Well there may be a more lasting impact in Waitakere and Manukau, but elsewhere it looks like we are back to increases. At least for the time being.

As the Reserve Bank said just prior to announcing the restrictions, slowing down the housing market would take a combination of things including increasing interest rates, lower migration, looking at tax treatment for investors, but the biggest influence would be massively increasing housing supply. Other than interest rates, those are not things that the RBNZ can directly influence. Furthermore, none of them have materially changed.

Consequently, the strongest forces that have been pushing up house prices are left to do their job. Yes demand has been reduced, and yes supply is up a little. But not enough. Interest rates, while they have risen slightly, are still low enough to not cause pain. Ultimately we have too many people for the number of houses, and until that is resolved it is difficult to see values dropping.

Should I really be surprised then that values haven't continued to drop? Perhaps not.

Interest rates in 2017

Mortgage rates have risen across the curve since the ASB November's Home Loan Rate Report. NZ interest rates are generally affected by a combination of the RBNZ's Official Cash Rate (OCR), offshore interest rates and banks' funding environments. While the OCR has remained at a record low, offshore interest rates (especially in the US) have lifted by more than we expected. At the same time, deposit growth has slowed relative to lending growth. As a result, not only are banks competing to attract and retain deposits (putting a floor under interest rates), banks are having to finance this funding gap in relatively more expensive offshore markets. Despite this, mortgage rates remain low relative to historical averages and current "specials" are even lower for most term rates. We expect the RBNZ to leave the OCR on hold until late 2018. As the OCR is one factor influencing floating and shorter-term fixed mortgage rates, we are not likely to see the floating mortgage rate and short-term fixed rates decline any further this year. Further, higher funding costs and increasing global interest rates could see further (but modest) upward pressure on shorter-term interest rates. Upward pressure on longer-term mortgage rates is likely to be slightly more pronounced. Longer-term rates are more heavily influenced by offshore developments, particularly in the US. US interest rates responded strongly to Donald Trump's proposed policies and have risen sharply in the months following his election to the US Presidency. This has flowed through to New Zealand long-term interest rates. We expect US rates to remain elevated, and as a result, expect to see further upward movement over time in NZ's 3- to 5-year fixed mortgage rates. The RBNZ's LVR lending restrictions and borrowers The RBNZ introduced a third round of LVR restrictions on 1 October 2016. Nationwide, investors are now required to have a 40% deposit and owneroccupiers (O-Os) are required to have a 20% deposit. Only 10% of O-Os loans can be permitted with a deposit of less than 20%. As a result, the practice of offering "specials" or lower rates on lending with equity in excess of the LVR restrictions is likely to remain in place. Borrowers should monitor these "specials", and discuss the options with their mortgage providers when deciding what to do with their mortgage. Identifying the best strategy Personal preferences for certainty and flexibility are also important when choosing a mortgage.

Source ASB Home loan report 2017   Kim Mundy ASB Economist

Reserve Bank reduces OCR

The Reserve Bank has dropped the OCR rate by 25 basis points to 1.75%

The BNZ and Westpac have advised that they will not be cutting interest rates at this time as the cost of overseas funds are volitile.

Reserve Bank Holds rates

The Reserve Bank left the Official Cash Rate at 2.0%.

House Price inflation remains excessive, posing concerns for financial stability. There are indications that recent macro-prudential measures and tighter credit conditions in recent weeks are having a moderating effect.

Monetary policy will continue to be accommodative. Our current projections and assumptions indicate that further easing will be required to ensure that future inflation settles near the middle of the target range.

Reserve Bank cuts OCR to 2%

The Reserve Bank cut the OCR by 25 basis points to a new record low of 2.0% this morning.

It pointed to weak global conditions,ongoing low inflation and the high New Zealand dollar as the reasons for its move.

As such, the Reserve Bank said monetary policy will continue to be accommodative- and further cuts to the OCR are likely to come.

Kiwisaver House Caps Change

Housing Minister Nick Smith has announced effective today Kiwisaver house price caps would increase by $50,000 accross the country.

They are now $600,000 in Auckland,

$500,000 in Wellington, Christchurch, Hamilton, Tauranga, Queenstown and Nelson-Tasman.

$400,000 in all other areas.

In Addition for new build properties the caps increase another $50,000, i.e $650,000 for Auckland, $550,000 inWellington,Christchurch,Hamilton,Tauranga,Queenstown and Nelson-Tasman.

$450,000 in all other areas.

In addition Income caps have raised to $85,000 for a single buyer or $130,000 for two or more buyers.

Reserve Bank targets investor lending

All major Banks have followed the Reserve Banks directions and have instigated a LVR ratio of 60% on residential property investors (i.e. a deposit of 40%).

The LVR to owner occupiers is 80%. This is nation wide.

Loans that are exempt from the existing LVR restrictions, including loans to construct new dwellings, would continue to be exempt.

Future OCR cuts dependent on inflation

New Zealand's economy is trucking along nicely - and yet inflation continues to evade the reserve Bank's target level,according to several new reports.

Despite continued weakness in dairy prices, the tourism and construction sectors are boosting economic growth to the point that HSBC has raised their GDP growth forcast from 2.4% to 2.6% in 2016.

Despite this, the Reserve Bank still faces a challenge in getting inflation up to it's near 2% target. The subdued inflation outlook indicates further scope to cut the OCR to 2%, largely due to the resilient strength in the NZ dollar.

LVR restrictions stopped $20 Billion of lending

The Reserve Bank governor Graeme Wheeler says the LVR( Loan to value Ratio) restrictions introduced by the bank have been "very successful".

He says the restrictions have stopped about $20 Billion of highly leveraged lending since they were introduced.

Before they started around 21% of lending was  with an LVR of over 80%, now it is down to 13%.

Wheeler said further LVR changes for investors is one of the scenarios the Reserve Bank is currently looking at.

According to the bank property investors account for 46% of lending in Auckland and around 40% in the rest of the country.

Official Cash Rate Left Unchanged

The Reserve Bank yesterday left the Official Cash rate unchanged at 2.25%.

Mortgage Lending Data

New Reserve Bank Lending data shows total lending of $6,504 billion in April was slightly down on March's $6,572 billion.

Of this $3,536 billion went to Auckland borrowers and $2,968 billion went to non-Auckland borrowers.

Investors accounted for $2,386 billion of April's new lending.

First home buyers borrowed $789 million in April.

More on Hamilton Prices

Property investors have become - by far - the biggest buyers in the Hamilton housing market.

And nearly one in three of those is coming from Auckland.

Figures from property analyst Core Logic show in the past year almost half of all those buying property in Hamilton are those who already own other properties.

First-home buyers and Auckland investors were neck and neck in buying houses in Hamilton in the third quarter of 2015.

First home buyers stood at 18.2 per cent, only just ahead of 17.4 per cent for Auckland investors. Add in the other investors on 30.5 per cent and you have a total investor market of 47.9 per cent.

Hamilton houses trumping latest council CVs

Just seven months after new valuations were set for Hamilton homes,some are already fetching up to $205,000 above those figures.

Hamilton City council revealed an average increase of 21.4 per cent on Capital Valuations in November last year, compared with the last time they were set in 2012.

Real Estate Institute figures for March show the median house sale price in Hamilton rose to $472,000 from $350,000 year on year.

What's happening with Mortgage rates?

The consumer price index (CPI) rose 0.2% in the march quarter, after a fall of 0.5% in the December 2015 quarter.

Most inflation measures picked up, suggesting inflation may have bottomed out but it is still very weak, well below the bottom of the 1% to 3% target of the Reserve Bank.

That would normally prompt the bank to cut the cash rate to try and stimulate inflation. But on the other hand, real Estate Institute data shows house price inflation has picked up substantially after what seemed to be a slowdown earlier in the year.

Economists said an OCR cut was still likely but might be pushed further out by the news.

Auckland Prices Up In March

Ongoing lack of supply has started to push Auckland's prices up again,Barfoot & Thompson says.

The average sales price rose by 5.4%, from $822,024 in February to $866,782 in March.

The number of houses sold in March was up 92.1% from 698 sales in February to 1341 sales in March.

The lack of supply continues to be the main driver- at the end of March listings were down 6.8% on February according to Peter Thompson.

Apartment Takeover of Auckland?

Over 50% of new builds in Auckland will be "attached" predicts architecture research company RCG.

This is a considerable shift from the average of the last 20 years, which has been closer to 35%.

In RCG's view,demand for medium density living is set to boom in Auckland as it has in Australia, where at least 60% of new homes are attached in the three largest cities.

Rising house prices, an aging population, shrinking household sizes and record migration levels are believed to be behind the move to attached home living.

Reserve bank drops OCR

On Thursday, March 10th the RBNZ cut the OCR to 2.25% citing a myriad of concerns particularly around weaker world conditions and lower inflation expectations.

The Bank's are in the process of adjusting their mortgage rates with the drop in rates usually not reflecting a full .25% cut.

Reduction in the Official Cash Rate (OCR) by 25 basis points

The governor of the Reserve Bank today announced the reduction in the Official Cash Rate (OCR) by 25 basis points to 2.75 percent.

The reduction is warranted by the softening in the economy and the need to keep future average CPI inflation near the 2 percent target midpoint. The governor also advised that some further easing in the OCR seems likely depending on the emerging flow of economic data.

HLANZ comment: This reduction has been factored in by some banks that reduced some of their rates last week. The response of the remaining banks will be interesting over the next few days.