to Valu in Review for September 2004. This is a summary of news articles in the press over the last month. We hope you

Read, learn, enjoy ...

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The government has indicated that it may become compulsory for new houses being built in the colder regions of the country to be double-glazed within the next three years. This would add another 25% to 30% to the cost of windows in new houses.

Solar heating could also become compulsory.

Both measures are being considered in the current review being undertaken of the building code.
 

The Reserve Bank increased the rate, as widely expected, this month. The expectation from economists is that there will be at least one more interest rate rise before the end of the year and possibly two. If this is the case rates could well increase to a floating rate of 9% by the end of the year. If the rate does reach 9% this would mean that the cost of servicing a $100,000 mortgage has risen by $34 a week since January of this year ($1,750 pa.).

It is believed that many homeowners/ investors will not feel the increase in rates for 18 months or so. This is due to the fact that about 70% of mortgages are at fixed rates, and of those on fixed mortgages about 80% are for 2 years or less. It is believed that the average mortgage interest rate for fixed mortgages of 1 or 2 years is currently 6.9% (the current floating rate is approximately 8.5%)

Overall the economy has not slowed down as many predicted, despite the growing strength in the NZ dollar, migration numbers falling and the increasing interest rate all adding to inflationary pressure. It is expected that by the middle of next year inflation will be running at 3 %, which is at the top if the range that the RBNZ has imposed.

The next review of the Official Cash Rate is on October 28.
 

The Government is looking at changing the way the Act works in regards to projects with a national significance (especially infrastructure project) to give the Government greater input. There will also be the ability for the local council and developers to refer the project to an overall board of inquiry for major decisions

The Environment Court will only be used to hear matters in dispute as opposed to hearing the whole application and local Councils will need to keep a register of the local Iwi and the claim to their tribal areas.

It appears that the changes do not address issues at a smaller development scale of costs and delays in the RMA process.
 

Changes in the Building Act designed to protect the end consumer, which take effect early next year mean that private firms/ certifiers have effectively been excluded from doing the work.

The work will pass back to the local council. This comes at a time when many councils around the country are struggling with the current workload. It could also see an increase in both the time to obtain the certification and an increase in the cost of that certification.
 

After the series of floods this year, and the Government contributing millions of dollars to help uninsured homeowners (in some instances 60% of homes flooded had no insurance), the Government is considering reviewing the way the Earthquake Commission works (to beyond just covering storm and flood damage to residential land). This would need to be funded and a levy on property rates has been offered as a possibility.
 

Nationwide research undertaken by Massey University has shown that three years is the average period of time that the majority of investors have owned their investment (based on 889 surveyed).
 

August 2004 was $247,000. This was up almost 15% on the same period last year (but down $2,000 on July 2004).

On a seasonally adjusted basis the growth of house prices for the third quarter of the year is all but zero.
 

In Auckland the shortage of tradesmen has seen the progress on one development of 10 dwellings take longer than what Housing NZ would like. This comes at a time when there is a long list of households (609) needing housing in that area with 302 considered high priority for housing.

Figures recently released show that there are 202 State tenants with net incomes in excess of $50,000 p.a.
 

The Government will give $10m for flood protection as a result of 5 major floods in the last 20 odd years.

The flood management plan was designed to look after the area as a whole. It included flood control measures such as stopbanks but also pest control to prevent erosion and slow down floodwater run off in the upper catchment area, as well as moving flood prone dwellings.
 

A report released by the above council’s shows that people in the area are looking to buy in more affordable areas such as Katikati and Te Puke. This move is not specific to one demographic. There has also been a move to apartment style of living as well.
 

The Hastings District Council is introducing a $15 fee for all property queries. The Council has found that people are foregoing the LIM report ($150) to gain their own information on properties that are investigating.
 

Housing New Zealand and Christchurch City Council are close to signing a contract that would see them provide a 24-unit housing development in Richmond. This was the first of three “social” housing projects that the Council was considering.