to Valu in Review for January 2005. This is a summary of news articles in the press over the last month. We hope you had a great break and that you now….

Read, learn, enjoy ……..

…….. and happy investing!

 

The AMP quarterly home affordability index to the end of December 2004 continues to show it is harder for first time homebuyers to afford their first home. This is primarily a result of the interest rate increases last year, wages not keeping up with the cost of ownership, and the fact that house prices have increased 46% since 2001. For example a house worth $178,000 in 2001 is now worth $260,000.

Meanwhile the Housing Minister has indicated that there will be assistance to young, low-middle income families with children in the up-coming budget to get them into their fist homes. The plan is expected to cost tens of millions and assist 10,000 families in a “seriously expanded” new initiative (as opposed to the current arrangement with Kiwibank) according to Mr Maharey.
 

According to Massey University rents in the private sector last year remained stable. The national median rent was $245. In most areas the median rent is at the same levels they were a year ago. One region that is the exception is Tauranga where rents increased by 13%.
 

For the period ended November 2004 the number of residential building consents has continued its downwards trend over recent months (for both houses and apartments). The trend has been for a decline in the number of consents issued since December 2003 following the peak in March 2003.

House sales to end of December 2004. The national median house price has remained relatively stable at $260,000 and up from the December 2003 figure of $229,000 (based on sales of 107,009 for the year). The month saw a small fall in actual volume when compared to December 2003 (down approx. 4% from 8,703 to 8,377). It is believed that the November and December figures may have been impacted on by the banks interest rate war on 2-year rates assisting to increase volume.

Region	November 2004	December 2004
Volume of Sales in NZ	9,502	8,377
Northland	$214,000	$221,500
Auckland	$354,000	$352,000
Waikato, BoP, Gisborne	$230,000	$232,000
Taranaki	$166,500	$186,000
Manawatu, Wanganui	$149,000	$150,000
Hawkes Bay	$236,750	225,000
Wellington	$281,750	$276,250
Nelson, Marlborough	$285,000	$265,000
Canterbury, Westland	$225,000	$231,000
Otago	$193,000	$200,000
Southland	$142,000	$138,000

Dr Bollard of the Reserve Bank of New Zealand left the official cash rate unchanged at 6.5% in his January review. The next review is in March. Interest rates are therefore likely to remain unchanged.

The economy is expected to slow down in growth (growth rate of just over 2% is expected) over the upcoming year. This is caused by the interest rate increases of last year taking effect, reduced immigration and the high NZ dollar are expected to slow consumer spending.

Inflation was running at 2.7% annually as at the end of December, the highest for 2 years.
 

Changes to the consent process take effect from March will, in the short to medium term, make it difficult to manage the construction process on dwellings as the building industry, councils and the new Department of Building and Housing come to terms with the new Building Act. Under the new laws the time taken to get consent is based on the value of the building (e.g. under $500,000 – 10 working days). However many councils, who are experiencing a boom in their region) are already not meeting the deadlines detailed in the Act.
 

Apartment blocks now account for about 1/3 of all false alarm call out in Auckland. This has lead to some tenants disconnecting the alarms to avoid the call out fee of $1,000 plus GST per false alarm (each building gets 2 “free” false alarms a year – one building is up to $25,000 in fines).

The frequency in the alarms going off has lead to some tenants ignoring the alarms, which recently lead to one tenant opening her door to see the corridor filled with smoke.

The Fire Service believe the frequency of false alarms is due to bad planning and the type of alarm being installed.
 

New charges from 1 February were introduced for resource consents. The levy is $4,505 plus GST. From 31 May developers/ builders will also need to pay for building consents.

These costs are on top of the current costs such as a Resource Management Act levy of $35,000 (approx. on an average property).
 

The council is currently considering the allocation of resources in its region – including water. One of the prospects being considered is metered water. Environment Waikato is currently redrafting its rules on how water resources should be allocated.
 

The council is looking to re-zone about 25 ha of rural land in Richmond to residential zoning to yield between 300-400 sections. This is to allow for the estimated 2,800 odd new houses required in the next 20 years as the region continues to grow.
 

The local council has changed its local district plan affecting those people that rent out their homes and holiday homes. Under the plan, houses rented for less than 3 months to groups of more than 4 people will be subject to resource consents of higher (possibly commercial) rates. These costs will no doubt be passed onto the renters.
 

A waterfront property was sold over the Christmas break for $1.5m. This equates to a price of $1,850 per square metre.