to Valu in Review for July 2005. This is a summary of news articles in the press over the last month.

Read, learn, enjoy ...

... and happy investing!

 

The average value of housing increased in value by 14.2% in the year ended June 2005 to $306,200. (13.5% year ended May 2005).

The only region that experienced a decrease in house values was Nelson (1.3% year ended June 2005).

Hamilton experienced the biggest gain in residential values, for the main centres, with an increase of 23.6% for the year ended June according to Quotable Value figures. The figures are calculated on a three month rolling average basis.

Meanwhile figures released by REINZ, for June, indicate that the national median house price has continued to increase to $284,500. An increase on June of last year of 17.1%.

However, in the 4 months to the end of June, the median house price in Auckland city has fallen 5% ($20,000) from $455,000 in March. The Auckland region median house price in June was $366,000 ($372,000 in March). Five of the 12 regions that the REINZ has NZ divided into posted price reductions in the average median price. Sales volumes are also down.

Auckland ($366,000) can no longer claim to have the most expensive median house price with Queenstown and Wanaka ($395,000) now wearing the crown.
 

ASB Bank Investor Confidence Report for the quarter ended 30 June, show Residential rental property has bucked the trend of a decrease in confidence. The majority of other asset classes have seen investors confidence reduce on the ability to produce returns. Residential property is seen as the asset class that is expected to return the best returns over the intermediate period with 21% of respondents picking this asset class.

When people were asked if they expected this years returns to be better than last years returns only 10% expected greater returns (24% quarter ended 31 March).

Inflation. For the annual period ended 30 June was at 2.8% (upper end of the Reserve Banks bracket is 3%).

Official Cash Rate (OCR). Prior to the review on Thursday 28 July, most economists were picking the Reserve Bank to leave the OCR at 6.75%. With the rate not likely to move (reduce) until the first quarter of 2006. The Reserve Bank did not disappoint with the OCR remaining at 6.75%.

Growth in the economy appeared to be slowing down as a result of reduced demand (as opposed to the economy not being able to keep up with demand). This growth slow down will also help reduce inflationary pressure. Indicators of growth slow down include reported labour shortages not as critical as the recent past, business and consumer confidence falling, reduced retail spending, building permits for new dwellings at lower levels. Going against this trend was increases in power and petrol which could have an inflationary effect.

New Zealand Institute of Economic Research survey of business opinion. Quarter ended 30 June. The survey overall recorded a reduction in businesses overall sentiment. Over the next 6 months a net 34% of businesses expect the economic climate to worsen (28% in March). Overall a lot of the figures have reduced but are still high when compared to the recent past. It is expected this will help the economy to still grow but at a moderate steady rate.
 

Figures released by the Property Council from its Investment Performance Index for the annual period ended March 2005 show commercial returns are still increasing.

	2004	2005
Overall Return	13.72%	16.74%
Including:
Capital Growth	4.02%	6.90%
Rental Income	9.42%	9.37%

The areas of fastest growth was, Wellington for office space and Auckland for commercial property.
 

Transpower has confirmed the route that its proposed new power cable will take. It is the “Western” route.

Letters have been sent to about 600 effected owners showing an indicative route and the proposed 65m easement with the line. Transpower has indicated a willingness to negotiate to purchase properties if required.
 

The Far North District Council is planning on implementing a new by-law requiring owners to have their septic systems certified. The by-law is aimed at guarding against environmental and public health risks after research indicated last year that many private tanks/ systems did not work properly.

The proposed bylaw requires owners to have their systems cleaned and certified every three years. It is expected the by-law will take effect from the middle of 2006.
 

With the increase in house prices and landlords increasing rent due to demand more people are seeking the assistance of emergency housing providers. Many emergency housing providers are stretched as demand continues to grow.
 

The plans to house about 8,000 people on the site on the old Winstone quarry in Mt Wellington are closer to becoming reality with one of the many Auckland City Councils committees giving approval to plans (to do with public transport links out of the development into existing routes not being feasible). Development can now start on that part of the disused quarry.
 

Owners of older (pre 1930s) homes in some of the inner suburbs (Newton, Berhampore, Mt Cook) could be forced to obtain resource consent for major alterations or demolition of their houses after proposed district plan changes were approved this month by the Council. The changes could result in increased costs and time delays to owners. The proposed changes are now going through the public consultation process. The changes are similar to those already in effect on older housing in Mt Vic and Thorndon.
 

There is currently 2 commercial subdivisions planned, one at either end of Blenheim.
One is aimed at bulk retail and the other commercial and light enterprises.

Both developments are at the feasibility/ initial consultation process. It is believes that there is a shortage of commercial property in the region and the town is losing opportunities to Nelson and Christchurch.