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

Read, learn, enjoy ..

.. and happy investing!

 

The Real Estate Institute median house prices for July showed 6 regions with median house price increases. These were Hawkes Bay, Taranaki, Manawatu/ Wanganui, Nelson/ Marlborough, Otago, Southland. The volume of nationwide sales was 8,213, up from 8,025 in June. The national median house price was down to $280,000 ($284,000 in June).

In Auckland, 10 years ago, the median house price was 6 times the annual average income. Now the median house is approximately 9 times the average income. The average income has increased 30% to $41,000 (from $30,900,10 years ago). In that time the median house price has almost doubled to $363,500.
 

NZ has the lowest unemployment rate of any developed country, as at the end of the June quarter. The rate was 3.7%. At the same time employment has grown 3% for the year ended 30 June 2005 (an additional 11,000 jobs have been created in three months).

Net migrant flows continue to decrease. For the 2005 - 06 financial year the Government has allocated 45,000 places for people to be granted permanent residency (48,800 for 2004 - 05).

Retail sales figures (on a seasonal and inflation adjusted basis) for the June quarter come in at 1.3% for the quarter, which was almost double what economists had been expecting.

The next review of the Official Cash Rate ('OCR') is due on 15 September. Economists do not expect the OCR to be changed so close to the election date. However there will be inflationary pressure building with low unemployment, high retail sales and substantial increases in the price of fuel over the last couple of months (likely to show up in increased transport costs in food etc). This comes at a time when the Reserve Bank is close to the top of its 1 to 3% inflation target band.

Home Affordability. The ability for people to be able to afford to buy their own home continues to decrease according to the AMP Home Affordability Index. The June quarter was the fourth consecutive quarter which saw all 11 regions affordability decrease on an annual basis.
 

In June of last year the Government announced that it would be building 3,000 new State houses.

It has been announced that 2,400 of these will be in Auckland. With 1,135 in South Auckland, central Auckland getting 704, West and north Auckland getting 567.

The homes will be built over the next 5 years and would be a mixture of stand alone houses, terraced housing and apartment blocks (ranging in size from 10 to 125 units).
 

Following on from last month’s article . The Government has announced a subsidy that will assist home owners to offset the cost of de-commissioning their septic tank and connecting to the local councils new reticulated sewage schemes.
 

In a preliminary report to the Council QV has indicated that its 3 yearly review of values for rating purposes on the citys residential and commercial premises have increased 'on average by at least 60%'.

The increased values will reflect in the local rates this year and the Auckland Regional Council rates next year.
 

The average increase in rates this year is 4.8%. However this varies within the Regional Council based on the underlying City Councils area. Those city Councils that have had their rating valuations updated earlier this year, Rodney and Waitakere have had bigger overall increases. The average increase across the board in Rodney is 22.3%.
 

The Council owns 18 ha of paddocks at Flat Bush. The paddocks have been earmarked to be a new town for 40,000 people. The Council is setting up its own council controlled entity to run the development and establish the new town. This is to ensure the 'once in a lifetime' chance to develop the town centre will be according to best practice and avoid weak planning, ugly buildings and environmental damage. The entity will be subject to full sound business practices.
 

Developers have applied to the Tasman District Council to subdivide 100 ha into 900 sections. The plot of land is bordered by Lower Queen Street, McShane Road and the Appleby Highway in Richmond. The majority of the sub-division would be within 1.5 kms from the city centre. This plan is in conflict with the Councils own plans where the council wants to turn 50 ha in the same area into a mix of business and light industry.
 

Environment Canterbury is currently considering a train network for the city should commuter rail gain political and community support. The council has received a report of the feasibility of the project with the 5 alternatives costing between $55m to $690m.

The Council has raised the possibility of acquiring land under the Public Works Act as the council makes its plans for 2006- 2016. The land may need to be acquired for a number of key sites (a station near Jade stadium, a central city station and an exchange near Addington).