| | The main news this month has been the budget. There were a number of announcements that will have a direct impact on investors. We have summarised the main things here as there has been plenty of analysis in the media on the various initiatives announced. Please read, learn, enjoy .... .... and happy investing!
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| | There were a number of announcements that affect investors directly. - IRD is getting an additional $14.6m over the next three years for property transaction audits. This is to enable the IRD to enforce the law. Loosely speaking if an investor buys a property with the intention of selling it for a profit then tax must be paid on any gain in value of the property. Between 2004 and 2006 this auditing had gathered an extra $100m in taxes. - Shared equity scheme to assist first time home buyers. $1.4m has been allocated to research and design a scheme for NZ. A pilot scheme will not be funded until 2008. - $19.8 was given to the Housing Innovation Fund. This provides assistance to community groups and local authorities to develop affordable housing. The money is to be received over the next 4 years. - The Healthy Housing fund targets overcrowded households by getting them into more appropriate housing. This fund received an additional $23.8m, over the next 4 years. - Kiwi Saver Scheme. People will be putting 4% or 8% of their income into this scheme as a way of saving for their future. The impact of this is difficult to predict. This could mean that they are happy to let their super scheme grow in Kiwi Saver and will not invest in property (or have the money to invest in property) as an alternative way to save for retirement. The scheme also provides a subsidy for the "first time home buyer" after three years in the scheme- which could possibly lead to an upward pressure on lower priced dwellings at that time.
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| | There have been a number of new entrants into the New Zealand market recently who have offered to sell houses on fixed-fees, or provide marketing packages for sellers to sell their house themselves. The traditional real estate agent is faced with a number of different pricing models from competitors. This has led the agents being prepared to negotiate on their fee (traditionally between 3% - 4% plus advertising and administration fees). The Government has announced its preferred option for a revamp of the real estate industry. Under the option announced it included the following: - there would be a new Real Estate Licensing Authority. This would be separate from the Real Estate Institute of New Zealand ("REINZ"). This Authority would have the ability to investigate and resolve complaints. Its powers would include the ability to impose fines, compensation and de-licence agents. - A new register of Real Estate Agents. This register would also include details of any breaches of the new standards. - Agents and sales people would not have to belong to the REINZ. Submissions by the public are open until 10 July 2007.
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| | Research undertaken by Roy Morgan on behalf of Wizard Home loans in February, indicates that 17% fewer people are looking to buy their own home than in the same period last year. It found that the category of people who had the biggest change in mind where those living outside of a main centre and earning less than $45,000. Meanwhile the cost of building is also increasing. For the quarter ended 31 March the cost of building increased 1% as the cost of wages and materials increases. For the annual period the increase was 5.1%. The increases have been contributed to a shortage of skilled labourers (increased wages) and increased costs on materials (timber, concrete, steel and iron).
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| | Figures released by QV for April show that the national property sales values have increased to a national average price of $366,032 - up 10.6% over the same period last year. The main urban centres average values were:
| North Shore City | $543,472 | | Auckland City | $563,100 | | Manukau City | $407,478 | | Hamilton | $341,778 | | Tauranga | $417,116 | | Wellington City | $489,034 | | Christchurch City | $348,892 | | Dunedin City | $262,337 |
The monthly figures provided by REINZ, for April, have a median selling price of $349,000. 9 out of the 12 REINZ regions had an increase in value, 1 (Manawatu/ Wanganui) remaining unchanged and 2 (Waikato/ Bay of Plenty and Otago) decreased in value. There was a drop in the number of sales between March (10,989) and April (8,194). This could be because of the timing of Easter. In April 2006 there were 7,576 sales. The number of days to sell a house, nationally, was 28 (34 days in April 2006). The regions with the biggest increases for the 12 months ended April 2007 were Gisborne (up 29% to 275,000), Upper Hutt (up 28% to $325,250 and Invercargill (up 27% to $175,500). The most expensive place to purchase is North Shore City in Auckland where the median sale price is $540,000.
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