to the Valu in Review for October 2007. The October review of the Official Cash Rate had a stern warning regarding inflationary pressure in the economy - primarily from Government spending but the rate itself remained unchanged. The numbers from both the REINZ and QV Valuations indicates the number of sales is down but in general the value is staying up due to a lack of properties for sale. In this edition there are also comments on mortgage rates and the lack of competition from the lenders, insulating houses, and a new website for Tenancy Tribunal orders. As always please read, learn, enjoy ....

.... and happy investing!
 

We are now able to offer Land and Building valuations through a sister company "Property InDepth Ltd"

Welcome to the revolution! Property InDepth has been set up by two of Valuits key personnel, Steve Tucker and Steve McNamara. The company is taking valuation to the next level - we not only provide registered valuations of residential property, but we also supply you with much more!

* Speed - reports delivered online within hours, not days
* Experts - our valuers focus on one Council area so they really know their stuff
* Risk analysis - specific to the property improvements and the location
* Thorough market commentary - what's the market doing in your sector
* Condition - detailed report by room including condition of items
* The location - we provide lots of info including schools, average age and incomes, public transport and access to motorways, ethnic make up etc - all especially useful to the investor.
* Rental Information - what rentals are being achieved, what % of homes in the area are rentals, and more.

These new reports really will assist you with making that big decision. Our finance reports also aim to assist with the process of getting finance, rather than it being the hurdle it currently is.

Visit our website at www.propertyindepth.co.nz or call 0800 indepth/0800 463378 to find out just how great these reports are.
 

The review of the Official Cash Rate ("OCR") on 25 October by the Reserve Bank resulted in no change to the OCR - which has had 4 increases this year. The current OCR is 8.25%. Dr Bollard indicated that the OCR was unlikely to be increased until December 2007. In the statement accompanying the review Dr Bollard acknowledged that the housing market is finally showing signs of slowing. It appears that going forward his concerns are over Government spending (and also possible tax cuts) adding to the inflationary pressure in the economy and therefore the need to keep rates consistent at this stage.

Most economists are predicting that interest rate cuts will not happen until at least the second half of 2008.
 

QV Valuations - calculates its figures over the 3 month ending September in comparison to the same period last year.

	Aug '07	Sept '07	Ave Sale Price (Sept 07)
National Increase	13.3%	13.2%	$404,089
Auckland	12.0%	12.1%	$512,964
Hamilton	14.1%	14.4%	$365,515
Tauranga	7.0%	8.2%	$438,703
Wellington	14.5%	14.1%	$364,357
Christchurch	14.1%	13.1%	$364,357
Dunedin	9.6%	10.4%	$270,254

REINZ. Figures are based on actual sales and are the median values for the month

	Sept '06	Aug '07	Sept '07
National	$313,000	$350,000	$351,000
Northland	$280,000	$315,500	$320,000
Auckland	$397,750	$450,000	$441,500
Waikato/ BOP	$287,000	$325,000	$322,750
Hawkes Bay	$261,000	$275,000	$282,000
Taranaki	$250,000	$257,000	$265,000
Wanganui/ Manawatu	$210,000	$215,000	$240,000
Wellington	$329,000	$381,050	$380,000
Nelson/ Marlborough	$310,000	$334,000	$330,250
Canterbury/ Westland	$277,500	$310,000	$315,000
Central Otago Lakes	$441,000	$474,500	$477,500
Otago	$216,000	$238,000	$236,000
Southland	$140,000	$176,000	$195,000
National Sales	8,658	6,394	5,894
Days to Sell	31	33	32

 

A government minister has announced they are preparing an Affordable Housing Bill to put to parliament. It would give local councils the ability to promote affordable housing more easily. In the bill councils would be able to allow more intensive housing and/ or waive development contribution if the developers included low cost housing. The idea behind the bill is to encourage low cost housing as opposed to enforcing the requirement for it in a development.

The project by Queenstown Lakes District Council and Housing New Zealand to provide "affordable" homes to locals has moved closer with the Council agreeing to guarantee a $2m loan to the Trust the Council has set up to run the project. The council has identified land in Wanaka and Arrowtown that would be suitable for the building of the 35 affordable homes it hopes to provide.
 

Two documents have been released by the government on New Zealand's requirement to reduce greenhouse gas emissions. The thrust of the papers is about energy conservation. It was mentioned specifically by the Ministers releasing the documents that landlords may need to start insulating houses now (there is currently a government subsidy for up to 50% of the cost of insulation) or face the regulatory requirement of insulating renting properties in the future. The Officials responsible for energy efficiency and conservation were considering minimum energy performance standards - especially for rental properties.
 

The Tenancy Tribunal has launched its new website. The Tribunal makes approximately 20,000 orders a year. The website now gives the public the ability to access these orders. To balance privacy issues a minimum amount of detail is required to find specific cases.

The new website is at http://www.tenancytribunal.govt.nz/
 

Infometrics has released a report that predicts the definite end of the housing boom in 2008. They are predicting at least 2 more increases in the OCR in the next 6 months. This would increase both short term and long term mortgage rates to over 9%. Other key elements mentioned were:
- falling houses prices would limit household spending
- The labour market will remain strong over the next 6 months - keeping spending up
- After this falling house prices, and low immigration will result in decreased spending
- The kiwi dollar may reach a new high in value against the US Dollar
- Economic growth is expected to be around 3% a year over the next 3 years.
- With the housing market cooling the biggest contributor to domestic inflation will be food prices.
 

In an investigation into mortgages being taken out via mortgage brokers it has been revealed that first time home purchasers with a deposit of 20% are very rare according to information provided by one mortgage broker. Approximately 40% of mortgages for the first time home buyer are 100% loans with another 50% of mortgages having a 5% deposit.

The total value of the New Zealand mortgage market is $148 billion. It is not known how many mortgages are 100% financed (or more).

Commentators on the market are warning against people taking out 95% or more mortgages as if the value of the underlying property drops these people could have a potential problem.

As homes become less affordable and the lending institutions are looking to differentiate themselves there are further new developments in products. New initiatives include: shared home loans (where multi people buy a property together), increase in the number of years the mortgage can be taken out, mortgages of 102% of the value (this includes lending to pay the fees for the mortgage).

Spring is a time where over the past couple of years the banks have been competitive with mortgages to encourage new borrowers to them. To date this spring we have not seen this competition.
 

It is estimated that home-sellers will pay $1.2b in commission this year.

There are a growing number of agencies that offer flat rates (as opposed to a % of the sale price) or agencies that offer marketing packages so people can sell their own homes. One of these flat rate agencies has faced a disciplinary hearing before the Real Estate Institutes disciplinary board during the month regarding comments made on the industry. The complaint was subsequently "thrown out" by the disciplinary board

The "high profile" of the disciplinary hearing has seen Associate Minister of Justice, Clayton Cosgrove, making comment about the need for tighter regulation of the real estate industry. These are due to be released soon.