Cri­sis – what hous­ing cri­sis?

Manawatu Standard - Property Weekly - - Front Page - He­len Mays

The hous­ing short­age is top of mind to New Zealan­ders, ac­cord­ing to Neigh­bourly.co.nz’s on­line opin­ion poll. Politi­cians are in the ring with their gloves off, try­ing to push their lat­est so­lu­tion and a pos­i­tive elec­tion re­sult in the same breath.

From home owner to prospec­tive buyer, real es­tate agent to banker, the pres­sure is on to sell well, but more im­por­tantly buy quickly, or miss out.

Prop­erty auc­tions are prov­ing pop­u­lar in the big­ger cities be­cause of a promised end date and a mass gath­er­ing of peo­ple with cash in hand.

Andy Ste­wart, REINZ spokesper­son for Manawatu, says auc­tions aren’t as pop­u­lar in Palmer­ston North, mak­ing up only around three or four per cent of sales.

‘‘Auc­tions are very pop­u­lar in Auck­land, Tau­ranga and Welling­ton right now but here in Palmer­ston North we have a lot of first home buy­ers and the auc­tion process doesn’t es­pe­cially suit them.’’

Be­fore bid­ding at auc­tion, Andy ex­plains there is the re­quired due dili­gence of prop­erty val­u­a­tions et cetera that are a sig­nif­i­cant cost with no guar­an­tee of a suc­cess­ful out­come.

‘‘Auc­tion is a very vi­able method and it’s fan­tas­tic for the ven­dors, pro­vid­ing a def­i­nite end date and the best price from mul­ti­ple bid­ders, but the dol­lars up front for a first home buyer make buy­ing at auc­tion less at­trac­tive.’’

First home own­ers here are in a hurry to se­cure a prop­erty be­fore the price in­creases get away on them. In­vestors are reach­ing beyond the big­ger cen­tres and have dis­cov­ered ex­cel­lent value for money in Manawatu.

Prop­erty val­uer Ja­son Hock­ley says the real es­tate mar­ket in Manawatu has seen a large price increase from April into May, with June in­creas­ing slightly again.

‘‘The size of this increase can be com­pared to the ac­cel­er­a­tion rate we last saw dur­ing the ma­jor price up­lift of 2004 to 2007,’’ Ja­son ex­plains.

The short­age of houses for sale is caus­ing every­one great con­cern. There are first home buy­ers with money in hand and cur­rent home own­ers want­ing to sell, with both afraid of not find­ing a house to buy; there are agents with­out list­ings and banks with hun­dreds of preap­proved loans and no houses for clients to set­tle on.

‘‘Buyer des­per­a­tion has been a ma­jor driver for price rises as many po­ten­tial pur­chasers con­tinue to miss out. Every­one’s be­com­ing in­creas­ingly fran­tic,’’ Ja­son con­firms.

He ex­plains we have now had a fairly pos­i­tive mar­ket since the mid­dle of 2014 and low in­ter­est rates con­tinue to un­der­pin in­ter­est from home own­ers and in­vestors.

‘‘Palmer­ston North still of­fers some of the most af­ford­able homes in the coun­try and many in­vestors are seek­ing bet­ter re­turns than the cur­rent bank de­posit rates pro­vide.’’

Ja­son sug­gests the key ques­tion now is, will th­ese trends con­tinue?

‘‘On the sur­face of fun­da­men­tal eco­nomic driv­ers, sup­ply and de­mand is still se­verely out of equi­lib­rium. It would take a phe­nom­e­nal po­lit­i­cal or global event to change this pat­tern.’’

He adds the Re­serve Bank ap­pears to be con­stantly ‘‘un­der the pump’’ to keep in­ter­est rates low as the cur­rency mar­kets con­tinue to hurt ex­porters.

‘‘The primary sup­ply of houses needs ramp­ing up as there’s a crit­i­cal need for many new homes in the city.

‘‘If this was the case and the sup­ply did increase, then the sec­ondary sup­ply mar­ket of ex­ist­ing older homes would have some pres­sure taken off. There­fore with th­ese driv­ers at work I an­tic­i­pate that the mar­ket is likely to be even higher come Christ­mas time.’’

Ja­son an­tic­i­pates dis­cus­sion on the hous­ing mar­ket will soon be over­shad­owed by up­com­ing global events such as the Olympics and the US elec­tions in Novem­ber.

‘‘Th­ese events may take some of the me­dia spot­light off the hous­ing mar­ket, the US elec­tions es­pe­cially will prob­a­bly make for some in­ter­est­ing fol­low­ing.’’

This year prop­er­ties in Manawatu, Horowhenua and Whanganui are up for reval­u­a­tion and Ja­son an­tic­i­pates an ex­tremely busy 12 months.

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