Dig deep to find real issue
This week’s furore over house prices and cashed- up foreign investors has taken a predictable turn, focusing on race rather than the real issue affecting first- home buyers hoping to own a house in Auckland.
The real issue, you see, is much deeper than the overly simplistic one it has turned into. Yes, some people overseas are exceedingly wealthy and are spreading their cash across the globe by buying real estate. But why real estate?
Remember when the GFC took hold? Some people started buying gold. But look at how gold’s price has dropped from the heady days of 2011 when it sold for more than US$ 1800 an ounce. It has been slipping since 2012 and now sits at US$ 1157 an ounce. How low will it go?
Putting large amounts of cash in banks is a non- starter given the low interest rates offered ( some banks are even charging savers to store their cash). Taking a punt on stocks is a more long- term bet than investment, and carries the risk that the money will be lost.
If you have millions in disposable cash, where to put it is an issue.
So you can understand why real estate is a big draw to people looking for a safe haven. And, given our current exchange rate, foreigners of all nationalities are getting even more for their currency.
What has been allowed to happen to real estate in Auckland is complex, and needs someone who’s way above my pay grade to make some tough decisions. Making a list won’t solve anything.
Median price
Latest figures from the Real Estate Institute reveal the national median price of a home in New Zealand is now $ 450,000 — up 5.4 per cent ($ 23,000) on June 2014 and down by $ 10,000 on May’s median figure. Auckland’s median price rose 26 per cent during the 12 months to June to $ 755,000.
In June, 7426 homes were sold across the country, more than 29 per cent higher than the same time last year, but 7 per cent fewer than in May. Of those, 1610 were auctions, up 613 on June last year. The institute’s CEO Colleen Milne says there is increasing evidence Aucklanders are looking to buy outside of the Super City as own- occupiers and for investment.