Winter is here

Despite a flood of stories about the Real Estate market,  making it look like we are in a tornado of change, in reality not a lot has changed over the last 18 months.  At the beginning of the year, we predicted the market would slow in the second half of the year and average a 12% annual rise. We are well past the 12% annual rise and the market would have to go into reverse for this prediction to be true. 

So apart from underestimating the rise so far this year, by a wide margin, are we seeing any evidence of the market going into reverse anytime soon?


While we are seeing some traction from building companies it is still not enough to match supply. Most building companies cannot keep up with the demand and there are waiting list of over 12‐18 months or longer, to get a home built. New homes are beginning to catch up, but its still 10 years before supply meets demand.


Most if not all builders we talk to are lamenting the cost of buildingmaterials. The variety of materials has dropped considerably due to shipping issues and the costs have risen fast. In the last newsletter (Feb 2021) we wrote this:

  • Building costs are going up fast. In 2016 the average cost to build in NZ was $1906 per m2 with many variances depending on size, quality, and location. In 2020 that had risen to $2238 and will be higher today. ( We are now nearly twice the cost to build the same house than our Australian cousins who are paying around $1,190 per M2. (Michael Yardney Property Update). Get your kids to get a trade if they are looking to be wealthy in NZ.

While statistical figures are not available most builders would be looking at around $3,000 per meter for a key ready home now. That means a 160 m2 house is going to cost $480,000 to build. Add a $350,000 section to that and you have a modest new home costing $830,000. While new build costs are rising rapidly there is no chance existing established homes will not follow suit.


The population of Whangarei is increasing rapidly. The last figures out of the WDC were suggesting a 2.5% increase this year. This is most likely conservative today. Based on a wider population of around 90,000 that is 2,250 new residents a year. With an average family size of 2.2 people per household (Census 2018) that is 1,022 new homes required a year. Based on an average section size of 600m2 plus 20% for roading and services that means we require 73 Hectares of new land every year. To put that into perspective that’s a land area ¼ the size of Onerahi every year just to keep up with new demand. (Excludes airport). 

Are we seeing this sort of housing growth yet! No, but it is starting to catch up.


Houses are a commodity just like any other, effected by supply and demand. If a market gets too over‐ heated then people get scared that they will pay too much, stop buying, and wait for it to come down before buying. It certainly appears to me that the market is overheated right now. It started just after Covid and has accelerated since. So, I would not be surprised to see the market stall for a period of 12‐24 months. Personally, I think it would be a good thing. 

But on the contrary, if we also have faith in the historically proven statistic that house prices double every 10 years, then by 2032 the average house price in Whangarei will have hit $1.3 million. To get there, prices need to rise by $52,000 a year. And that is not far off what they have been doing.


Normally this would be a real threat, but there is little left in the Government interference arsenal. They have fired all but two bullets in their six‐shot revolver, (one being Capital Gains tax) and they kind of shot that one anyway when they lifted the Brightline test to 10 years, so its stuck halfway down the barrel. 

The last bullet is interest rates.


There has been a sensationalist headlines recently predicting that interest rates will rise by the end of this year. I prefer to believe what the Reserve Bank says . as they are the ones who will do the lifting , and they are saying they could start to rise toward the end of 2022. Interest rises can and will influence house prices. They always have and always will. When the cost of servicing housing debt gets too high then we as a nation get into trouble. Firstly, the individuals involved and then their banks. High interest rates will not be a good thing for our economy and the Reserve Bank is very unlikely to allow them to be used as a Housing sledgehammer, as they have in the past. 

The concept of rising interest rates will slow the market to a degree, but for Interest rates to have a significant effect they would have to rise above 4‐5% and that appears unlikely at this stage. 

What we will see is the amount people can borrow, (based on their income), drop. Banks are already factoring in a rise in interest rates into their current lending criteria, so we should not see any shocks. It is more likely there will be a pause as people save more to close the gap between the purchase price and what they can borrow. 

The threat of rising interest is the one significant change in the future scenario and very likely to occur.


We are seeing a curious trend in the rental department where average rents appear to be dropping from  $500 pw in May to around $465 pw at the end of June. But before you panic, or celebrate, depending on your views about rents, we have seen this before. Its almost a winter chill effect. It was a regular occurrence in my Housing New Zealand days. When the power bills start to rise for winter (shorter days and colder weather means more power usage) then those that are genuinely struggling often opt to cohabitate with someone else. Either people share a house or people move back in with family for a while. Its invariably the most financially vulnerable and therefore logically the lower end of the rental market. You get more turnover of the cheaper rentals and therefore an average rental yield that looks like it is dropping. It usually stalls by Mid August  and is rising again by September. 

Contrary to this drop Jane Pitman, our business development manager, is fielding calls from prospective tenants looking to pay in the $600 and $700’s. She recently let a property at $750pw and currently has four qualified professionals looking in this price range right now. If you have a property that you think could suit, call her on 021892443.


I was in Reefton pursuing visible  flakes of gold in a tea coloured river in the pouring rain a few weeks ago. Reefton is in the middle of gold and  coal country of the South Island. Driving back late one drizzling  evening I saw a train being loaded with black coal, wet and glistening under the halogen loading lights. 

Later that night I met some friends and I dropped into the Wilson Hotel for a meal. What a magnificent meal. I had the biggest chunk of succulent and delicious Pork belly on mashed potatoes and roasted vegetables you ever saw, and my friends dined on fresh caught blue cod. We talked to the publican who is a character in himself and some of the locals, most of whom are actively involved in coal mining. One, a delightful 70‐year‐old, was fully employed at his ripe old age, as either a 50‐ or 70‐ton digger driver.

The conversation drifted to the old‐time gold miners and their skills at getting the gold out of the hills. The digger driver casually mentioned that it was a good thing the old timers did not have access to the type of machinery he drove. When asked why? he replied “The Southern Alps would be flatter than a football field. “ The conversation drifted back to coal and the Publican produced a silver looking rock he had on a shelf behind the bar. It turned out to be a manmade, exceptionally light metal, called Silicon Steel. He explained that Silicon Steel was the one reason coal mining can never stop. It is made by fusing coal and silica together to form a rust resistant, lightweight, anti‐magnetic product that is used extensively in the electrical motor field and the medical industry.He also explained that the coal we had seen earlier that day, was heading to Lyttleton where it would be shipped overseas. Sadly, these fine and uniquely New Zealand characters were just a little bitter about how their livelihood is treated in this country.

 Which brings me to the point of this article. Did you know that New Zealand is currently importing over 1 million tons of coal a year to run the Huntly Power Station, and the Glenbrook Steel Refinery? Apparently, it comes from Kalimantan coal fields of Indonesia. Why? 

The Huntly power station was built to run on coal from the Huntly coal fields and gas from the Taranaki Gas fields. It is owned by Genesis Energy, produces 12% of New Zealand’s electricity supply and is used more as a back‐up system when the Hydro Dams are low, as they are now. 

The station was due to be fully converted to Gas, but then the gas supplies began to run out. It was then supposed to be closed in 2018, but then the water supplies began to run out. Its mothballing had been extended to 2022 and then again to 2025. So, a dirty CO2 coal fired atmosphere polluting monster, we have. 

But get this. The station uses about 2 million tons of coal a year. Up to 1 million tons of coal is shipped from Indonesia, unloaded in Auckland or Tauranga, and trucked to the Rotowaro Coal mine in Huntly, where it is blended with the local NZ coal, put on a conveyor system, and delivered via conveyor to the Huntly Power Station. 

I am sure this all makes perfect economic sense, and I get that there are times when we need back up power, but to a simple person like me, and the fine coal miners of Reefton, how can importing coal make any sort of sense, environmental or otherwise. Instead of using our own plentiful supplies of the CO2 emitting fuel, that are within 10 kilometers of the power station, we are importing coal from 9,508 sea kilometers away, adding huge transport and pollution costs to the product. Maybe I’m being dumb and Indonesian Coal is a special green coal that adds oxygen to the air when burnt.


The Quarterly Employment Survey December 2020 has the average New Zealander earning $1289 per week. Tax calculated on that figure is $252 pw. (NZ Tax Calculator) 

Therefore every time you casually hear of another million dollars being given away or allocated to something or other and think that Is only a million dollars, keep in mind that the hard working average New Zealander has to work and pay tax for 76 years just to cover it and maybe it’s your turn next.


You will all have received first a generic email from Harcourts, followed by a very embarrassed apology from me. And embarrassed I was. Apparently, I missed an email that said all Harcourts database people would be added to a follow up system called ‘Active Pipe”, unless I specifically asked for them to be excluded. (You have been now). So, the mistake is on me, as I should read every email that comes into my inbox, especially ones with the heading “IMPORTANT”, but quite frankly I do not as most of them have nothing to do with me and everything seems to have important as a heading and I think I should decide what is important to me. 

I must say the responses to the apology were simply humbling and magnificent. Both Diana and I really felt your forgiveness, support, encouragement, and reinforcement of the integrity of our relationship. 

We started this newsletter in 2014 when we were looking for a way to use our collective 70 years of Real Estate knowledge to help others. We followed it with the Facebook posting and the Blog “Real Estate with Barry Joblin”. (If you ever need to look at old newsletters go to this page as all issues are in the archives). It was something where we felt we could add value to our relationship by sharing both our knowledge and our Real estate instincts with you and we hope you have received value from them. 

While not necessary, we would hope that should you sell, you will contact us first, but also understand that people choose an agent for a variety of reasons.

Email me if you have anyone that wants to be on my database and who will be interesting in receiving this newsletter on a monthly or go to  My blog

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