The latest interest rate cuts and property?

The Reserve bank has dropped the Official Cash rate by .25 basis points today and hinted that they will drop again this year . Most will be expecting that to flow straight into lower mortgage rates which is “mana from heaven” for property owners and property investors .

However  bank economists are saying that the 80% of the money we borrow from overseas is not getting cheaper and in fact has gone up a little bit . So we can expect the floating rates to come down a fraction but fixed rates may not move this time around. The main signal from the Reserve bank is that interest rates are not likely to go up anytime soon.

The big impact the reduction will have on the market is that the  interest rates people receive from the banks for money deposited will go down and that means lots more people  are going to be heading to the Real Estate Market to find an alternative to bank deposits .

As these people join the already crowded house buyers list there is going to be  more upwards pressure on property prices. Most properties in the investment category are receiving  multiple offers within weeks of going on the market. All agents in our company have a long list of investor buyers looking for ” a good property in a good area with a rental return of over 6% .”  These properties do not exist anymore and buyers need to drop their expected rate of return to 5% or lower or move into the lower socio- economic areas.

On Average property prices  in Whangarei are rising at $1,400 a week and that rate is expected to increase to over $2,000  per week later this year . While a good rate of return is great , in a rising market like this, your capital gains will greatly outstrip your rate of return and therefore its smarter to get hands on the property at today’s prices than to concentrate too much on the return.  In six months time today’s property prices are going to look  cheap and rental increases will catch up with your ideal rate of return.

If the property meets all your other requirements, except you rate of return, pay the money and secure it now as you are going to have to pay more next month.

 

Whangarei prices still heading up!

Corelogic have just released their February Property Sales figures. The speed of increase is going up with Whangarei now showing a 14.6% year on year rise . This is well in line with predictions that we will hit around 20% growth this year . However the rate of growth has slowed down this month to a 0.7% increase from a 1% increase last month.  This probably reflects the apparent slow down in the Auckland market where prices appear to have stagnated for the last two months together with the holiday period.  Despite this slow down all the signs are for more pressure on property prices not less. Low interest rates are going to be with us for several more years. Houses are not being built as fast as demand dictates. In other words we have a housing shortage that is getting worse not better. Our population is getting bigger faster through natural growth, emigration and people not leaving the country. Building materials and costs are going up daily so the cost of building is increasing fast .

Every indicator that I look at says the rise in house prices is far from over and that Auckland has another round of rises coming. A bit like the calm before the storm or better still Auckland is passing through the eye of the hurricane . And while Auckland tends to be the focus of attention the provinces , like ours , will get big capital gain rises over the next two years as we close some of the gap that happened when Auckland prices  bolted away.

The average house price is now just under $392,000 . That’s a $6,000 rise on last month so properties are increasing on average at $1,400 per week. This is really important to remember if you are negotiating to buy a property. An average sale would take 6 weeks to settle from the time it was first signed up. That means the property will have gone up in value by $8,400 from the time you signed up to the time you pay for it. The message is clear , be prepared to pay more for it to secure it. If you miss the property you are chasing not only will have some costs but the next property you chase will be that much dearer. Its not the time to quibble over a few thousand dollars of price. It is the time to get your foot on the property now.  It will be worth what you made in a matter of weeks .  Remember ” you never pay too much but sometimes you buy it too early”

 

WHAT NOW ?

Price Rises Accelerating

price rises. Corelogic’s January price release show Whangarei continuing on its growth curve at 13.9%. That’s a full 1% higher than last month’s record 12.9% figure. Both Tauranga and Hamilton have hit over 20% growth in January so the likelihood Whangarei will follow is very strong.  The average price is now $386,876 which is currently an increase of over $1000 per month .  The prediction of us hitting 17.5-22.5% growth this year is looking good.

25 good reasons why you should buy your next Rental in Whangarei.

  1. Good Rental Returns . The average property price is $380,000 ( Corelogic Dec) while the average rent paid is $355 per week *( Harcourts Dec) . That’s a 4.85% return based on the average. By buying well you should see a 5-6% return. With borrowing heading below 5% properties can be fully funded and be neutral in terms of cost.
  2. Population Growth. The city is growing fast. Whangarei city has around 55,000 people, but if you add in the population within 30 minutes of the city centre you have a population that is over 80,000. It has historically been growing at 1% per year but those that would know say that this has accelerated over the last two years. In one three month period last year   a large health organisation added 1000 new people to its clientele.
  3. New Housing not keeping up with Growth. . New housing is not keeping up with population growth so there is a looming shortage of housing on the horizon. Approximately 350 houses are being built a year but we need 700-800 to keep up with population growth.
  4. Young Families. The population has a higher proportion of young people than many centres. The young, especially young families are the ones more likely to rent. This is supported by The Harcourt’s Just rentals Team who have a large waiting list of qualified tenants looking for properties. Good schools are a drawcard for these people.
  5. Forestry. Currently forestry work is developing fast as Northlands “Wall of Wood’ is currently being harvested. Many employers complain about not being able to find suitable workers to meet demand. This industry is expected to grow up to 2020 and then level off.
  6. Rents Increasing. Rental prices are on the way up. The shortage of good rental properties has driven prices up and will continue to do so this year and probably for the next two to three years as well.
  7. Capital Gains. The Whangarei market has lagged far behind the Auckland market. Prices only started to increase towards the beginning of 2015. There should be a long catch up period of around two years meaning Whangarei properties can expect considerable capital growth .
  8. Accidental landlords exiting Market. The good real estate market has allowed the “accidental landlords “to exit. Accidental Landlords are those who tried to sell but couldn’t, so rented their properties out instead. This is contributing to the growing shortage of rentals.
  9. Beneficiary Benefits. Most beneficiary statistics lump Northland into one category. A casual glance will suggest large numbers of unemployed. But the reality is Whangarei has just above the average number of unemployment, the high numbers are further north where there are fewer jobs and more cannabis. There is plenty of employment for people who want to work and the unemployment figures show a large percentage of unemployable people rather than any shortage of work.   There are many types of benefit and by circumstance they tend to be long term tenants. Many of these people are model tenants in behaviour and the way they look after the property. By having direct debits from Social Welfare you get a reliable, if not excellent payer. By using stringent vetting procedures this provides an unlikely, but reliable pool of good tenants.
  10. Ports of Whangarei. Whangarei Port is in place and expanding as required. Many say it’s a log port but as the CEO points out most container ships have their own loading and unloading equipment so the concept of purpose made container ports is obsolete. It is a deep water port and can take ships larger than Auckland can take and you don’t have the problem Auckland has where the port is in the CBD, yet the dispatch centre is in Wiri , meaning that every container has to be loaded from the port, driven through the busy CBD to its dispatch centre in Wiri. Ports of Whangarei is on a growth curve.
  11. Base Hospital. Northlands Base hospital is located in Whangarei. It is a great employer of transient people who are high earners and want to rent for a number of years. They want better quality housing and we have people currently paying up to $550 PW. These people are allowed to live 20 minutes from the Hospital, so most areas in Whangarei ,including a lot of the Rural areas, qualify
  12. Marsden Point Refinery. People often overlook the huge benefit this “ Muldoon Era Think Big project” has had on the economy. The refinery is a massive employer and pays some of the highest wages in the area. The refinery loves the low oil prices and is having some of its best years ever. It’s been a part of Whangarei for so long people forget the financial boost it gives to the district. It’s a bit like what the Tiwai Aluminium smelter does to the Invergargill region without the requirement to provide it cheap power.
  13. Marsden Point and Ruakaka Expansion. We have seen a building boom in this area as a new town is being born. The growth in this area has many parallels to Papamoa beach and we know how that went .
  14. Retail Growth. Cities have a size when they attract the big name retailers. At a population of around 80,000 we have passed that size. Most of the big name retailers are either in Whangarei or coming. These are mostly 7 days a week employers so have larger numbers of staff. (Bunnings , Mitre10 Mega, The Warehouse, K-Mart, Briscoe’s, Countdown, Pak & Save, and New World, Rebels Sport, and most of the fast food outlets , to name just a   few. )
  15. Property Price Growth. We have only just begun our growth spurt so have a long way to go before our prices reach their natural market value. So far we have had $25,000 of an expected $150,000 increase in the average price. Much of this increase will happen in 2016.
  16. Investment Outlay. The three provincial centres that are benefiting from the outflow from Auckland are Hamilton, Tauranga and Whangarei in that order. Whangarei has the cheapest houses of the three, so is the easiest centre to buy into with the best rate of return.
  17. Cheap Rates. Due to some prudent Council management our rates are some of the lowest in the country which means less in outgoings. ( average rates around $1,500)
  18. Proximity to Auckland. We are   just over 2 hours from Auckland, with the distance getting shorter every day due to highway construction and improvements. We already have people who live here and commute to Auckland on Monday and back again on Friday.
  19. Baby Boomers. As the baby boomers reach retirement age many are looking for an affordable coastal centre to retire to. Whangarei is increasingly being discovered by these people. While they are not renters themselves they are buying up many of the properties that have previously been rented.
  20. Migration. Whangarei seems to be attracting a group of people who don’t want to live in a city the size of Auckland. We have been getting our share of migrants from Australia, South Africa, Korea, and India. Most of these people will be renting for a time.
  21. Movable Businesses. Many jobs are internet or export based. There is no need to be located in a major centre and many small internet based businesses have relocated for economic and lifestyle reasons. These businesses tend to employ 1-5 people and we have seen a lot relocate from as far away as Christchurch. No earthquakes up here.
  22. Investment Buyers. Auckland investment buyers are buying up here in increasing numbers to find affordable housing and to get reasonable returns. 5-6 % returns on good quality homes in good areas are achievable. This is putting pressure on supply pushing up the price of existing rental properties.
  23. Larger Companies. Some Auckland based businesses are relocating to Whangarei. Cheaper labour, cheaper land and buildings , and a great port.
  24. Lifestyle. Whangarei is well known for its proximity to some of the best beaches, fishing and diving in the country. What is not so well known are the large number of stunning scenic walks from the gentle 10 minute Kauri forest canopy walk in AH Reid Park to the gut busting, but scenically stunning, 6 plus hour Smugglers Bay to Ocean Beach walk.
  25. Facts and Figures. Harcourt’s Just Rentals keep statistics of their monthly activity. The last report from January is interesting reading. It shows a vacancy rate of just 0.48%. This is very low and would be a lot lower still if not for a couple of very run down properties in low socio-economic areas that are very hard to let. Of more interest is the growing number of rental enquiries with the office receiving 581 new enquiries in the month.

Let me buy your next Rental Property. If you want to buy a rental property let me do the hard yards for you. I can look at the new listings that come in, before they hit the market , select the good rental ones, and put a contract together that allows you to inspect the property  before being committed to it. I can help with the price and explain its strengths and weaknesses.  After 30 plus years I am pretty good at finding the right ones.  Get in touch, outline your basic requirements and let me do the rest.  We have the property management team to take care of it from there.

The Big Short. We both watched the movie “ The Big Short ‘ . This is an intriguing documentary type movie demonstrating how the Global Financial Crisis was created by almost criminal activity in the banking sector. Its compelling viewing for anyone interested in Real estate, and based around how mortgages were manipulated, packaged and then sold as triple a investments. The mortgages were “low starts” where the borrower pays an artificially low rate for a year or two before hitting the actual market  and usually unaffordable level . All stuff that can’t happen in NZ but from the message in the movie is very likely to be repeated in the USA.

Where we are, where we’re going and what this means for you…

  • 10% growth reached

First and foremost I want to wish you all had a Merry Christmas and a Happy New Year. It’s great to look forward to a new year and the challenges it will bring. Diana had a total knee replacement on the 14th December so our break was based around her recovery. She has been back at work three weeks later so good on her for having the heart of a lion and being the model patient!

Looking back on 2015 it was a huge real estate year and the market has moved strongly. Corelogic have released their December figures and there are a few surprises.

Firstly Whangarei has entered double digit property growth with the chart below showing 12.9% growth year on year. The increase is in line with predictions I made earlier in the year at an increase of over 10%. But I have to admit 12.9% is higher than I predicted.

The question for 2016 is, where it will go next? As boom markets are rare it’s hard to predict based on past evidence. What I do predict is that it will continue to rise as prices are still a long way from where they should be (See September newsletter or go to Blog link at bottom of page for reasoning). The average price in Whangarei according to Corelogic is now $380,592. To catch up with the trend line, as Auckland has now done,   prices needs to move to around $500,000.

The figure of $500,000 is based on QVRP figures which show a better average price in my opinion. If you use the REINZ figures then the catch up figure is $450,000. One shows the average price and the other the median price. Both figures show growth.corelogic graph

  • 2106 predictions

So How Fast Will Prices Rise in 2016?

The answer is faster than they are now!   12.9% growth is going to look slow next year. As you can see from the chart Hamilton has hit 19.5% and Tauranga has hit 18.2%.  Auckland is now at 22.5% but may have reached a growth peak as the rate of growth is slowing. All three provincial centres are still accelerating in terms of their growth rate. It seems hard to believe now, and I am reluctant to put it in words for the fear of being wrong, but all the evidence points to a growth rate next year, for the Whangarei market, of 17.5-22.5% possibly higher. It depends on whether the growth happens quickly over a year of slightly less quickly over two years.  My guess is it will take two years, although 2016 will show a greater proportion of that growth. The growth will follow a bell curve hitting a high and then slowing down.  The peak of the bell curve should be towards the end of next year.

By the end of next year I would expect the average house price in Whangarei at 20% growth, to be $456,000 – a price increase of over $76,000.

That will still leave another full year of growth of over $50,000 in 2017 before we hit the natural values line of $500,000. Of course the line will have shifted upwards by 2017 and the natural values line will be higher at $540,000 so there is actually $90,000 of growth left by then.  As in any boom style market the chances are very high that we will overshoot the natural level and 2018 will also be a good year.

To put these figures in perspective, if we take the QV current average house price of $380592 and multiply that by the current growth of 12.9% then we have Whangarei properties currently increasing by $4,091 per month or $944 per week.

However If we look at the predicted range of 17.5-22% ( 20%) then we will see the average property increasing in value  in 2016 by $6343 per month or $1463 per week .

In 2017 average house values will be $459,000 so taking a slightly slower growth rate of 15% will see house prices increases of $5,737 per month or $1324 per week.

It’s a great time to own property.

  • 2017 predictions & Possible road blocks to prices rising

In 2017 average house values will be $459,000 so taking a slightly slower growth rate of 15% will see house prices increases of $5,737 per month or $1324 per week.

It’s a great time to own property.

So what could go wrong?

There are a lot of potential factors that could impact prices over the next few years. I will name a few but there are a lot better sources than me to explore these.

  1. Another Global Financial Crisis, like China or the USA having a meltdown.
  2. Donald Trump getting his finger over the nuclear launch button,
  3. The Reserve Bank whacking interest rates up, a new building technique or material that allows cheaper housing.
  4. A dramatic drop in the fees/ cost of subdividing and building,
  5. A major rise in the price of oil, Increasing tension in the Middle East, Auckland housing prices collapsing as the media have been suggesting for the last 9 months.
  6. All of these are possible scenarios (some are happening), but in my opinion unlikely to dramatically affect our New Zealand market, some events would strengthen it. “Which is more likely …? That Auckland’s prices come down to the levels of the rest of the country? Or that the rest of the country starts to catch up with Auckland?
  7. If the rest of the country continues to chase Auckland’s prices, as is happening now, then the chances of Auckland’s prices dropping, reduces significantly as the gap closes. Based on the Core logic figures Hamilton’s growth rate for December is 19.5%. That’s only 3% lower than Auckland and closing fast. In the past Auckland was growing at 300-500% faster than the same provinces. It is very likely the provinces growth rate will pass Auckland’s this year as they begin the catch up cycle. Auckland prices are not actually dropping, it’s just the rate of growth is slowing as they pass the peak of the bell curve.
  8. The lesson learnt out of Auckland is, not that prices come down as land supply increases but that the builders, developers and suppliers of materials all increase their margins so there is no drop in prices. Until the current housing demand is satisfied prices will continue to rise. Why would prices drop when there are buyers out there willing to pay the money?   I come back to a comment I made at the beginning or the year.

Rotorua

In the last Newsletter I made a note that I thought Rotorua had to be ready for a growth spurt and I see that house price growth has hit 9.3% this Month which is a massive increase on the 2.3% growth a couple of months earlier. It’s not my market, but if I lived in Rotorua I’d be looking for a rental right now.

  • The contribution of the 65+ age group.

happy penioners

Pensioners are adding value to the Country?

From a survey of 8000 people in 2013 NZGSS found the following.

  • One-third of people aged 65 years or over (65+) said they, or their partner, provided support to family members aged under 18year of age who didn’t live with them, according to the 2012 New Zealand General Social Survey (NZGSS).
  • And 15 percent of older people provided support to 18 to 24-year-old family members who didn’t live with them.
  • People aged 65year+ provided money, a place to stay, and help with childcare to younger family members who didn’t live with them (excluding their own children). Money provided to those under 18 was usually spending money or an allowance, while for 18–24-year-olds it included educational costs or text books. For family members aged 25–64 money was given for bills or debt.
  • Just over one-fifth (21 percent) of people aged 65+ provided help with childcare to family members aged under 18 years.
  • 12 percent gave this help to family members aged 25–64.
  • Of all people aged 65+, 6 percent allowed their 18 to 24-year-old family members to stay in their home some of the time; 16 percent provided a place to stay for those under 18.

Tip #1   Goal in life… Live long enough to be one!

  • The risk of going Guarantor

One of the saddest sales I was involved in was a retired couple who helped their grandson set up a business by going guarantor. The grandson went broke, took off to Australia, leaving the Grandparents with an $80,000 loan against their house. What many people don’t know is that a guarantee is not just for the loan amount but includes penalties and any unpaid interest and debt accrued. The amount owed to the bank may be double what was originally guaranteed.

We got involved when this property was being put up for mortgagee sale. Fortunately, with family help, we managed to refinance the grandparents. However this delightful 80 year old couple now has a significant mortgage on their property in their retirement years. You can imagine the strain they are under.

Tip #2 It’s a lovely thing to help out another person, and bless you for having the heart to do it, but if it involves your own home get good independent advice before you commit.

Cats and dogs

 

These are restrictions the Whangarei District council are applying to most subdivisions that include any bush. Basically it means anyone buying the land cannot have a dog or a cat as a pet. It might be a big advantage to the native birds in the bush but it’s a huge disaster for everyone else. Properties with these covenants are very hard to sell and frankly the covenants often get ignored. One of the main reasons the developer of the  “Golf Harbour” subdivision in Maunu went broke was because the “cats and dogs” restriction made the properties very hard to sell and still do today. If you consider that the bush concerned is huge, 1500ha, and is bordered on three sides by Maunu road, Western Hills Road, and Three Mile bush road with a rough guess saying there are around 800 homes with direct access to this bush, then you have to ask what sense does it make to say, “but you 20 people here can’t have the same rights your neighbours do.”

If you lived close you could take your dog for a walk along any of the streets where these covenants exist but if you actually lived in one of the houses then it is “No dogs or cats for you!”

Further towards town if the “Pukenui ‘gated subdivision half way down the Maunu hill is a reasonably new subdivision which also has “no cats and dogs” conditions because they back onto the same Pukenui Forest. Like many of these more unreasonable restrictions, people tended to ignore them. So there were a reasonable number of cats and dogs roaming around the subdivision. The council has decided to enforce the restrictions and these naughty evil pet owners have been given a time lined ultimatum to get rid of their pets or face the consequences.  Guess what!  If you drive through this community today you will find lots and lots of “for sale” signs. Rather than getting rid of their pets these naughty people are getting rid of their houses.

A person I know was considering subdividing their bush block into two. It could be done but both, the new section and the existing section with the existing house on it, would then have Cat and Dog covenants on them. The person currently has both Cats and Dogs. They would have to get rid of them as part of the consent. This is unreasonable and stops growth in the area. The end result is they are not going ahead with the subdivision.

The consequence is that the bush surrounding their place will continue to have no protections. The dogs can roam free through the bush, whereas with a little compromise the bush could be fenced off and these areas could be a dog free at least! Good luck trying to make it cat proof!   Pest plans to eradicate opossums, rats and stoats could go ahead as could plans to eradicate invasive weeds.  So the end result of the WDC policy is that instead of having improved protections for the bush the bush has no protection at all. It’s a good example of where the legislated intention to protect and conserve nature is thwarted by what actually happens in life when the good intentions of the legislators hit the hard realities of practice.

HJR Logo

A New Rental Feature.

Because Harcourt’s have access to such a large database of information through “Harcourt’s Just Rentals”, I want to introduce a new feature to this newsletter. This will be the average rental price paid by tenants to “Just Rentals.” This figure is not a breakdown of rents by bedrooms, just the average paid.  It will give a good indication of where rents are heading, up or down, and how fast.   The figure for the end of November is $346 and December $350.55 which shows a 1.3% increase over just one month. This should be the beginning of a trend as rental prices start to catch property increases. I will start to graph this figure as more of this original data becomes available.

 

 

 

Property Market Snapshot: November 2015

Auckland

The latest CoreLogic figures say the average Auckland house price has hit $896,676. That’s very close to the peak of where property prices should be based on the 8% growth line discussed in the last newsletter. The prices will probably go higher, as the fundamentals of supply and demand have not been met and there is still a shortage of properties compared to the number of people, however in my opinion buyers are in gambling territory now. You should expect the 8% growth over the year and chances are that it will be higher but based on historical property price trends Auckland prices are now very close to where they should be. Last newsletter it looked like Auckland was still 16 months away from its peak. I now believe that’s more like 8-12 months. The catch up period is over for Auckland but it is still there for the provinces.

Whangarei

Price growth has hit 7% year on year. The average Whangarei house is now worth $362,021. That’s currently an average growth rate of around $2,100 per month and this is predicted to accelerate.

In the last newsletter in September, Whangarei’s property growth was 4.6%, so over the last two months this growth has accelerated dramatically and is predicted to continue to do so. It should hit double figures by the end of the year. Hamilton has already hit 14.9% annual growth and Tauranga has hit 11.2%. Auckland is sitting on 22.6% growth but the gap with the provinces is starting to close. The growth continues to be associated with places close to Auckland showing the ripple effect discussed in an earlier newsletter. The one surprise is Rotorua which has property price growth of just 2.3%. If I was to guess at the next place in NZ to benefit from the Auckland price ripple it would have to be Rotorua.

Rental Market

I had a discussion with Mel Lindsay the manager of Harcourts Just Rentals to get the latest information about the market. This market is also going through some serious changes, most of which are good for the landlord.

Key points are:

  • There is a serious shortage of rental properties out there.  There is still resistance to the low priced poorer socio-economic areas and poorly maintained properties,  however  there is huge demand for the middle and better areas.
  • Tenants are staying longer! This is great news for landlords. The most costly period for any landlord is tenant change over time. This is when you lose income and end up spending money on the property to fix those items that where ok for an existing tenant but need replacing for a new tenant.
  • The shortage of properties and tenants staying longer are probably linked. When you don’t have a viable alternative, you stay with the existing option.
  • The shortage is being made worse by the accidental landlords, the ones who couldn’t sell their properties so rented them instead, now  selling their properties, leaving the market to the long term and serious landlords.
  • Vacancy rates have dropped close to zero. This is the down time when the property is between tenants. As a landlord you want this time to be as short as possible. In a traditional market a company would be proud of a vacancy rate of 2-3 percent. Harcourt’s Just Rentals are currently running at 0.06 percent which is a very impressive figure and great news for landlords.
  • Rents are on the way up for most properties. Rents have been edging up due to supply and demand and this is expected to accelerate over the next 12 months. Mel has asked me to express a word of caution here. It’s not across the board and poorly maintained properties and properties in poorer social-economic areas have not seen the same increases.
  • When a property is vacant the rent can be raised quickly but when occupied it should be raised gradually and regularly so the tenant doesn’t get “rent shock” and leave.
  • The Whangarei Hospital is in its recruitment season so there are a lot of medical people looking for accommodation right now. These people have to be within 25 minutes’ drive of the Hospital. Surprisingly, with the new bridge, the Parua Bay area is a major beneficiary with 4 recent requests for homes in this area. Call Mel if you can help. (021347355)
  • Harcourt’s Just Rentals have been listening to their landlords and tenants and have researched and implemented a team approach to property management. They call it the” Pod System”. Each property now has two portfolio managers. A lead manager and a back-up manager. This means at least one manager, who knows the property, is likely to be available for landlords and tenants requests and the key decision making, such as rental levels, is done using two heads rather than one. Problems are solved quicker and sickness and leave are fully covered. The teams are saying the results have lifted their level of customer service and satisfaction significantly.

News you probably weren’t expecting…

Real Estate Salespeople are the Good Guys!

A recent survey conducted by ‘Neilsons’ on behalf of the Real Estate Agents Authority found the following. Among those who had recently taken part in a real estate transaction with an agent.

88% found the agent knowledgeable about the market. 85% were provided with all the information they needed and thought the entire process was clearly explained to them. 84% found the agent both professional as well as knowledgeable about the relevant legal requirements. 84% thought the agent acted ethically, honestly and openly during the transaction.

This is a big improvement on past surveys and shows the new legislation is having a good long term effect on the public perception of the profession.

What you need to know about the Reserve Bank Policy shift

In his latest issue, Tony Alexander (BNZ economist) discusses what appears to be a huge shift in the Reserve Banks’ thinking. In the past the bank has used interest rates to curb house prices. However in a low inflation, low interest rate economy, raising interest rates has a detrimental effect on other factors such as the value of the Kiwi dollar. If we have high interest rates then overseas money flows into the country to take advantage of the rates, our dollar goes up and then our exporters find it hard going as their products are less competitive, so the country suffers.

The 30% Auckland based deposit requirement is the first of what may be a series of moves by the Reserve bank to control house prices by restricting credit to house buyers. In simple terms what the bank does is instead of making money more expensive it makes it harder to get. The days of easy money could dry up.

Last week my 5 year old grandson was staring intently at my head for some moments before he quizzically stated, “Poppa Baz! I have never known anyone with silver hair before”. Bless him!. Us old silver hairs’ can remember the last time credit was hard to get in the 1980’s . To get into my first home I had to have a dedicated post office home saver account. It had to be open for a minimum of three years with a steady savings record. I then qualified for a first mortgage at a subsidized rate and a second mortgage at a higher rate. It was not enough to buy a home but by the time I added to it, by taking my overdraft up to its limit, maxing out both my credit cards and taking a small bridging loan from my solicitor, I had enough to buy my first home. It looks like these days are coming back, so relationships with your banker will become more important.

If you don’t get Tony Alexanders newsletter can I recommend you do. He talks plain English and has been very accurate over the 10 years that  I have been reading him. The link below will take you to his last issue and there is a free subscribe button on the page.

Click here  and open the word document