A month can seem a long time, no matter what industry or profession you are in. The New Zealand real estate market is no different.

 

Just when it looked like the market was slowly, surreptitiously taking forward steps to recovery, the spectre of a Capital Gains Tax has thrown the market into confusion, or so some analysts would have it. Along with this we have had reports that ‘City’s house values hit new heights’ (NZ Herald, 12 July 2011) following a report in the New Zealand Herald on Saturday July 9, that ‘… now the (real estate) market is stuck in the doldrums.” Confused ??? - no-one would blame you if you were.

 

Sometimes the real estate market in New Zealand is a bit like ‘The Tale of Two Cities’, First, there is Auckland, and then there is the rest of the country. Monday’s front page story in the NZ Herald stated that ‘house values in central Auckland have topped the previous peak in 2007 because of strong demand …” and that “Auckland is deemed a safe place to invest.” The report did acknowledge that the sales figures being attained, “are so high they have pushed the national average up, despite values dropping throughout the rest of the country.” This story is in stark contrast to the one published in the same paper three days previously where that reporter wrote of the market being “stuck in the doldrums”, and asked if New Zealanders’ “love affair with housing is over or just cooling off?” That same issue featured another story of a North Shore couple that they had profiled in April 2007. The couple earned $95,000 a year between them, but could not afford a mortgage. This recent story was a follow-up on the same couple, saying that over the last four years, nothing much had changed for them.

 

All articles quoted were written by different reporters writing their opinions, based on various reports in the public arena. There are probably areas of truth in all reports, depending on the geographic area being covered. The confusion for the reader, in general, is that many articles use data for a particular geographical area to give a ‘broad-brush’ account of the market overall, which can be quite misleading. Even within the Auckland market alone, there are wide variances of activity among the suburbs. The same can be said of the North Shore, as it is, with our market in North Rodney. White Light was initiated to concentrate on our local market, which we will summarise a little later in this edition.

 

Labour’s Capital Gains Tax has not had tax practitioners leaping to their feet to applaud the Labour Party’s tax policy package. John Shewan of Pricewaterhouse Coopers says, “I’m still with the Inland Revenue view that the costs outweigh the benefits, because of all the carve-outs.”

 

No matter what your political affiliation, at present, the threat of Labour being in a position to implement such a tax is not looking too great following the results of the latest political polls. If the threat was serious, it could cause real estate investors to have a few jitters.

 

While the latest BNZ—REINZ Residential Market Survey reports a ‘strongly rising interest in Open Homes’ with a net 23% of agents reporting that they are noticing more people going through Open Homes, local reports would suggest that this is not indicative of the local market. Open Home attendees are down considerably as prospective purchasers do their homework on computers, from the comfort of their own homes or offices. Unfortunately, this does not give them the opportunity to ‘get the feel’ of a property.

 

 

 

 

Sales numbers for North Rodney were quite positive for June, although dropping back by 14% from the high in May. There were thirty-two residential sales (down 22% on May’s figure of 41) equaling the numbers for June 2010 and thirteen rural sales (up 2) recorded for June.

Of the residential sales twenty-nine were for developed houses. The table overleaf shows the spread of sales throughout the suburbs. Omaha continues to have good sales although even here the majority were for prices lower than the 2007 Capital Value, with the highest sale a little over $1.5 million. Sales in Snells Beach, Algies Bay and Warkworth were of an average level with only three of the recorded twenty sales exceeding the $500,000 figure and nine selling for $400,000, or less. Fourteen of the twenty were for prices below the 2007 CV, while some CV’s were not available or were prior to dwellings being built.

 

Once again, most of the rural sales were for established lifestyle properties with about one-third being for bare, undeveloped sites.

 

The graph above shows both residential and rural sales, month by month, for the years 2010 and 2011. Apart from March, rural sales have continued to track upwards, although very slowly. The residential graphs make interesting viewing as we head into the winter months.