Aussies snap up our homes

19th June 2013

Source: NZ Herald

Australians are contributing to New Zealand's skyrocketing house prices, with new research showing they bought more property than any other overseas group.

The figures have prompted calls to ban purchases by foreigners or impose a tax on top of the sale price.

BNZ chief economist Tony Alexander has found Australians are the biggest single group of overseas buyers with 22 per cent of all property purchases by foreigners. Chinese are second at 20 per cent and British at 13 per cent.

The BNZ-REINZ survey asked real estate agents to identify the proportions of their sales to various groups. It found 8 per cent to 9 per cent of sales were to foreigners.

While there are no exact figures showing the number of house purchases by foreigners, Real Estate Institute figures last month showed 7714 residential properties were sold. If that trend continued and around 90,000 houses were sold annually, about 8000 New Zealand houses could be going to foreigners.

Mr Alexander suggested changes. "If the housing problem is home affordability, then special generalised Auckland or national imposts such as minimum deposit rules will make things worse for the already cash/deposit-strapped group we want to be able to afford houses," he said.

"One instead will need to take buyers out of the market which are not the ones we think deserve to buy affordable housing.

"That means something like a law banning second property purchases, banning purchases by foreigners and forcing people to sell houses they own but are not occupying, perhaps because they are overseas."

Judith Taylor, previously with property specialists Australia's Property Women but now with Select Property Finder specialising in Newcastle, led a buyers' group of 40 Australians to New Zealand in 2009, saying they were interested in our cheaper houses and wanted to find out more about our market. She said yesterday that one woman bought about nine properties on that trip, and the group was enthusiastic.

She said "those who bought there were very, very happy" and had kept their places.

Mr Alexander suggested eight housing crisis solutions, saying they could "quick jump" supply but said the chances of his radical policies being adopted were between low and zero.

Maurice Williamson, Land Information Minister with responsibility for the Overseas Investment Office, has rejected the concept of a foreign buyer register. But the office does not have jurisdiction over most house sales and only handles $100 million-plus property deals, those involving sensitive land such as seaside or lakefront or fishing quotas.

David Whitburn, Auckland Property Investors Association president, agreed foreigners should be discouraged from buying here - not by being banned, but by being charged more.

"If you are not a permanent resident or citizen, there should be a strong investigation into charging a stamp duty charged on your purchase," he said.

"Perhaps something like 4 per cent of the purchase price.

"We cannot risk offending our major trading partners, so whatever moves are made cannot be too drastic.

"Foreign purchasers are only a minor reason for the strongly rising Auckland market," Mr Whitburn said.

"Two decades of inept local and central government policies have meant uncertainty for developers with high development costs.

"We have a continuation of very strong population growth in Auckland. The Auckland market is likely to keep rising until the supply side is sorted," Mr Whitburn said.

Peter Thompson, Barfoot & Thompson managing director, said only a small proportion of auction bidders at his firm's Shortland St rooms were Asian and many of those could be residents or descendants of New Zealanders for many generations.

But Ian Thornhill, a Barfoot agent, raised concerns about the situation last year, commenting after an Epsom deal when a Chinese investor bought a house then left it empty.

Alistair Helm, a real estate commentator, has singled out New Zealand as one of the few countries in the world not to impose a stamp duty in the form of a tax on a property purchase, that makes no capital gains taxation on property sales and that has no restriction on foreign ownership outside of the rules of the Overseas Investment Office.

Tackling the 'sum insured' challenge

17th June 2013

Source: Stuff Business Day

OPINION: For many people their home is their most valuable asset.

Until recently in New Zealand it's been usual to insure your home on the basis of total replacement cover. This meant that you would provide information to your insurance company about the size of your home and, if it was destroyed, then your insurer would arrange to demolish the damaged structure and rebuild you a new dwelling to the same size and specification as it was before.

There was no limit on the amount your insurer was required to spend in order to replace your home.

Since the Christchurch earthquakes, many New Zealand insurers have changed the basis of their home insurance policies; they now require you to specify a "sum insured" for your home. This means that if your home is damaged or destroyed then the sum insured is the maximum amount the insurer will be prepared to spend to remedy the damage.

The onus is now on you to tell your insurer the cost to rebuild your house. If you under-estimate the cost and your house is destroyed, your insurer will not be prepared to rebuild your home to the same size and specification as it was before.

It's also worth noting that the rateable value of your home doesn't have a direct bearing on the cost to rebuild, therefore it is not a good idea to rely on the RV for insurance purposes. Instead you should investigate the actual cost of rebuilding your home to set your sum insured.

There are two methods to help you set the sum insured:

1. Online calculators: Some insurance companies provide online calculators to help you work out the likely cost of rebuilding your home. If you choose this option, you may want to ensure you cover any recent house additions or renovations. If you're contemplating any major renovations within the next 12 months, make sure these are covered as they're likely to increase the cost to rebuild your home to its current standard.

2. Property valuer: An alternative to using an online calculator, particularly if your home is an older house with period features or perhaps architecturally designed with non-standard design elements, is to engage a specialist property valuer. A valuer can provide you with a more accurate valuation of rebuild costs than an online calculator so you can use that information to establish the sum insured.

When renewing your home insurance policy you should also remember that you have a duty to disclose all material facts to the insurer which may affect the risk being insured.

For example if you are planning substantial renovations at your property, or perhaps anticipate leaving the property vacant for a period while you are overseas on holiday, then you should disclose that information to your insurer.

If you forget to provide that information it may mean you could jeopardise your insurance cover if you make a claim on your policy.

The need for you to set a sum insured when you renew your home insurance policy is a good reminder to review all the information you have provided to your insurer about your home, such as your excess, and also a review of your household contents insurance.

It's important to get your sum insured right so you have appropriate insurance cover when something goes wrong. Using an online calculator or a professional valuer will help you get the most from your policy.

House sales outperform prices

17th June 2013

Source: Stuff Business Day

The housing market continues its seemingly relentless upward climb, according to the latest REINZ/Fairfax Media NZ Housing Market Report, which shows ongoing growth in both house prices and the number of sales in most parts of the country.

The report lists the median selling prices and number of dwelling sales that occurred in the three months to the end of May for almost every suburb in the country, although some suburbs were omitted where the number of sales was too low to provide reliable median price or sales comparisons.

The report then compares those numbers with the same figures for March to May last year, so that readers can get an indication of how much the housing market in their area has changed in that time, whether they live in Kaitaia or Bluff (see table below). 

Although it is the median price figures that usually attract the most attention, especially from people who are considering buying or selling a property, the number of sales in an area is at least as important because it provides an indication of the strength of the market.

The report shows that over the last year, the overall number of sales increased at a faster rate than the median selling price.

Nationally, the median selling price of all dwelling sales recorded by the REINZ increased by 7 per cent in the three months from March to May, compared with the same period last year (from $369,000 to $395,000).

However the number of sales grew twice as quickly over the same period, increasing from 20,181 for the three months to May last year, to 22,946 for the same period this year, a rise of nearly 14 per cent.

Even in the red hot Auckland market, where the cost of housing has become a major issue for many, the number of sales outpaced the increase in prices.

In the three months to the end of May, the median price in Auckland was up 13 per cent on the same period last year, while the number of sales was up 18 per cent over the same period.

This suggests the market remains extremely strong, with rising prices underpinned by significant sales activity.

In the REINZ's latest report on the market, chief executive Helen O'Sullivan pointed to a shortage of new listings in many areas, something that could potentially put further upward pressure on prices.

Many people thinking of selling a property delay listing it for sale over winter, waiting until spring when they hope better weather will encourage more people to go out house hunting and sunny days will allow them to present their property at its best.

But with unsatisfied demand for properties from buyers persisting, a decline in new listings could put even further upward pressure on prices.

However that could be tempered by rising mortgage interest rates.

The strong rise in house prices over the last couple of years has at least in part been fuelled by the lowest average mortgage interest rates since 1964.

However that is unlikely to last because interest rates are expected to start rising by the end of this year or early next year, and they could keep rising quite steeply once they start going up.

That could make existing home owners hesitant about putting their home on the market and taking on extra debt to buy a more expensive property, while first home buyers will want to keep a lid on how much they borrow so that they aren't too stretched when rising mortgage repayments kick in.

However O'Sullivan believes the likelihood of rising interest rates could be increasing buyer activity.

"There was a very clearly flagged indication from the Reserve Bank that interest rates will rise by the end of the year, so there's a keenness to get in now while interest rates are low and fix for as long as you can," she said.

So far there was no sign of the usual winter downturn in sales.

"It is holding up very strongly compared to the usual trend at this time of year. Buyers are very active and if they've been looking for a while, I don't think they'll stop just because it's June," O'Sullivan said.

Snow finally returns

17th June 2013

Source: Otago Daily Times

Coronet Peak's on-piste snow base was topped up with some fresh layers of powder snow over the weekend after the field had been dealing with warm weather and no natural snowfalls since early June.

The ski area was open for business over the weekend with a snow base of 35cm yesterday, a top-up of 3cm of new snow at the base and 5cm at the top of the mountain providing good skiing and riding conditions on the main trails.

Colder temperatures overnight on Thursday allowed the ski area to make snow for the first time since June 3, focusing on the top half of the mountain.

The skifield opened on June 8, attracting larger crowds than expected. The mercury fell to -3degC over the weekend and Coronet Peak's 211 snow guns activated.

NZSki's other Queenstown skifield, the Remarkables, is scheduled to open on June 22.

The ski area already has 30cm of snow on the lower mountain and 70cm on the upper mountain. This weekend's snowfall was the biggest at the Remarkables since June 3.

At Cardrona Alpine Resort above the Cardrona Valley, the skifield reported 30cm of new snow as it geared up for its season opening next Saturday.

The skifield had a 60cm base at the top of the mountain and 30cm at the base buildings.

The other Wanaka area skifield, Treble Cone, reported 50cm of new snow yesterday. It is due to open for the season on June 27.

NZSki's Mount Hutt ski area, near Methven, opened as scheduled on Saturday for its 40th season.

It had a base of 70cm at the top of the mountain and 50cm at the base building due to a combination of heavy natural snowfalls last month and snowmaking.

Mt Hutt ski area manager James McKenzie said the snow pack served as the ''perfect'' base for future snowfalls and further snowmaking.

Queenstown Lakes change in direction 'a positive example'

17th June 2013

Queenstown Lakes District Council (QLDC) has signalled a welcome change of direction, proposing an overall rates increase of 1.5 percent. This equates to a zero percent increase, once growth is provided for, in this years annual plan.

Source: Voxy.co.nz

The council is also reviewing organisational structures and service delivery methods to help get on top of existing debt.

Federated Farmers Local Government spokesperson, Katie Milne, believes this, more responsible approach, is necessary and more positive than ratepayers may realise. That is why our submission to this year’s annual plan is backing the councils’ change in approach.

"Basically, the council is asking how we can do things more efficiently. That is a question we think all councils need to be asking this year".

A number of ratepayers submitted to the council expressing real concern that cutting spending will result in slashed services and less community support.

"I understand why some people would be upset about a potential loss of services that they value, but council have signalled the primary intention is to do the same at a lower cost"

"When measured against other councils, QLDC’s debt per ratepayer is among the highest in New Zealand".

"Any business owner knows that debt is a useful tool but its use is limited by your ability to service and ultimately repay that debt. If you take on too much debt, eventually decisions are dictated more by what you owe than what you want to do".

"In addition the district has some particular challenges to address as a result of relatively low funding for roading, a large number of non-resident users of the district’s infrastructure and the need to plan for growth."

"There are very few councils sitting on the same debt precipice as QLDC. Nonetheless we think all councils need to be asking the same fundamental questions this council is asking".

"It is important to remember that any councils spending is not funded from some magical pool of money. This money comes from ratepayers and often from larger land owners."

"I know there are a number of ratepayers in other districts that are using Queenstown Lakes as a good example of a council taking responsibility for financial issues and turning the financial ship around".

"We think other big spending councils should also be reviewing what they do and how they do it. For QLDC, the decisions in this year’s annual plan acknowledge the council has reached a financial fork in the road. They either make cuts now or hamstring their own decision making in the years ahead".

Queenstown revels in record shoulder season

17th June 2013

Source: Mountain Scene

Queenstown’s shoulder season tourism is picking up.
 
According to just-released statistics, the resort enjoyed its best ever April with guest nights 5.1 per cent ahead of the same month last year. 

International guest nights increased 11.2 per cent to 137,957 – an extra 13,886 guest nights. 

International guest nights comprised 63 per cent of all guest nights. 

Domestic guest nights were down 3.9 per cent to 81,044, but that was because Easter was in late March this year, rather than April last year, Destination Queenstown chief executive Graham Budd says. 

“March domestic nights were 7.8 per cent ahead of 2012, so overall we’ve still had good domestic growth,” Budd says. 

“We’re steadily seeing the autumn season grow as more people discover what a fantastic time of year it is to visit.”
 
The Commercial Accommodation Monitor also revealed average hotel occupancy in April was 66.4 per cent, 11.2 per cent higher than the same month last year. 

For the 12 months ending April, overall guest nights were up 7.4 per cent on the previous 12 months.

May house sales hit six-year high

13th June 2013

May saw the best month for house sales in the past six years, according to monthly property stats released today by the Real Estate Institute.

Median house prices in Auckland, Canterbury and other parts of New Zealand including Westland, Nelson and Marlborough rose to a record last month also.

The median price in Auckland rose to $565,000 from $555,000 in April, the biggest gain of any region. Auckland prices also rose 2 percent to a new record high based on the REINZ Stratified Median Housing Price Index, the Reserve Bank's preferred measure that strips out distortions in the data.

The figures were released as both Housing Minister Nick Smith and Auckland Council appear before the parliament's social services select committee, which is considering a bill that would free up land for housing in New Zealand's biggest city, which currently lags behind demand and has fanned prices.

 "There are too few houses coming to market in the Auckland region, creating an imbalance between supply and demand and driving up house prices at both the regional and national level," said REINZ chief executive Helen O'Sullivan. "The low level of new builds is well below trend, making little impact on the available stock of residential properties for sale."

The Reserve Bank is considering limits on high loan-to-value home mortgages among measures to take the heat out of the property market, which it says could pose a significant risk to country's financial stability.

All eyes will be on Reserve Bank Governor Graeme Wheeler tomorrow morning at 9am, when he delivers his quarterly Monetary Policy Statement. This statement may contain further details about the nature and timing of attempts to rein in house prices.

Nationally, house sales rose 7.5 percent in May from a year earlier to 7,714, the highest for that month in six years, while the median house price rose 0.4 percent from April to $392,000, a gain of 6.2 percent from May 2012.

The REINZ Stratified Median Housing Price Index rose 0.7 percent from April to a record, having gained 8.7 percent from a year earlier.

Days to sell rose to 35 in May from 34 in April, but down from 38 in May last year.

The median house price for Canterbury/Westland rose to a record $360,000 in May from $353,000 in April, while Nelson/Marlborough recorded a record median price of $353,625.

ASB Bank economist Jane Turner said that after seasonally adjusting today's REINZ stats, house sale edged lower by 3 per cent in May.

"While house sales are up 7 per cent on year-ago levels, the trend in house sales has been steady over the past 6 months. However, there is evidence that Auckland and Canterbury markets are supply constrained and demand in these area may be stronger than turnover implies," said Turner.

She said it was concerning to see the lift in house prices outside of these regions, where supply constraints were less of an issue.

"The acceleration in house price inflation in these areas indicate it is becoming increasingly appropriate for the Reserve Bank to lift the OCR (official cash rate) from very low levels to ease demand."

Turner said higher interest rates would provide some offset to stronger income growth and increased household confidence.

"However, at the minute the Reserve Bank is reluctant to increase the OCR given the elevated trade-weighted New Zealand dollar and low inflation pressures."

Turner said that recent communications from the Reserve Bank indicated it was strongly considering placing restrictions around growth in high loan-to-value lending.

"While blocking access to credit might choke off demand in some instances, it is unlikely to have much impact on demand for prospective buyers in strong capital positions, particularly while interest rates remain at very low levels."

Turner said she saw the OCR as the most effective tool in reducing housing market pressures and expected the Reserve Bank to lift rates from March next year.

Report: How young are shut out of owning home

12th June 2013

It is becoming more difficult for young people to own their first home, particularly in Auckland. Photo / Richard Robinso

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Housing has become a battle between old and young, a new report says.

Priced Out - How New Zealand Lost Its Housing Affordability, from public policy thinktank the NZ Initiative, argues that home ownership in a large part depends on your age.

If you're young, you are more likely to be locked out of housing and may never be able to climb the first rung on the property ladder.

Authorities such as Auckland Council, who thought a rural-urban boundary would work to the advantage of ordinary people, save transport costs and restrain unnecessary local authority outlays, were wrong, the report claims.

It says that fears Auckland would sprawl over farmland are exaggerated and opening up more rural areas for housing would ease house price pressures.

Less than 1 per cent of New Zealand is built on "even after including landfill and roads", the report says.

Artificial land restrictions, anti-development attitudes, over-powerful planners, tight building regulations and gun-shy councils have all been blamed for New Zealand's housing crisis in the report written by former Local Government Minister Michael Bassett and research fellow Luke Malpass.

Auckland's rural-urban boundary had been almost completely shut for many years, the principal cause of rising land values.

"The MUL [Metropolitan Urban Limit] favours the old and the rich and it punishes the younger and poorer," the report says.

Dr Oliver Hartwich, initiative executive director, said: "It is scandalous that ordinary New Zealanders are increasingly priced out of the housing market. We need to restore housing affordability to improve social mobility."

Hugh Pavletich, the Christchurch-based co-author of the annual Demographia Housing Affordability survey, agreed with the report, which draws on Demographia data to show the median cost of a house in Auckland is now 6.4 times the city's median income.

"New Zealand has 270,000sq km of land area of which only 1800sq km is urban. Auckland takes up only 530sq km and Christchurch 188sq km. Only 0.7 per cent of all land in New Zealand is urbanised. We have about the same land area as the United Kingdom which has a population of 63 million," Mr Pavletich said. He advocates building on farmland and abolishing city limits.

"There is no need to constrain our cities. We couldn't urbanise a further half a per cent of our land area over the next 50 years even if we met all the demand for all the housing that's needed," he said, praising the Government for its aim to have 39,000 houses built in the next three years.

The report shows land prices in Auckland make up more than 60 per cent of the cost of a home.

Auckland Council's draft Urban Plan advocates 70 per cent of all new development be constrained within the city limits, sparking a widespread outcry from many communities.

The report found that when Auckland rural land is freed up, it is always "too little and too late" and said there was nothing approaching a free market in housing: "It is a market largely created and manipulated by government - whether from Wellington or by local councils."

Spreading on to farm land would ease pressure fast.

"Even if New Zealand were to double its built footprint, less than 2 per cent of the country would be built upon. Settlement patterns in comparable cities in other countries show that doubling built-up areas produces a capacity to house far more than double the population."

Urban sprawl fears had resulted in restrictive, prescriptive zoning which had conferred a virtual monopoly market power on landowners near the city fringes, the report said, further blaming councils for high levies, fees and development contributions.

These had been "death by a thousand cuts" to housing supply, pushed up by the leaky homes crisis as councils sought to protect themselves against claims of negligence and passed on more costs.

"Nothing was done to rein in the agendas of planners," the report said, blaming councils for their "hopelessly conflicted position" as the sole provider of infrastructure while also deciding on where the urban boundaries should be.

If people did not like the service from a council or council-run company, there was little choice but to grin and bear it, the report said.

"In the Auckland region, where an estimated 13,000 new houses are required each year, absurdly high prices are being paid each week for very ordinary homes while only 4000 new houses are being added to the total housing stock each year," the report said.

Auckland's rural-urban boundary favoured those who owned houses and made it more difficult for people to make the first step on to the ladder.

Someone who bought an inner-suburb Auckland house for $70,000 in 1975 could find it worth $1.5 million today.

US cities, with fewer zoning restrictions, had not experienced New Zealand and Australia's sharp house price upturn.

Expectations about housing have changed too as people demand bigger places and many first-home buyers have an unrealistic expectation of what standard of house is available at what price.

Home ownership rates are now around 1916 levels, before large-scale Government intervention, the report says.

Auckland Mayor Len Brown defended the draft Unitary Plan and said urban sprawl was not the way forward.

Auckland would be a sustainable city with a balance of going in, up and out and simply advocating building on farmland was not an option, he told the Herald.

Getting more affordable housing was crucial for Auckland and people often forgot just how many houses had been built in the previous boom last decade, he said.

The city must plan for growth and do that responsibly, Mr Brown said.

"The type of house we have now will be a different house to what we have in five or 10 years time. Aucklanders are renowned for looking for different housing types, whether or not they are renting, and/or owning," Mr Brown said.

The Priced Out report backed the Productivity Commission's recommendations which advocated increasing land supply and introducing new rules to encourage cost-reduction and enhance innovation.

"We need a Government and local authorities prepared to face up to the current housing crisis and pursue solutions relentlessly to fix it," the report said, asking whether the building industry was to blame, or developers or bureaucrats.

"Each of these aspects plays a role in why New Zealand housing is so unaffordable," the report concluded.

Environmental Defence Society chairman Gary Taylor backs rules to stop the city spreading into the country and says rules in other countries ensure a much clearer demarcation between urban and rural, with areas for development and non-development clearly defined.

Auckland Housing Accord proposals on special housing areas, which could dispense with resource consents, was a serious assault on the planning framework which can only lead to poor outcomes. "To be blunt: slums," he said.

OCR rise could be on the cards as house prices soar

12th June 2013

Source: Otago Daily Times

Rising Auckland house prices could be flagging a rise in the interest-driving official cash rate (OCR), which the Reserve Bank has keep at a record low 2.5% for the past 26 months.

Economists in a New Zealand Institute of Economic Research (NZIER) survey released yesterday back up the wider consensus of others that the rate will be held at 2.5% until at least mid-2014.

The Reserve Bank will tomorrow release its monetary policy statement, widely expected to remain unchanged at 2.5%, despite a boost in construction and rapid rise in house prices.

Senior NZIER economist Dr Kirdan Lee said its ''shadow board'', of nine independent economists and businesspeople believes the Reserve Bank will hold the OCR, but cautioned Auckland house prices had continued to ''surge higher, risking a costly correction further ahead''.

''So, for the first time in 18 months, raising rates has more support than cutting interest rates,'' Dr Lee said in a statement.

Auckland's average house price was at a record $735,692, according to Auckland real estate agent Barfoot & Thompson. Three of its staff had sold more than 300 homes between them during the past year, at an average $721,000, The New Zealand Herald reported.

NZIER's principal economist, Shamubeel Eaqub, said the Reserve Bank should not raise the OCR yet, as inflation was low, the country's economic recovery was ''fragile'' and the exchange rate remained high.

''[The Reserve Bank] can and will use macroprudential tools to cool the frothy housing market soon,'' he said.

However, the Reserve Bank had to be ready to step in with an OCR increase, if it was needed to maintain financial and economic stability, Mr Eaqub said.

'$1000 down' property deals back

12th June 2013

Source: NZ Herald

House-hunters are seeing a return of "buy-off-the-plans" developments which advertise low deposits and no repayments until completion.

The arrangements lured investors during the 2007 property boom with the expectation property prices would keep rising and they would be able to sell and make an immediate profit after the apartments were built.

But experts warn that although the deals may seem attractive now, interest rates may not always be as low and house price growth could slow.

The deals involve buying the property before it is built, based on the developer's plans. A small deposit is put down and a sale price agreed on. The balance is paid once the project is finished.

Developers use the pre-sale signatures to secure a bank loan before construction.

Such offers slowed when property prices decreased after 2008 but it appears the trend has re-emerged as property prices pick up again.

Marketing material for Urba Residences, an apartment development at 5 Howe Street in Freemans Bay, offers "just $1000 down and nothing else for 18 months" for those using existing equity in their current house, or a 10 per cent cash deposit.Barfoot & Thompson agent Alistair Brown told the Herald that of the 140 apartments about 80 had been bought, with about half choosing the $1000 down-payment option.

About 90 per cent of the buyers were owner-occupiers and they were at all stages in life, he said. "You've got the first-home purchasers who can't afford the $1 million Ponsonby villa and they're seeing this as a stepping stone. And it's also got the people who are trading down from a house to an apartment."

The block is being built by Conrad Properties, which has built about 3500 apartments around Hobson and Nelson St. Prices start at $285,000 for a studio and go up to $800,000 for a three-bedroom unit.

The yet-to-be-built Tenor Apartments on Library Lane in Albany and M Central on Putney Way in Manukau are also being advertised with $1000 deposits.

And it's not just apartments - standalone homes around Auckland are also being advertised to buy off the plans for low deposits.

Real Estate Institute chief executive Helen O'Sullivan said she had seen a rise in developments being offered for sale before they were built.

"It's a sign of the building market starting to respond to increasing prices, and ultimately that is something we desperately need to happen in Auckland, in terms of the supply increase."

But she advised buyers to check out the developers' previous work, make sure their deposit was secure in a solicitor's trust rather than being held by the development company and, if they could, negotiate a "get-out" clause if the finished product was not what was promised.

"You certainly wouldn't want to put down 10 per cent, that would be a lot of money to have tied up. So you can see why they are pricing it that way, to seem attractive.

"What happened in 2007 is everyone piled into those things without thinking them through, thinking 'Yay the property market will keep rising and in 18 months I'll have a profit, because they're $250,000 today and they'll be $300,000 in 18 months time and I will have only put up $1000. Good for me'. It might not be that way."

When the development is built body corporate levies may be higher than thought and interest rates might be a lot higher than expected, Ms O'Sullivan said.

She advised against sales off plans for first-home buyers as they were complicated and there was a higher risk.

Cult of compact living blamed for high prices

10th June 2013

Source: Stuff Business Day

Too much focus on compact cities has restricted suburban growth, pushing up house prices, a new report suggests.

The Priced Out study, released today, suggests local government has to fix a situation it caused that led to the present housing affordability crisis.

In the report, released by business and independent public policy organisation The New Zealand Initiative, former government minister Michael Bassett and Luke Malpass question why the supply of new houses never responded to the skyrocketing demand from the 1970s onwards.

They conclude much of the blame lay with local government bodies joining the "compact cities cult" and being very restrictive in zoning policies that would free up land for development.

"Having compact, dense inner cities is fine but often that is prioritised at the expense of urban development. Most people want to live in suburbs."

Malpass rejects the notion that extending city zones might eat into land needed for farming, noting that less than 1 per cent of the country was built upon, far less than in other countries.

These policies and their high levies, taxes and consent fees seemed to indicate local authorities gave little thought to how they affected house prices, he says.

"Councils are very different, but councils have limited ways of making money and certain councils have used housing as a way of subsidising a large amount of activities."

Yet with councils having to bear the brunt of the leaky building costs, the consequent rise in construction oversight was understandable, he adds.

Wellington City Council housing portfolio leader Iona Pannett questioned whether evidence against compact cities took into account today's housing needs.

Current council planning policy balanced out making land for development available while keeping infrastructure costs down. "We've got enough growth for about 20 years - that's quite a lot."

The city council's development levies were relatively small when compared to other local authorities, while consent fees were in line with other city councils.

"Council consenting fees as a proportion of the overall costs is really tiny - it really is about materials and land costs."

Ms Pannett said the levy would also be reviewed shortly, and a broad overview of housing in the capital would be released at the end of the year.

Much of the report supports policies the present Government put in place to address housing affordability. Housing Minister Nick Smith announced a review of council development levies in February and measures to encourage council to rezone land out of city limits for new housing after the release of the Productivity Commission housing affordability inquiry last year.

Smith said while he could not comment on the report specifically, he welcomed any thoughtful contributions to the "huge challenge" of home affordability.

Malpass also notes that the peak of new homes in the 1970s was fuelled by government welfare policies after World War II that subsidised and promoted house construction.

"The New Zealand Government basically printed money for about 50 years to pay for those policies, which is why no-one is really considering them now."

The report acknowledges that several other factors fuelled increased prices - notably a rise in expectations and new standards around house size, insulation and double glazing.

Wellington was named the fourth-most affordable region in New Zealand, behind Manawatu, Hastings and Waikato, in a 2012 survey.

More new homes, but is it enough?

6th June 2013

Source: Stuff Business Day

The supply of new homes is cranking up fast, but it is unlikely to be enough to meet hot demand or to cool racing house prices, especially in the overvalued markets of Auckland and Canterbury.

Just as March quarter building work figures came in much better than expected yesterday, the Reserve Bank effectively waved the red flag that limits on low-deposit home loans were just around the corner.

Statistics New Zealand figures showed home building volumes jumped 12 per cent in the March quarter, the biggest rise in a decade. That took house building back to levels last seen in 2008 after the slump sparked by the global financial crisis.

House-building volumes are recovering but are still about 20 per cent lower than normal, as a share of the total economy.

Also late yesterday, economists said the Reserve Bank issued a consultation paper outlining how it might limit high loan to value (LVR) home mortgage lending, for banks lending to borrowers with a deposit of less than 20 per cent.

The limits on loans worth more than 80 per cent of a home's value would restrict the share of lending banks could make to borrowers with a low deposit, rather than banning them outright, Westpac Bank economists said.

LVR limits are expected to be brought in before the Reserve Bank lifts the official cash rate, and could delay the first step up.

But ultimately economists expected interest rates would have to rise to rein in rising house prices.

The Reserve Bank has long-flagged "macro-prudential" tools to help cushion the banking sector if there is a property crash. Both the IMF and the OECD have said recently that the New Zealand housing market is 20 to 25 per cent overvalued.

Westpac Bank economists said the Reserve Bank's consultation paper for high LVR lending aimed to get banks ready so the limits could be brought "in the relatively near future" if needed and could come in with just a fortnight's notice.

Bank of New Zealand senior economist Craig Ebert said the latest house-building figures showed there was a "supply response under way, but is it enough to keep up with what is rampant demand for new homes, underpinned by very low interest rates?"

It was a real race between supply and demand and BNZ expected house price inflation to "moderate but not collapse".

"House prices are well above fundamentals (compared with incomes), but that's different from saying they are about to crash," Ebert said, and it remained an open question what would happen next.

The "$64,000 question" was how many more new homes would be needed to slow down rising house prices. There was also intense demand for homes and so it was hard to gauge how the balance would be struck.

Prices were likely to keep rising in the meantime and house-building costs were also starting to pick up.

"There is a risk it keeps going up, too rapidly for too long and increase the degree of overvaluation in most markets," Ebert said.

While house prices had risen fast in Auckland, rents had been relatively flat rather than rising as they would with a "genuine housing shortage" as seen in the 1990s.

When house prices were outpacing incomes, and rents were not moving much, "it has the hallmarks of a bubble", Ebert said.

ANZ Bank senior economist Mark Smith said there was a housing shortage in Auckland and Canterbury and the Reserve Bank had repeatedly said it wanted to see supply catch up with demand for new homes.

So the latest residential building figures, the best growth in 10 years, were "encouraging".

In Canterbury the value of work was up about 20 per cent in the March quarter and Auckland was up about 10 per cent.

HOME BUILDING

March quarter building work total building volumes up 5.8 per cent

Residential building volumes up 12 per cent

Fourth quarter in a row of home building growth

Largest quarterly growth for home building since 2002

Trend for home building has risen 31 per cent from the trough of the building slump in late 2011

March quarter non-residential building down 0.8 per cent

'Rivers of gold' to slow to a trickle

5th June 2013

Source: Stuff Business Day

Newspapers may be a dying medium, but online advertising is showing double digit-growth and will top more than half a billion dollars in 2017.

The forecasts from PwC's 2013 Global Entertainment and Media outlook, released today, suggest the digitisation of New Zealand's entertainment and media businesses is paying off.

PwC's analysis shows traditional newspaper advertising's "rivers of gold" will continue to slow to a trickle, declining at an average annual rate of 5 per cent.

The review projects that this year, TV advertising spend will push newspapers out of the top spot for the first time.

PwC partner and technology specialist Paul Brabin said the long-term decline in newspaper advertising revenue meant print media needed to urgently monetise digital channels.

The report shows online advertising grew more than 12 per cent in 2012 and is forecast to continue growing at nearly 9 per cent a year for the next five years.

By 2015, online will become the second-biggest medium for advertising after TV, and revenues will reach $543 million by 2017.

"Pleasingly, our newspaper publishers are following global trends seen in mature markets by building digital paywalls," Brabin said.

"Paying for our online news content will be the new normal."

Digital circulation spend is forecast to increase 38 per cent until 2017 as paying for content online becomes commonplace.

Fairfax Media, publisher of this website, is investigating paywalls for its online newspapers.

Across the ditch, its flagship Australian titles have already introduced paywalls for some overseas readers.

Rival publisher APN has also said a paywall for its online New Zealand Herald content was inevitable.

The proliferation of smartphones, tablets and mobile devices is also changing the advertising landscape.

"Mobile advertising is taking off in New Zealand and has grown a massive 175 per cent in 2012 as more Kiwis carry smart phones, while our broadcasters are successfully monetising online catch-up TV content by selling advertising," Brabin said.

The TV and video game markets are among the other big winners, with strong growth forecast, while magazine, film, radio and music industries are expected to hold their ground.

Overall, the entertainment and media industry in New Zealand is projected to grow at an average annual rate of 3.5 per cent, reaching $6.8b in 2017.

"On the whole, the future looks promising for New Zealand's entertainment and media businesses, and New Zealand trends are consistent with global trends," Brabin said.

Property prices reach all-time high as supply dwindles

4th June 2013

Source: One News
Housing prices have reached an all-time high as the number of properties being listed drops, the latest property report shows.

In May the average national asking was price nearly $455,000, up 1.7% on last month and 4% year on year, according the NZ Property Report.
In Auckland the average was $631,656, up nearly $20,000 on the previous month, and in Central Otago it was a whopping $707,510, nearly $30,000 higher than in April.
No region in New Zealand has ever had an average asking price higher than $700,000 before.
Inventory of houses for sale has dropped to a record low. Measured by the number of weeks it would, in theory, take to sell all the listed property, May saw that number drop to 25.4 weeks. The long-term national average is 38.
In the country's largest property market, Canterbury, the inventory level in May was just 14 weeks - down 14% on the previous month and 42% on the same time last year.
Auckland's inventory level in May sat at 12 weeks.
Realestate.co.nz marketing manager Paul McKenzie says ongoing demand for homes in these regions drove the fall in inventory and the low numbers indicate supply is not keeping up.
"Lack of supply is what is really driving the low inventory and high asking price, but the demand is very real.
"We had more than 1.5 million visits to our websites in the last month, a 20% increase from the same month last year, which shows that despite the high in asking price there are still plenty of people looking to buy."

The full report can be read here .

Mortgage rates tipped to top 7pc

4th June 2013

Source: Stuff Business Day

Home buyers and farmers appear likely to bear the brunt of new mortgage lending requirements which could start to take effect by the end of this year and potentially push mortgage interest rates above 7 per cent by the end of next year.

One of the ways the Reserve Bank is considering reining in what it sees as risky lending by banks is by introducing what it calls Sectoral Capital Overlays (SCRs). These would require banks to increase the amount of capital they hold, relative to the nature and scale of their lending into specific sectors of the economy.

Although the requirement could be applied to any economic sector, it is probably significant that the only sectors referred to as potential candidates for the treatment in the Reserve Bank's policy statement on the subject were agriculture and housing.

While the pace of growth in residential mortgage debt captures most of the headlines, the latest figures from the Reserve Bank show rural debt has been ballooning at an even faster pace.

They show that farm debt to banks and other financial institutions was $50.4 billion at the end of March and increasing at an annual rate of 5.2 per cent.

Although household debt, which is mostly made up of mortgage lending, was higher overall at $193.6b, it was growing at a slightly slower pace, 4.3 per cent a year.

By comparison, loans to businesses ($78.9b at the end of March) were growing at just 1.9 per cent a year and that rate of growth had been in decline since October last year.

The Reserve Bank's policy statement on SCRs said introducing them could make the targeted sectors, such as housing and farming, less attractive for the banks to lend to.

"Banks might decide to reduce their exposures to the sector if faced with a higher cost of funding. Alternatively, should banks pass on any increased funding cost, a rise in borrowing costs would help reduce demand for credit in the targeted sector," it said.

It may also moderate rising house or farm prices.

"Expectations of slower credit growth may flow through to asset price expectations, helping mitigate speculative demand," the statement said.

The likely implications for borrowers are that riskier loans, such as those where the borrower has a low amount of equity, will become harder to get and interest rates may start to rise.

While introducing SCRs is only one of the tools the Reserve Bank is looking at using to control residential mortgage lending in particular, there is a growing feeling that it will need to raise interest rates as well, to take some of the heat out of the housing market, and possibly the rural property market.

Mortgage interest rates are at their lowest level since 1964 (refer graph) so, given the cyclical nature of financial markets, it's likely they will start to rise. The big question is when.

Dr Ganesh Nana, chief economist at economic consultancy BERL, believes there is a case to be made for lowering interest rates further but conceded they are more likely to rise than fall.

In separate reports released last week, Institute of Economic Research principal economist Shamubeel Eaqub and BNZ chief economist Tony Alexander both picked that the Reserve Bank would start forcing up interest rates some time next year.

Eaqub believes that could happen as soon as January, and that the Reserve Bank will likely have raised interest rates by 1.25 per cent by the end of next year, which would push most mortgage interest rates to above 7 per cent.

But in doing that the Reserve Bank would be treading a fine line.

The effect higher interest rates would have on mortgage repayments can be seen in the accompanying table, but their overall effect would be broader than that.

According to the Reserve Bank, the household, business and agricultural sectors collectively owed banks and finance companies $322.8 billion at the end of March, and that mountain of debt grows higher each month.

Every 1 per cent rise in interest rates would add another $3.23b a year to the interest payments made by households, farms and businesses to service that debt.

On the other side of the coin, people have been pouring money into bank deposits in spite of the low interest rates they have been providing. At the end of March, banks and other savings account providers were sitting on $117.9b in depositors' funds.

So every 1 per cent rise in deposit rates would plough another $1.18b (before tax) back to those account holders.

If deposit and borrowing rates both increased by 1 per cent, the net cost to the economy would still be more than $2b a year, putting at risk the fragile economic recovery.

A bigger worry for the Reserve Bank would be that higher interest rates could push up the value of the New Zealand dollar at a time when the bank is trying to force it down. So it has the formidable task of trying to bring down the exchange rate while cooling the overheated housing and possibly the rural property market at the same time.

A lower exchange rate would boost export earnings, but also raise the cost of imported goods.

This means that heading into next year, anyone with a mortgage could be facing the twin perils of rising interest rates, which would force up their mortgage payments, and higher prices for imported goods, which would include everything from petrol to computers, clothing, tea and coffee.

While there is considerable uncertainty about the extent and timing of those events, one thing seems certain.

The currently favourable environment (for household borrowers) of low interest rates and the low cost of imported goods is unlikely to last much longer.

Anyone considering taking out a home loan or other form of debt should, therefore, leave themselves some wriggle room to cope with potentially higher costs hitting their household budget in the next year or so.

NZ Property Report - May 13

4th June 2013

NZ Property Report – May 2013

Fernhill land for sale

31st May 2013

Source: Otago Daily Times

The buyer of Queenstown land valued at more than $7 million will have a rare opportunity to build accommodation higher than 10m to capitalise on views of Lake Wakatipu and the Remarkables.

The site at 96-98 Fernhill Rd, covering more than 9000sq m, was placed on the market by NZF Money's receiver KordaMentha with Bayleys Real Estate for sale through mortgagee tender.

The property is about 2km from the Queenstown central business district, opposite the Queenstown Heritage hotel and behind the two-storey Heritage Villas.

Although a covenant limits the use of the site to visitor accommodation, resort planning consultant John Edmonds said he had been successful in amending this covenant for the units which surround the site, which are now able to be used as residential dwellings.

The zoning anticipates the site to be developed into high-density visitor accommodation, such as apartments or terraced or semi-detached housing.

''High density residential subzone A'' came with a special ''rolling height limit'' rule which can allow an owner to build over the permitted 10m restriction as a discretionary activity of the Queenstown Lakes District Council.

The property is being marketed by Bayleys Queenstown commercial and industrial agents David Gubb and Dave Fea.

Mr Gubb, said yesterday there had been ''a good level of inquiry'' about the property, most of it from Queenstown itself. The tender closes on June 12.

Low interest rates a 'trap'

31st May 2013

Source: Stuff Business Day

Home buyers are being warned to look long-term as lenders offer record short-term mortgage rates.

Fixed one-year interest rates have fallen below 5 per cent in the past week as house prices soar in the main centres.

However, two mortgage brokers and a financial planner are cautioning borrowers tempted by short-term interest rates.

Broker Gary Dobbs warned house hunters not to focus on low interest rates and budget on mortgage payments of 8 per cent.

"Mortgage rates have been between 5 and 10 per cent in the last 10 years; 8 per cent represents a rough average."

Dobbs suggested borrowers have a plan, as he expected an interest rate hike to 8 per cent in the future.

"Banks used to assess you on a higher interest rate but they don't anymore."

Financial planner Stephen McFarlane said short-term low interest rates were a trap.

"The banks are luring us in. What will the interest rate look like when our wonderful rate has expired and we still have many years of repayments ahead of us?" McFarlane said.

He advised borrowers to mix floating with low short-term fixed rates, and target at least 50 per cent in three to five-year terms.

"It will provide some risk management and some certainty at the risk of a stronger than expected rate rise,"  McFarlane said.

Broker Malcolm McDonald said the Official Cash Rate was predicted to rise by 100 to 125 points by the end of next year.

"It would be better to look at the longer two to three-year terms which are all just as competitive," McDonald said.

"If I was buying a house now I would base my personal budget around being able to pay a rate 1 per cent to 1.5 per cent higher than current rates.

"Budgeting to pay more than the carded rate allows borrowers to take advantage of lower rates and assists in reducing debt."

McDonald said there had always been three cardinal rules to borrowing - "Savings, serviceability and security."

OWNER BRACED FOR HIGH RATES

Will Walford, 30, and his partner Bronwyn own three homes.

They were paying 10 per cent interest on the mortgage when they first bought in 2005.

Both are working, without dependants, and could still service the mortgage if interest rates hit 10 per cent again.

They are paying a floating rate on their own home and a fixed rate on their two rental properties.

Two empty rentals and one income would be the worst case scenario, Walford says.

"It would be tight if we only had one income."

He said they did not expect low interest rates to last forever.

"Interest rates have been under 6 per cent for at least two years so we are not maxing out what we can borrow. We are within the 80 to 20 borrowing ratio.

"We have our own home on a flexible overdraft at 5.6 per cent and we treat that like a bank account so we can get it paid off as quickly as possible."

Their rental properties are fixed at 4.99 per cent over two years.

"If the mortgages go up the rents go up."

Walford said they offered their rentals below the market rate.

"It offered us a bigger choice in terms of tenant; lower rent has given us a lot more tenants to pick from. We can use the rental income as a way to leverage interest rates."

He said the couple had a long-term plan. "As your house price increases your equity increases.

"The rent covers the mortgage plus a bit more."

Snow blankets Queenstown ahead of ski season

30th May 2013

Source: Voxy.co.nz

Queenstown is buzzing after 24 hours of constant snowfalls blanketed the town and surrounding mountains, giving local ski areas a huge boost before the start of the winter season.

Destination Queenstown CEO Graham Budd says the fresh snowfall transformed the resort from autumn colours into a winter wonderland "literally overnight".

"We only get snow downtown a few times a year so it’s always a treat for locals and visitors and it makes for some stunning photo opportunities," he says.

"Coronet Peak is scheduled to open on 8 June and the other local ski fields are set to follow in the next few weeks so there’s an excited buzz around town now as everybody gears up for winter."

Locals and visitors will welcome the start of Queenstown’s winter season on 21 June when the annual American Express Queenstown Winter Festival kicks off with 10 days of fun and frivolity on and off the ski slopes. Dubbed the Southern Hemisphere’s biggest winter celebration, the multi award-winning festival (21-30 June) attracts around 30,000 locals and visitors to celebrate the start of the winter season with live music, fireworks, street parades, comedy, food and wine events, crazy races, quirky entertainment and mountain mayhem.

Mr Budd believes Queenstown will be an even more popular short-haul holiday destination for Kiwis and Australians this winter thanks to increased flight scheduling and capacity.

"Queenstown is a short flight from New Zealand’s major centres and only three hours from Australia which makes it very accessible for a winter holiday or long weekend.

"The skiing is world-class, while in Queenstown itself there’s also plenty to do off the slopes whether it be exploring the region’s lake and alpine scenery, ice skating, taking a wine tour, playing golf, indulging in a spa treatment, some retail therapy, or enjoying the buzz of the vibrant apres ski atmosphere and busy events calendar.

"It really is the ultimate winter holiday destination for all ages. Everyone who has ever aspired to have a winter holiday in Queenstown should make 2013 the year they say ‘we did it’, " says Mr Budd.

House consents hit five-year high

30th May 2013

Source: Stuff Business Day

Building consents for new houses have hit a five-year high, Statistics New Zealand said today.

Consents for 1,755 new houses, including apartments, were issued in April, the highest number since 2373 consents in April 2008.

Statistics New Zealand spokesman Blair Cardo said the ''bumper month'' for building extended across the country, although numbers naturally higher in Canterbury and Auckland.

''In particular, Wellington and Otago regions together consented 185 apartments, boosting new house numbers there.''  

Housing consents including apartments were up 43 per cent compared with the same month last year, or 19 per cent on a seasonally adjusted basis, up 8.3 per cent on March.

Excluding apartments, consents rose 41 per cent to 1541.

Apartment consents were also well up on last year at  214, compared to 138.

Statistics New Zealand said the trend for housing consents including apartments had been on a rise for 25 months in a row, after hitting an historic low in March 2011.

In Canterbury, it was obvious rebuild efforts were picking up pace. Earthquake-related consents for non-residential buildings climbed to $308m, up 35 per cent on a year ago.

The number of new houses being planned and built in Auckland is ringing alarm bells for the New Zealand Institute of Economic Research (NZIER).

Releasing updated economic forecasts yesterday, NZIER said sharply rising house prices in Auckland "may be speculative" and have the Reserve Bank worried. It noted that house price inflation was far higher than rent rises, suggesting houses were being bought as an investment, not because of a demand for homes.

This could lead to the Auckland house price bubble bursting, with economic implications for the whole country, NZIER said.

Wakatipu finds room to grow

29th May 2013

Source: Otago Daily Times

In this week's Behind the Story, James Beech takes a ''big picture'' look at future growth in the Wakatipu Basin, with the help of the Queenstown Lakes District Council, to see where New Zealand's fastest-growing centre has room to manoeuvre.

The average total population of the Lakes district in 2011 was 46,612, or 28,440 residents and 18,172 visitors, which is projected to snowball to 67,439, or 44,093 residents and 23,346 visitors, by 2031.

The average age of the district's population is projected to rise from just under 36 in 2011 to nearly 42 in 2031.

There were 12,625 dwellings in the entire district, as of a year ago, but plenty of capacity already exists for a further 24,484 dwellings in the district.

Where is Queenstown going to house an expected 20,000 extra people?

1 ARROWTOWN SOUTH, also known as requested plan change 39, aimed to rezone about 30ha of rural general zoned land for up to 215 residences and 12.2ha of open space, including 4.6km of publicly accessible trails and footpaths and a small village area. The area was between McDonnell Rd and Centennial Ave and bounded along its southern boundary by the Arrowtown Golf Course.

Commissioners refused consent in September 2010. However, the plan change 29 hearing in the Environment Court confirmed the boundary, subject to a minor amendment.

The developers behind plan change 39 have now asked the Environment Court whether they can radically amend plan change 39 to match the court's decision on plan change 29.

2 SPEARGRASS FLAT RD CAMPUS is a consented $3 million to $5 million new school to ease enrolment pressure on the St Joseph's School, Queenstown, and offer Catholic education to families in the wider Wakatipu Basin.

The campus for 112 primary school-aged children is ready to be developed, pending funds, after the remaining two pairs of appellants withdrew their application in June last year to appeal the High Court decision.

Speargrass will consist of a 480sq m classroom block and a 220sq m administration block. Management will be retained by St Joseph's School. A total of 43 car parks will be provided, along with playing fields and a hard court area.

3 ARTHURS POINT has 265 dwellings and space available for 450 to be built.

4 QUEENSTOWN has more land awaiting development than meets the eye at ground level. A view from above reveals dirt tracks where subdivisions are waiting to spring up.

A $50 million convention centre for between 750 and 1000 people is being considered by the council on part of the 4ha of council-owned land at the top of Man St, overlooking central Queenstown and Lake Wakatipu. The centre would occupy an estimated 1.4ha, leaving the council with 2.55ha.

More five and four-star hotels, plus luxury visitor and residential apartments, are allowed on the remaining 4ha of vacant land at Kawarau Falls Station.

Kelvin Heights has provision for more homes a short distance up and around Deer Park Heights. There are 581 houses now, and a further 1844 dwellings can be built.

5 FRANKTON FLATS contains 69ha of unremarkable land known as the ''last remaining greenfields site within the urban growth boundary of Queenstown'' and continues to be hotly contested by developers.

A $125 million retail complex, with a Countdown supermarket as a major tenant at the abandoned Five Mile site in Queenstown, was cleared for development after a judicial review instigated by Shotover Park Ltd was dropped on April 29.

Shotover Park, the council, Lakes Environmental Ltd and Queenstown Gateway Ltd settled the issue out of court on confidential terms ''acceptable to all parties''. The seven-building complex is expected to be built in two stages and open by Christmas 2014.

Foodstuffs South Island Ltd, behind the proposed Pak'n Save, and H&J Smith, behind Crossroads Properties Ltd, behind the proposed Mitre 10 Mega, both hope the willingness to reach an agreement demonstrated by parties interested in Frankton Flats will extend to progressing the development of their big-box retail plans nearby.

6 SHOTOVER COUNTRY is a new $300 million residential development on 120ha of rural land between the Shotover River and Lake Hayes Estate. It is considered one of last pockets available for major residential development in the Wakatipu, with 750 homes planned.

The Government confirmed last month a new $14 million primary school on 3ha at the heart of Shotover Country was scheduled to open in 2015, to cater for about 500 pupils.

There were about 1635 primary school-age children in the Wakatipu as of July last year and the population was expected to grow to about 2400 by 2020, Education Minister Hekia Parata said.

7 LAKE HAYES ESTATE had 284 houses, but land for only 74 more, as of April last year.

The Queenstown Lakes Community Housing Trust called last month for expressions of interest to buy commercially zoned vacant land at 3 Onslow Rd, valued at $350,000, and construct a building for a cafe-bar and manage the commercial operation.

8 KAWARAU FALLS BRIDGE is arguably the most publicly in-demand development in Wakatipu, but a replacement two-lane bridge for the 87-year-old one-lane structure is not expected to be built by the New Zealand Transport Agency until after 2015.

Commissioners recommended to the council to approve the construction, operation and maintenance of a new bridge, with minor conditions, last month.

The agency, as the requiring authority, has 30 working days to advise the council whether it accepts, or rejects, the recommendations in whole or in part, or whether it proposes to modify the requirement.

9 JACKS POINT is a 1200ha settlement to include more than 1300 residential homes, restaurants, shops and a luxury lodge.

Interest in property increased when the estate remained inside the reduced enrolment zone of Remarkables Primary School, Frankton, announced a year ago.

10 HENLEY DOWNS is the new special zone of 520ha of land within the Jacks Point Resort zone. The private plan change request by RCL Queenstown Pty Ltd was approved by a council subcommittee last month and

opened to public consultation.

Rezoning would enable an increase in residential development from 1300 residences up to 2400. Lakeshore protection and an ''agricultural, conservation and recreation area'' area involved.

More than 20 submissions were received by the council by the end of April, about half in support and half opposing the private plan change request.

Remarkables Park Ltd and Shotover Park Ltd were in general support, although they sought clarification about the type of development which would take place. The Otago Regional Council requested the plan change be declined unless the district council was satisfied any risk of liquefaction, fan flooding, wastewater and natural hazards were understood and addressed.

The Queenstown and District Historical Society submitted the applicant had given the wrong name to the development, saying it should be called Hanley Downs, after the 19th-century farmer Jack Hanley.

Convention centre: 3 site options

28th May 2013

Source: Otago Daily Times

Three council-owned sites in Queenstown are being considered for the resort's proposed convention centre.

In a statement yesterday, Queenstown Lakes District Council chief executive Adam Feeley said the Lakeview site had already been identified as one with ''cost-effective potential'' because it was large and flat and had ''sensational locality''.

However, Mr Feeley said it was ''imperative to test options'' and sites at Stanley St and the Gorge Rd car park were also being considered.

Although the Lakeview site was a good fit in terms of the ability to leverage other commercial opportunities - key to the success of the centre - the potential of the other two sites needed to be understood more fully from economic benefit, financial and consenting perspectives, he said.

''In parallel with the preparation of information for consultation are the negotiations with both the funders and the proposed operator, SkyCity Entertainment Group.

''As I have previously stated, there are many strands to this.

''The investors need to know the project is financially viable; the operator needs to know it represents a good business opportunity; central and local government need to ensure that the scope of any contribution is both well-defined and capped, and that the process has been robust.''

The council's draft annual plan consultation requested general feedback on the concept. There were concerns from some Wanaka submitters the only impact for them would be ratepayers' money contributing to the centre.

Another concern relayed to the council was such centres were ''notoriously unprofitable'' and some submitters urged the council not to make any financial contribution towards a convention centre.

The council has announced SkyCity as the ''preferred operator'', which drew criticism from Julian Haworth, who wrote that its apparent ''devious dealings'' in back room deals with central government should exclude it from any community projects.

The issue also drew positive submissions, with the council receiving support for the centre, and to put forward ratepayers' money if necessary.

Sir Eion Edgar, who was on the committee which investigated the feasibility of the centre, said it was ''extremely important for the future of Queenstown''.

The council's draft annual plan, which was approved in April, said ''it is not the intention that council would be involved in either the ownership or operation of a convention centre''.

Funding is being still being investigated but in April, Prime Minister John Key said the Government might contribute some funding towards its estimated $50 million price tag.

Last week, Mr Feeley said feedback through the draft annual plan would help the council to ''formulate the formal consultation process''.

Queenstown voted one of world's top destinations

23rd May 2013

Source: Voxy.co.nz 

Queenstown has been named one of the world’s Top 25 Travellers’ Choice Destinations by TripAdvisor, the world’s largest online travel community.

As well as rising to 25th place on the international list, the four season lake and alpine resort was also named best destination in New Zealand and second best in the South Pacific.

The Travellers’ Choice Destinations awards honour top travel spots worldwide based on millions of valuable reviews and opinions from TripAdvisor travellers. Award winners were determined based on the popularity of destinations, taking into account travellers’ favourites and most highly rated places.

Destination Queenstown CEO Graham Budd was delighted with award and said it was a fantastic international achievement for the resort.

"We’re aware of the power of Trip Advisor in influencing the travelling community, so the news that Queenstown has been ranked by millions of travellers worldwide alongside cities like Paris, New York and London is a testament to the quality of our operators and the exceptional travel experience they deliver."

The cosmopolitan resort town, famous for its spectacular scenery and huge range of world-class experiences, has previously earned international accolades from other travel authorities such as Lonely Planet, Conde Naste and National Geographic.

Latest articles Advertise Contact Help Make NBR my homepage Print archive Subscribe Hot Topics: Solid Energy | Unitary plan | Budget Queenstown industrial property in recovery

23rd May 2013

Source: National Business Review

Queenstown’s industrial market enjoyed increased in activity in recent months, with leasing of several long-vacant premises.

There have also been more buoyant land sales, according to Colliers in its annual review of the Queenstown market.

Vacant land sales predominantly in the Shotover Park industrial area have historically shown growth, with land values rising from $150-$250/m2 in 2002 and peaking in 2006-07 at $800-$1000/m2.

Recent land sales indicate values generally ranging from $350-$550/m2.

“We understand there have been some pre-sales within the next stage of Shotover Park for sites ranging in size from 700m2 to 1200m2 at sales levels from $400-$500/m2.

“However, the progress and timing of this extension to the industrial area is also uncertain due to consent and planning issues.”

Industrial rents are now typically in the range of $95/m2 to $140/m2 for good-quality warehouse space and $120/m2 to $150/m2 for offices, with some good profile locations achieving retail/ showroom rentals of up to $250/m2.

Industrial yields are stable and are now at circa 7% to 8.5%, depending on the tenant, lease terms, size, quality and location.

Vodafone prepares for 4G launch

23rd May 2013

Source: The Southland Times

Queenstown and Glenorchy will be the first towns in New Zealand to have Vodafone's 4G network coverage when Wakatipu coverage begins on June 20.

Vodafone director of external affairs Tom Chignall, who was in Queenstown to unveil network details yesterday, said quantum leaps in network use and capability meant exciting times were ahead for smartphone and mobile device users. "Over 50 per cent of Kiwis now use smartphones, which have taken over from PCs [personal computers]," he said.

That had contributed to data use quadrupling in the last two years.

The surge in data use was mostly video-driven, with video streaming and downloading accounting for 23 per cent of total data use, Mr Chignall said.

The 4G network would allow a seamless connection with cloud-based applications and stored data, high-definition video-conferencing and content streaming. It would allow a user to download an entire movie in minutes, Mr Chignall said.

As well as giving 4G network details, Mr Chignall revealed Wanaka's network capacity had been expanded.

Queenstown world-class destination

22nd May 2013

Source: Otago Daily Times

Queenstown is the world's 25th best destination, according to TripAdvisor.

The global travel website released its latest survey results yesterday. Queenstown was ranked first in New Zealand, second in the South Pacific and 25th worldwide.

It was ''fantastic'' a New Zealand destination ranked so highly, Tourism New Zealand chief executive Kevin Bowler said.

''To receive this sort of third-party endorsement via the TripAdvisor community is incredibly valuable.

''Queenstown itself is an absolute jewel made even more popular by it providing the backdrop to many scenes in The Lord of the Rings trilogy and now The Hobbit,'' Mr Bowler said.

The world's best destination was Paris, ahead of New York (2), London (3), Rome (4) and Barcelona (5).

Milford Sound was ranked fifth in New Zealand, Wanaka seventh and Dunedin ninth.

In the South Pacific, Milford Sound was 14th, Wanaka 19th and Dunedin 21st.

Ranking were based on reviews and opinions from TripAdvisor travellers.

More than 400 destinations were considered.

The survey was in its fifth year.

More people moving to New Zealand

21st May 2013

Source: Stuff

More people are arriving to live in New Zealand long-term than leaving the country, with April seeing the biggest net migration gain in two years.

Statistics NZ said today that the net gain of 1600 in April reflected more people arriving from around the world and fewer New Zealanders leaving.

The seasonally adjusted net loss to Australia in April was 2000, the smallest net loss since late 2010.

There was a flood of migration to Australia after the Canterbury earthquakes, but that has been ebbing away.

The latest net loss to Australia was well down on the recent high of 3600 recorded in September 2011.

On an annual basis, New Zealand had a net gain of 4800 migrants in the April 2013 year, compared with a net loss of 4000 in the April 2012 year.

200-unit village planned for site

21st May 2013

Source: Otago Daily Times

An artist's impression of the St Paul de Vence Queenstown village-style development proposed for an excavated site on Lake Esplanade. Image supplied.A French-inspired village with about 200 residential units is proposed for a steep piece of land on Lake Esplanade.

Heaven on Earth Corporation Ltd has lodged a resource consent application with Lakes Environmental for the proposed village, named St Paul de Vence Queenstown.

The site is an excavated piece of steep land between a reserve and the Rydges Hotel, with Thompson St behind. Creative director Maurice Orr, who lives in the Wakatipu, hoped the application would be approved and if all went to plan, construction could start in 2015.

Prices for the units would depend on size, he said. A two to three-bedroom unit could cost between $300,000 and $400,000.

He said with a lack of large-scale projects in the area, short-term benefits would include work for construction workers and long-term, the substantial rates boost and general spending from the residents and guests.

He said while it was accepted families with children could live in apartments in cities, Queenstown had not reached that stage and, consequently, he was unsure whether the development would be an answer to housing the resort's fast-increasing population.

Asked whether the units would be for visitors or residents, he said his view was to have ''a good balance of visitors and locals'' so visitors could come to a hotel and ''end up eating with a local''.

Key features of the development's design include glacial and snowflake shapes, white and glass being primary aspects and eight floors receding progressively up the steep site.

Another feature of the site, he said, was the neighbouring reserve area.

The resource consent application states that to the southwest of the site there is a steep recreation reserve which is ''almost a forgotten area'' and Mr Orr yesterday said he had creative hopes for it.

''One idea we have had was to make it into a sculpture reserve,'' Mr Orr said.

The site of the proposed village had always been earmarked for a hotel and it was already excavated when he purchased it.

He said he had been planning the development before Christmas.

Lakes Environmental has requested further information for the resource consent and, due to the consent still being processed, the units are not yet for sale.

Housing market not flooded with overseas buyers - economist

21st May 2013

Source: TVNZ

An economist says that new figures reveal that the local housing market is not being flooded by overseas buyers.

BNZ Chief Economist Tony Alexander says that the latest BNZ and Real Estate Institute residential market survey figures show that offshore buyers account for only 8% of all residential house sales in New Zealand.

And of that percentage, 16% were from the United Kingdom, 15% from China, 14% from Australia, and 12% were from other Asia countries.

Of those home buyers, 3.6% said they are not planning to move to New Zealand.

He said the survey shows the idea that "cashed up foreign buyers" are putting pressure on the New Zealand housing market is not the reality.

Alexander said Kiwis are "looking for easy answers as to why the market's rising so rapidly".

"And of course if you go along to an auction, there's always high visibility of whoever the successful purchaser is, and it certainly seems many Chinese prefer buying through the auction method, rather than the more protracted one on one negotiations shall we say," he said.

"But the evidence doesn't actually back up the anecdotes with regards to the Chinese purchasing everything in Auckland.".

However, Alexander said while not significant now, in the next two to five years New Zealand will see more foreign buyers enter the market.

He said New Zealand's engagement with China in particular is going to grow.

Alexander said he believed "there will be an upward trend, especially out of China, because there's simply so much growth in wealth there".

China is New Zealand's second largest trading partner, and Prime Minister John Key has been encouraging the link between the two nations.

Key visited China earlier this year, where he re-signed a visa fast track scheme for Chinese business people travelling to New Zealand, and pushed for a boost in tourism numbers to New Zealand.

Alexander told ONE News: "The number of Chinese migrating to New Zealand is rising, their desire to get assets outside of China is rising, we'll see more foreign purchasing and because I believe New Zealand house prices for domestic reasons are going to go higher I do think we need a foreign house purchase policy."

Alexander is calling on the Government to adopt Australia's foreign ownership model, which dictates that anyone without permanent residency must apply to buy property and can only purchase 'off the plan' new builds or build their own houses.

This way they contribute to housing stock and do not put pressure on existing stock, Alexander said. They must also sell property if they move overseas again.

The Green Party has signalled Hong Kong's housing policy as being a successful model. Last year Hong Kong placed a 15% tax on properties bought by foreigners instantly cooling the market, which had become the most expensive in the world.

First home buyers accounted for 24% of house sales, while investors accounted for 19%.

He said those figures are consistent with the results in March.

House prices unlikely to fall fast

21st May 2013

Source: Stuff Business Day

Westpac chief economist Dominick Stephens says Auckland house prices are unlikely to be forced down in the short run by the Government's moves to speed up consent processes for new houses.

The Government has warned councils it will take control of the housing planning and consent processes from them if they don't act quickly enough to free up land for houses.

The move is aimed at speeding up supply particularly in Auckland where booming house prices have the Reserve Bank worried.

Speaking at a post-Budget function this morning, Stephens said the tight supply of houses had not been the only factor in house prices rising, and cited the example of Invercargill and Taranaki which had only small or negative population increases during the past five years yet still had significant increases in house prices in that period.

"As long as interest rates stay low and the tax system favours property, house prices will go up," he said.

"Stimulating a whole lot of building will not move house prices in the short run."

Under the housing accord the Government reached with the Auckland Council last week, the council will be required to boost the number of housing consents it issues from an average 5000 a year to 9000 this year through fast-tracking the consent process.

Economic Development Minister Steven Joyce, speaking at the same function, said that would rise to 13,000 next year and 17,000 the following year.

The most the council had ever passed in one year previously was 12,000 in 2003, he said.

"We've had a robust discussion with the Auckland Council because they're not consenting enough sections," he said.

"They need to get off their bums and do it."

Joyce said the Government would prefer not to have to intervene in the process but it wasn't prepared to let the housing supply shortage remain unchanged.

"People expect us to do something," he said.

The government is introducing new legislation to formalise the Housing Accord until further changes are made to the Resource Management Act.

"This is not going to mean you can just build a 15-story building in the middle of Mt Eden, there are a lot of limits on that, but it will see more mixed housing in some areas on the fringe," Joyce said.