Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Residential Property Defies Detractors

10 February, 2000

Residential Property Defies Detractors

The Real Estate Institute of New Zealand believes that New Zealanders’ confidence in residential property as a long term investment is valid, despite the comments of detractors to the contrary, REINZ president Mr Max Oliver said today.

Mr Oliver said that while residential property might not be the highest performing investment, statistics indicate that compared to term deposits and managed funds it is not only a competitive investment, it’s performance is more consistent over the long term.

Mr Max Oliver said, “The doomsayers deride residential property, citing the recent downturn in sales volume as evidence. These assertions completely ignore the big picture, where according to statistics gathered by WestpacTrust, property compares favourably to many other forms of investment.

“For the October – December period the national sales volume has fallen from each corresponding month in 1998. Conversely, homes are retaining their value and the level of enquiry remains high. It is obvious that the major catalyst for reduced volumes is the increased residential mortgage interest rates in the last quarter of 1999. For example, in December 1998 a three year fixed term mortgage could be taken at an interest rate of 7.15 per cent. In December 1999, the lowest available fixed interest rate for the same term is 8.10 per cent, with every indication from lending institutions that rates will continue to rise.

“Rather than an ailing sector, as some commentators would have you believe, that sounds like the New Zealand public are choosing carefully where to commit their money but still recognising value when they see it.
“While some market commentators and economists advocate consumers place their savings in other investment vehicles, New Zealanders continue to value property as a tangible, familiar investment that offers the opportunity to expand from one home to two, using rental income to retire debt. The result is a long-term savings programme with minimal risk.”

According to figures released by the Institute, both the national median sale price and the national median sales volume for residential property have fallen on a month to month and a year to year basis. The national median sale price was $170,000 for December, compared to $172,000 in November and $168,000 in December last year. Sales in December this year were 4,710 compared with 6,661 in November and 6,170 twelve months ago.

The majority of lending institutions announced an increase in their one year fixed interest rates in the month to January 10 and significant upward movement was recorded for two and three year fixed interest rates.

Floating rates rose to range between 6.50 and 7.25 per cent, compared to the 5.85 to 7.25 per cent available in the month to December 10, 1999.

One year fixed rates ranged between 6.85 and 8.00 per cent, with most institutions recording an increase of between 0.25 and 0.30 per cent from the previous month. Five year fixed rates ranged between 8.70 and 9.10 per cent, while fixed two, three and four year mortgage rates ranged between 7.75 and 8.95 per cent.

The median price across the North Island rose on a month to month basis, with the exception of the greater Auckland area; while the median price across the South Island fell on a month to month basis, with the exception of Otago which recorded a median price of $145,000, consistent with November 1999. Nationwide, only regions not to experience a rise in median price on a year-to-year basis were Canterbury, Otago and Southland.

All regions experienced a decrease in sales volume against December 1998 and November 1999.

Section activity decreased, while the national median price rose with 402 sections sold during December at a median price of $80,000, compared to 625 in November at $78,000.

The national median price for rural property rose over both year to year and month to month comparison.

The national median price for December was $447,500, up from the November median of $402,500 and the December 1998 median of $437,000.
The national sales volume fell to 154 in December from the 186 transactions recorded in November, but rose from the 141 properties that changed hands in December 1998.

Lifestyle block sales rose on a year to year basis from 325 transactions in December 1998 to 343 sales in the latest period , while the median price of $ 173,000 for December 1999 compare to $193,000 for December 1998 and the $185,000 recorded last month.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Interim Crown Accounts: Minister Sees Strong Economic Fundamentals

Stronger-than-forecast wage and employment growth, and higher company profits are shown in the figures for the eleven months to 31 May. More>>


1.5 Percent: Official Cash Rate Unchanged

The Official Cash Rate (OCR) remains at 1.5 percent. Given the weaker global economic outlook and the risk of ongoing subdued domestic growth, a lower OCR may be needed over time to continue to meet our objectives. More>>


IMF On NZ: Near-Term Boost, Risks Tilted To Downside

New Zealand's economic expansion has lost momentum and while the near-term outlook is expected to improve, risks are increasingly tilted to the downside, according to the International Monetary Fund. More>>


Traceability: NZ To Track Satellites, Eggs

The New Zealand Space Agency (NZSA) is continuing to build its capability as a regulator of space activity with a new pilot project which allows officials to see real-time information on the orbital position of satellites launched from New Zealand. More>>


OECD On NZ: NZ's Living Standards Framework Positive But Has Gaps

Treasury’s living standards framework reflects good practice internationally but has some data gaps, including in areas where New Zealand fares poorly, the Organisation for Economic Cooperation and Development says. More>>


RBNZ Act Review: Govt Plans Deposit Guarantee Scheme

The Coalition Government today announced moves to make New Zealand’s banking system safer for customers through a new deposit protection regime, and work to strengthen accountability for banks’ actions. More>>