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

 


When did Aucklands Property Boom really begin?


So when did Aucklands Property Boom really begin?

It's interesting to note that some Auckland property market commentators have the opinion that Aucklands property boom actually commenced in December 2001.

But Property Market Analyst Kieran Trass of Hybrid Property Consulting completely disagrees with this timing... He reveals in the graph below that most Auckland regions started their property market "Recovery" phase from September 2001. Trass notes this recovery excluded the Papakura region which only started to recover from reducing values in mid to late 2002. Trass also points out these figures clearly evidence that Aucklands property market did not enter the "Boom" phase (i.e. strong growth throughout ALL Auckland regions, not just some) of the property cycle until the third quarter of 2002.

Trass notes that what we did evidence, in the period from Sept 2001 to June/Sept 2002, was a distinct movement through the "Recovery" phase of the traditional property cycle.

Trass also states that some market commentators do not understand that a boom is always preceded by a recovery phase (so they don’t account for the recovery phase) and they also will probably fail to understand when we enter the "Slump" phase. “You see we don't simply evidence a plummet in values. We will just evidence a trend in lower value growth initially, followed by an eventual bumpy ride, until we experience negative growth.”

How can Trass be so sure that this will happen when we enter the next "slump" phase... ”Well it's just common sense and based on simple supply and demand. Also experience has taught me that there are a few issues which typically arise either at or just after the end of a boom.”

Trass names just a few signals that will appear when this boom is over:

Values ironically continue to increase! Thats right even after the boom is over values continue to increase. Just look at 1997... The boom clearly ended in 1996 but in 1997 values still increased in Auckland by @ 5%!

2) Ever hungry "developers and speculators" who were in a rush to capitalise on what appeared to be fat profit margins inevitably realise they have built too many properties and create a glut of unsold stock. After this happens market values simply react based on the fact that some developers or speculators can not afford the holding costs of their unsold stock and eventually are forced by the financiers to sell, or to accept a lower (or negative) margin, by dropping their price. This influences the price of other surrounding properties.

3) Rental levels become generally unaffordable, peak and then start declining (in line with more vacant stock being available to rent due to slowing sales volumes - i.e. see point 1).

4) The fundamentals of buying rental property are no longer sound. That is, most properties are priced at a point where if you were to purchase them (and fund 100% of the purchase price) they will be "negatively geared" (i.e. not enough cash flow to cover all outgoings). This is when developers will start offering you incentives like a free holiday, cash rebate, interest free term, free car etc,etc to entice you to buy, oh and they will be very adamant that the tax break alone makes it worthwhilst to buy the property... beware of the sharks which always come up for their last good feed at the end of the boom!

5) Lenders "tighten" their lending criteria in preparation for an inevitable reduction in values.

Trass’s consistent opinion on the progression of Aucklands property market cycle has been evidenced by his property clock timings displayed on Hybrid Property Consultings website at www.hpc.co.nz . In the market commentary section of the website Trass has the Property Clocks progression through the cycle since September 2001 which reveals his early identification of the property markets progress from the slump phase to the recovery and now the boom phase.


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

I Sing The Highway Electric: Charge Net NZ To Connect New Zealand

BMW is turning Middle Earth electric after today announcing a substantial contribution to the charging network Charge Net NZ. This landmark partnership will enable Kiwis to drive their electric vehicles (EVs) right across New Zealand through the installation of a fast charging highway stretching from Kaitaia to Invercargill. More>>

ALSO:

Watch This Space: Mahia Rocket Lab Launch Site Officially Opened

Economic Development Minster Steven Joyce today opened New Zealand’s first orbital launch site, Rocket Lab Launch Complex 1, on the Mahia Peninsula on the North Island’s east coast. More>>

Earlier:

Marketing Rocks!
Ig Nobel Award Winners Assess The Personality Of Rocks

A Massey University marketing lecturer has received the 2016 Ig Nobel Prize for economics for a research project that asked university students to describe the “brand personalities” of three rocks. More>>

ALSO:

Nurofen Promotion: Reckitt Benckiser To Plead Guilty To Misleading Ads

Reckitt Benckiser (New Zealand) intends to plead guilty to charges of misleading consumers over the way it promoted a range of Nurofen products, the Commerce Commission says. More>>

ALSO:

Half A Billion Accounts, Including Xtra: Yahoo Confirms Huge Data Breach

The account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (the vast majority with bcrypt) and, in some cases, encrypted or unencrypted security questions and answers. More>>

ALSO:

Rural Branches: Westpac To Close 19 Branches, ANZ Looks At 7

Westpac confirms it will close nineteen branches across the country; ANZ closes its Ngaruawahia branch and is consulting on plans to close six more branches; The bank workers union says many of its members are nervous about their futures and asking ... More>>

Interest Rates: RBNZ's Wheeler Keeps OCR At 2%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2 percent and said more easing will be needed to get inflation back within the target band. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news