Residential Property Defies Detractors
REAL ESTATE INSTITUTE OF NEW ZEALAND
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.
-ENDS-