Latest Property Market Update
Early signs of growth in the housing market seems to be appearing according to the July real estate data. Prices nationally are still showing some growth. The median price increased by 1.7% nationally and by 2.4% in Auckland over the past month. The volume of sales also shows upward movement.
Nationally sales increased by 3.7% and Auckland by 6.6% year on year. The numbers were 6,118, up from 5,897 and for Auckland 1,894, up from 1,777. The average days to sell was 3 days longer
nationally now at 40 days. For Auckland also 3 days longer at 44 days. Both are compared to July last year.
One of the probable reasons for the improvement in prices and number of sales would be the removal of the proposed capital gains tax. Buyers now have more confidence to make a buying decision. The Reserve Bank cut the official cash rate (OCR) by 0.5% which was bigger than the expected 0.25%.This will likely show up as further stimulates to the housing market going forward.
Where to From Here?
The now record low New Zealand mortgage rates will certainly assist home owners and new buyers. Rates are forecast to fall even further to try to help stimulate the stagnating New Zealand economy. In part the USA / China trade disputes, Brexit and some other overseas faltering economies are having a detrimental effect.
A lot of business commentary is accusing the present government of being unable to manage the New Zealand economy. The ANZ Business Confidence Index was running at +20.0 (positive) prior to the election and has been negative ever since. It now sits at –44.3 (negative), the lowest for 10 years. We have gone from a rock star economy to talk of a possible recession.
The Reserve Bank which is independent of the government clearly sees the risk to the New Zealand economy. Not only did it cut the OCR by 0.5%, it also indicated further cuts were likely. This will certainly help stimulate the housing market.
What Every Home Buyer Should Know
Things are constantly changing. New building materials, new methods of construction and many other changes make home buying a risky proposition for the uninformed. Properties cost over a million dollars in many places and at least a several hundreds of thousands of dollars in all parts of New Zealand.
Buyers better learn all they can so as to make an informed decision. Here are a few of the things buyers absolutely should know before purchasing:
- What is a LIM report?
- What is a home inspection?
- Property file?
- Weathertightness risk?
- Does the property contain Asbestos?
- Is there dangerous Methamphetamine (P) contamination?
- What is a Code Compliance Certificate (CCC)?
A very brief answer to all of these questions follows:
- What is a LIM report?This is a report detailing the major information the local council has on file relating to a property. Check for unpermitted building work, any council notices, orders or requisitions and any risks such as flooding or slipping or hazardous substances on the site.
- What is a home inspection?This is a written report from a qualified, insured building inspector. The report will give information on the condition of the property and point out work that needs to be done. This includes structural, building work, plumbing, electrical and heating and ventilation. Also included is weathertightness and safety issues.
- What is a property file?This is the more detailed information held by the council including the building plans and specifications. This information is not in a LIM report (see Home Inspections Newsletter Issue 1 & 23 for more information).
- What is weathertightness risk?This is the level of risk that a home has of becoming effected by moisture or even becoming a “leaky building”. The design of the building, method of construction and material used all affect the weathertightness risk.
What Else Should The Buyer Know?
- Does the property contain Asbestos?Asbestos was extensively used in building prior to its ban from New Zealand. Asbestos stopped being used in the mid 1980’s. Friable asbestos – as a dust is very dangerous to health. Asbestos was extensively used in fibre cement weatherboards, roofing products as a fire resistant material and for insulation.
- Is there dangerous Methamphetamine (P) contamination?Methamphetamine is an illegal but widely used drug in New Zealand. Clandestine labs have been found in many houses, motel rooms, apartments and other buildings. The drug and chemicals used in its manufacture contaminate the building requiring extensive remediation. The cost can be tens of thousands of dollars. Contaminated dwellings can have serious effects on the health of the occupants (see Home Inspections Newsletter Issue 7 for more information).
- What is a Code Compliance Certificate (CCC)?From 1992 onwards local councils had a responsibility to inspect residential buildings during construction. When completed and finished correctly to the building standards of the time, the council would issue a CCC. This confirmed the construction met the building code. Any illegal construction would not have a CCC. Banks will not lend money as a mortgage to a property that does not have a CCC.