Latest Property Market Update
House prices in New Zealand have increased in the last 12 months by the highest percentage since records began. The increase was 32.3%. 12 months ago in May 2020 the median price for
residential property across New Zealand was $650,000. In May 2021 it was $820,000.
The government and the reserve bank try to manipulate the market by bringing in a capital gains tax (the brightline test), reducing / removing interest payment tax deductions for landlords and LVR (loan to value ratio) restrictions.
Try as they may, they so far at least have not been able to affect the first law of economics. Which in essences says: SUPPLY SHORTAGE + STRONG DEMAND = INCREASED PRICES. The government failed to build more than a few hundred houses, let alone the promised 10,000.
Where to From Here
This meant the shortage has remained. The demand for houses is still very strong so prices continue to rise. There is little doubt the government measures will have an effect over time but until the shortage of houses is taken care of all the intervention will not fix the real problem.
It is certain to cause other bigger problems such as a shortage of rentals which is already happening. Rents are rising and will continue to rise as the shortage of rental properties gets worse. First home buyers are being shut out of the market due to imposed LVR rules (20% deposit required) and the resulting interventions described will make it even harder for home owners.
In Home Inspection News issue 42 there was an article entitled– Is Now a Good Time to Buy a House and the answer was yes. Back then (September last year) the 1 year fixed mortgage rate was 2.55%. Today the rate is 2.19%. It is now harder to buy but the answer to the question is still YES, now is a good time to buy.
Windows & Doors
The purpose of a house is to provide a dry space in which to live. A lot of effort goes into waterproofing and insulating a home. The areas where dampness or even water are most likely to cause problems is around windows and doors.
Heat can most easily escape around windows and doors and these are hard to insulate. Careful waterproofing and draft sealing by means of waterproof films, tapes and sealants around windows and doors is now a significant part of the building code.
Types of Windows and Doors
In New Zealand there are basically two types of materials – timber and aluminium that are used for windows and doors.
There are certainly other materials such as UPVC (unplasticised polyvinyl chloride) but they probably only account for less than 5% in NZ homes. As energy efficiency of homes becomes more important we are however likely to see an increased use of UPVC because of it’s better insulation properties. This will be despite the higher cost of UPVC compared to timber and aluminium.
No matter what material – wood, aluminium or UPVC is used for the framing, the glass is going to be the largest area where heat can escape. Before October / November 2012 windows and doors on new homes were single glazed. From that date onward all new homes had to be built with double glazing.
The energy efficiency is better than single glazing and the sound proofing is also better as is the security but of course the cost to build increased.
How does double glazing work?
Double glazing works by producing an air (or low thermal conductive gas) gap between glass panes that insulate against heat transfer. If a gas such as Argon is used in the gap instead of air the insulation effect is even greater. The cost of double glazing however goes up. In Scandinavia, colder parts of Europe and Northern America triple glazing is also being used.
This is more effective still at insulating windows but the cost is very high. External doors are usually solid wooden doors or doors with wood and glass. The glass can be double or even triple glazed, same for Aluminium / glass doors.
For houses with internal garages the heat loss through normal garage doors can be quite high. With insulated garage doors and better perimeter seals a big gain in energy efficacy can be achieved. The energy efficiency of New Zealand homes is slowly improving. Upgrades in existing single glazing by “retrofit double glazing” is becoming more common.
It costs a fair amount of capital outlay to retrofit double glaze. The savings in power bills will take time to recover the outlay but the benefit of a warmer, quieter and more secure home are immediate.