100% Home loans down south

Hi Westan,

Not sure about the reserve bank but as we have seen at “home” in oz the round of rate rises are a calculated set of measured actions to achieve an end. As an outsider it appears that it is an adhoc round of never ending increases. There is a reason for this not in the least that they are trying to control behaviour.

A drop in rates is not likely but IMO based on what I have been reading and absorbing rates will be on hold for a while. Why – we all recognise that the economy of a country is more than just the housing market and rates put too high a pressure on the currency.

We have seen the currency weaken against the AUD and the US dollar this week but then again this is against a backdrop of inflationary pressures in the US and possible further rates rises there which makes the NZ dollar more attractive.

Not sure about the local economies elsewhere but I spoke to a builder in December who had 33 new single homes on the go (ie individual contracting to build homes on their own sites) and also read yesterday that the old showground is to be developed into a retail/manufacturing centre covering 24 ha. The new velodrome/sports centre is nearing completion and the old site is to be redeveloped. Rents for quality ie median and upper quartile homes are rising while rent for lower quartile homes are drifting off.

Again just based on what I am seeing locally is that employment growth is significantly higher than the national average. New employment is strongest in the light industrial area which means large numbers of new small businesses and or employees. However, the SIT still drew in 4500 students last year to december.

We have just finished a rehab for a client on a 1 bedroom flat (without garaging or carport) and hoped to increase the rent from $70 to around $100. I had the property manger call twice to get the finish date and we had it rented and the tenant in paying $120 a week before the carpet and vinyl were even finished.(NB this property only has an open fire and would fetch another $10 with a heat pump.)

But then again in the same street there is a 4 bedroom home renting for $120 a week, so it just depends on the sort of product you offer the market. The same 4 brm should be attracting at least $200 per week in rent.

Around the corner there is a block of 1 bedroom flats that are brick and could be receiving the same rent, but in there current condition they are lucky to be fetching $60 a week.

New employees rather than students are seeking rental homes and demanding a higher standard and hopefully and affordable new home which may not have been a realistic expectation in Auckland or Wellington.

Anyway – that’s just what is happening in my patch.

Regards,

Don