Real estate, post COVID-19 level 4 (since 2020)

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#2590872 23-Oct-2020 16:03

heavenlywild: When interest rates for deposits are so low, it's no surprise people with savings decide to put it towards a property to get more gains.

Agree with the above, land is drip fed which leads to demand. I don't think its developers wanting to land bank, they are desperate for land to open up to sell to FOMO buyers like myself. I don't want to pay 50k ot 100k more in 12 months so I bit the bullet.

I am not sure if all developers want to sell their land now. I think many would prefer to sell over a long period as the land is likely to be worth more in the future than our is totally. They can also artifically constrain supply to create a sellers market driving up prices. If 10,000 new sections came avaliable instantly in a town, hen it world become a buyers markets for land and likely drive down prices.

I actually looked at buying some land to subdivide and there was an incentive to drip feed them onto the market due to the councils rules with subdivision and their charging of rates. Not sure if all the councils do things the same way.

heavenlywild

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#2590888 23-Oct-2020 16:12

mattwnz:
heavenlywild: When interest rates for deposits are so low, it's no surprise people with savings decide to put it towards a property to get more gains.

Agree with the above, land is drip fed which leads to demand. I don't think its developers wanting to land bank, they are desperate for land to open up to sell to FOMO buyers like myself. I don't want to pay 50k ot 100k more in 12 months so I bit the bullet.

I am not sure if all developers want to sell their land now. I think many would prefer to sell over a long period as the land is likely to be worth more in the future than our is totally. They can also artifically constrain supply to create a sellers market driving up prices. If 10,000 new sections came avaliable instantly in a town, hen it world become a buyers markets for land and likely drive down prices.

I actually looked at buying some land to subdivide and there was an incentive to drip feed them onto the market due to the councils rules with subdivision and their charging of rates. Not sure if all the councils do things the same way.

I should say the context I was referring to is a new subdivision where very strict rules apply so any land banking isn't possible, and only "qualified" builders are able to buy and build.

tdgeek

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#2590962 23-Oct-2020 19:19

Political will is an easy thing to say, we want to encourage higher prices. Would a governing party want to pass a law that adversely affects employees? Or Employers? No. Home owners are a substantial number. Delicate. Its better to regulate land banking, "real" absentee homes, make owning rental more profitable, and subsidise new builds and penalise buying existing homes to cover the subsidy, just as the EV subsidy was to be.

mattwnz

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#2590965 23-Oct-2020 19:32

heavenlywild:
I should say the context I was referring to is a new subdivision where very strict rules apply so any land banking isn't possible, and only "qualified" builders are able to buy and build.

That situation also pushes up prices and means that we can end up with horrible subdivisions. They have built one down the road from me where are the houses are franchise off the plan houses not designed for the site. So they can be pointing in the wrong direction for the sun and poor land distribution for outdoor living. . Developers must be making a killing. Often you will find that these building franchises snap up the land and then sell land and home packages that can be very expensive.

kingdragonfly

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#2595243 31-Oct-2020 07:04

My opinion of Porirua: I wouldn't want to live there, unless I had one of the few jobs within Porirua, such as the Police college.

Not a great place for job lookers, someone raising a family, or the retired. Just a lousy bedroom community.

Commute to Wellington is "do-able", but at 38 KM, the best you can hope for is a 40 minute commute one way.

Stuff: Skyrocketing rents push people out of NZ's most expensive city: Porirua

"The latest Trade Me Rental Price Index showed that prices rose 3 per cent around the country in the year to September, from $495 to $510.

But they went through the roof in the area covered by the Porirua City Council, from north of Tawa up to Paekakariki. Trade Me figures showed the median rent in the city rose 25 per cent in the last year, from $500 to $625, making it the most expensive place to rent in the country.

Trade Me Property spokesman Logan Mudge described the increase as an 'incredible jump'. Porirua pushed Wellington and North Shore into second place at $600 a week, with Auckland – yes Auckland – some way back at $550 for its median weekly rent."

quickymart

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#2595260 31-Oct-2020 08:01

I always found the train service from there pretty good (and reliable).

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tdgeek

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#2595270 31-Oct-2020 08:56

Its a weird situation, we apparently have a housing affordability crisis, which I agree with, but sales and prices are at record levels. Yes, investors buying up but first home buyers are at what appears to be record levels. It seemingly cant be that unaffordable. And also that the high numbers of FHB will exclude FHB that due to Covid, are out of work or see that there employment is not stable enough to commit. One benefit I guess is getting FHB into homes to reduce demand. The low interest rates will also promote new builds.

I feel we need to be incentivised to new builds. A duty on existing home purchases, that goes to subsidy for new builds, say 20k per house. Maybe also lower interest rates for new builds, offset by higher rates for existing homes.

BlinkyBill

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#2595277 31-Oct-2020 09:55

kingdragonfly: My opinion of Porirua: I wouldn't want to live there, ...

A not insignificant part of the problem is one of too high an expectation on the part of first-home buyers. Having, as an expectation, that the house must ‘tick all the boxes’, must be in the right area, must be in great condition, well all of these expectations push up prices for those desirable properties and thus the market.

It seems to me that compromising on expectations and doing anything to get onto the ladder is more important than living in the perfect house in the perfect location.

Nothing wrong with Porirua by the way; I used to live there, and until recently lived not far away.

alasta

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#2595347 31-Oct-2020 12:40

I have been living in Porirua for the last year and it's been great. I will miss it when I return to Wellington in a couple of months.

The express trains that run at peak times get me to Wellington station from Plimmerton in about half an hour.

mattwnz

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#2595424 31-Oct-2020 14:35

BlinkyBill:
kingdragonfly: My opinion of Porirua: I wouldn't want to live there, ...

A not insignificant part of the problem is one of too high an expectation on the part of first-home buyers. Having, as an expectation, that the house must ‘tick all the boxes’, must be in the right area, must be in great condition, well all of these expectations push up prices for those desirable properties and thus the market.

It seems to me that compromising on expectations and doing anything to get onto the ladder is more important than living in the perfect house in the perfect location.

Nothing wrong with Porirua by the way; I used to live there, and until recently lived not far away.

I don't think that is the case so much these days, because they are simply priced out of those markets. People are moving further and further out pushing up prices in smaller towns. For example in Wellington there has been a lot of buyers prepared to buy in the South Wairarapa where you did get more bang for your buck. This is because by train the travel time to Wellington each day isn't too bad. 90 percent apparently of buyers recently have been from Wellington. But it has now pushed up prices substantially.
The main problem in Wellington is the lack of land being released for new houses. Even though there is plenty of land in the area.

mattwnz

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#2595426 31-Oct-2020 14:46

tdgeek:
Its a weird situation, we apparently have a housing affordability crisis, which I agree with, but sales and prices are at record levels. Yes, investors buying up but first home buyers are at what appears to be record levels. It seemingly cant be that unaffordable. And also that the high numbers of FHB will exclude FHB that due to Covid, are out of work or see that there employment is not stable enough to commit. One benefit I guess is getting FHB into homes to reduce demand. The low interest rates will also promote new builds.

I feel we need to be incentivised to new builds. A duty on existing home purchases, that goes to subsidy for new builds, say 20k per house. Maybe also lower interest rates for new builds, offset by higher rates for existing homes.

Housing is not really less affordable now. The problem is the housing prices. Affordability is based on what mortgage someone can afford to service. As interest rates have continued to drop, it allows house prices to artificially rise, as people can afford to service a larger mortgage. The main issue now is getting the deposit which is now huge due to the high price houses cost. But because people are now relying on low interest rates it is going to be difficult to raise then again. I see the US is looking at raising theirs but they don't have a housing crisis like NZ.
The government had promised no new taxes, and they have no motivation to fix the housing crisis. So they won't be doing too much because they don't want house prices to drop. They broke their promise with kiwibuild which was seriously flawed. Kiwibuild could have partly helped with the housing crisis but not in its current format which is developer driven and with no government funding .

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mattwnz

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#2595427 31-Oct-2020 14:47

alasta:
I have been living in Porirua for the last year and it's been great. I will miss it when I return to Wellington in a couple of months.

The express trains that run at peak times get me to Wellington station from Plimmerton in about half an hour.

Apparently the rents are the highest in NZ

kingdragonfly

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#2595573 31-Oct-2020 17:40

To Porirua's benefit, using the median rent versus using the average rent (mean) is probably unfair.

$390 K/year maximum rent --- Auckland
$139 K/year maximum rent --- Wellington
$86 K/year maximum rent --- Porirua

A standard "metropolitan statistical area (SMSA) would make the comparison fairer, which Stats NZ does supply.

MSA / SMSA are more popular in the US because of the size and variation of regions, but are a somewhat recent introduction to NZ.

Sidenote: if you're looking to buy in an unfamiliar disperse place, the MSA / SMSA is your friend.

mattwnz

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#2595574 31-Oct-2020 17:46

kingdragonfly: To Porirua's benefit, using the median rent versus using the average rent (mean) is probably unfair.

$390 K/year maximum rent --- Auckland
$139 K/year maximum rent --- Wellington
$86 K/year maximum rent --- Porirua

Realestate people always seem to use 'Median' instead of 'Mean', for some reason. IMO they should probably exclude the outliers and then do an average. But often there isn't enough of a sample size to do this. Figures are often cherry picked to support certain narratives.

quickymart

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#2595582 31-Oct-2020 18:17

I used to work with a girl when I lived in Wellington back in the 90s. She commuted from Masterton on the train every single day. Took her ages (90 minutes from memory) to get to work and back but for the most part the train was quite reliable. And here was me thinking my commute from all the way in Kilbirnie was really long! :D

However this had nothing to do with house prices - her partner (at the time) lived in Masterton and she was living with him.

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