The biggest improvement is the average days to sell which, at 25 days, is the first time it has fallen below a month since April 2005. Properly priced properties sell relatively quickly, often with competing offers.

The median price is sitting at around the $330,000 which Quotable Value tells us is an improvement of 2.2% compared with last year. Hastings and Central Hawkes Bay prices improved much more significantly at 6.1% and 8.8% respectively. Well-presented homes tend to attract a premium.

In the middle and lower end of the market demand is being stimulated by low interest rates and benefits to first home buyers. Buyer activity is also being boosted by positive immigration into the region, and out of town investors seeking better returns than metropolitan areas provide.

A lack of properties available for sale is not only limiting buyer choice, but constraining the scope of potential house sales in the months ahead. This data means that sellers can put their house on the market with confidence.

Over 93% of Hawkes Bay properties sell by Private Treaty, with the few remainder sales evenly divided between Auction and Tender. These latter methods of sale are not favoured by local purchasers who overwhelmingly want a clear price indication. Most importantly for sellers, those strategies could mean losing the best buyer who wants to buy now, rather than being forced to wait for a later date.

Although consumer confidence appears to be easing, households don’t appear to have been spooked as much as businesses by drops in dairy prices and uncertain global economic prospects.

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According to interest.co.nz, this time last year the average one year fixed term mortgage rate was 6.04% across the banks.

This fall has prompted many mortgage holders to want to break their fixed term agreements to shift to a better rate.

Many banks enable customers to make small additional home loan repayments without penalty. However, lenders may charge an early repayment cost (ERC) fee or “break fee” if you repay a fixed interest rate loan or make a significant lump sum payment before the fixed rate term ends.

The reason lenders charge a break fee is because when a fixed rate loan is repaid early the lender may lose money. The fee recovers this loss. The loss occurs for the lender when interest rates at the time of early repayment are LOWER than the interest rate applicable to the loan. This is because the lender cannot re-lend the repaid funds at the same rate that it could when it first loaned the money.

If interest rates have risen or remained stable, there will not be a cost to the lender if the loan is repaid early, so a break fee will not be charged (though a separate administrative fee may be charged).

Calculating a break fee is a complex formula and the formulas vary across the banks. In times of falling interest rates, break fees can rise significantly. Mortgage holders can be surprised at the size of the fee if they repay their loan early.

If you have a problem relating to the break fee charged by your lender, you may contact the office of the Banking Ombudsman at bankomb.org.nz.

Bear in mind, simply charging a break fee is not necessarily an issue in itself. The types of things that could be a concern are:

• if your lender didn’t tell you about the break fee;
• your lender didn’t tell you about how the break fee is calculated;
• there is a mistake in the calculation; or
• your lender gave you incorrect advice about
• the most appropriate type of loan for your circumstances.

For a useful guide to Early Repayment Costs on Fixed Rate Loans click here

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According to realestate.co.nz there were 366 properties for sale at the start of September and 169 new properties were listed during the month. Then 68 withdrew from sale (primarily vendors whose motivation to sell eased, or whose expectations were unrealistically high) and 112 properties sold. Overall the market shrunk to 355. A lack of properties available for sale is limiting the scope of potential house sales in the months ahead.

Limited choice is now beginning to lead to an improvement in property prices in Napier, particularly in mid-range properties, and while the shortage of stock continues we expect this to continue in the months ahead. This trend is likely to be restrained by affordability issues such as local income constraints. REINZ reports that the current median price in Napier is $337,500. Quotable Value reports that present prices are an average of 1.3% higher than a year ago. The Quarterly Price Index shows that at current levels prices are similar to those being achieved at the market peak in 2007 / 2008.

Well-presented properties in popular localities which are correctly priced are attracting excellent interest, often receiving multiple offers and selling for above average prices.

Although consumer confidence appeared to ease this year, households don’t appear to have been spooked as much as businesses by the drop in dairy prices and uncertain global economic prospects. The Reserve Bank and the New Zealand dollar, have both responded to these challenges – with the Bank cutting the OCR further in September, and the dollar depreciating 12% in the past three months.

Napier: Number of Sales 2014 / 2015

Napier: Median Prices 2014 / 2015

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Activity in the top half of the North Island is leading growth across the country as buyers look for more affordable property options outside major metropolitan centers.

First home buyers taking advantage of recent incentive improvements has help lift demand for homes up to the $350,000 cap which have improved by 19% during the past year. Investors are competing for these homes looking for better returns than banks or shares can currently offer.

A softening of lending constraints and further easing in interest rates is benefiting sellers in higher price brackets as well. In particular turnover between $350,000 and $600,000 has improved 25% over the past year.

A lack of property available for sale is limiting the scope of potential house sales in the months ahead. An audit of data from realestate.co.nz shows only 366 properties for sale in Napier in September 2015, which is 33% fewer than the same month a year ago.

Improved demand has had a positive effect on prices, which have stabilized. Quotable Value is reporting that prices have improved by 2.4% in Napier compared with the same period last year. QV’s Quarterly Price index shows that at current levels prices have returned to levels similar to the 2007/2008 market peak.

Well-presented properties in popular localities which are correctly priced are attracting excellent interest, often receiving multiple offers and selling for above average prices.

Although consumer confidence has eased this year, households do not appear to have been spooked as much as businesses by the drop in dairy prices and mounting uncertainty about global economic prospects. The Reserve Bank and the New Zealand dollar, have both responded to these challenges – with the Bank cutting the OCR further in September, and the dollar having depreciated 12% in the past three months.

Napier: Number of Sales

Napier: Median Prices

The post Strong turnover constrained by supply appeared first on Cox Partners Estate Agents.

The key driver in Napier is housing demand.

First home buyers taking advantage of recent incentive improvements has lifted demand for homes up to the $350,000 cap by 12% during the past year. Investors, many from outside the region, are competing for these homes looking for better returns than banks or shares can currently offer.

A softening of lending constraints and further easing in interest rates is benefitting sellers in higher price brackets as well. In particular turnover between $400,000 and $600,000 has improved 25% over the past year.

A lack of property available for sale is limiting the scope of potential house sales in the months ahead. At the start of August data from realestate.co.nz shows there were only 384 properties for sale, which is a massive 38% less than the last quarter of 2014.

Improved demand has had a positive effect on prices, which have stabilized. Quotable Value is reporting that prices have improved by 1.9% in Napier compared with the same period last year.  QV’s Quarterly Price index shows that at current levels prices are within 2% of the 2007/2008 market peak.

Well-presented properties in popular localities which are correctly priced are attracting excellent interest, often receiving multiple offers and selling for above average prices.

However, in the background is a series of negative blows affecting economic confidence including slumping dairy prices, an early peak in the Canterbury rebuild, and the negative confidence shock associated with events in Europe. The Reserve Bank and the New Zealand dollar, have both responded to these shocks – with the Bank expected to cut the OCR further in September, and the dollar having depreciated 12% in the past three months.

Napier: Median Prices

Napier: Sales Turnover

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The good news is that because of the combination of low interest rates and relatively affordable property prices in our area, home affordability is currently at it’s best level in years.

Now is a good time to ask the question should I rent or buy a home?

If you’re buying your first home, you may also qualify for the Home Start Loan Grant. Also after 3 years of contributing to KiwiSaver, you may be entitled to a first home deposit subsidy. If you’ve owned a home before, in some circumstances you may still be eligible for the first home deposit subsidy.

A good place to start is to contact a mortgage broker.

When considering whether to buy, do your numbers carefully. You don’t want to move into a home only to find yourselves under financial pressure as time goes by. We can connect you with a reputable adviser who can assist you with this.

Here are some questions to ask when weighing up the affordability of a home:

1. How much deposit do you have?The bank expects you to prove your savings record, and show that you have saved some money as a deposit toward your home.
2. Can you afford the repayments now?The bank will look at your employment record, your income and how well you are managing your expenses. Get your credit card and hire purchase under control.
3. Can you afford repayments on 1 wage?If pregnancy is not a possibility, this is not such a vital consideration.
4. Can you still afford the repayments if interest rates rose by 2 %?If you can’t, than don’t buy. Interest rates may rise next year, so allow for a 2% increase to be conservative.

If you can afford to buy, then go ahead.

Don’t wait for the ‘right time’. Start enjoying the benefits of home ownership now.

These benefits include long term capital gain; feeling safe and secure; building up your asset base; and getting on the path to prosperity.

Finally, start out with a modest home, then trade up when you’re ready. Always keep your home repayments at a (conservative) affordable level.

For other great advice about buying your home call Cox Partners Estate Agents on 835-4321
for our FREE booklet,  “Buying Your Home”.

The post Rent or buy a home? appeared first on Cox Partners Estate Agents.

Since February 2015 the gap between the benchmark 10 year average monthly turnover has narrowed, which indicates a recovery in demand, which was relatively sluggish over the past 18 months. This stronger growth could be attributed to the lifting of the LVR speed limit to 15% (outside Auckland) coupled with lower interest rates. Further interest rate cuts are expected.

A lack of listings is limiting Napier house sales potential in the months ahead. According to data from realestate.co.nz, listings have been lower than a year earlier for each of the last nine consecutive months.

HomeStart subsidy and larger Kiwisaver withdrawals for first home purchasers since April 2015 has increased activity below $300,000. Investors from outside the region have also increased the demand for more affordably priced homes. However, softening lending constraints and further easing in interest rates has also benefitted sellers in higher price brackets.

Overall prices have only shown marginal improvements, with the latest monthly price index from Quotable Value showing that current prices are on average 1.6% higher than a year earlier.

The quarterly price index shows that at current levels prices are within 2% of the 2007/2008 market peak.

The measure for the average days to remains high at around 8 weeks in June, probably because a number of the properties which sold during the month had been for sale for an extended period of time.

Properties that are located in popular areas, are well-presented and correctly priced are attracting the most interest, often receiving multiple offers and selling for above average prices.

Napier Monthly Median Selling Price

Napier Monthly Sales Volume

The post A lack of listings is limiting Napier house sales potential appeared first on Cox Partners Estate Agents.

Since February 2015 the gap between the benchmark 10 year average monthly turnover has narrowed, which indicates a recovery in demand, which has been sluggish over the past 18 months. This stronger growth could be attributed to the lifting of the LVR speed limit to 15% (outside Auckland) coupled with lower interest rates.

The lack of property available for sale could limit the scope of potential house sales in the months ahead. According to data from realestate.co.nz, listings have been lower than a year earlier for each of the last nine consecutive months.

HomeStart subsidy and larger Kiwisaver withdrawals for first home purchasers since April 2015 has increased activity below $300,000. Investors from outside the region have also increased the demand for more affordably priced homes. However, softening lending constraints and further easing in interest rates has also benefitted sellers in higher price brackets.

Overall prices have only shown marginal improvements, with the latest monthly price index from Quotable Value showing that current prices are on average 1.3% higher than a year earlier. The quarterly price index shows that at current levels prices are within 3% of the 2007/2008 market peak.

The measure for the average days to sell leapt to almost 9 weeks in May, probably because a number of the properties which sold during the month had been for sale for an extended period of time.

Properties that are located in popular areas, are well-presented and correctly priced are attracting the most interest, often receiving multiple offers and selling for above average prices.

Napier Home Sales

Napier Median Selling Price

Napier Supply of Homes for Sale

The post Napier house sales strong appeared first on Cox Partners Estate Agents.

This recovery appears to have been led by an increasing number of active first home buyers, encouraged by an easing in interest rates and softening lending constraints. New Kiwisaver rules for settlements after 1st April 2015 are enabling larger KiwiSaver withdrawals for first home purchases.

As a result the turnover of homes below $300,000 his risen significantly by 18% during the past year, while the turnover of homes selling above $500,000 has fallen by 15%.

The April sales result eased back to 91. The primary constraint appears to be the availability of appropriately priced homes in reasonable locations. The available listing stock has fallen to approximately 5.8 months supply, and this is helping rebalance the market in favour of sellers, particularly in the market segments where competition is strongest (i.e. below $300,000).

Overall the Quotable Value monthly price index for April 2015 shows a small improvement in prices of 1.6% compared to the previous year. The quarterly price index indicates that current prices are sitting at around 3.1% below the 2007/2008 market peak.

There has also been a small improvement in the average days to sell, however it is still taking between 7 and 8 weeks to find a buyer for a home in Napier. The length of time to sell is acutely dependent on the appropriate pricing strategy.

The Reserve Bank recently announced measures explicitly targeting Auckland property investors in an effort to cool the country’s largest market. At the same time the Bank acknowledged that housing market pressures around the rest of the country are generally subdued. As a result, the Bank has lifted the speed limit on low deposit (<20% deposit) lending outside of Auckland from 10% to 15% of new mortgages, irrespective of whether the buyer is an investor or owner-occupier.

If you want more detailed information and analysis of the Napier Real Estate Market please contact Cox Partners on (06) 835-4321.

Napier: Number of Sales

Napier: Median Price

The post Napier home sales recover appeared first on Cox Partners Estate Agents.

In its six-monthly financial stability report, the Reserve Bank announced its intention to introduce new loan-to-value ratio (LVR) limits on lending to property investors in the Auckland Council area that would require those borrowers to have at least a 30% deposit.

The Reserve Bank imposed its original limits on mortgage lending with deposits of less than 20 % in October 2013, but house prices in Auckland have continued to rise due to strong inbound net migration and a lack of supply.

This new restriction is an attempt to take the heat out of the Auckland property market, which the Reserve Bank sees as a key risk to New Zealand’s financial system.

The supply and demand factors in Auckland are absent from most regional economies like Hawkes Bay where housing supply is consistent and population grown is benign due to relatively poor employment prospects.

The 2013 LVR measures constrained the volume of sales in Hawkes Bay which have been recently been tracking at around 20% below the 10 year average.

Recognising more subdued housing markets outside Auckland, the Reserve Bank is easing the restrictions on high-LVR lending for all residential lending to 15% per cent from the existing 10%. The 10% speed limit will stay in place for Auckland owner-occupiers.

This means banks in Hawkes Bay will be able to approve more loans to people with less than 20% deposit. These changes will come into effect from October 2015.

In recent months turnover has improved in Hawkes Bay. This is primarily because many first time buyers are taking advantage of the Home Start subsidy and improved KiwiSaver withdrawal incentives from 1st April 2015.
This weeks pre-budget announcement adds to the effort to rein in Auckland’s housing market. Speculators who buy and sell residential property for profit within two years will be taxed on the capital gains. The family home or an inherited estate will be excluded.

Measures will also be introduced targeting overseas buyers who have been able to escape paying any tax on their profits.

It is unclear what effect this combination of measures will have on turnover or prices in Auckland or Regional New Zealand. But over time, what the changes will provide will be better quality information about owners of investment properties.

Our reading of the Napier market is that the short to medium term turnover will remain at between 80 and 90 sales per month, and price levels are unlikely to shift significantly from current level, which plateaued several months ago.

Cox Partners publish a monthly analysis of the Napier Real Estate Market which is distributed to our interested people by email.

If you’d like to receive this interesting and informative commentary, please call us on 835-4321.

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