Quake may rattle NZ real estate market

First National New Zealand: Quake may rattle NZ real estate market

Residential property sales and activity in New Zealand for the majority of February showed a stability not seen for 12 months, according to the First National Group.

However Group general manager John Stewart said the new earthquake would have implications across the country, and real estate in Christchurch would be very diminished for the foreseeable future.

Excluding Christchurch, the Group’s monthly survey showed healthy enquiry, highest sales for the quarter, a slowing of the general price slide and green shoots in building and investor activity.

“œNotwithstanding the tragic events in Christchurch, the general market in February looked to have settled into a better frame of mind than was the case a year ago in terms of stability of sales and increased enquiry and listings.

“œThere is normally a drop off in both enquiry and buying activity but that didn’t occur this February. The market remained remarkably consistent so that is a positive indication.â

Stewart said the real estate market and rest of New Zealand economy was awaiting Reserve Bank and Governmental reaction to the stalling economy and the new Christchurch earthquake.

“œThere is some conjecture that the Official Cash Rate will be dropped by up to 50 basis points to stimulate activity. Others reflect on the dropping value of the New Zealand dollar possibly fanning inflationary fires necessitating a more conservative approach.

“œAt the same time though, exporters, especially the primary producers driving rural centres, will receive quite substantial earnings increases on the back of a falling dollar.

“œSo, does Bollard welcome the resultant increased spending in the regions and provinces and is granted by Key, freedom to let inflation have it’s head beyond the legislated 3%? Or does he cave in and leave interest rates as they are or even lift them, to slow spending?

“We believe the former has to be the case and that comes down to courage”¦the courage that the New Zealand economy and people of Christchurch deserve.”

The survey, done across First National’s 70-odd offices and representing 500 salespeople nationwide, showed the following:

Prices: Prices compared with February 2010 had dropped in 67% of locations, instead of in 74% year on year over the December/January period.

Prices of 2brm properties recorded an annual decrease in slightly more places (26) across New Zealand than prices of 3 or 4 brm homes (which recorded annual drops in 22 locations each).

Sales volumes: Sales were higher than either December or January and similar to February 2010. The likely result of increased enquiry six weeks prior.

More enquiry overall but still, buyers showed a reluctance to purchase. One agent said Bill English’s comment about a double dip recession had destroyed confidence in his upper South Island marketplace.

Sales in Auckland were characterized by families upgrading and more first home buyers taking advantage of governmental schemes like KiwiSaver. Investors here were also creeping back, with mainly in south Auckland.

One agent noted the presence of more new investors “green and clutching their real estate bibles”.

Listings: Similar in most areas as the same time last year, until the earthquake.

Investors: 15% of offices reported increased sales to investors, compared with just 8% in December and January. Locations included Northland, Auckland, Timaru and Tauranga.

Sections: Section sales occurred in isolated pockets (including Whangamata, Mangawhai and Richmond) but were still at very low levels overall. Ninety percent of offices reported almost no activity on sections.

Building: Eighteen percent of offices reported increased building activity during February, a slight increase on Dec/Jan but the remainder reported low levels or none. Some commented that building costs were still too high.

ends

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