April 2017 Newsletter

Statistics New Zealand has released revised population growth projections for our regions and local authority areas. Rather than forecasts, these projections are based on trends in an area’s age profile, death/birth rates and migration (both internal and international).Tony Alexander, Chief Economist at BNZ, often invites investors to look into these figures when weighing up potential property investment opportunities.

“[We invite] people interested in investing in regional residential property markets to refer to these numbers when considering whether the low prices of an area represent a bargain or simply reflect the dynamic of weak population growth or in fact population shrinkage,” Tony explains in his BNZ Weekly Overview column.

At a regional council level, here are the latest population growth projection levels forecast for between 2013 and 2043.

Tony says: “What we see is that percentage-wise Auckland is projected to have the greatest growth in population from 2013 to 2043 of 55.8% or 833,000.

“This will account for 56% of the country’s projected population growth and [will mean that] come 2043 Auckland will account for 39.3% of all people in NZ, [up] from 34% in 2013.”

Comparatively, between 1961 and 2013 Auckland grew from 21% of the population to 34%.

Projections at a local authority level provide a more detailed breakdown of possible population growth, which is helpful for prospective property investors.

“It pays to keep an eye on population growth scenarios because history tells us that at this stage of the housing cycle people tend to get over-optimistic regarding regional growth, invariably overestimating the number of people who will leave Auckland,” Tony explains.

“There are 17 local authority areas around New Zealand where population is projected to shrink, led by Ruapehu [with a drop of] 28%, then Opotiki [dropping by] 24%.”

This is down from previous calculations made in 2015, which forecast that 26 local authority areas would see a decrease in population.

“For some of these 17 areas population may not decline if net migration is at the high end of possible scenarios,” Tony cautioned.

“Personally I would boost projected population growth for the areas north of Wellington as development of the Wellington Northern Corridor greatly raises the potential for businesses to shift up the coast – especially should Wellington suffer another shake.

“I’d also bias a bit more generally toward strong city growth versus more country linked areas given the way the technological revolution we are living through is encouraging city living.”

While there are many factors a property investor should take into account when weighing up the pros and cons of a potential investment, potential population growth is a helpful measure to keep in mind when comparing opportunities.

Click here for statistics on Masterton and other areas.

Source: realestate.co.nz

Flatter house prices are on the cards this year, but any decline in prices will have broader economic consequences, Infometrics is predicting.

By Miriam Bell

The economic consultancy has just released its latest forecasts and they show house prices falling in the second half this year to sit 2.7% below their December 2016 level.

This decline will be due to the dampening effect of tighter mortgage lending conditions and higher interest rates.

Infometrics chief forecaster Gareth Kiernan said the emergence of flat or falling house prices within the next few years will undermine consumers’ willingness to spend.

At the same time, the discretionary portion of households’ budgets will be squeezed as interest rates gradually rise from their historic lows.

These effects will be particularly acute in Auckland, where house prices are highest, he said.

“An increase in mortgage rates from 5% to 6% adds almost $200 to fortnightly repayments on a 25-year mortgage for someone who has bought the average Auckland house with a 20% deposit.

“The result of this squeeze is persistently weak growth in household spending from 2018 through to early 2021, with per-capita growth nationwide holding below 1.0%pa throughout this period.”

People that have heavily leveraged themselves to purchase property are likely to find that increasing debt-servicing costs cause a significant degree of financial stress, Kiernan warned.

“Re-entering the workforce or taking on additional hours to boost their income shape is one way that people can adapt as mortgage rates track upwards.”

Meanwhile, Infometrics sees headwinds building for the residential construction sector.

The sector is considered one of the current drivers of economic growth but it is already struggling with capacity pressures.

Kieran said the safety net of rising house prices have acted as a safety net for the sector.

“They encourage developers to push ahead with new projects as they expect any building cost overruns to be covered by higher sale prices at the end of construction.

“But, with the wind having been taken out of the housing market’s sails, that financial buffer looks to be less assured.”

Further, Infometrics believes the annual new dwelling consent total slipping back from its current level of 30,162 in the year to February 2017 to below 29,000pa in the March 2018 year.

This is a worrying prediction, given New Zealand, and particularly Auckland’s, ongoing housing supply shortage.

In a broader economic sense, Infometrics expects greater price pressures both domestically and internationally and have revised their inflation forecast for 2017 up by 0.2% to 1.7% per annum.

Kiernan said that, against this backdrop, the Reserve Bank is likely to begin raising the OCR by the middle of next year.

“But these OCR increases will only be gradual, as ongoing elevated levels of net migration and high labour force participation will prevent capacity pressures getting as out of hand as they did in previous business cycles.”

Source: landlords.co.nz

Decorating a child’s bedroom is about finding that delicate balance between fun and practical. The room should allow space for children to play and grow, while also offering plenty of storage for toys and belongings.Shelley Ferguson explains: “Children’s bedrooms are a great place for grown-ups to experiment design-wise as we can be more creative; however the style of the room should still be led by the child’s needs and interests.”

We invited realestate.co.nz followers on Facebook to share pictures of their children’s bedrooms.

Here are our top 10 picks, submitted by real mums and dads:

Zara created a minimalistic nursery for her little one, featuring greenery for colour and an eye-catching rug from Dapper Mr Bear. There’s lots of floor space for bubs to play, which Shelley Ferguson says is key: “Sometimes kids just want to rumble, roll around, or lie on the floor and daydream. Whatever their age, try to achieve a room layout that allows this type of important play”.
Amanda’s daughter’s lovely bedroom features an adorable wardrobe door decal. Plenty of shelving means accessories and toys can be both displayed and tidied away. “Children’s bedrooms are a great opportunity to be brave with colour, creative with design, and to get DIY cred with the family,” says Shelley.
Lauren’s little guy has a perfectly polished nursery, featuring lots of temporary accessories that can be easily switched out as he gets older. If you want to ensure the space fits in with the rest of your home, Shelley recommends that the basics, like paint and flooring, are consistent with other rooms in your property. “Then let your little one inspire a theme that can be layered on top, and easily changed as they grow.”
However, if you are keen to make a statement in your child’s room, paint can be a wonderful way to do this. Rebecca’s husband used test pots from Mitre 10 and some masking tape to create this gorgeous mural in their newborn son’s bedroom. Big statement pieces like this “add a sense of adventure and create a room kids are keen to hang out in” Shelley explains.
Rachel’s five-year-old daughter loves rabbits and horses, inspiring this pretty-in-pink bedroom. Allowing your child to be part of the design process can be exciting, Shelley says: “Use your child’s likes and interests as a guide and choose a range of designs you think they’d like, that you can also live with. Then, let them choose from that selection.”

Click here to see the final 5 bedrooms.

Source: realestate.co.nz