market report - lifestyle

The Western Bay of Plenty rural lifestyle property market had a relatively difficult year in 2011.  Sales continued to be relatively difficult to achieve and generally occurred as a result of vendors having to be more realistic in their price expectations. Despite a slight increase in the volume of sales, we believe that prices have remained relatively soft.  Significantly, there appears to have been greater activity in the higher price brackets. This was an area which was notably quiet over the last couple of years. Despite this increased sales activity, with the odd exception, there does not seem to be much in the way of upward pressure on sale prices.

The availability of credit remains an issue and deleveraging remains at the forefront of the minds of many.  Interestingly we note some lenders are now accepting smaller deposits for home loans than 12 months ago.  Home owners appear unwilling to change houses as this normally involves taking on more debt. 

We have recently encountered reluctance on the part of banks to lend on Monolithic clad homes until they are satisfied in their condition and in one example we found a refusal to lend.  If this is a new policy it is likely to a have a significant effect on the selling (and consequently values) of these homes.

According to QV residential property indices values in Auckland are -1.0% below the same time last year, Wellington is -2.9%, Christchurch figures have been distorted by the recent earthquakes, Dunedin is -3.8% and Tauranga values are -2.4%. 

We consider job security is still a very important factor in the timing of a recovery in the market and we are now hearing of employers seeking more staff, however job opportunities are attracting large numbers of applicants.

The Reserve Bank has recently decreased the Official Cash Rate from 3.0% to 2.5% in the wake of the second Christchurch earthquake in an effort to offset its impact on the struggling New Zealand economy.  This has seen a reduction in the floating interest rates of 0.5% from most of the major trading banks.  The longer term five-year loans have seen little movement in rates suggesting that any cuts will be short-lived.  It is anticipated that once the reconstruction work is well underway and contributing to economic activity that the Reserve Bank will look to increase the OCR.