House prices have continued their gradual average rise across New Zealand, driven largely by post-earthquake Christchurch rebuilding and booming Auckland, latest property figures show.
In Dunedin, residential property values were 5.1% higher than they were a year ago and have risen 2% over the past three months, government valuer QV's September figures, released this week, show.
Within the city, property value growth on the Taieri had been the lowest at 1.4% over the past year, while growth in coastal areas and on the peninsula was the highest at 10%.
Spring had generated good demand for city property, resulting in good turnouts at open homes, QV Valuer Tim Gibson said.
Lower to mid-range properties were continuing to be snapped up if priced fairly and well presented.
Property values in provincial centres were now slightly increasing almost everything and were starting to follow the trend seen in most of the main cities. In the South, property values are up everywhere except for Southland.
Nationally, property values were up 1.8% over the past three months and 5.3% over the past year, edging ahead of the previous market peak of late 2007.
The figures were released on the same day as a Massey University report showing that buying a home has become more affordable in every part of the country except Auckland over the past year.
Property prices jumped in the wider Auckland area by 2.8% over the past three months and 7.2% over the past year.
Although house prices had been slowly increasing for more than a year, QV's figures had to be put in context, research director Jonno Ingerson warned..
The rate of value increase was relatively slow, he said, now around 5% a year compared to the 10-15% the country enjoyed in the mid-2000s.
And the rise was being driven largely by Auckland and Canterbury. Taking those regions out of the equation, values across the rest of the country had increased only by about 1.5% over the past year.
First-home buyers and investors were more active in the market than they had been for several years, Mr Ingerson said.
But buyers were generally "acting carefully, doing their research and not overpaying" despite the lack of listings, which would ordinarily mean increased competition and prices.
The New Zealand economy continues to show signs of recovery, with business-to-business payment times falling to their lowest level in nearly a decade, following an improvement of four days year-on-year and two days quarter-on-quarter.
These findings are from the latest Dun & Bradstreet Trade Payments Analysis*, which examines the millions of accounts receivable records contained on the D&B database. The analysis reveals that average payment times during the September quarter 2012 fell to 40.3 days, a figure that is significantly lower than the peak of 50.8 days recorded at the height of the GFC and on par with levels previously seen in the June quarter of 2004.
In comparison, New Zealand's largest trading partner, Australia, recorded payment times of 52.5 days during the September quarter. This was nearly two weeks longer than Kiwi firms and remains higher than pre-GFC payment times.
Average payment days, 2004-2012
This reduction in payment times, which has been trending downwards since 2008, aligns with recent Reserve Bank data** indicating a pickup in domestic trading conditions. The economy grew by 2.4 per cent in the year to the September quarter and official data suggests that this growth will likely continue over the rest of the year and into 2013.
According to D&B New Zealand's General Manager, John Scott, lowered payment days signal the improved cash flow position of many firms.
"It is certainly encouraging to see that the majority of New Zealand businesses are cutting the time taken to pay their bills," said Mr Scott.
"This trend has been evident over a number of quarters now, and suggests that firms are better understanding and managing their cash flow. This trend having a flow-on effect on the broader economy, as businesses continue to experience more positive financial conditions and as a result, less of a strain on their cash flow cycles.
"Trade credit accounts for a significant portion of short-term finance for firms and consequently, is one of the most important identifiers of individual business health as well as overall economic health. This is particularly true for small businesses as they often rely more on trade credit rather than bank credit."
Businesses with six to 19 employees were the quickest payers during the September quarter at 39.4 days. This was down by nearly three days from the same quarter last year and down by 1.4 days from the June quarter, to reach the lowest level in eight years. This was followed by firms with 20 to 49 employees, at 39.6 days - this was also down by nearly three days year-on-year and down by two days quarter-on-quarter.
The slowest payers were businesses with more than 500 staff at 42.4 days, although this was down by nearly five days year-on-year and by 2.6 days quarter-on-quarter.
Average payment days by employee size
According to Stephen Koukoulas, D&B's Economic Advisor, the sharp decline in average payment days fits with other news pointing to a broader lift in the economy.
"There is a strong correlation between average payment days and the strength of the economy. A rise in the days taken by firms to pay their bills usually signals weak economic conditions, while a fall in payment days - like we are witnessing now - typically indicates more favourable financial conditions. It appears firms that are sufficiently cashed up pay their bills sooner," said Mr Koukoulas.
Adding to the positive outcome is the performance of individual sectors, most notably firms in the commodity sectors of agriculture, forestry, fishing and mining, which collectively make up eight per cent of the national Gross Domestic Product.
In particular, firms in the agriculture sector took 36.9 days to pay their bills, down by more than three days. This sector was the fastest payer compared to all other industries, reflecting its strong financial position relative to the rest of the economy. Recently-released Reserve Bank figures indicate that economic growth in the 12 months to the September quarter was largely driven by increased production in the agricultural sector off the back of favourable climatic conditions.
Businesses in the fishing sector took 39.2 days to pay their bills in the September quarter, representing an improvement in payment times two days year-on-year, and by 4.5 days quarter-on-quarter. Forestry and mining firms each took 37 days to pay their bills, three days below the national average and down by 1.4 days and 2.2 days respectively year-on-year. In particular, the mining industry improved payment times quarter-on-quarter by more than three days.
In contrast, firms in the traditionally late-paying sectors of communications and electric, gas and sanitary services (EG&S), averaged payment times of 43.7 days and 41.8 days. This was an improvement of nearly one week year-on-year for firms in the communications sector and an improvement of just under eight days year-on-year for those in the EG&S sector, with the latter sector recording the biggest reduction. Both industries also reduced payment times by more than one day quarter-on-quarter.
"The eight-year low in average payment days suggests there may be potential for acceleration in economic growth. If these sorts of numbers are sustained or even built upon in the next few quarters, we could see an unexpected pickup in economic activity in the latter part of 2012 and into 2013," said Mr Koukoulas.
"Given the sluggish performance of the economy in recent years, this would be a most welcome development. This lift may even bring forward speculation about the possible timing for the first interest rate hike in 18 months."
I agree. As rates drop business investment will increase, leading to higher wages that improve the ability of people to compete for well located and high quality property (both rental and buying), and thus prices will increase.
Catweasel laugh. Back to boom boom across a Tasman. It all the good.
Stinkbug also laugh - laughing good!
Maybe Cat could remember that there are more market states than simply boom or bust.
Yep, it's about affordability of servicing for the average person, not the price per se - I tend to think anyhow.
Question is - as prices now rise in response to an IR getting close to zero, how much scope is there for continued strong rises in the future once the affordability ceiling at such rates is reached? And how much monetary ammunition is the RBNZ (and Australia) left with in the event of future economic shocks?
If we use an important counter-stabalization tool to support house price growth until it can effectively go no lower, in the event of a future economic shock we will have to rely upon fiscal policy to do the heavy lifting.
Catweasel say a more the fascinate is a where a NZSX50 getting its fuel from. As it a speak, it a sitting on 18.35% gain over a 52 week. Make a mouse house price look the rather sedate.
What are your thoughts on this cat? Do you think it's related to the fall in interest rates/currency and do you think it will be repeated in Oz? How have the smaller sectors of the market performed?
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
Floating home mortgage rates are likely to stay low for even longer, with economists pushing out the Reserve Bank's first move up in rates till late next year, or even into 2014.
But even cheaper one- and two-year fixed mortgage rates could eventually jump sharply if there was a sudden rush from floating rates in an effort to beat a rising tide, economists said.
Annual inflation hit a 13-year low of just 0.8 per cent in figures out yesterday, reflecting a high New Zealand dollar holding down import prices.
The kiwi dipped after the figures came out, falling from almost US81.9c to end just under US81.6c.
Inflation is also being held down by slack demand and "full price phobia" , forcing retailers to discount widely, especially for electronics and more recently second-hand cars.
Unexpectedly low inflation of just 0.3 per cent in the September quarter has raised the probability of an interest rate cut to perhaps 40 per cent, according to Bank of New Zealand. But Westpac economists say a rate cut would probably not be sparked unless the global economy got much worse, or there was a serious slowdown in New Zealand.
Most economists still think new Reserve Bank governor Graeme Wheeler will sit on his hands in his first official one-page statement to the market next week.
Low inflation was helpful for the central bank, but it was future inflation that mattered. That was expected to head back towards 2 per cent next year, in part because of the inflationary impact of a burgeoning housing market and the Canterbury rebuild and the waning impact of a high currency.
Cutting rates now could add fuel to the already booming Auckland and Christchurch property markets. The central bank would also be concerned about the potential for rising construction costs in Canterbury, already running at almost 10 per cent this year, to spread to inflation outside the region economists said.
But for now official rates are expected to stay on hold for at least another year.
About 60 per cent of borrowers are on a floating rate mortgage at present, with rates averaging 5.87 per cent.
Some fixed rates are even cheaper, with some rates for one and two years fixed about 5.25 per cent or less.
Westpac chief economist Dominick Stephens said fixed mortgage rates were so low the housing market would pick up even more in the coming year.
One- and two-year rates were lower than floating because of a "small risk" of large cuts to the OCR if there was a real collapse in the European economy.
"There are a lot of New Zealanders currently floating and looking to fix. If they all opt to fix at once, fixed rates could jump up very rapidly," Stephens said.
So sitting on a floating rate till it was clear interest rates were going to rise "might leave you stranded".
"Trying to beat the market is perhaps not a good idea, but who knows when the market will wake up and realise the importance of the Christchurch rebuild [for inflation]," Stephens said.
ANZ Bank senior economist Mark Smith said official interest rates would remain "lower for longer" with the Reserve Bank keeping rates on hold till 2014.
The central bank had time on its side because of the high proportion of borrowers on a floating rate. That meant any lift in the official cash rate would flow through to borrowing rates for many people quickly, unlike when most were on fixed rates and the impact took time to feed through.
Meanwhile, yesterday's inflation figures showed more discounting, accounting for about 12 per cent of items on sale in the quarter, especially imports benefiting from a high dollar.
Sharp discounting may account for the near 3 per cent fall in second-hand car prices in the September quarter.
THE LOWDOWN
Annual inflation: 0.8 per cent (year to September) September quarter inflation: 0.3 per cent
Quarterly rises: Food group: up 1.1 per cent
Tomatoes: up 57 per cent
Lettuce: up 32 per cent
Local authority rates: up 3.6 per cent
House rents: up 0.6 per cent
House insurance: up 17 per cent
Quarterly falls: Second-hand cars: down 2.8 per cent
New Zealand consumer prices rose at a slower-than-expected pace in the third quarter on falling transport, taking the annual pace of inflation below the Reserve Bank's target band.
The consumer price index rose 0.3 per cent in the three months ended September 30, according to Statistics New Zealand, slower than the 0.5 per cent forecast by the central bank. The annual pace of inflation slowed to 0.8 per cent, below the 1 per cent forecast by the Reserve Bank and outside its target band of between 1 per cent and 3 per cent. That's the first time it's dropped below the target band since 2002.
"Increases were countered by cheaper transport, telecommunications services and fresh milk," prices manager Chris Pike said in a statement.
Today's figures may fuel calls for the Reserve Bank to cut the official cash rate from its record-low 2.5 per cent in a bid to revive a slowing economic recovery and reduce the yield appeal of a strong currency.
What are your thoughts on this cat? Do you think it's related to the fall in interest rates/currency and do you think it will be repeated in Oz? How have the smaller sectors of the market performed?
Catweasel think it a possibly relate to its low the interest rate, but not NZ the dollar.
Unlike a Australia, a NZ have the recently introduce "super" the scheme. So more tax sucked from mouse pocket into a equities. Ultimately even the more a fanatical about mouse house than in a Australia.
Finance companies a wipe out since 2009 and a bank sector dominate by a Top 4.
A earthquake create the interest rebuild.
Ultimately it a economy base around the "soft" commodity, which in some the way, quite a sexy for small economy.
Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.
Forum Rules:
The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.
Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.
Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.
This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.
Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ
Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy
