This week’s budget and housing market news

Trying to pick the current trend in the housing market cycle is a tough call. Will prices remain steady, rise or fall — and can a trend in one part of the country be applied to another? There’s so many variables.

The economists over at Westpac rightly say the housing market cooled early last year only for a surprising winter flush to set it off again. I well remember plenty of estate agents telling me they were surprised to be so busy last winter.

This week Westpac economists say the market is cooling once more. And it’s something I have seen first-hand from the editor’s chair over the past few weeks. The number of emails coming in from estate agents promoting new listings has dropped like a stone – it’s a reliable barometer to the state of the market.

As the economists write this week: “Market turnover is down, house prices are now falling in Northern New Zealand, and the rate of house price inflation has slowed elsewhere, most notably in Wellington.

“This is bang on what we were expecting. We have long been forecasting a modest decline in house prices due to a raft of expected law changes.”

Westpac expects the Reserve Bank to loosen its mortgage lending restrictions in November, providing a summer boost to the  market.

New development canned

A multimillion-dollar housing development by EcoBuild Developments  has been canned in Whanganui’s London St because  arsenic levels found in the soil are five times more than allowed.

Director Baden Brown said the company had big plans for the land, with designs for 20 sections, houses built under the eHaus brand, natural drainage, solar power and a central green space.

The land was formerly a playing field for St George’s Preparatory School, and mystery surrounds the source of the arsenic.

Prefabs no silver bullet

Prefabrication or house-building factories are no “silver bullet” for the stretched residential construction sector, says an industry chief whose businesses use traditional techniques.

Herald property writer Anne Gibson reports that Grant Porteous – managing director of Deacon Holdings – says the Government is being misled about prefab plants or modular housing being a silver bullet and dramatically reducing the time and cost of construction of new homes.

Porteous says  his franchised businesses were by far the largest house-builders in New Zealand and he was concerned about prefab expectations.

Housing Minister Phil Twyford wants a “significant” number of KiwiBuild houses to be prefabricated. Meanwhile, Bindi Norwell, Real Estate Institute chief executive, says Auckland was short of about 60,000 homes.

Qantas mystery

Mystery remains over the substance that caused 16 Qantas office workers to fall ill after breathing in a noxious odour in a 16-storey Auckland building last week.

A Qantas spokesperson says the airline is continuing to work with the property manager Bayleys and WorkSafe NZ to understand what caused the incident.

Various tests carried out did not pick up any further issues or abnormalities and will continue over the next two weeks. Air monitoring systems were also put in place.

Of the 100 Qantas staff in the building at the time, 16 were treated at hospital after being exposed to the smell which caused nausea, headaches and vomiting.

Housing promise broken

Labour leader Jacinda Ardern says one of its a key election promises of building affordable homes priced at $600,000 under its Kiwibuild programme has been broken. Prices will now  start at $650,000 for a 3 bed home.

She says the increasing cost of land and a 5% rise in materials (annual inflation is 1.1%) has caused the price blowout.
Ardern concedes $650,000 is not affordable for most people.

To buy a home priced at $650,00 you’d need a deposit of $130,000 and mortgage repayments on a $520,000 loan would be $689 a week at 4.85%.

The median price of homes in Auckland is $850,000, according to the Real Estate Institute.

Interest free loans

New Zealanders wanting a home could be given an interest-free mortgage under a scheme being considered by the Government.
Prime Minister Jacinda Ardern says the Government is considering a shared equity scheme as a way of making housing more affordable.
Shared equity involves a share of a mortgage being secured by a third party – usually the state or a government agency – as a second mortgage.

It has to be repaid when the house is sold. Ardern said people on lower incomes had “no chance” at the moment at buying homes in Auckland.