Banks need to man-up and cut rates

Calculating Interest Rates

Chatter over last week’s surprise cut to the official cash rate by Graeme Wheeler continues to rumble on.

Most people, including yours truly, figured a cut would come on June 9, but the Reserve Bank governor unexpectedly sliced a quarter of 1 per cent off the OCR, taking it to an historic 2.25 per cent.

There’s firm talk of at least one more cut in the pipeline, and whispers of the OCR going below 2 per cent — will we see the OCR drop to 1.75 per cent by Christmas?

However, it seems the days of the OCR having a direct effect on floating mortgage rates are over. With banks drawing on foreign cash to make loans, they have the perfect excuse not to pass on the savings Wheeler hoped would help businesses and floating rate mortgage payers.

The theory is that if people pay less in bank interest, they’ll spend the money saved into the economy (instead of using their credit card), or reduce their debts.

Following the cut, the ANZ reduced its floating rate by just 10 basis points (to 5.64 per cent), the BNZ kept its floating rate unchanged at 5.79 per cent, and ASB reduced its rate by 20bps to 5.55 per cent. The Co-op is the only bank, at the time of writing, to pass on the full cut to its borrowers — its rate is 5.45 per cent.

If banks won’t play ball, then the RBNZ’s ability to massage the economy via the OCR are over. Wheeler even made it pretty clear he expected the banks to pass on the full cut, but they have ignored him.

While the banks should be free to absorb any rises in the OCR to stay competitive, they should pass on any cuts in full. It’s what the Reserve Bank governor wants, and it’s what borrowers want.

High demand

According to the latest Harcourts Market Watch newsletter, 80 per cent of homes taken to auction are selling, and that demand has pushed the real estate firm’s average Super City home sale price to $899,445.

Harcourts’ CEO Chris Kennedy says:  “The central region has 40 per cent less stock than was available last year, and average prices are up 29 per cent. It’s your classic supply and demand situation.”

In Christchurch, based on Harcourts’ figures, prices rose from $437,630 to $509,534 in the 12 months to February.

Fixed rates

HSBC is the only bank offering a fixed rate at below 4 per cent, but I’m hoping we will see plenty of other banks following suit this year. Until then … some of the best deals include ASB’s 4.15 per cent for one year and KiwiBank’s 4.99 per cent for five years.

Auckland real estate market heats up and OCR cut

Shock announcement from the Reserve bank, the OCR is down to 2.25%.

RBNZ governor Graeme Wheeler says: “The outlook for global growth has deteriorated since the December Monetary Policy Statement, due to weaker growth in China and other emerging markets, and slower growth in Europe.

“This is despite extraordinary monetary accommodation, and further declines in interest rates in several countries. Financial market volatility has increased, reflected in higher credit spreads. Commodity prices remain low.

“Domestically, the dairy sector faces difficult challenges, but domestic growth is expected to be supported by strong inward migration, tourism, a pipeline of construction activity and accommodative monetary policy.

“The trade-weighted exchange rate is more than 4 percent higher than projected in December, and a decline would be appropriate given the weakness in export prices.

“House price inflation in Auckland has moderated in recent months, but house prices remain at high levels and additional housing supply is needed. Housing market pressures have been building in some other regions.”

The property drought may be over as listings are starting to rise as we head into autumn. According to Barfoot & Thompson, while the number of properties the firm had for sale during January was the lowest for 20 years, it entered March with more than 2000 new listings.

So it looks like brighter days are here for buyers as more listings means more choice, and a better chance of getting what you want.

Peter Thompson, the firm’s managing director, says there’s an “extremely high number of properties in the pipeline” for settlement in March and April. The company currently has 3318 properties on its books, the highest monthly figure since March 2015.

Based on its sales, Thompson says the average house price is just over $822,000. While the median price, a more accurate figure, is $738,000.

Thompson says: “While prices are down from their record highs, based on past trends, prices in coming months are most likely to build modestly.

“This trend has occurred over the past nine years, where Auckland house prices have followed a cycle of falling in the first quarter of the year and then rising from autumn on.”

Asking prices rise

Meanwhile average asking prices for Auckland property listed on realestate.co.nz reached a new record in February, going up by more than $100,000 in 12 months to $866,000.

The ‘average’ asking price is not the same as sale price, but the firm’s Brendon Skipper says the national average asking price in February was $565,861, a hair below the record high of $568,215 set in August last year.

He says Auckland is not alone in seeing record highs for asking prices, so too is Otago, Hawkes Bay and Coromandel.

However, Skipper says average asking prices need to be seen against a background of relatively low inventory.
New listings for February across the country totalled 11,989. Auckland had 4202 new listings, up 1.4 per cent from February 2015.

Busy month

Jonno Ingerson of CoreLogic says the firm has seen an increase in property valuation activity that suggests an increase in sales, and therefore an increase in property values.

He says: “Of course this is only two weeks of data, but the turnaround is dramatic.”

Ingerson says high demand is being driven in part by Kiwis return from Australia. In addition, fewer people are leaving New Zealand.

“Bear in mind that since 1981 March has been the busiest or second busiest sales month of the year,” he says.

“We therefore expect market activity to be strong at this time of the year, usually right through until May. A lack of listings, evident across much of the country, is likely to help push prices up for some time yet.”

Auckland property prices slide further – down almost 1%

House prices are continuing to drop across Auckland according to the latest figures from QV, it reports they are down 0.7 per cent over the past three months, but the regions are picking up. Nevertheless, the average price of a home in Auckland City suburbs is $1.088 million, and is $925,656 across the wider Super City.

QV’s Andrea Rush says: “There continues to be strong growth in home values in Whangarei, Tauranga, Hamilton, Napier, Wellington and Queenstown. Values in Christchurch and Dunedin are also rising at a more moderate pace.”

However, Harcourts’ CEO Chris Kennedy, writes that despite talk of the market cooling, “high demand and low supply” means prices will continue to climb.

Talking to Herald business writer Liam Dann, Devon Funds Management’s Paul Glass says: “There’s no doubt at all that we have a bubble in housing. The amount of speculative investing that goes into housing is very problematic and needs to be addressed.”

BNZ’s Tony Alexander says Chinese buyers are re-entering the market, but are being a bit more selective about what they buy.

Rate cuts

On interest rates, the BNZ’s Tony Alexander says rates will stay low for “many, many years”.

He says the Reserve Bank will only cut the official cash rate if offshore economies get a lot worse, and that cutting rates “in a futile attempt [by the RBNZ] to get inflation to settle near 2 per cent” is unlikely.

Still, Reserve Bank Governor Graeme Wheeler will need to do something soon to lift annual growth up from its current 0.1 per cent.

The ANZ has joined Westpac economists and others in predicting a cut in the OCR, because of the high Kiwi dollar, lower inflation expectations, receding export prices, and dairy payout prospects. Expect to see the OCR at 2.25 per cent on June 9.

Construction

Annual residential building consents in Auckland rose 21 per cent in 2015, but we are still more than 26,000 homes short of what we need in the Super City.

Economists at Westpac say a construction boom is spreading beyond Auckland to Bay of Plenty and Hamilton, where consents issued in the December quarter were up more than 50 per cent on the same time in 2014.

They say reconstruction spending on housing in Christchurch is well advanced and has started to ease back.

Foreign buyers

More than 37,000 IRD numbers were issued to foreigners between October and February. Because of a rule change introduced in October 2015, non-residents can’t buy or sell a property without one.

Over time, this will provide a clear picture of the percentage of homes sold to foreigners.

Free on Monday

Our quarterly Property Report is free with Monday’s New Zealand Herald. It includes a list of the latest property prices across the North Island, an indepth look at the rental market, why property sellers could be sued and why going West may be best.

Easy to use audio player

The Cue  audio player provides an audio player widget with a dynamic playlist – delivering a fully responsive player for your posts, pages and widget areas.

The main site of the plugin is here. (I am not an affiliate seller.)

Download the free basic version of the plugin and you’ll likely find all you need.

The full version includes a cool audio player in the footer area of your website that keeps playing when people navigate away from your page (so long as they are still on your website).

Re the default audio player in WordPress…

To custom code the width of the inbuilt / default WordPress player use this code in your CSS (I suggest you use a CSS plugin such as this one to add CSS code).

The width can be pixels or a percentage (i.e.: 50%) of your page width.

.mejs-container.svg.mejs-audio {
width: 250px !important;
}

Have fun, and keep your WordPress questions coming in.

Why LinkedIn has lost its way

When LinkedIn first surfaced as a professional networking site in May 2003 it was well-regarded and attracted truly professional people. The people one might want to touch base with, but have zero chance in normal day-to-day circumstances.

When LinkedIn first surfaced as a professional networking site in May 2003 it was well-regarded and attracted truly professional people. The people one might want to touch base with, but have zero chance in normal day-to-day circumstances.

It was like Facebook, but with a touch of (noun) je ne sais quoi. The site  attracted people who did not share photos of what they were eating, didn’t state the bleedin’ obvious and one really could join the site knowing you’d be rubbing digital shoulders with fellow professional around the world.

It was a site that often featured interesting conversations.

Today though, it has slipped somewhat to become quite pedestrian. And just like Facebook one finds people sharing banalities along with those ridiculous posters (see below). Why do people feel the need to share such stupid things. It’s meant to be a professional networking site.

LinkedIn should not be the place for these pointless posters featuring hackneyed phrases. And frankly I can’t hide them fast enough from my timeline.

I’m so over seeing them, along with blatant self-promotion and sales pictches that I am weening myself off the site altogether (along with Facebook).

And then there are the requests to connect on LinkedIn sent be people one doesn’t know, and who are not even in the same or related business.

Since LinkedIn started I have opened and closed two accounts. I am now on my third, and I can’t see that lasting much longer.

The only real positive experience I have had from being on the site is a welcome approach from Microsoft late last year to work for them as an editor on one of its news sites in New Zealand. Great job, poor timing.

Below, as seen on professional networking site LinkedIn moments before this post was published.
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Lack of property listings keeps pressure on prices

For the time of year, the number of properties listed for sale is at a 20-year low,  says Peter Thompson, managing director of Barfoot & Thompson.

With so few properties on the market, those that are listed should attract a lot of interest, and should, says Thompson,   “ensure that prices remain solid”.

Sale prices achieved at the real estate agency last month were down on the all-time highs seen in the last quarter of 2015, with the current median price being $760,000, down 5 per cent on December — but 8.6 per cent higher than the same time last year.

During January  the firm sold 893 properties, most sales were in the outer southern and northern suburbs of Auckland.

In January, of all the properties sold by the firm, 20.7 per cent went for more than $1 million, and the number of homes sold for less than $500,000 represented 28.6 per cent of its sales.

A report from Bayleys says the Auckland market has taken a breather over the last 3 months. Even so, the time to sell all inventory is sitting at just 10.3 weeks against a long-term average of 24.5 weeks. An indicator of strong demand.

Tenancy disputes

Figures released by Tenancy Practice Services show landlords across the country lose an average of $1800 in disputes with their tenants — around five weeks’ rent — every year.
Landlords in Auckland are losing an average 5.6 weeks’ rent, in Wellington it’s 5.8 weeks and Canterbury, 4.8 weeks.

Body corporates

Calls are growing for body corporates to be more transparent. Auckland Central MP Nikki Kaye wants to hear apartment owners’ concerns via her website betterbodycorporates.nz.

According to reports, worries raised by apartment owners include a lack of pre-purchase disclosure and allegations of the manipulation of proxy votes at body corporate meetings.

Kaye wants the Unit Titles Act changed, and  intends to produce a report to put in front of her ministerial colleagues.

Stonewood Homes

Stonewood Homes New Zealand went into receivership this week. KordaMentha has been appointed receivers to the company, as well as Stonewood Homes and Sterling Homes. Independently owned Stonewood franchises are not affected.

Affected homes will be completed under the Master Builders guarantee.

Best rate
This week’s best fixed rate is from HSBC, offering 3.95 per cent for 18 months.

Call for lower mortgage rates

ASB chief economist Nick Tuffley says population growth in New Zealand accounts for much of our current economic growth (such as it is) — which is perhaps why the government is not keen to cut migrant numbers and take the pressure off the demand for  housing.

Around 5000 people settle in New Zealand every month, with many spending money on housing, furnishings, clothes and cars. Tourism is masking the downturn in dairy income.

But it is the push for economic growth that’s key here, and lower interest rates is one way to achieve that. In line with many economic commentators, Tuffley expects the Reserve Bank to cut the OCR in June to 2.25 per cent   to boost economic growth —  that should translate into  cheaper loans  as the floating mortage rate should drop in tandem.

Tuffley also says any slowdown in the Auckland housing market due to investor loan-to-value ratio restrictions and tax rules was caused by a knee-jerk reaction.

Having got to grips with the new rules, investors — foreign and domestic — are easing back into the market. As I mentioned in a previous column, the first quarter of this year is a window of opportunity for first time buyers.

Over at the BNZ, its chief economist Tony Alexander says pressure on Auckland housing will continue for the foreseeable future with the population growing 3 per cent a year, and housing construction failing to meet demand.

He is 50-50 on whether the Reserve Bank will extend the 30 per cent deposit rule for investment properties outside Auckland. It all depends how hot the regions get.

Fixed rates
In my opinion the current crop of fixed rate deals from the larger banks are pitiful. The best two-year rate is from the TSB, offering 4.29 per cent.

HSBC has the best five-year rate of 4.99 per cent and it has also just announced a rate of 3.95 per cent for 18 months – but there are strings attached.

if you are looking for a stop gap six month rate, the ASB is among those offering 4.85 per cent.

All up, the current fixed rate deals are higher than they should be, the banks can do better.

January sales
There were 5048 residential sales across New Zealand in January, up 4.3 per cent on January last year according to the Real Estate Institute.

The national median price for the month was $448,000, down 3.7 per cent on December’s figure. Strip Auckland sales out of the data and the national median price falls to $361,250.

The institute’s CEO Colleen Milne says first time buyers are heading to Hawkes Bay and Taranaki to get more for their money.

Canterbury

Fewer people are looking for rental properties in Canterbury, according to Nick Tuffley of the ASB. He says rebuilding work has peaked,  and “prices are settling”.

Auckland property prices dip

For the first time in more than a year Auckland property values have dropped in price — to an average $928,921.

For the first time in more than a year Auckland property values have dropped in price — to an average $928,921.

Property valuation firm QV, part-owned by the government, says its House Price Index shows the cost of home in the Super City went down half of one  per cent during January, and that average values for residential homes across the country dropped 0.3 per cent.  Prices similarly dipped in January 2014. Continue reading “Auckland property prices dip”

Make your website smartphone friendly

In this week’s WordPress Tips & Tricks podcast I re-look at the Profile Widget Ninja plugin that has been updated to allow you to alter it to fit in with your theme’s colours.

Well worth looking at if you want a cool looking profile of yourself or your staff on your website.

And here’s a theme well worth looking at if you want to simplify your website.

Smartphones are it. If your website doesn’t work well, or look good, on a smartphone you are missing out on a huge audience. Time to fix it.

Wondering about how popular podcasting is getting? Check out this latest Rajar listening survey here.

Your WordPress questions are always welcome.

Create a cool looking profile element in your sidebar

Profile Widget Ninja can be used to display user profile section with description, profile image, cover image, custom read more link and social links.

It can be used in any widget area, such as a sidebar or a footer. Social link options such as Facebook, Twitter, LinkedIn, Instagram and Pinterest are available.

Multiple user profiles can be displayed simultaneously using multiple widgets.

Download the free plugin HERE

See an example of the plugin in action here – although I have not used all the options available within the plugin.

How to download your WordPress media library

Had a situation where I wanted to download all the media from my WordPress site and figured there must be an easier way than to pick through all the folders via an FTP program.

There is an easier way – with the DownML plugin from the WordPress directory.

It’s a simple one-trick pony plugin that – while currently out of date – works perfectly with WordPress CMS V4.4.

Got a question about WordPress? Let me know via my contact form.

Cheers,

Steve

Don’t panic if you die and need to share your login details

Great idea for a plugin that sends out an emergency email should the user not be able to share their login details, perhaps due to illness or a sudden departure.

The plugin sends out an email that you write to an email address you specify. The email can contain login details to you WordPress site as well as any other details you need to share in your absence – such as login details to other online accounts you may have.

Check it out at https://wordpress.org/plugins/wp-digital-dead-man-switch/