Building and Housing Trends: April - June 2007
This Building and Housing Trends publication covers the period from 1 April to 30 June 2007. It is based on a combination of accessible information and forecasts from government agencies.
Executive summary
The economy
New Zealand’s economic activity (when measured by real Gross Domestic Product (GDP)) increased in the March 2007 quarter (up 1 percent) compared to previous quarters in 2006, the strongest increase quarter on quarter since the June 2005 quarter (up 1.1 percent). However, economic growth was still below that of the 2002–2004 period. Real GDP grew by 1.7 percent in the year ended March 2007, down from 2 percent growth in the year ended March 2006.
Conversely, the construction industry continued to shrink in real terms, declining by 4 percent in real GDP in the year to March 2007. The construction industry grew by 2.9 percent in the year to March 2006.
The number of people employed in the construction industry rose in the June 2007 quarter. There were 187,900 people employed in the construction industry in the June 2007 quarter. This is an increase of 1 percent from the 186,100 employed in the March 2007 quarter, and a yearly increase of 3.8 percent from the 181,000 employed in the construction industry in the June 2006 quarter.
While 2006 appears to have been a period of unusually high employment in the industry, it would seem that employment is still rising overall on a trend that has persisted since 2001. However it is difficult to reconcile steadily increasing construction industry employment with a contraction in construction industry output since the June 2006 quarter, as evidenced by GDP data.
Inflation in the housing sector has continued to rise. The annual inflation rate was 6.1 percent for purchase of new housing in the June 2007 quarter, higher than the 5.8 percent measured in the March 2007 quarter. The annual inflation for actual rentals for housing was 2.6 percent in the June 2007 quarter, lower than the 3 percent measured in the March 2007 quarter.
The housing sector
The housing market slowed this quarter, though it is too early to determine whether this is the start of a trend. The median house price from the Real Estate Institute of New Zealand (REINZ) was 10.2 percent higher at $345,000 in July 2007, compared to $313,000 in July 2006. This is a substantially lower growth rate than in previous months. The last time annual price growth was lower was in January 2007.
By contrast, the number of days to sell a property suggests an active housing market. The median number of days to sell a house in July 2007 was 31 days, which is significantly lower than the 35 days it took in July 2006 and approximately the same as the 30 days it took in July 2005 (see Figure 6). This conflicts with the number of sales, which suggests that current market activity is due more to random fluctuations than any change in market fundamentals.
Recent tenancy bond data from the Department of Building and Housing shows that average weekly rents are on the rise for new tenancies of most dwelling types provided by private landlords. The rental for a one-bedroom flat grew most substantially at an annual rate of 13.8 percent followed by a four-bedroom house at 8.9 percent, a two-bedroom house at 7.8 percent, a three-bedroom house at 6.2 percent, and a two-bedroom flat at 4.2 percent.
Overall rents continue to rise, both in Auckland and in New Zealand as a whole. In the year to June 2007, mean New Zealand rents for new tenancies increased by 9.2 percent. In Auckland over the same period, rents for new tenancies increased by 5.2 percent in North Auckland, 6.6 percent in Central Auckland and 6.2 percent in South Auckland. This continues existing rental trends.
The trackback URL for this page is http://www.thomsonjones.co.nz/trackback?post=3169911
HTML is not allowed in comments, http://... will be automatically linked.
