Issue 2013 / 4   28 March 2013 

Welcome to the fourth fortnightly General Finance Mortgage Commentary for 2013.  We aim to keep you informed on developments at General Finance Home Loans and the mortgage market in general.  

The Money Market
This morning (9 am on 28 March 2013) the money markets were at the following levels:
Official cash rate    2.50% (unchanged)
90 day bill rate       2.65 (down from 2.66)
1 year swap rate    2.71 (unchanged)
3 year swap rate    3.08 (down from 3.13)
10 year bond rate   3.59 (down from 3.83)
NZ/US dollar      0.8371 (up from 0.8207)

Auckland’s Housing Shortage
Commentators have been saying that the Auckland housing market will perform well this year and may rise overall by around 10%.  Next year is forecast to be positive too. Low interest rates are one thing that is driving this but there is another more important factor - Auckland is simply not building enough homes. According to a recent report from Westpac Bank, this under-building is serious - Auckland needs to build a minimum of 9,500 dwellings annually. We are building half this number. To quickly unwind the shortage, we need to build well in excess of 9,500 in the short term. This shortage will remain for the foreseeable future and house prices will only go in one direction, which is up.

Who Is Buying Our Houses?
There has been much made, particularly in Auckland, about the number of houses being sold to foreigners. Recently the Bank of New Zealand and the Real Estate Institute of New Zealand carried out some research in this area. It shows that around 11% of these houses are being bought by offshore parties. The three most common places of origin of these buyers were China, United Kingdom and Australia. Furthermore the research showed that around 50% of these buyers were planning to live here. What these figures did not show was the breakdown by suburb. This is where you will see the real variances. In Epsom, for example, there appears to be a large number of off shore buyers, whereas in parts of Henderson there are relatively few.  As Auckland has been in the top ten best places in which to live in the world in a number of surveys, we expect to see more foreigners wanting to live here. 

Tendering for Rentals
A new method of obtaining a rental property is appearing on the Auckland market. That is tendering for your accommodation. If you want to live in a certain area, know exactly what type of property you require and how much you are willing to pay, then, why not tender. Tendering is an accepted practice in the marketplace – buyers already place tenders for such things as properties, cars, and plant and equipment. We can see this method for obtaining accommodation being used more, particularly by professional people who are short on time and do not want to visit thirty or forty properties before they find a suitable one. This will ultimately become just another method of obtaining a property to rent. 

Tax Financing
March 31 is approaching, signalling the end of the financial year. For those who have tax to pay or with tax arrears to clear, General Finance is happy to lend funds for these purposes. We are aware that many prime rate lenders are not prepared to lend for payment of tax. It is simple - if you have residential security, borrow from us for 6-12 months and then refinance with a prime rate lender. We are happy to assist here. 

As everyone's personal circumstances are different and the tax treatment of their affairs is always determined by their own circumstances, you should not act on any comments made in our Commentary without obtaining your own independent professional advice.

General Finance Limited is a Registered Financial Services Provider, with registration number  FSP8882.