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Spring bounce? Housing loan approvals hit highest weekly volume and value since July with record run of NZ$1b plus weeks reaching 26

Spring bounce? Housing loan approvals hit highest weekly volume and value since July with record run of NZ$1b plus weeks reaching 26
A spring bounce

By Gareth Vaughan

Housing loan approvals rose to both their highest volume and value last week since July, Reserve Bank figures show.

A total of 7,060 mortgages were approved in the week to October 12 with a combined value of NZ$1.173 billion.

The volume was up 19.8% year-on-year, based on a comparison of the most recent 13 weeks of data with the same 13 weeks last year. The value was up 33.7%.

There have now been 26 consecutive weeks where the value of approvals has topped NZ$1 billion stretching back to Easter.

That's the longest such run since the Reserve Bank started tracking the data in October 2003. The previous longest NZ$1 billion plus run was 20 weeks in 2006.

The record high for volume was 11,193 approvals in the week to December 15, 2006, and the record high for value was NZ$1.542 billion in the week ending March 16, 2007.

Despite the recent strong run of mortgage approvals, the overall housing loan market is growing relatively slowly.

Based on Reserve Bank sector credit data, housing loans stood at NZ$176.742 billion at the end of August, up 2.2% year-on-year, and up NZ$673 million, or about 0.40% month-on-month. Double digit growth rates were recorded between 2003 and 2008, peaking at 17.4% in April 2004.

The Reserve Bank defines a mortgage approval as a firm commitment to provide credit for the purchase of housing, which has been accepted by the borrower.

It says a commitment exists once the home loan application is approved, and a loan contract or letter of offer has been issued to the borrower. Seven banks respond to the Reserve Bank's survey, between them representing 99% of registered bank lending for housing, and about 94% of total housing lending.

Included in the data is the refinancing of other banks customers, any loan where the security changes, and any loan where the liability holder changes. Excluded is own customer refinance, business borrowing where the security is the owner’s home, and when the underlying value of a loan is “topped up," with only the topped up portion included. See more detail in the Reserve Bank's description of the data series here.

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It's going to be a big summer in the city.

Care to make it interesting?
I've attended untold auctions and glimpsed inside the world of as many agents recently, and there aint much happening. That is, unless after enthusiastically marketing your place, then suffering open homes week after week, all to end up with either no bids, or BS bids, all below the reserve has a point.
Admittedly I wasn't paying much attention back in the bearish 90's (when I should have), but if this is what it's like in a bullish market, I'd hate to think what it would be like when it turns down.
My point; this is still a relatively illiquid market despite all the supposed positives, where achieving an attractive exit requires a big serving of luck. Lotto?

I'm not sure you remember correctly ctnz.
Some very top end prices did fall dramatically after 87, but in general house prices continued to rise pausing a little during the 91 recession and then roaring away as low interest rates took hold in 92.  House prices fell from 97 to 01 but not dramatically in Herne Bay or Grey Lynn.  And we all know what has happened since 02.
In fact the first time I looked at property in Grey Lynn/Ponsonby (in 1991) a typical villa in tidy order was somewhere between $120,000 and $180,000 (plenty were above or below that range given the variety of properties).  By 2001, they were in the $300-450,000 range.  Today $900-1,300,000 is about the range for a tidy villa (up from $750-1,150,000 at the start of the year).
Will prices fall sharply in those very desirable areas?  Probably not by much and probably not over longer time frames.
After about 10 or 20 years the original price becomes trivial to the value and the income received.  Those Grey Lynn villas purchased for $120,000 20 years ago now probably rent for $40,000PA.  That's why a lot of owners never sell.

Very much location specific - ie who cares about Wanganui.
That's why I said 'the city'
Take this beauty:
Bidders fought over it for the chance to eventually pay $1,070,000 for 400sqm of land.

I don't care about Wanganui either.
Ah, Kingsland again. Lucky vendors alright, but I seem to remember we already established this.
The real "beauty" in the Kingland deal is Becs P (but she didn't offer herself up as part of it). 
Outside of that, the new owners will need every other house on Dryden to be 1.5m+, or risk overcapitalising once the hard dirty process of cleaning it up is complete.
After all the auctions attended lately, it seems clear that most done deals are that way because buyer willing to pay whatever the sellers reserve or price is.
Maybe I'm already fuddy-duddy in early 40's but paying out money just because I have it and somebody is asking for it, doesn't necc mean that doing so is smart.
If the vendor is cursing, then I'll know I'm on the right side of the deal. If everybody is clapping and smiles, then chump at table is me.
I've looked at these places recently, none of which have sold. I am a buyer, but never at the asking price;
Big house in bush on NS, no bids at 900+, I'm keen at low 800's
Very cool city pad, 1 bid last night at 1.32, reserve prolly 1.5+, I'm keen at 1-1.2m
B'head apt, cheeky buggers only bought 6 months back at 439, put new carpet in, now want 530, I offered 460
House on Lake Pupuke, no bids today at 1.5, so on the market it goes, UP TO 1.65, I'm keen at 1.3
City apt, they wanted 530, price now down to 450, would be keen at 380
...unless some other idiot pays asking price.

Grey Lynn not Kingsland.
Liverpool st - a voyeurs delight? Creepy.

Yea, pretty much any apt in the city a voyeurs delight, or curse, depending on which way you look at it, haha.

Looks like a classic example of Irrational exuberance to me....

Some 30% of home loans in Ireland in arrears. House prices fell by half of its value.
Irish State pushes Banks to forgive home debt.
What is so special in New Zealand? I can't believe home prices still rising.
Recently nice home in Whangarei failed to attract any bids at auction, afterwards listed for sale for 30% higher than takers.


will be interesting to get a break up by region, considering chch is picking up, wonderhow much of this is a result of that

Well actually Christchurch and canterbury in some sectors has been slowing down over the last 6-8 weeks. Especially spec's clearance rates have really dropped off. Change in that market is currently happening, change there will go in waves and the market has certainly changed.
Auckland is not worth the energy and has been that way since pre Christmas last year. Making good money on our US and Brazilian properties currently. Systematic sell down to current tennants  and investors of lower quality stock. 

Should see 3 year fixed mortgages at 4.95% offered during November! Then even more mortgage approvals granted.
Tony Alexander yesterday - "My thoughts on that low inflation at 0.8% - seems like a good time to keep an especially strong eye out for banks which might discount fixed rates for three years and beyond. The three year swap rate now sits near 2.73% from 2.82% last week and 2.94% a month ago."

Interest Rates too high  - need to fall iNZ
Employment set to jump above 7%
Conditions for a Rate hike?    I don't think so.  More cuts coming.

and does anyone think House prices can sustain with unemployment going up????

If this is accurate then my predictions re: unemployment have been right on the money. From early / mid last year I said unemployment would be at least 7% by the end of 2012, even when Zoro at Westpac and Mr Alexander of BNZ (who's 'never wrong') were saying 5-6%. 
And yes it will climb most in Auckland, which will limit house price gains other than in the expensive central suburbs 

Rents rising.
Cheaper to own your own home than rent:

Geez the article is not comparing apples to apples... she bought a studio apartment and obviously the mortaga will be low...

Its all Smoke and Mirrors - If you look at the figures carefully and extrapilate the information for what it is the average loan is just over $165k and is nothing more than home owners repositioning themselves in the market. However it certainly wont suprise me that the banks and real estate agents will pick up on this information and try to put a spin on it, that "all is good in the hood"

I would just like to say that since 2008 my rent has gone up $10 per week

Some may say you have been fortunate, others may say unfortunate. The reality of it is that good tennents are hard to ome by and if you have a 'goody" they are worth their weight in gold.

Yeah we are pretty good tenants, been there 1.5 years and the landlord is quite happy, hes a pretty good landlord too which helps, all this talk about rent rises makes me laugh though because to me its rubbish, our landlord hasn't even suggested raising the rent, and its a prime property.

As an ex Landlord who kept rent levels the same for five years on a well maintained Auckland property, I have to say that unless you know the motives for keeping the rent at the same level, you shouldn't assume that "rent rise talk is rubbish".
They could be amateur landlords [I was and didn't review rents properly] or more problematic for you, you could be keeping the property in good conditon while the landlord works to a wider plan i.e. sale, re-occupation, renovation etc. If your rent is below market, then be prepared for an eventual shock, even if it's some time away. 

Call me stupid if you wish, but aren't we missing the key point here - the data includes remortgaging. If I'm not mistaken, would an increase in activity be directly related to the impending demise of a certain Green Bank?

Good point - wheres the answer?

$176billion....if its 50% over-valued...oh dear....
....whats out GDP again?
or Govn tax income?
Kind of dwarfed I'd suggest.

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