OCR unchanged at 2.5 pc
The Reserve Bank (RBNZ) has shown itself committed to its recent statements, by leaving the official cash rate (OCR) unchanged at 2.5 per cent this week.
Statements from the RBNZ over the past few months have consistently forecast that policy stimulus will be removed starting from around mid-2010.
This means borrowers can expect interest rates to start rising slowing from this point in time, towards more normal levels.
In its official statement following the March board meeting, the RBNZ declared that inflation was tracking as expected, although there will be some inflation pressure in the short term due to the implementation of the Emissions Trading Scheme and increases in ACC charges.
The RBNZ said that consumer confidence and household spending has increased over the past few months, but there is still caution from households.
And although the RBNZ expects to increase the OCR this year, it is possible that any increases may be limited and infrequent, as current bank costs reduce the need for policy intervention.
No new tax for property investors
At his opening speech to parliament, the Prime Minister indicated that the Government has ruled out proposals to introduce a land tax, comprehensive capital gains tax or new tax on residential investment properties.
The move is a welcome one for property investors, particularly those who have been sitting on the sidelines waiting to find out what, if any, new rules would be put in place that would affect their investment goals.
Announcing that these proposed taxes will not be introduced has given property investors some more certainty around their investments and it is now expected that more people will enter the property market with investment in mind.
There still will be some tax changes that will affect property investors, so keep an eye out for the May Budget to see the final tax package.
For those who are now considering property investment, it is a good idea to have a thorough understanding of your financial options prior to beginning the search for a new property.
A properly structured investment loan, tailored to suit your personal financial situation and overall investment goals, is a key component of any successful investment.
Reading the signs
Property values have increased further according to the QV residential property indices for January released recently.
Nationally, values are 4.4 per cent above the same time last year and 4.3 per cent below the peak of the market in late 2007.
The average sales price across New Zealand also increased to $409,807 in January, up from the $404,671 in December. However, the average sales price is a less reliable measure of value change than the QV index as the average can be skewed depending on which part of the market is active.
Glenda Whitehead of QV Valuations commented that the majority of the market activity, particularly in the main centres, is being driven more by existing homeowners and first home buyers.
Those currently entering the market appear to be taking a cautious approach to their decisions, and are doing their research thoroughly. Some of the frantic market activity of 2009, when there were multiple buyers competing for a property, appears to have eased, at least for the time being, according to Ms Whitehead.
Values in most of the main centres have continued to increase in recent months and are now all above the same time last year. Values in the Auckland Region are now 7.3 per cent up, the Wellington Area is 5.7 per cent up, and Christchurch 6.3 per cent up. Values in the other main centres have fluctuated in recent months, but still remain above last year by 3.5 per cent in Hamilton, 0.6 per cent in Tauranga, and 5.0 per cent in Dunedin.
In the provincial centres values have been more variable over recent months. However, values in nearly all areas are now above the same time last year. Rotorua is 3.3 per cent up, Napier 5.1, New Plymouth 7.1, Wanganui 0.1, Palmerston North 5.6, Nelson 3.6, and Invercargill 4.6 percent. Whangarei is the only centre still below last year at 3.9 per cent.
Queenstown Lakes is 0.5 per cent above last year and this is the first time it has shown year on year growth since May 2008. This is due to an increase in values in the last few months after a relatively flat 2009.
What’s in when you’re inside, in 2010?
Are you planning to re-decorate your house this year? Or even just daydream about it?
What is it that influences your choice of colour and style?
Maybe you will follow the ‘green’ trend and use only natural paints, recycled timber and organic cottons. Or find your penchant for marble tiles, stainless steel kitchen and ornate décor being curtailed by a need to trim the budget in the aftermath of the ‘GFC’.
US magazine Natural Home Living surveyed its readers recently and found that both the economy and a sense of environmental responsibility are shaping the way trend-setting Americans live.
Here are their predictions for Interior Design Trends, 2010.
- We’ll be looking for warmth
Seeking comfort, people will move away from dark, cold wood and stone in favour of warmer colours such as honey and caramel. - Textiles will be bold, bright and natural
The focus this year will be on geometric prints in bold patterns–Herringbone, Indonesian prints and Bargello (Florentine stitching). There will be a rising demand for environmentally friendly, organic fabrics. - Colours will be bright and natural
This will be the year of bright, saturated colours, such as turquoise, which spice up quiet spaces while still drawing inspiration from nature. Colour authority Pantone has named turquoise its colour of the year for 2010, with the by-line “escape to a tropical paradise this year - even if it is only in your fantasy”. Of its choice, Pantone says that through combining the “serene qualities of blue and the invigorating aspects of green, turquoise inspires thoughts of soothing, tropical waters and a comforting escape from the everyday troubles of the world, while at the same time restoring our sense of wellbeing”.With both warm and cool undertones, Turquoise pairs nicely with any other colour in the spectrum, Pantone says. “Turquoise adds a splash of excitement to neutrals and browns, complements reds and pinks, creates a classic maritime look with deep blues, livens up all other greens, and is especially trend-setting with yellow-greens.” - We’ll let more sunshine in
Designing with natural light was a strong trend in 2009 that is predicted to continue in 2010, according to Natural Home Living. Opening up the home to natural light will not only reduce our dependency on electricity but can also raise the spirit. - Rugs will be minimal
Messy, shaggy rugs that trap and hold dirt and dust mites are out, in favour of flat, woven floor coverings.
Crime doesn’t pay the mortgage
Owning a home may be the great American dream, but the lengths to which some will go to achieve it can seem rather more nightmarish.
According to the Tampa Bay Tribune, a 73-year-old local man opted recently to take matters into his own hands to avoid forfeiting on his mortgage repayments. Police have charged the man with robbing three banks, taking around NZ$850 each time in order to make the payments.
If convicted, he faces a maximum of 15 years in prison for each charge - longer than the length of any mortgage!
