WILSON COLLIN, 300238419

Assignment 1,

Post 1

“Commercial properties”.

http://www.stuff.co.nz/business/industries/9865977/Commercial-property-sales-rebound

The major news this week was the release of International investors putting New Zealand in their top-10 list of Asia-Pacific real estate investment targets (Gibson, 2014). This has caused Commercial property sales to rebound after the 2012 slump.

Investors will look for real-estate opportunities as demand pushes prices up over the foreseeable future. Increasing foreign investment is a main driver for the increase in Demand for commercial property in New Zealand.

“Jones Lang LaSalle, said more than $2 billion worth of properties sold for more than $5m last year, with office properties leading the way.” (Ninness, 2014) This is positive news for Welly Real Estate as office values will increase and this is an indicator that investors are willing and able to pay upper market prices for office space.

Again with increasing foreign investment Industrial property prices will continue to increase also. The main driver of these prices will be the Auckland region as 76% of industrial property sales, in 2013, occurred in the Bombay hills. (Ninness, 2014)

 

Individual firms will receive a boost in Assets as land value increases. This will increase their lending ability, however the recent OCR increase of 0.25% has increased interest rates in an attempt to cool the housing market. This will discourage lending.

“To keep inflation expectations in check, interest rates would need to rise towards a level where they were no longer pushing the economy forward, adding to demand.” (WEIR, 2014)

Interest rates are expected to continue to rise to combat inflation. However interest rates are at a 50 year low, so interest rates are still relatively low. (WEIR, 2014)

A boost in land value will allow consumers and other property owners in the market to increase their borrowing potential. This allows struggling businesses to stay afloat in the short term as lacking cash flow into the business can be boosted by borrowing.

 

This is positive for Welly Real-estate as opportunities arise in the short term. I recommend that Welly Real-estate invest in both industrial and commercial property in the immediate future. I predict the market values will continue to increase as investors will look to increase the Supply of commercial space in Major cities throughout New Zealand. "We don't have enough real estate to satisfy that demand. So the natural result should be there will be an upward pressure on prices” (Gibson, 2014).

Any increase in Supply will be done by utilizing idle resources, such as empty or idle land lots. However, NZ property market prices will still increase due to a lacking supply.

This will increase the inflow of cash to Welly Real-Estate in the short term as sale opportunities are expected to arise. This will help to keep them operating in the foreseeable future.

Works Cited

Gibson, A. (2014, march 25). Foreign funds eye NZ commercial real estate. Retrieved from http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=11225553

Ninness, G. (2014, March 25). Commercial property sales rebound. Retrieved from http://www.stuff.co.nz/business/industries/9865977/Commercial-property-sales-rebound

WEIR, J. (2014, March 13). Mortgage pain time: OCR rises to 2.75 per cent. Retrieved from http://www.stuff.co.nz/business/money/9822918/Mortgage-pain-time-OCR-rises-to-2-75-per-cent

Post 2

“New Zealand Dollar”

http://www.stuff.co.nz/business/industries/10018244/RBNZ-may-intervene-in-currency-Wheeler

A large factor in the New Zealand economy in recent times has been the strong New Zealand Dollar (NZD). Ellen Read’s article addresses the New Zealand Dollar and her thoughts as to its future movements.

"The Reserve Bank considers that the exchange rate is overvalued and does not believe its current level is sustainable” (READ, 2014).

Due to offshore factors such as the US economy bouncing back and the slowing growth of the Chinese economy the NZD will be forced to drop to control inflation.

The NZD cannot sustain such a high exchange rate. It must come down at some point. The Dairy industry, US economy and Chinese economy will be major players in how fast the reserve bank will increase interest rates to cool the NZD.

The chart below shows the trend of the NZD/USD over the past year. The chart shows a linear increase over the past year. The NZD is at a 5 year high. The NZD has been on a steady increase over the past year and is expected to drop over the next year. (READ, 2014)

Source:  (Limited, 2014) (See Final Hand in for image)

When the NZD weakens foreign investment into NZ becomes attractive. Outlined in Gibson’s article for the New Zealand Herald, rising property sales and NZ becoming a popular country for foreign investment is increasing the demand for commercial property in New Zealand.

"We don't have enough real estate to satisfy that demand. So the natural result should be there will be an upward pressure on prices.” (Gibson, Foreign funds eye NZ commercial real estate, 2014)

Combining this increase in demand with a lowering NZD will make NZ property very attractive in the foreseeable future.

For Welly Real Estate the strong NZD is holding foreign investors at bay. This gives Welly Real Estate a window of opportunity to gain a good foot hold in the Welly property market. There are large opportunities in the New Zealand property market.

Increasing property values will increase rates and rental prices. This will mean an inflow of new clients for Welly Real Estate’s Relocation sector. This will be a way of keeping a healthy cash flow into Welly Real Estate and will help keep them afloat in the immediate future. A healthy cash flow will allow Welly Real Estate to keep covering operating expenses.

Works Cited

Gibson, A. (2014, 03 25). Foreign funds eye NZ commercial real estate. The New Zealand Herald.

Limited, N. (2014, April 7). New Zealand Dollar Exchange Rates. Retrieved from NZ FOREX: http://www.nzforex.co.nz/exchange-rate/NZD

READ, E. (2014, April 07). RBNZ may intervene in currency - Wheeler. Fairfax NZ News.

Assignment 1,

Advice for Welly Real Estate

“International investors with a total of US$2 trillion ($2.34 trillion) in funds have put New Zealand in their top-10 list of Asia-Pacific real estate investment targets” (Gibson, Foreign funds eye NZ commercial real estate, 2014).

Foreign investment in New Zealand property is an imminent and ongoing occurrence and will create major opportunities for New Zealand property owners. This shows the potential of foreign investment in New Zealand. Welly Real Estate facing difficult financial times will limit the opportunities they have access to however opportunities are there. I recommend Welly Real Estate:

·         Loan to increase investment in commercial properties

·         Concentrate on relocation and renting sectors to keep cash flow healthy and cover Operating expenses

·         Follow the NZD and use as an indication of when to sell to repay outstanding debts.

I Recommend that the above three options are in Welly Real Estate’s best interests. Staying out of the housing market and concentrating on commercial property will be a good move for Welly Real Estate. The New Zealand housing market is overpriced at this time and prices are expected to fall.

 

Investment into the New Zealand housing market has been up 40% over the past two years (Herald, 2014), also inflation increase and a booming economy means the OCR is expected to increase to sustain growth for as long as possible.

"The OCR will need to rise by about 2 percentage points over the next two years for inflation to settle around the target" (Herald, 2014).

The housing market in New Zealand has peaked and prices will begin to fall as banks continue to put restrictions on first home buyers and interest rate rise again. However commercial properties are an attractive prospect.

Increasing foreign investment will be the main driver for commercial property prices in New Zealand. Large foreign investors are moving into the New Zealand market and a few good purchases now for Welly Real Estate could give the boost needed and pull them out of debt.

I suggest investing in industrial lots. Increasing foreign investment will cause property developers to look for idle resources to increase the supply of property in New Zealand (Ninness G. , 2014). This will be a low risk option with good return. However investing in industrial lots will not increase cash flow into Welly Real Estate, it will increase the Operating expenses as loan repayments become greater.

 

The relocation and renting sector for Welly Real Estate will be a major sector to keep them afloat over the next year. As property prices increase renting prices will also increase this will leave business looking for cheaper alternatives meaning more clients for Welly Real Estate. A government policy set on a budget surplus will also leave vacancies in office space as Government contracts from spending, as I have addressed in an earlier blog based on Kate Chapman’s Government surplus on a knife-edge article. This will provide good opportunities to down grade client who are looking for a cheaper alternative.

The New Zealand dollar will be a good indicator on when to sell. Strong commodity and dairy prices along with a decline in policy interest rates are at a 50 year low have all contributed to the strong New Zealand Dollar that is considered overvalued.

Government will use the Official Cash Rate (OCR) to combat inflation and keep it between one and four percent. The OCR is expected to increase over the next two years to combat inflation as net migration increases continue to pressure consumer demand. This will see the NZD drop from the recent peak.

As the NZD drops foreign investment becomes far more attractive and affordable. This will be a major cost driver and can be a large cash injection for Welly Real Estate in the long term.

Getting Welly Real Estate back on its feet will take planning for the short and long term. Using foreign investment to make a gain is a good prospect on the horizon for Welly Real Estate.

Works Cited

Gibson, A. (2014, 03 25). Foreign funds eye NZ commercial real estate. The New Zealand Herald.

Herald, N. (2014, Mar 13). Dollar Jumps on OCR hike. the New Zealand Herald.

Ninness, G. (2014, March 25). Comercial Properties Rebound. Stuff.co.nz.

READ, E. (2014, April 07). RBNZ may intervene in currency - Wheeler. Fairfax NZ News.

 

Wilson Collin, 300238419 

Oliver Woolley, "Len Brown promises 18,000 more homes"

https://nz.finance.yahoo.com/news/len-brown-promises-18-000-043354855--spt.html

Project One: Amber Haddock

BILD 261 Building Economics

Project 1- Economy Advisor – Individual

Amber Haddock 300289126

 

Article: House prices surge in spite of loan restrictions. By Anne Gibson.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11213979 

 

Anne Gibson’s article released by the NZ Herald goes into significant detail about how the new lending restrictions brought into regulation on October 2013 are going to be of impact in the future. With the new tighter lending restrictions this means; "Banks will be required to restrict new residential mortgage lending at LVR’s of over 80 percent (deposit of less than 20 percent) to no more than 10 percent of the dollar value of their new residential mortgage lending" (Reserve Bank of New Zealand). The article forecasts the effect of prices rising further despite it being harder for home buyers to buy properties or invest into the property market. 

The LVR restrictions have put an effect on demand but could potentially have fled off sellers as well; as listings are continuously dropping this keeps the housing market tight whilst house prices still increase especially in Auckland's property market (Smith).

An economist stated that as interest rates rise over the year this would then have a flow on effect with price inflation to the property market and would ease over 2014. As property listings drop continuously in Auckland and Christchurch the low levels of supply versus high levels of demand will take years to even out, however construction that is taking place in these areas is growing rapidly (Smith). National marketing manager Paul McKenzie stated that buyers would be affected most as prices will be increasing, however listing numbers will be decreasing (McKenzie).

The LVR restrictions that were put in place did not have the attended effect as first time home buyers were getting around the 20% deposit restriction through other means of borrowing (Duncan). 

The article released by NZ Herald relates to Welly Real-Estate as it forecasts how the lower end of the scale in terms of the property market has been affected by the LVR restrictions and how this affects first time homebuyers. The LVR restrictions are a branch in the market under Macroeconomics that deals with the performance, structure and behavior of the market.

 

Article: More people choosing to rent. By James Weir

http://www.stuff.co.nz/dominion-post/business/residential-property/9844647/More-people-choosing-to-rent

James Weir’s article released by the Dominion Post implements how home ownership is dropping. This means less people own their own homes as apposed to those who do. In the 1990's studies showed that close to three out of four families owned their own homes. Now days this has dropped by 65%. The age gap that thus fell mostly for, was people aged in there thirties and forties (Kiernan).

The house pricing increase/boom in the 2000's could reflect the decrease in households owning their own homes. In 2000 "house prices peaked at close to 6 times the average disposable income" (Weir). First time home buyers and younger people are finding it extremely difficult to buy into the property market, this could be due to one of two things; prices have increased to over 6 times the amount of disposable income or people are not settling down until an older age now or more Asian migrants are migrating to NZ but reluctant to invest in the property market which then in turn results in an increase in rental properties (Weir).

Due to prices for houses rapidly increasing, renting is the next best option financially. “Recent research suggests on average it is about $138 a week cheaper to rent than own a house”(Weir). In comparison to home ownership and renting, it is easier for those whom rent to move houses than those whose money is invested in the asset. From 2001 to 2013 home owning has decreased by 54.6% over a range of age groups between 20-70. From 2001 house price started to rise significantly and the gap between renting and buying has widened greatly (Kiernan). Homeowners have potential capital gain whereas those in rental properties do not get this bonus (Weir).

 The article released by the Dominion Post relates to Welly Real-Estate as it forecasts how the lack of supply versus demand results in more people choosing to rent. The result of supply and demand is a branch in the market under Microeconomics that deals with the smaller part of the market in terms of the decisions making and the implications on individuals.

 

Advice for the company

 Welly Real Estate is a real estate agency that aims to assist commercial needs in an innovative and dynamic way. In relation to the articles outline in this report, information has been gathered relating to the real estate situation to date and todays market all around New Zealand. The property market is at an all time high in terms of house prices, interest rates and mortgage rates thus this means that the housing industry is becoming unpredictable to future investors wanting to invest into New Zealand’s property market. In 2013 the new LVR lending restriction come into laws, stating that potential buyers had to have a 20% house deposit before purchasing and borrowing off the banks which then in turn meant that for first time home buyers to now get a foot in the door in the property market is increasingly difficult.

 To advise the company on the market situation would deem hard, as the market is very unstable, the lower end of the scale in terms of house prices is very weak, this is due to the LVR restrictions. Advise to the company would be too focus more on the higher end scale of the market as this is feasibly more stable according to Premium Real Estate Auckland (Premium). In consideration to this, the company may have to employ a more qualified professional and someone that is able to achieve those targets and professionalism. Having to employee someone that required a higher wage cost would mean the business would have a slight down fall, resulting in higher wage costs however would balance out with the increase in commission the company would receive for the higher sale prices of the house. In relation to other real estate companies throughout New Zealand the ones in the higher market are deemed more of a success to those in the lower end! Proof of this is as followed: Premium real estate in Auckland New Zealand is a real estate agent that “has been building a wealth of experience and knowledge in the high-value, luxury property market” (Premium). This particular agency is a company that is known for is stability and solid property resource that can be relied on. Welly Real estate could follow the lead in becoming a successful company like Premium Real estate if they move the business towards the high value end of property market (Premium).

If the company focused on the high-value luxury property markets this could result in an increase in wage costs, a decrease in number of houses sold and an increase in commission per property that in turn should balance out and allow for stability and income for Welly Real estate just like Premium Real estate in Auckland.

According to statistics from the global property guide, Auckland has the highest valued properties over the country and the number of sales were up 2188 properties (16% from the previous year). If Welly Real estate were to focus the business on high value properties, they could situate this in Auckland as the house price values are high and listings are increasing (Global Property Guide).

 Another niche in the market that Welly Real Estate could move the business towards would be to become a real estate agent that focuses on Property Management in residential properties. Due to people choosing to rent more because of the supply of housing being in decline the business could be in financial gain by focusing the business in this particular aspect. Taylor Property Plus located in Wellington New Zealand is a business that operates as residential properties managers and allows for exceptional services (Taylor). Kelvin and Rae Taylor whom run the company have over 230 properties that they manage which would be of evidence that this specific category in the property business is successful and could be of achievement for Welly Real estate (Taylor).

 An article released from stuff.co.nz by Greg Ninness forecasts how Hamilton and Wellington may provide better opportunities for residential property investors as rents are rising faster, providing landlords with better rental yields on their investments as opposed to Auckland and Christchurch with there is a significant shortage in housing (Ninness). If Welly Real Estate fixated the business towards residential property management perhaps they would focus their rental management in cities such as Hamilton and Wellington where prices for rentals are increase which then in turn increases landlords rental yields and provides for an increase in profit for property managers.

 

Work cited:

Duncan, H. "House prices surge in spite of loan restrictions". Web. March10.2014. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11213979.

 

Kiernan, G. “More people choosing to rent”. Web. May 2. 2014. http://www.stuff.co.nz/dominion-post/business/residential-property/9844647/More-people-choosing-to-rent

 

Global Property Guide. “New Zealand's property market remains buoyant”. Web. May 2. 2014. http://www.globalpropertyguide.com/Pacific/New-Zealand/Price-History

 

Ninness, G. “Insider guide to investing in rental properties”. Web. May 2. 2014. http://www.stuff.co.nz/business/money/9539298/Insider-guide-to-investing-in-rental-property

 

Premium Real Estate. “Premium Real Estate- high-value, luxury market”. Web. May 2. 2014. https://premium.co.nz/aboutus/

 

Reserve Bank of New Zealand. "Loan to value ratio restrictions". Web. March 10. 2014. http://www.rbnz.govt.nz/financial_stability/macro-prudential_policy/5393159.html

 

Smith, D. "House prices surge in spite of loan restrictions". Web. March 10.2014. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11213979.

 

Taylor, K. “Why Taylor Property Plus”. Web. May 2. 2014. http://property-plus.co.nz/about-us/

 

Taylor, R. “Owners”. Web. May 2. 2014. http://property-plus.co.nz/owners/

 

Weir,J. “More people choosing to rent”. Web. May 2. 2014. http://www.stuff.co.nz/dominion-post/business/residential-property/9844647/More-people-choosing-to-rent

 

 

 

 

 

 

 

 

Hayden Fahey - Project One

Hayden Fahey

BILD 261 Economy Adviser

300295081

Project one

http://www.stuff.co.nz/business/money/9539298/Insider-guide-to-investing-in-rental-property

Investor property up.

In Gregg Ninnes Stuff article, Inside Guide to Investor Property, information regarding the opportunity of perspective property investors and property value to rental values were discussed. Housing shortages in central areas are creating a surge in rental prices, with Christchurch and Auckland most affected, Auckland median rents raising 10% from last year. Other centres such as Hamilton and Wellington may prove to be better for residential property investors (Ninness, 2013).  

Residential property rents in New Zealand’s largest centres have seen an increase since last year, Auckland suburbs have seen a median rent increase of 10% since October last year. Christchurch has had an increase of upto17% in poplar suburbs such as Cashmere and Riccarton, (Real Estate Institute of New Zealand, 2014).

The higher rents offer higher returns to investment property owners with existing properties. For investors expanding portfolios in large centres will find it difficult to achieve profitability because property prices have generally risen faster than rents (Ninness, 2013).

Other market areas such as Hamilton are proving to be more reliable areas for prospective investors. Hamilton has experienced rents rising faster than property prices in most residential property areas. The median selling price of properties sold in Hamilton in October was up five per cent on October last year. Prospective investors are presented with higher profit yields on their investments (Real Estate Institute of New Zealand, 2014).

Wellington has experienced a stable residential property market recently. With relatively low growth in rental values and little or no rise in property values the market has remained very stable. Median rents through the wider area of Wellington rising less than 5% while the median property value increased by 0.5% over the same period (Real Estate Institute of New Zealand, 2014).

http://www.stuff.co.nz/business/money/9870980/NZs-top-places-for-property-gains

NZ's top places for property gains

Dunedin has proven to be the highest yield location for long term New Zealand property investors. Student accommodation needs and the Christchurch rebuild programme have been present in the city for some time, driving up the yields. Dunedin had seven out of ten of the highest yielding suburbs in the country.

Dunedin has a large student population that requires accommodation within the city. The students need to be accommodated in relative close proximity to the campus; students also are most likely to rent due to the lower cost of renting for a few years rather than purchase a property. The large housing demand by students offers a reliable tenancy base for property owners. Three bedroom houses in the suburb of Hei Hei were returning gains of up to 14 per cent capital gain yield (Harris, 2014).

The Christchurch rebuild programme has also been driving up rental yields recently. Christchurch currently has a shortage of properties both for sale and rent. This property shortage in Christchurch has created a surge in Dunedin’s rental market as demand has increased while the rebuild takes place. The yield growth since the earthquakes in Dunedin has been quite evident according to a report by Westpac (Harris, 2014).

Rental property investors in Dunedin are experiencing high profit margins. High profit margins can be expected from rental investments because property prices are relatively cheap in relation to the rental income received. Dunedin's suburb of Forbury had a yield of 8.3% on the capital (Real Estate Institute of New Zealand, 2014).

The successful rental yields are attributed to economic model of supply and demand. There is a high demand for residential rental properties in Dunedin currently created by a continuous demand for student accommodation and a recent demand for Christchurch rebuilders. The two competing renters have driven up rental demand. Dunedin has always had a steady rental base from students that can be relied upon for steady profit, now rental demand from Christchurch rebuilders has driven up the property yields creating higher profits for the rental property owners. The rental boom from Christchurch can be expected to diminish as renters return to their city after properties have finished construction or more properties become available to the market (Harris, 2014).

Buying a house in the current property with debts has become very expensive. This is a direct result from the Reserve Bank initiating restrictions on low equity mortgages in October last year. The Reserve Bank restricted the mortgage market, making mortgages with a deposit of less than 20% difficult to get. This impacts first home buyers who are mostly unable to purchase property. The LVR has affected mainly the lower value properties in the market (ONE news, 2014). The Reserve Bank initiated this restriction in an effort to control the market for the country’s long term benefit. This is macroeconomics as it adjusts the market behaviour directly (Reserve Bank of New Zealand, 2013). Therefore with LVR restrictions first home buyers will be deterred from purchasing a new house without proper funding. Prospective first home buyers will look to rental properties instead of purchasing as LVR restrictions do not affect the rental property market.

Welly Real Estate should invest in residential property for rental opportunities. Due to LVR restrictions throughout New Zealand Prospective first home buyers will look to rental properties instead of purchasing as LVR restrictions do not affect the rental property market. This creates a large opportunity that Welly Real Estate could invest in.

There is evidently opportunity for profitability in the investment of residential properties for rent. Wellingtons stable property market serves as a relatively safe option for property investment, increasing rent values and stable property values offer great opportunity for a profitable investment. Hamilton also provides an ideal area for property investment, with rents rising faster than property values.

Dunedin’s high rental yields on properties capital, gained from other investors on low cost makes Dunedin an ideal location to invest in similar properties. With Dunedin’s high demand for rental properties from students studying in Dunedin a reliable long term profit will be attainable for rental properties. Multiple properties will bring higher profit margins to the company. Christchurch rebuilders have increased profitability to investors by increasing rental demand. The demand increase may not be stable when Christchurch rebuilds and more properties are available within Christchurch.  Christchurch has boosted the property yields on an already profitable rental market. Welly Real Estate could invest in low cost rental properties in Dunedin with little risk. These properties have proven profitable in the long term and should remain so with the large student population continuously expanding.  

Rental properties in these locations should provide improving rental yields. With residential properties throughout the country becoming increasingly expensive for purchase and limited properties available, rental properties are becoming more popular. Property management is an economically viable option in the current property market for Welly Real Estate.

Harris, C. (2014, March 27). NZ's Top Places for Property Gains. Retrieved April 20, 2014, from Stuff: http://www.stuff.co.nz/business/money/9870980/NZs-top-places-for-property-gains

Ninness, G. (2013, December 21). Stuff. Retrieved April 2014, from http://www.stuff.co.nz/business/money/9539298/Insider-guide-to-investing-in-rental-property

ONE news. (2014, April 24). LVR taking a chunk of low price sales out of housing market. Retrieved May 1, 2014, from ONE news: http://tvnz.co.nz/business-news/lvr-taking-chunk-low-price-sales-housing-market-5939958

Rel Estate Institute of New Zealand. (2014, March). REINZ Regional Data March 2014 . Retrieved May 4, 2014, from REINZ: https://www.reinz.co.nz/shadomx/apps/fms/fmsdownload.cfm?file_uuid=D18ABB95-71FC-469B-88BB-E60D8182AD1B&siteName=reinz

Reserve Bank of New Zealand. (2013). Loan-to-value ratio restrictions. Retrieved April 26, 2014, from Reserve Bank of New Zealand: http://www.rbnz.govt.nz/financial_stability/macro-prudential_policy/5393159.html

Josh Foster Report 2

 Main Article; Residential real estate prices hit new highs
http://www.voxy.co.nz/business/residential-real-estate-prices-hit-new-highs/5/187432

The Real Estate institute of New Zealand announced that national sales were down 10% on March last year but are up 19% on February. Meanwhile, the national median price also reaching a record high of 440,000 (Hurndel, 2014). Also there were clear signs that the national volume of sales was decreasing, with only 2 of 12 regions that represented only 3.9% of sales showed an increase. Over the Easter and ANZAC break however, National sales and prices dropped. This is expected due to many people combining these two breaks and taking 10 days over hence culling sales (Gibson). Leading Auckland real estate Company; Barfoot and Thompson took a 42% dip in April sales from that of March (April sales were still higher that 2013).

The Reserve bank’s LVR restrictions are showing a clear relationship to sales dropping with an average decrease of 13% over the adjusted year.  However on the supply side, listings have increased 13.2% (Gibson).

These rising prices and decreasing sales have a negative effect on the macro economy and micro economy. The rising prices attribute to the increase of inflation and lack of sales will affect a company negatively and may force them to adjust costs (eg. Barfoot and Thompson).

With prices rising and sales dipping, a demand has increased for ‘shoebox’ style apartments. These apartments allow people (especially 1^st time buyers) to get into the market at prices less than $200000, which is far more affordable than the national mean (Hill).

Advice I give to Welly Real Estate is to invest in the market for smaller apartments, as they are more appealing (pricewise) to consumers and look to be very popular in the near future. Also I would look into better advertising as sales in general are decreasing and this would help increase your company’s sales, as it would give you a better chance of acquiring the clients over your competition. Lastly I would look at trying to trim operating costs while sales are low and while you may be trying to set up in the apartment market.

Works Cited

Gibson, A. (n.d.). Retrieved from NZ Herald : http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11249728

Hill, M. (n.d.). Retrieved from Stuff.co.nz: http://www.stuff.co.nz/business/money/9949804/Shoebox-apartments-good-for-Auckland

Hurndel, S. (2014, April). Residential real estate prices hit new highs. (F. W. Media, Producer) Retrieved from Voxy.co.nz: http://www.voxy.co.nz/business/residential-real-estate-prices-hit-new-highs/5/187432

Josh Foster - Positive growth in property

http://www.stuff.co.nz/taranaki-daily-news/news/10008645/Positive-growth-in-property