Epsom Weekly - 19/04/2024

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Tony Alexander: The scene is slowly being set for some quick interest rate cuts

But the cuts may not come soon enough.

ANALYSIS: Last week I wrote about the deteriorating labour market and how people’s rising worries about employment are affecting housing. Because the employment cycle lags the economic cycle, even when we are initially out of recession and activity is picking up, the labour market will continue to worsen –probably well into 2025.

Does this mean the housing market will be weak well into 2025? Probably not. But until the Reserve Bank recognises it has over-restricted the economy and it cuts interest rates quickly, the current situation of a flat market is likely to persist.

Flat in the context of residential real estate doesn’t mean no change in prices but rather when looking past the month to month fluctuations there is little evidence of much price gain. For instance, if we look at the average over three-month periods, we see that in the September quarter of last year Auckland house prices on average rose by 2.6%.

They then rose 2.5% in the December quarter but have now declined by 0.8% in the first three months of this year. In Auckland the number of properties listed for sale at the end of March was 23% higher than in July last year so buyers have extra stock to peruse at their leisure.

In fact things are so leisurely now for buyers only 6% of agents in Auckland responding in my monthly survey with NZHL now say that buyers are displaying FOMO. Back in September that was 45%. The pandemic frenzy peak was 90% in October 2020.

The net proportion of real estate agents in Auckland saying that more investors are actively looking for property has turned negative by 5% from a positive 16% in September. The net proportion saying they are seeing more first home buyers has dipped from 56% to only 12%.

A key characteristic of this recent fresh period of market weakness is a backing away of young buyers to a greater degree than the backing off of investors. The only small investor change looks like it is due to not that many deciding to advance their buying anyway over the second half of last year. They are affected by large increases in some key costs such as for rates and insurance, debt servicing charges are cyclically high, and many may simply be ageing and looking to fund their retirement through selling their investment asset.

Independent economist Tony Alexander: "But now job worries are acting to rein in household spending and that is something the Reserve Bank will have to increasingly take into account.“

The young buyers have probably pulled back firmly from their earlier very strong interest because of the new development running through the economy and discussed last week – employment worries. This is actually something quite important.

The negative impact on the economy and therefore eventually inflation has to date not been assisted much by the labour market. The unemployment rate has only gone from an unsustainably low 3.2% to 4% and wages growth has only minimally slowed down.

But now job worries are acting to rein in household spending and that is something the Reserve Bank will have to increasingly take into account as we advance through this year. It will be discussing whether the overall degree of restraint on the economy is turning out to be more than it think it needs, especially with a fresh deterioration underway in the outlook for world growth due to heightened tensions and actions in the Middle East.

The scene is slowly being set for some quick interest rate declines – but definitely not in the next few months.

-TonyAlexanderisanindependenteconomicscommentator.Additionalcommentary fromhimcanbefoundatwww.tonyalexander.nz

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Easement

An easement gives a person or entity the legal right to use a property they don’t own for a specific purpose.

For example, a property might have an electricity easement in favour of Vector – this means that Vector has the right to enter the property to install or maintain the electricity network on, under or over the land.

The Land Transfer Regulations 2018 set out, in general terms, the rules and obligations relating to easements. However, it’s always a good idea to check the easement document itself, as this document has the ability to substitute the general regulations for more tailored terms.

What are the most common types of easements?

Generally, easements are granted in favour of neighbouring property owners, the council or utility companies, allowing them rights of way or granting access for the installation or maintenance of certain utilities.

Here are a few common types of easements:

• Right of way – where a property owner is granted the right to use a particular driveway, path or accessway

•Right to convey water, electricity, telecommunications or computer media –usually in favour of Vector, Chorus or a neighbouring property

• Right to drain water or sewage – typically in favour of neighbouring properties or occasionally the council

• Party wall – if there are adjoining townhouses that share a supporting wall, the easement would set out the arrangements between owners (such as maintenance obligations)

• Eaves encroachment – if the eaves of one house extend over an adjoining property (often the case with townhouses), the easement would give that property owner the right to enter the other property to maintain or clean the eaves

How can easements affect a property purchase?

When you’re buying a property, there are a few reasons why it’s important to know about any easements that apply.

Firstly, if there’s an easement on your property, you’ll need to know that you can’t prevent someone who has an easement right from, for example, entering the property and digging up the soil to access the drain.

Secondly, it’s important to understand how maintenance costs are to be shared, if applicable. A right-of-way easement for a driveway, for instance, will generally set out who’s responsible for maintaining the driveway. Costs are usually shared equally, but if one property owner has greater use of the driveway, that owner will sometimes be responsible for paying a larger share of maintenance costs. The easement may also set out what happens if one party damages the driveway.

Finally, you’ll need to know if there are any restrictions that affect how you can use the property. An easement will sometimes state that you can’t build a structure (such as a shed or fence) on certain areas of the property, as this would prevent access to something like a drain.

Information about how to create, surrender, vary or remove an easement.

https://www.linz.govt.nz/guidance/land-registration/land-registrationguide/easements

Informationsource: https://armstrongmurray.co.nz/property-with-easement-nz/

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