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17 March, 2023
Market News

NZ residential rental market news, March 17

Sam Nicholls
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The REINZ monthly report, Porirua property values up 27%, and Silicon Valley Bank's positive impact on the NZ property market

The bullet points from this week:

The REINZ Monthly Property Report was published Tuesday
    House prices have continued to fall due to economic headwinds and Cyclone Gabrielle in February. 
    National house prices have fallen by 14.2% in February compared to the same time last year. 
    Wellington and Auckland have had the biggest price falls since the downturn began, down by 22.9% and 21.6% respectively. 
    Median house prices were down annually in all regions, except Marlborough. However, median prices increased from January in most regions, with Auckland seeing a 7.0% rise. 
    National median price fell to $762,000 in February, an annual decline of 13.9% from $885,000 last February, but up 40.4% from January. 
    Sales nationwide were down 31.1% annually to 3964 in February, from 5750 at the same time last year. 
    Auckland and Wellington have had the biggest decline in sales with 41.4% and 17.0% respectively. 
    New listings were down 29.5% to 8143 in February, from 11,545 listings last year, however inventory levels overall have returned to standard levels. 
    The total number of properties for sale nationwide was 29,083, a 25% annual increase. 
    Properties took a median of 60 days to sell in February, 18 days more than at the same time last year, and six days more than in January. 
    This was backed up by Trade Me data that came out this week which revealed that homeowners were asking for $88,300 less for their properties on the website than they did at this time last year. 
    Download the report

Two more building companies go into liquidation
    A fifth building company connected to Msonti, Bayside Designer Homes, has gone into liquidation, while a sixth is not answering its listed phone number. 
    The liquidator's first report shows that Bayside owes over $1.9 million to unsecured trade creditors and has left nine builds unfinished. 
    Other companies linked to Msonti, including JacksCo, JacksCo Civil, JacksCo Holdings, and Auckland Hardscapes and Kerbing, have also gone into liquidation in recent weeks.
    NZ Tiny Homes went into liquidation in November, leaving several people without homes and out of pocket. 
    Six people took their issue to the High Court to get their money or property from the liquidators and the company. 
    The six tiny homes were stored and insured by the liquidators, and were partially complete, waiting for a Code Compliance Certificate (CCC). 
    The ruling was a resounding success for all six tiny home purchasers, who were now entitled to receive the incomplete building in its present state. 
    The decision was a groundbreaking one, recognising an equitable lien, which is the property right that arose in favour of the purchasers, in a sale of goods context for the first time. 
    The judgment would have a wider implication on liquidations in general, according to lawyer Jol Bates.  
    Read the article
Porirua property values up an average of 27%
    Residential property values in Porirua have risen by an average of 27% since 2019, according to the latest rating valuations by QV. 
    The average house value in Porirua, as at October 1, 2022, was $857,000, compared to $673,000 three years ago. 
    By the end of February, Porirua’s average home value was $814,716, which is lower than the October 2022 value. 
    QV valuations are conducted every three years for the city council to set rates. 
    The new valuations on 20,740 properties in Porirua did not increase the total rates collected by the council, but affected each property owner’s contribution. 
    The total rateable value for Porirua is now $20.2b, with the land value of those properties valued at $11.2b, according to the QV valuations. 
    QV will send letters to property owners from March 22 about the new valuations, and objections need to be made by April 28. 
    Read the article

Tony Alexander: The (positive) impact of the collapse of Silicon Valley Bank on the NZ property market
    REINZ reported a 0.1% monthly rise in its house price index in February, following a decline in January and December. 
    Net migration flows have turned positive, with a net gain of 33,000 people for the year to January. 
    Accelerating population growth will create more demand for rental accommodation and houses to own, particularly in Auckland. 
    A US government takeover of Silicon Valley Bank has led to concern and a decline in US economic activity and inflationary pressures which takes away some of the pressure on the Federal Reserve to keep raising interest rates. 
    Interest rates have fallen across the curve in the US, leading to decreases in borrowing costs for New Zealand banks. 
    Wholesale borrowing costs in New Zealand are likely to be volatile for many months and so banks are unlikely to initiate a fresh round of fixed mortgage rate cuts. 
    Growing discussion of monetary policy tightening slowing will encourage more potential house buyers to back away from worst-case scenarios of rate rises. 
    The strengthened evidence of first home buyers getting into the market suggests a potential bottoming of the nationwide house price cycle before the middle of the year. 
    Read the article

Overseas investors are scooping up land in the Auckland suburbs
    Overseas investors have purchased more than $123m worth of land in the Auckland region since September 2022 under a pathway to encourage house building. 
    Neil Group, a company registered in the Virgin Islands and owned by Malaysian and Singaporean investors, bought 13 hectares of land on Trig Rd in Whenuapai for $49m and is building a 300-house development at a different site also in Whenuapai. 
    Fletcher Residential, which is 55% Australian owned, 13% USA owned, and 5% UK owned, bought 0.7ha in Onehunga from Kāinga Ora for $7.6m to replace state housing with 62 dwellings, and purchased 4.27ha of former quarry land at 100 Morrin Road in St Johns from Eke Panuku, developing 204 dwellings and 60 dwellings for retirees. 
    Retirement village operator Metlifecare, owned by the €9 billion Luxembourg-based EQT Partners Infrastructure Fund, purchased 8.6ha of land on Jellicoe Rd in Pukekohe for $23m. 
    Buying land for residential development and carving off a slice for retirement living is a trend that has emerged strongly within recent Overseas Investment Office (OIO) notifications. 
    Villages for retirees are treated differently under the rules, allowing overseas investors to continue to own and operate them. 
    National Party housing spokesperson Chris Bishop announced he has submitted a bill that would change the Overseas Investment Act to give "build to rent" housing developments the same privileges as retirement villages. 
    The bill would also give rented apartment buildings the same depreciation tax write-offs that commercial buildings have enjoyed under the law since 2020. 
    Overseas investors who want to build residential developments can apply for consent under the "increased housing test", but they are required to sell their holdings within a certain number of years. 
    Read the article

The information provided in this article is for general informational purposes only and should not be considered legal advice. We make no representations or warranties about the accuracy, completeness, or suitability of the information, and we do not accept any liability for any loss or damage that may arise from your use of the content. It is essential to consult with a qualified legal professional for advice tailored to your specific situation.

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