NZ residential rental market news, September 20

BNZ & Kiwibank lower rates, the market experiences a 10-year high in unsold stock, and disputes between tenant and landlord, and owner and insurer.

Too long; didn't read? Here're this week's TLDRs...

Housing market shows slight recovery, affordability still a challenge

Property sales increased by 1.6% in August compared to last year, but are still 15% below the 10-year average for August. 
There are many listings available, and buyers are taking their time due to high mortgage rates. 
Mortgage rates are expected to drop, which will likely increase buyer competition and put upward pressure on prices. 
The CoreLogic Home Value Index fell 0.5% in August, with property values down 3.7% since February. 
Auckland property values are down 6% from their peak, while Christchurch has been more resilient. 
First home buyers accounted for 27% of purchases in August, supported by KiwiSaver and low-deposit loans. 
Mortgage rates are expected to continue dropping as the OCR is likely to be cut again in October. 
Despite easing inflation, affordability remains a challenge, and a property boom is unlikely.     
Read the article

Housing prices continue to slide, potential structural weakness

Auckland's average asking price dropped below $1 million for the first time in almost four years, reaching $986,750 in August. 
National average asking price was $818,250 in August, down 2.3% from the previous year. 
Trade Me Property suggests this decline might reflect a potential structural weakness in the housing market. 
September's data will indicate if the market is facing temporary seasonal issues or a longer-term structural decline.       
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Housing market sees 10-year high in unsold stock

Housing stock on the market in August has reached a 10-year high. 
Many properties are unsold despite their marketing campaigns. 
This unsold stock is comparable to retailers' end-of-season items that need to be cleared. 
New listings in August were up 8.1% compared to last year, but sales have not kept pace. 
The market is facing an overhang of unsold properties, with over 25,000 still available.      
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Housing prices driven by demand, costs, and investment trends

House prices are now nine times the average income, compared to three times in the 1980s and 1990s. 
Lower interest rates and inflation since the 1990s have allowed buyers to bid more on homes. 
High construction costs, more stringent safety standards, and a lack of new cities have also driven prices up. 
Housing is viewed as a retirement asset, with investment strategies developed since the 1990s. 
Migration has increased housing demand, while longer lifespans reduce older homes for sale.       
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BNZ cuts mortgage rates after US Fed decision

BNZ has reduced its mortgage rates following the US Federal Reserve's decision to cut interest rates. 
The one-year fixed rate is down to 6.29%, and the two-year fixed rate is now 5.79%. 
This follows the RBNZ's recent OCR cut from 5.5% to 5.25%, the first reduction since 2020. 
Other major banks are also reducing rates due to falling wholesale rates and expectations of more OCR cuts.     
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Kiwibank lowers rates in response to market competition

Kiwibank has reduced its fixed home loan and deposit rates in response to lower wholesale interest rates. 
The one-year fixed rate is now market-leading at 6.29%. 
Rate cuts range from four basis points for six-month terms to 20 basis points for longer terms. 
Kiwibank is matching cuts from other major lenders, including ANZ. 
Further reductions in interest rates are expected as central banks continue to lower their benchmarks due to slowing inflation.         
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Insurer refuses claim for construction-related damage, homeowner considers legal action

A homeowner claims their property was damaged by vibrations from nearby construction. 
The homeowner reported significant structural issues like cracked walls. 
Their insurance company is refusing to cover the repair costs, citing that the damage was not sudden or accidental. 
The homeowner is frustrated with the lack of response and is considering legal action. 
The case highlights a potential gap in insurance coverage when dealing with construction-related damage.         
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Proposed hazard maps disrupt Nelson's property market and insurance

Proposed hazard maps in Nelson are causing properties to become uninsurable. 
Homeowners and developers argue that the maps unfairly label properties with different risk levels under broad hazard zones. 
Some homes that underwent geotechnical engineering remain stable, yet still face insurance challenges. 
Developers report house sales falling through due to the overlays, which make buyers and insurers cautious. 
The council is considering adjustments, while geologists support the maps, stating they help identify areas needing further scrutiny.      
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Tenant-landlord dispute escalates over protest sign on property

A conflict between a landlord and tenant over a sign on a fence escalated, leading to the tenant's power and water being cut off. 
The tenant had placed a sign protesting the condition of their home, which the landlord found unacceptable. 
The tenant accused the landlord of retaliatory behaviour by cutting off utilities. 
The landlord argued the tenant had breached the lease agreement by erecting the sign. 
The situation has intensified, raising concerns over tenant rights and landlord retaliation.        
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Private companies may not match charities in public housing care

There is a debate over whether companies can effectively manage public housing traditionally handled by charities. 
Housing companies argue they can bring efficiency and scale to public housing services. 
Critics, including charities, believe companies may lack the community focus and support that vulnerable tenants need. 
There are concerns about profit-driven motives and reduced quality of care for tenants. 
The government is considering whether companies can fill the gap in public housing delivery as demand grows.      
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