NZ residential rental market news, April 21

REINZ & Core Logic report summaries, proposed housing consent cost cuts & migration boom's effect on housing.

The bullet points from this week:

REINZ Monthly Report & House Price Index released

The total number of properties for sale in New Zealand increased by 14.1% YoY. 
Excluding Auckland, inventory increased by 25.6% YoY. 
Nationally, the median price decreased 12.9% YoY to $775,000 in March. 
Days to sell have increased to 45 days for March 2023, up from 9 days compared to March 2022. 
New Zealand saw an increase in the number of properties sold, with 5,877 sold in March, up 42.9% MoM. 
New listings decreased by 17.7% YoY to 9,242 in March. 
Auckland’s listings were down 22.1% YoY. 
The REINZ House Price Index (HPI) showed an annual decrease of 13.1% for New Zealand. 
Nationally, new listings decreased by 17.7% YoY to 9,242 in March 2023. 
The median number of days to sell a property in March was 45 days, nine days longer than in March 2022. 
West Coast and Southland saw increases in median sale price to $365,000 and $450,000 respectively. 
Auckland had a 16.6% decrease in the median sale price for March YoY but remained above $1 million at $1,000,600. 
Marlborough and Taranaki had an increase in new listings for March YoY at 18.6% and 9.7% respectively. 
Wellington has been ranked in the bottom two regions for seventeen months in a row. 
Download the REINZ Property Report
Download the House Price Index
Read the REINZ article

Core Logic Housing Chart Pack released

New Zealand’s residential real estate is worth a combined $1.57 trillion. 

Property values decreased 2.4% in the first quarter of 2023. 
Property values have fallen 10.5% in the past year, with the decline in average values surpassing the worst point of the Global Financial Crisis. 
With the Auckland region, Auckland City has recorded the smallest fall in Q1 values, down 0.8% in the three months to March 2023. Papakura has recorded the largest fall, down 6.1% over the period. 
Wellington has recorded a -20.0% drop in average property values in the 12 months to March, the largest of the main centres. Christchurch has experienced the most marginal falls, declining -2.9% for the same period. 
Sales volumes in the 12 months to March were 30.9% lower than a year ago. 
There were 7,680 new listings over the four weeks ending 9 April compared to 10,907 for the same period in 2022. 
Total stock on market is 36,172, well above the five-year average of 30,803. 
First home buyers remain a solid presence in the property market, with a 25% share of purchases over Q1 2023. 
Annual rental growth is around 3% in the 12 months to March, more subdued compared to 2022 levels, at least partly due to tenants’ affordability constraints. 
Around 50% of NZ’s existing mortgages by value are currently fixed but due to reprice onto a new (generally higher) mortgage rate over the next 12 months.  
Download the report
Read the article

High number of homes being completed in Auckland

New home completion in Auckland is at a five-year high with 1164 Code Compliance Certificates (CCCs) issued in February. 
This is a 14% increase compared to February last year and the most for the month since 2018. 
The rolling monthly average for new homes completed in Auckland in February was 1180, only slightly below the record high of 1202 set in June 2021. 
Builders in Auckland are expected to remain busy despite building consent numbers pointing to a coming slowdown in residential construction activity. 
There is an improvement in the amount of time it takes for residential building projects to be completed with 87% of the dwellings completed in February receiving their CCC within two years of their building consents being issued. 
Recent materials supply constraints within the construction industry are starting to ease, reducing construction timeframes. 
These data suggest a positive outlook for Auckland's construction industry in the near term. 
Read the article

Fewer properties being auctioned

The number of properties offered at recent real estate auctions in New Zealand has dropped by more than half since the summer peak. 
Interest.co.nz monitored 144 residential property auctions from April 8-14, compared to around 300 a week during the summer selling season. 
42 of the 144 properties offered were sold under the hammer, giving an overall sales rate of 29%, down slightly from the previous week. 
Auction sales rates have generally hovered at around a third for most of this year. 
Only 22% of the properties that sold achieved prices greater than or equal to their rating valuations, down from 39% the previous week.
Read the article

Average gap between asking prices and selling prices $100,000+

The average difference between asking prices and selling prices for residential properties in New Zealand is over $100,000. 
In March 2022, the average asking price on Realestate.co.nz was $883,823, while the national median selling price on REINZ was $775,000, a difference of 12%. 
Double-digit percentage differences between asking and selling prices have been common since July 2021. 
The average difference between asking and selling prices over the past 16 years has been 5.7%, but this has varied based on market sentiment. 
The percentage difference was continuously in double digits from January 2007 to November 2013, April 2015 to October 2019, and July 2022 to March 2023. 
The largest difference was 22% in January 2017 and April 2020. 
The smallest difference was 1% in March 2021. 
Read the article

Proposed cuts to housing consent costs

The Ministry of Business, Innovation and Employment (MBIE) proposed to reduce building consent costs by raising the building levy threshold and reducing the building levy rate. 
The current threshold was $20,444 and the current rate was $1.75 per $1000 of building work value. 
The proposal is to raise the threshold to $65,000, which would reduce the number of levy payers by about 36%. 
The levy rate would be reduced to $1.48, which would reduce the cost of a building consent over the new threshold by about 15% for all levy payers. 
The reduced cost would be irrespective of the value of their building work. 
MBIE suggests using a surplus built up from the levy due to recent unprecedented levels of building activity and noticeable cost increases to provide more support to the sector. 
Auckland property developers say that the proposed changes are minor tweaks that would not reduce costs much and do not address the actual issues. 
They say that there are lots of complaints about the extremely slow time frames involved with the consenting process generally. 
There are not enough building inspectors, especially in Christchurch and Auckland, and that impacts on the time frames involved with getting inspections of sites done and on the processing of consents.
Read the article

The new migration boom requiring houses

House prices in New Zealand have been falling since December 2021. 
The monthly decline of NZ house prices has been 1.1% on average in seasonally adjusted terms. 
In March, prices only fell 0.2% after adjustments for seasonal factors. 
It is not yet safe to say that house prices have stopped falling. 
There is no evidence of a wave of investors looking to sell their properties since the tax changes were announced in March 2021. 
Investors are pulling back from making new purchases of existing dwellings or new ones. 
The supply of rental property in New Zealand may be falling. 
New Zealand is experiencing a new migration boom. 
The country faces the biggest downturn in residential construction since the global financial crisis. 
The number of consents issued for new dwellings to be built was 18% lower in the three months to February than a year earlier. 
Tax changes put in place by the Government are contributing to a decreasing availability of rental accommodation. 
The outcome will be some new upward pressure on rents from later on this year. 
There will be extra growth in the waiting list for state housing.
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