NZ residential rental market news, December 22

An independent review of Kāinga Ora, a record number of new homes constructed in Aux, and an underwhelming 2024 beckons.

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

Record number of new homes constructed in Auckland

Auckland is experiencing a record rate of new dwelling construction. 
In October, Auckland Council issued a record 1949 Code Compliance Certificates (CCCs) for new dwellings, surpassing the previous record of 1927 in September. 
Both months marked the first time CCCs issued exceeded 1800 in any month in the past 10 years. 
The current completion rate is at a record high on both monthly and rolling two-month bases, with 17,558 CCCs issued in the 12 months to November. 
Despite the record completions, building consents for new dwellings in Auckland are declining, down 24% in October compared to the previous year. 
The high completion rate may be due to a focus on finishing existing projects rather than starting new ones. 
It remains to be seen if dwelling completions in Auckland will reach the benchmark of 2000 a month before a potential decline in construction activity. 
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Kiwis feeling a bullish market for the first time in 18 months 

For the first time in 18 months, more New Zealanders expect house prices to rise than fall, according to ASB economists. 
In the latest quarterly Housing Confidence Survey, a net 34% of Kiwis anticipate housing prices to increase, a significant shift from the net -8% reading in the previous survey and a net -43% reading at the beginning of the year. 
This marks the first time since April 2022 that expectations of rising prices have surpassed expectations of a decrease. 
Strong net migration and stabilised housing inventory are positive factors, but the main constraint on the market is the high level of mortgage rates. 
ASB economists predict a slower house price uptick compared to the previous trend, citing slowly increasing housing demand and restrictive interest rates as factors influencing the market.
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Trade Me stats show 34% surge in Gisborne supply

Trade Me's Property Price Index for November indicates the national average asking price for a property reached $864,650, up 0.5% from October.
Christchurch is the only major city experiencing a year-on-year increase, with an average asking price of $701,900, up 0.2%.
Wellington's average asking price fell to $910,500, reflecting an 8.3% drop compared to the same time last year.
The supply of properties for sale increased by 11% nationwide in November, with Gisborne experiencing a notable 34% surge.
Properties are selling almost a week faster, with the median time for a property to be listed onsite falling to 51 days, six days less than November last year.
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An underwhelming 2024 beckons

November saw the second consecutive monthly national property value rise. 
Main centres, including Dunedin, Christchurch, Auckland, and Wellington, experienced positive property value growth. 
Property sales volumes have been trending upwards for seven consecutive months, with a 19% increase in November compared to the previous year. 
New listings in the market are nearly 12% lower than the previous year, limiting buyers' choices of fresh stock. 
The property market's recovery is in its early stages, with expectations of a patchy year for both sales and prices in 2024. 
First home buyers may find good opportunities, but investors may face challenges with low yields and high mortgage rates. 
Rental growth in November reached 5.5%, reflecting higher wages, tightening supply and demand, and increased migration in New Zealand. 
Gross rental yields nationally increased to 3.2%, the highest level since late 2020. 
Approximately 54% of existing mortgages in New Zealand are due to reprice onto new mortgage rates over the next 12 months. 
Inflation appears to have passed its peak, and the Reserve Bank is waiting to observe the effects of the final 5.5% OCR for this tightening cycle. Mortgage rates are close to, or already at, their peak.
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QV: Expect a slow recovery

The average value of homes in New Zealand was $914,017 at the end of November, reflecting a 3.3% decrease from the start of the year but a 2.3% increase over the three months to November. 
Only three of the 16 main urban centres (Rotorua, Queenstown, Invercargill) had higher average values at the end of November compared to the start of the year. 
Whangarei and Tauranga experienced the largest declines in average values since the beginning of the year, with -7.4% and -6.3%, respectively. 
High interest rates are currently impacting the market and the economy, and this is expected to continue into the next year, as indicated by the Reserve Bank's recent announcement.
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Immigration levels may necessitate keeping interest rates higher for longer.

Net immigration in New Zealand has exceeded Reserve Bank expectations, with an estimate of 128,900 people for the year ended October, double the pre-COVID peak. 
RBNZ chief economist Paul Conway informed Parliament's finance and expenditure committee about the surprise, suggesting that high net migration might necessitate keeping interest rates high for a longer duration. 
RBNZ Governor Adrian Orr expressed concerns about the impact of extremely high net migration on overall demand, potentially requiring a more extended period of restrictive monetary policy. 
GDP for the September quarter contracted by 0.3%, below RBNZ's forecast of positive growth, prompting attention to factors like house prices and consents for new construction. 
RBNZ is monitoring labor market developments for their impact on inflation, which, at 5.6% in the year ended September, remains above the target range of 1% to 3%.
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Govt. confirms independent review of Kainga Ora

The New Zealand government has confirmed an independent review of Kāinga Ora, the social housing landlord, led by former Prime Minister Sir Bill English. 
The review panel, including Simon Allen and Ceinwen McNeil, will report back by the end of March, focusing on Kāinga Ora's financial situation, procurement, and asset management. 
Housing Minister Chris Bishop expresses deep concern about Kāinga Ora's operating deficit and emphasises the need for efficient social housing construction and value for taxpayers' money. 
Kāinga Ora has total assets of $45 billion and an annual expenditure of $2.5 billion. Concerns include a growing debt, projected to reach $28.9 billion by 2033 if the current trajectory continues. 
The review is part of the government's 100-day plan, aiming to understand and address issues within Kāinga Ora.
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