More regulatory and government action, the climate change based eviction, and the latest market dynamics.
Too long; didn't read? Here're this week's TLDRs...
Housing Market Rebounds with More Listings and Rising Prices in March 2024
REINZ released March 2024 data showing a significant increase in property listings and stock levels.
Listings nationally rose by 23.9% year-on-year, with notable increases in five North Island regions.
Inventory levels are at the highest since 2015, up 13.5% from the previous year.
Sales activity increased in 13 of 16 regions, with Gisborne recording the highest rise in sales.
The national median sale price increased by 2.7% year-on-year to $800,000.
Median days to sell decreased nationally from 44 to 38 days compared to last year.
The HPI is up 2.6% from last year, though it remains 14.5% below the 2021 peak.
Economic factors and policy changes are influencing both sellers and buyers, with expectations of market activity picking up in the coming months.
FHB Market Strength Continues Amidst Challenges for Movers and Investors
First home buyers (FHBs) maintained a high market share of 25.6% in property purchases in March.
Market conditions remain relatively favourable for FHBs with increased access to KiwiSaver and low deposit lending.
Movers and mortgaged multiple property owners (MPOs) continue to face challenges in purchasing properties due to high costs and lack of suitable options.
The market share for movers has stabilised at 26%, with potential improvement due to an increase in available listings.
Mortgaged MPOs held a 21% share in both March and Q1 2024, facing hurdles like low rental yields and stringent deposit requirements.
Mortgaged MPOs are increasingly purchasing new builds, benefiting from exemptions from LVR rules and favourable tax treatments.
Upcoming changes such as looser LVRs and adjustments in tax policies may improve conditions for both movers and mortgaged MPOs.
Affordability issues persist, but FHBs are likely to find better opportunities as more financing options and property listings become available.
Slight Relief in Mortgage Rates, But First Home Affordability Remains Tight
The lower quartile residential selling price has remained stable at around $600,000 since August 2022, after a drop from a high of $670,000 in November 2021.
Mortgage interest rates peaked at 7.04% in November last year and have slightly decreased each month since, reaching 6.77% in March.
The reduction in mortgage rates has not significantly improved affordability for first home buyers yet.
Weekly mortgage payments on homes bought at the national lower quartile price have recently oscillated around $911 for a 10% deposit and $719 for a 20% deposit.
Incomes for young couples (aged 25-29) have risen by 6.4%, increasing their after-tax pay to $2081 a week.
Approximately 40% of the income increase has been offset by higher mortgage payments, with remaining funds likely consumed by inflation.
The article suggests that while there are positive signs, these changes have not yet led to substantial improvements in home buying affordability.
Kiwi dollar's decline shifts economic burden from exporters to homeowners.
Historically, monetary tightening in New Zealand led to a rapid appreciation of the Kiwi dollar, affecting exporters negatively.
This time, similar interest rate hikes globally have prevented the influx of hot money, keeping the Kiwi dollar lower by over 5% compared to three years ago.
The current economic situation is more burdensome for homeowners with mortgages rather than exporters, reversing previous trends.
Despite a weaker currency, New Zealand's export ratio to GDP has not increased as expected, remaining lower than pre-pandemic levels.
Growing domestic consumption now plays a more crucial role in the economy, diminishing the potential economic buffer from stable export activities.
The housing market faces increased volatility, with future fluctuations expected to continue even after interest rates potentially decrease.
Historically low mortgage rates, such as one-year fixes post-Global Financial Crisis, may not remain the most cost-effective strategy moving forward.
Landlord fined $37,000 for failing Healthy Homes standards at boarding house.
The Tenancy Tribunal ordered Edgecumbe House Limited to pay $37,000 for multiple breaches of the Healthy Homes standards.
The breaches involved a lack of heating, extractor fans, and adequate cooking facilities at the boarding house.
MBIE investigated the property in June 2022 following a complaint.
The tribunal found that the landlord knowingly violated legal requirements, affecting 17 tenants.
Although immediate repairs were made, restrictions on heater usage continued.
Edgecumbe House's owner received a three-year restraining order but remains a landlord.
Tenants expressed concerns about negative repercussions for raising issues.
Housing Market Outlook: Rate Cuts and Tax Changes to Shape Future
Government housing tax policy changes are seen as positive, but interest rates are a major influence on future market directions.
Kiwibank's chief economist, Jarrod Kerr, predicts that interest rates might rise slightly more before potentially falling later in the year.
Positive feedback from Kiwibank's mortgage managers and clients at the end of last year; however, the current high interest rates temper excitement.
Kerr suggests that a rate cut, expected no sooner than November, could rejuvenate the market.
Westpac anticipates a transition from current market softness to stronger activity, driven by high population growth and improved investor sentiment.
REINZ's CEO, Jen Baird, reports increased activity among various buyer groups, especially first home buyers and owner-occupiers changing homes.
The market has normalised this summer after a slow previous year, with some vendors adjusting their price expectations to facilitate sales.
Economic uncertainty and high interest rates keep some buyers cautious, though real estate agents are optimistic about increasing activity in the coming months.
Selwyn Community Fights Eviction Over Climate Change Concerns
The Selwyn District Council has voted to evict residents of Upper Selwyn Huts by 2039 due to climate change risks.
Residents are distressed by the decision, with some seeing their homes as permanent legacies for their children.
A public meeting is scheduled to discuss a new draft deed of licence and gather resident feedback.
The area is prone to rising sea and lake levels, and nearby Greenpark Huts and Lower Selwyn Huts face similar fates.
Residents argue for more time, claiming immediate risks from climate change are not evident yet.
The council asserts the timing aligns with other lakeside communities and is necessary for safety and cost reasons.
Parnell Residents Decry "Hellish" Conditions Near Chatlys' Lodges
Residents of St Georges Bay Road describe living near two lodges owned by Suresh and Seema Chatly as living in a "street of hell" due to threats and harassment from the lodges' guests.
The City Garden Lodge, one of the Chatlys' properties, recently caught fire, intensifying community concerns.
Locals have complained for years about safety, with incidents including threats of violence and harassment by the lodge guests, some of whom wear home detention bracelets.
Residents claim the Chatlys have not demonstrated social responsibility, accusing them of prioritising profit over community safety.
Local authorities and police have been contacted multiple times, but residents feel their concerns are largely ignored.
The fire-damaged property was found to contain asbestos, raising health and safety concerns among the community.
ACT leader David Seymour and local police have acknowledged the issues but cite limitations in addressing the situation fully due to legal constraints.
An investigation into the fire's cause is ongoing, with only partial examination possible so far.
Government reforms set to boost competition and cut building costs.
the government has announced plans to reform the building materials sector by accepting code certifications from trusted overseas jurisdictions.
The Combined Building Supplies Cooperative (CBS) supports the changes, predicting increased competition and reduced building costs, though it may take up to three years for legislative effects to materialise.
The Window & Glass Association has expressed concerns about the challenges of understanding and trusting overseas standards and test reports.
Connor Molloy of the Taxpayers' Union argues that the quality concerns raised are unjustified and criticises industry groups for opposing cost reductions amid a housing crisis.
CBS chair Carl Taylor highlighted the lack of competition in the building supply industry as a significant factor driving up material costs and welcomed the government's proactive stance compared to the previous administration.
Government Streamlines Lending Rules, Plans Further Financial Reforms
The government is repealing 11 pages of "overly prescriptive affordability regulations" from the CCCFA.
Commerce Minister Andrew Bayly and Housing Minister Chris Bishop claim these regulations increased compliance costs and failed to protect vulnerable borrowers.
Introduced in December 2021, the regulations required thorough checks that extended loan processing times significantly.
The changes aim to simplify the home loan application process and remove the one-size-fits-all approach to loan assessment.
Additional reforms include improving dispute resolution, exempting councils to offer low-risk financial products, and removing duplicate reporting requirements.
Public consultation on further financial reforms will open in the coming weeks.
