NZ residential rental market news, September 27

Finding tenants is a struggle, Auckland sees over half of the nation's $1 million+ sales, and economists urge the RBNZ to get aggressive with their cuts.

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

Auckland dominates NZ's $1 million housing market

Tāmaki Makaurau Auckland leads $1 million+ sales, representing 52% of all recent deals. 
Ōtautahi Christchurch, Tāhuna Queenstown, and Te Whanganui-a-Tara Wellington also see significant activity. 
337 suburbs in the $1 million+ category, with Auckland having 167 of them. 
Tāhuna Queenstown and Western Bay of Plenty top the list for share of $1 million+ suburbs. 
$1 million+ stock is common in lifestyle block areas like Waikato and Taupō.      
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Lower house prices improve first-home buyer affordability

First-home buyers benefit from falling house prices and lower mortgage rates. 
Mortgage payments dropped by up to $97 per week from March to August. 
Auckland became affordable for first-home buyers for the first time in three years. 
Most regions now meet affordability criteria for buyers with a 20% deposit. 
The biggest challenge remains gathering a 20% deposit, with Auckland requiring $154k.      
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ANZ forecasts ongoing house price declines despite falling rates

ANZ economists expect house prices to continue falling. 
Increased housing stock and weak sales volumes are driving price declines. 
Mortgage rates are decreasing, but the housing market response is uncertain. 
RBNZ may not reduce the OCR quickly, as some expect. 
Housing market remains volatile, with activity levels still fluctuating.      
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Sharp rise in low-equity loans for first-home buyers

Nearly 40% of first-home buyers in August had a low-equity loan. 
This is a significant rise from 29.7% in February. 
The increase suggests banks are easing their lending criteria. 
The average low-equity mortgage size remains stable at around $619k. 
Regular mortgages for first-home buyers with 20% deposits also declined. 
Overall average first-home buyer price has dropped from the 2022 peak.      
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Renters face steeper housing affordability challenges

Housing affordability is worse for renters due to lower incomes compared to owner-occupiers. 
Renters earn about 22% less than the national average household income. 
For renters, the average house price is 8.8 times their income, making it difficult to buy a home. 
Mortgage repayments can take up to 69% of a renter’s income compared to 54% for the average household. 
Affordability challenges vary significantly by region and housing type.     
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Rents stabilise as supply increases and demand falls

Rents have stabilised, with the median rent at $640 per week. 
Rental listings are up by 38%, while demand has dropped by 36%. 
Auckland and Bay of Plenty remain the most expensive rental regions. 
Queenstown Lakes saw a rent increase of $170 in one month, reaching $950 per week. 
Canterbury experienced record high rents for two consecutive months. 
The slowdown in migration has reduced rental demand, easing pressure on the market.         
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Landlords face tenant shortages, drop rent hike plans

Landlords are finding it harder to secure good tenants. 
Plans to increase rents have dropped to a four-year low of 63%. 
Higher migration and more first-home buyers may be reducing rental demand. 
Some investors are selling properties due to rising costs, such as council rates and insurance. 
Access to credit is improving for investors, with fewer reporting difficulty. 
Few landlords plan to develop properties themselves, with many preferring already-built homes.         
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Investors face tenant shortages, as housing market activity rises

Property investors are finding it harder to secure good tenants, with 22% reporting difficulty compared to ease a year ago. 
Landlords are reducing plans to raise rents, with a record low 63% planning increases. 
Despite rental market challenges, expectations of house price declines are easing as interest rate concerns diminish. 
Real estate agents report an increase in market activity, with more first-home buyers and investors entering the market. 
Concerns about finance availability are easing, and banks are becoming more willing to extend loans. 
Confidence in the labour market is declining, with 48% of agents reporting employment concerns among buyers.      
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Economists call for aggressive OCR cuts amidst weak data

Kiwibank economists are urging the RBNZ to cut the OCR more aggressively. 
They advocate a 50 basis point cut in October, with another in November. 
ASB’s chief economist is more cautious, expecting only 25 basis point cuts. 
Markets are pricing in over 125 basis points of cuts by early next year. 
Mortgage rates have already fallen, especially for shorter fixed-term loans.        
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Rental inspections focus on upkeep, damage, and cleanliness

Rental inspections check for basic upkeep, cleanliness, and any damage. 
Tenants are responsible for general maintenance like lawns and cleaning. 
Inspectors look for mould, ventilation, and any damage beyond normal wear and tear. 
Tenants should report any issues needing repair during inspections. 
Privacy rules apply; inspectors cannot look through personal items or enter without notice. 
Inspections are typically done every 3-6 months, depending on the tenancy agreement.       
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