NZ Property Investor June 2023

The April figures from REINZ (the most up-to-date figures at time of print) reveal the market has slipped yet again. Across New Zealand the median price for residential property has decreased nearly 11 per cent annually, down to $780,000. The price plummet continues, driven by our tight economy, and it’s worth asking ourselves - how low will we go? Our lead story this issue, written by Sally Lindsay, looks at this question. Drawing on data, and the opinion of experts, she explores if we have reached the bottom of the market or if there are still drops to come. The prediction of property values is an imprecise science: it’s impossible to make judgements with 100 per cent accuracy. And the experts we speak to are mixed in their opinions. Kelvin…

NZPIF FROM THE PRESIDENT'S DESK SUE HARRISON Turning landlords and tenants into adversaries has been a popular narrative with the media and helps the current government bring in some heavy disincentives to own rental properties. There have been so many levers pulled to ensure that house prices come down while interest rates, council rates, insurance, maintenance and associated costs go up. The government says it is helping tenants, but the tax grab and extra rules have brought significant negative impacts. Rents have increased in New Zealand ahead of what is already a big influx of people migrating here. A Trade Me rental price index in February showed the median weekly rent had hit $600 for the first time and is up 15 per cent on the same month in 2020.…

Westpac has made the bold assertion the country no longer needs to sink into recession. This comes after it predicts the OCR will now rise to 6 per cent from the Reserve Bank’s prediction of 5.5 per cent. A big turnaround in net migration has prompted Westpac’s change in view, but means it sees more inflation pressure in the next few months. Westpac chief economist Kelly Eckhold says the big increase in population of an extra 65,000 in the past year is going to add to demand for housing, durable goods and add general support to the retail sector. DOWNWARD PRESSURE One implication, he says, is that house prices are not going to drop much further after significant falls over the past 18 months. “They are bottoming out and while…

The recent moves by the Reserve Bank to finalise its debt-to-income (DTI) restrictions tool has sparked discussion and surprise amongst property investors. Changes seem almost certain to be imposed from about March 2024 and have become an even greater likelihood since the RBNZ’s surprise move to loosen loan-to-value (LVR) ratio restrictions earlier than anticipated. Here’s where things stand and some key unknowns: No-one knows what the DTI limits will be. Will the RBNZ introduce a cap of seven times that of income, regardless of borrower type? Could there be exemptions introduced for new builds? Is a speed limit system likely, as per the existing LVR rules? Banks will look at “all” income and debt when calculating DTIs, incorporating existing loans as well as the potential new mortgage being assessed. The…

UP FRONT NEWS Investors’ market share of new purchases has slumped to a new low of 19.9 per cent. Low yields, high mortgage rates, high deposits and interest deductibility changes are deterring mortgaged multiple property owners (investors) from buying, CoreLogic’s Buyer Classification data shows. While mortgaged investors’ market share drops, the share of first home buyers and cashed-up investors is running at record highs. CoreLogic chief property economist Kelvin Davidson says the record low is slightly below the previous mark of 20 per cent in September last year. ‘We’re not seeing existing investors sell off to any great degree’ KELVIN DAVIDSON He says market conditions are particularly tough for mortgaged investors. “The 40 per cent deposit requirement has also been a hurdle. However, the prospect of that loosening to 35 per…

Objections to a $100-a-week rent increase have been thrown out by the Tenancy Tribunal despite the tenant’s novel argument. Parker Van Lawrence, representing tenant Tracy Constable, maintained the tribunal should find the $515 to $615 a week rent increase notice invalid because it was retaliatory or it was a constructive termination notice. Constable had been living in the average condition Massey threebedroom, two bathroom since July 2014. Previous rent increases had been modest; $10 in 2017 and $15 in 2020. The rent was $490 a week at the beginning of the tenancy and the new rent of $615 a week represented a 20 per cent increase over about seven-and-a-half years, equating to about a 3 per cent per year increase. Van Lawrence told the tribunal it could strike down the…