NZ residential rental market news, November 1

Housing market steadies as rates ease; Mortgage arrears spike; and Tenants and landlords face tribunal

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

RBNZ Sees Lower House Price Boom Risk Amid Stability

RBNZ reports a lower risk of another house price boom. 
Stable house prices and subdued demand are due to high mortgage rates and slow population growth. 
DTI limits introduced in July act as guardrails to prevent excessive borrowing if rates fall. 
Test rates used by banks for loan approvals have decreased from 9% to 8%. 
Less than 2% of current mortgages are in negative equity, and mortgage arrears are levelling off as interest rates ease.   
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Slower Property Decline Hints at Market Stabilisation

Property values declined by 0.5% in October, marking the eighth consecutive monthly fall. 
Total property value decline since February is now at 5.1%. 
Current national property value average is 18% below the post-COVID peak but remains 16% above March 2020 levels. 
Decline rates have slowed significantly, with October drops less severe than previous months. 
Slight gains were seen in Christchurch, while other main centres saw small decreases or remained stable.    
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House Prices Stabilise with Recovery Expected in 2025

House prices rose 0.3% in September, the first increase since April, but underlying market momentum remains weak. 
Sales volumes and days to sell both worsened, reflecting a slow market. 
Inventory levels are high, giving buyers more negotiating power. 
Mortgage rates are expected to stabilise around 5-5.5%, influenced by ongoing OCR cuts. 
ANZ forecasts house prices to rise by 4.5% over 2025, though uncertainty persists with rising unemployment and slower population growth as challenges.    
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Mortgage Arrears Rise, Spring Market Shows Recovery Signs

Mortgage arrears are up, with 21,200 households now behind on payments. 
Mortgage applications have risen, hinting at a spring market recovery. 
New mortgages issued in September totalled $6.5 billion, a 26% annual increase. 
Investor mortgage growth surged 54.4%, marking a return after a three-year lull. 
Financial hardship affects 13,300 consumer accounts, with nearly half facing mortgage difficulties. 
Business liquidations are up, especially in construction and hospitality sectors.     
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Rising Debt Strain as Festive Spending Season Approaches

Over 450,000 people are behind on debt repayments. 
Festive spending pressures may increase financial strain for many. 
Rising interest rates and living costs are major contributors. 
Credit card and personal loan delinquencies are notably high. 
Financial experts suggest planning and budgeting to manage holiday expenses.      
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Wellington’s House Insurance Costs Double Auckland’s Due to Risks

House insurance in Wellington costs twice as much as in Auckland. 
Average annual house insurance costs are $4467 in Wellington, versus $2014 in Auckland. 
Contents insurance is also highest in Wellington due to earthquake and weather-related risks. 
Overall insurance premiums have sharply increased in recent years. 
Rising natural hazard risks, especially earthquakes, are key factors in Wellington's higher rates.       
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Common Tenancy Tribunal Cases: Arrears, Bonds, and Terminations

Rent arrears are the most common cause for applications to the Tenancy Tribunal. 
Bond refund disputes also frequently lead to tribunal cases. 
Tenancies are often terminated or possession is sought due to various tenant/landlord disagreements. 
Compensation and damages claims arise from issues like property access and retaliatory actions. 
Outgoings disputes over costs like utilities are also frequent.           
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