NZ residential rental market news, September 13

The potential downward pressure on rents, house prices drop but confidence improves, and mortgage rates continue downward.

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

National house prices decline, regional variation evident

National house price index (HPI) decreased by 0.8% year-on-year. 
Auckland saw a 2.8% decline in HPI; regions outside Auckland rose by 0.3%. 
Southland had the highest HPI increase, followed by Otago and Tasman/Nelson/Marlborough/West Coast. 
Bay of Plenty's median sale price increased by 1.3%, but HPI decreased by 1.8%, indicating a long-term decline in property values. 
Christchurch's HPI rose by 1.0% while Queenstown-Lakes experienced a 3.0% decline.     
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House prices drop, but confidence improves

National median house price fell 0.6% year-on-year, now at $765,000. 
Auckland's median price dropped by 4.0%, standing at $960,000. 
Sales volumes decreased by 0.7% year-on-year but rose in eight regions, including Northland, Hawke's Bay, and Bay of Plenty. 
Listings increased by 8.1% nationally compared to August 2023. 
Southland had the highest HPI growth at +3.0%. 
Interest rate drops improved market confidence, although sentiment remains cautious.       
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Property market slowdown hits, Auckland suburbs decline sharply

Property values in many suburbs have declined after an initial rise at the start of 2024. 
50% of suburbs still saw meaningful value increases over the past year. 
Auckland has been particularly affected, with some suburbs like East Tamaki and Northpark seeing drops of over 6% in the past three months. 
71% of suburbs have seen property values decline since June, with affordability pressures and increased listings driving the downturn. 
Notable value increases were recorded in more affordable areas like Cobden and Blaketown, where values rose by 22.6% and 15.9% respectively. 
Suburbs with high-value properties, such as Arrowtown and Herne Bay, have remained resilient, though market sentiment is cautious overall.       
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House values decline despite lower interest rates

National house values declined by 2% over the past three months. 
Auckland saw a 0.5% decline in August, marking its seventh consecutive month of decreases. 
Lower interest rates are spurring buyer interest but haven't resulted in value growth due to high housing stock levels. 
Rotorua saw a notable increase, with values up 8.7%. 
James Wilson from QV expects continued soft market conditions with an abundance of listings keeping prices down.      
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Rental market sees slight tenant advantage in July

National median rent remained flat at $600 per week in July. 
Rent in nine regions decreased, with the largest drop in Gisborne, Hawke's Bay, and Tasman at $20 per week. 
Five regions saw rent increases, with the highest rise on the West Coast at $30 per week. 
The rental market is balanced, but slight softness suggests potential downward pressure on rents in coming months. 
The total number of newly tenanted properties was similar to last year, indicating stable demand.     
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Wellington sees rental oversupply, stable sales in 2024

Rental inventory in Wellington: A significant increase in available rental properties compared to prior years, with 2024 seeing a sharp rise due to unsold properties being listed for rent. 
Wellington rental prices: Decreased in early 2023, especially in student accommodation areas, as supply outpaced demand. 
Sales inventory: Now matches 2022 levels, showing stability after a price slump in 2023. 
House prices and affordability: Home prices closely follow regional incomes, with interest rates and construction costs influencing market trends.        
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Interest rates fall but remain above pre-pandemic levels

Interest rates have fallen, but remain higher than pre-pandemic levels. 
Mortgage rates are dropping, with some banks offering rates below 6%. 
Borrowers may still face higher rates on re-fixing, compared to previous loans. 
The fall in rates is driven by RBNZ's recent OCR cut, easing borrowing costs. 
The decrease provides relief, but affordability remains a concern for some.        
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Owning cheaper than renting in some regions despite high costs

In some areas, owning a home is now cheaper than renting, including Wairoa, Kawerau, Ruapehu, Buller, and Tararua. 
Wairoa’s first-home repayments are 79% of the cost of renting, with similar trends in other regions. 
The national cost of owning is 219% of the cost of renting, with Auckland at 235%. 
High homeownership costs in Queenstown and Auckland make buying significantly more expensive than renting. 
Employment opportunities are a key factor for first-home buyers in cheaper regions.     
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Labour revives wealth tax debate, seeking solutions to inequality

Labour Party is discussing wealth taxes again, seeking ways to address inequality. 
Wealth taxes could target high-net-worth individuals, focusing on assets rather than income. 
Concerns include implementation challenges, potential evasion, and negative impacts on economic growth. 
Alternative solutions, such as a capital gains tax or improving existing taxes, are considered more viable by some economists. 
The wealth tax debate highlights broader issues of tax fairness and economic justice.       
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