NZ residential rental market news, October 18

Unapproved pets in the Tenancy Tribunal; High stock, slow sales; and Auckland's rental oversupply.

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

Property Market Shows Stability Despite Annual Decline 

National median house price fell 2.3% year-on-year to $781,000. 
Auckland median price decreased 5.4% year-on-year to $970,000. 
Gisborne had the highest median price increase at 10.1%. 
Number of properties sold nationally dropped by 1.1% compared to September 2023. 
Listings increased nationally by 18.7% year-on-year. 
National inventory level rose 27.4% year-on-year. 
Sales excluding Auckland rose 4.5% year-on-year, with Hawke's Bay showing the largest increase at 26.3%. 
The median number of days to sell increased to 49 days nationally.       
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National house prices continue slight decline 

National house prices decreased by 0.4% year-on-year. 
Auckland saw a 2.0% decrease in house prices. 
House prices outside Auckland rose by 0.3%. 
Southland had the highest annual growth in house prices. 
Wellington showed a 2.2% decrease in long-term property values. 
Christchurch and Otago regions had the next best annual price growth after Southland. 
The median sale price can be skewed by market composition, but the House Price Index (HPI) provides more accurate insights.    
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House prices rising as sales volumes pick up 

Nationwide house prices are starting to rise again, with a 1.0% increase in September after remaining unchanged in August. 
Some regions, including Wellington, are still catching up with these trends. 
Sales volumes increased by almost 9% in the past three months, indicating growing activity. 
Days to sell have remained stable but are longer than a year ago. 
Housing stock remains high, reducing any immediate sense of urgency in the market.    
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Buyers offer below asking price amid weak demand

Buyers are currently paying less than the asking price for properties. 
Discounts range from 4% to 11%, depending on location and property type. 
Properties are staying on the market longer due to weaker demand. 
Buyers should research local market conditions to determine appropriate offers. 
It's essential to consider factors like property condition, seller motivation, and market trends when making an offer. 
Offering too low may risk losing out to other buyers, while too high can lead to overpaying.     
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High stock, slow sales: buyers' market prevails

Over 3000 residential properties are removed from the market each month. 
Median prices rose slightly in September, but follow typical seasonal patterns. 
Sales volumes remain flat, with a minor drop in September. 
New listings increased 18.7% year-on-year, showing vendor optimism. 
Stock levels remain high, creating a buyer's market, with decisions delayed. 
Many properties are being taken off the market due to unrealistic price expectations.     
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Tauranga's ghost homes challenge amid housing shortage

Tauranga is facing a housing shortage, with 3.7% of homes unoccupied. 
2142 homes were empty on Census night in 2023, an increase from 2018. 
Mayor Mahé Drysdale sees the issue as difficult to address, with a focus on holiday homes. 
Western Bay of Plenty has 8.6% of homes unoccupied, with Ōpōtiki having the highest rate at 18.2%. 
Councils are grappling with finding solutions but face other priorities.      
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Auckland sees rental oversupply as migration increases 

Auckland has more rental properties available than tenants due to high migration levels. 
The vacancy rate has increased in parts of the city, leading to softer rents. 
Rising migration has contributed to this imbalance, with many newcomers finding alternative housing options. 
Landlords may face challenges in finding tenants in the current rental market. 
This trend is creating opportunities for renters to negotiate better deals or find housing more easily.          
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Wheelchair user waits three years for accessible housing

A wheelchair user has been living in a motel for three years due to the lack of accessible housing. 
The person applied for an accessible home from Kainga Ora in 2021 but is still waiting. 
The motel environment is challenging, with inadequate space and unsuitable facilities. 
Accessible housing shortages are a widespread issue, with demand significantly outstripping supply. 
Advocates call for faster action from authorities to address the urgent need for accessible homes.      
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Construction costs rise slightly amid ongoing industry slowdown

Construction costs rose 1.1% in Q3 2024 after a fall in Q2. 
Annual cost growth remains subdued at 1.3%, well below the long-term average. 
Sub-contractor rates and material costs, such as PVC piping, dropped, but some items like window hardware rose. 
The construction sector has slowed, with dwelling consents down 34% since 2022. 
Despite the slowdown, falling mortgage rates and DTI exemptions for new builds could boost demand in 2025.        
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Banks use overdrafts to delay mortgagee sales

Banks use unauthorised overdrafts to help homeowners avoid mortgagee sales by covering mortgage shortfalls. 
These overdrafts prevent loans from being marked in default but accumulate expensive debt over time. 
Overdraft interest rates can reach around 22%, reflecting the high risk for banks. 
This arrangement provides temporary relief, allowing borrowers time to find a solution without losing their homes. 
Mortgagee sales remain low, but accumulating overdraft debt poses long-term challenges for borrowers.    
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RBNZ cuts OCR, mortgage rates continue to ease

RBNZ cut the OCR by 0.5% in October 2024 following a 0.25% reduction in August. 
Mortgage rates continue to ease, especially for short-term fixed and floating rates. 
Shorter-term mortgage rates are expected to fall further as the OCR decreases. 
Long-term fixed rates have already dropped significantly and may remain stable. 
Borrowers must weigh the benefits of locking in lower rates now versus waiting for further decreases. 
Volatility in the market could still impact future mortgage rate movements.         
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Inflation drops, but significant rate cuts unlikely

Annual inflation dropped to 2.2% in Q3, lower than expected. 
Despite the drop, non-tradeable inflation remains high at 4.9%. 
Tradeable inflation fell, importing deflation due to lower overseas prices. 
A 50 basis point OCR cut is still expected in November. 
A 0.75% rate cut is unlikely due to persistent inflation in locally influenced prices. 
The OCR cut will support economic growth but won't be a dramatic reduction.        
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Landlord wins case over tenant's unapproved dogs

A landlord won a Tenancy Tribunal case against a tenant who kept unapproved dogs at the property. 
The tenant had breached their tenancy agreement by keeping the dogs without the landlord's consent. 
The landlord had initially allowed one dog, but additional unapproved dogs were introduced. 
The Tribunal ruled in favour of the landlord, ordering the tenant to pay costs and remove the dogs. 
This case highlights the importance of adhering to tenancy agreements and gaining proper approval for pets.       
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