NZ residential rental market news, June 21

New granny flat regulations, the risks and rewards of home loan portals, and NZ property investor dollars moving to Aus.

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

Market Challenges Persist Despite Easing Lending and Tax Rules 

The property market faces ongoing challenges despite relaxed lending and tax rules. 
The RBNZ is expected to keep the OCR steady due to economic uncertainty. 
Government plans to relax LVR restrictions to support home buyers. 
New DTI ratios to be introduced, impacting mortgage lending. 
Recent tax changes affect property investors' financial decisions. 
Kainga Ora initiatives aim to address housing supply issues. 
Housing demand remains strong, driven by population growth. 
Property price growth has slowed but remains elevated. 
First-home buyers face affordability challenges despite policy adjustments.   
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Housing Prices Need to Drop for Affordability 

Housing is considered too expensive, and average prices need to fall. 
High property prices are unaffordable for many potential buyers. 
A market correction may scare existing homeowners but is necessary. 
Affordability issues are a barrier to home ownership. 
Government and RBNZ policies aim to address housing market imbalances. 
Lowering house prices could stabilise the housing market long-term. 
Existing homeowners may face financial pressure during the adjustment.    
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House Prices Stagnant Until Summer, RBNZ Policies Impact Market 

No significant house price growth expected until summer. 
RBNZ's current policies are slowing the housing market. 
OCR hikes have reduced buyer demand and affordability. 
Economic conditions and high interest rates impact the market. 
RBNZ may need to adjust its approach due to market realities. 
Potential for house prices to stabilise later in the year. 
Investors and first-home buyers remain cautious.   
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Housing Market Approaches Potential Tipping Point 

The housing market may be nearing a tipping point. 
High interest rates and tighter lending criteria impact buyer demand. 
The RBNZ's OCR hikes have cooled the market significantly. 
Property price growth has slowed and may decline further. 
Investor activity has decreased due to unfavourable market conditions. 
First-home buyers face affordability challenges despite lower prices. 
Market stability depends on future economic conditions and RBNZ policies. 
A potential market correction could lead to increased sales activity.    
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Winston Peters Supports More Granny Flats to Ease Housing Shortage 

Winston Peters advocates for allowing more granny flats to be built.
The government is aiming to simplify the construction of granny flats (small, self-contained houses) up to 60 square meters on properties with existing homes. 
Increased granny flat construction could help address the housing shortage. 
Granny flats provide affordable housing options for families and tenants. 
Regulatory changes are needed to facilitate easier construction of granny flats. 
Peters argues this approach can alleviate pressure on the housing market. 
Supporting granny flat development could boost overall housing supply. 
The policy aims to offer flexible living arrangements and support ageing populations. 
Overview:
Proposal: Allow building granny flats without consents.
Current Issue: Inconsistent standards across districts.
Criteria: Flats must be <60m², one story, <70% site coverage, with appropriate setbacks.
Features: Include plumbing, cooking, and sleeping facilities; safeguards needed.
Compliance: Must meet New Zealand Building Code; work by licensed professionals.
Public Input: Submissions open until 12 August.
Implementation: Mid-next year if approved.
Background: Part of coalition agreement; aims to reduce housing costs and address the housing crisis.
Benefits: Faster build process, estimated savings of $6,500 per build.  
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Home Loan Portals: Convenience vs. Security Risks

Home loan application portals offer convenience but come with risks. 
Users should be cautious of privacy and data security issues. 
Not all portals have the same standards for protecting personal information. 
There's a risk of miscommunication or errors in automated systems. 
Borrowers might miss out on personalised advice from mortgage brokers. 
It's crucial to ensure the chosen portal complies with legal and financial regulations. 
Home buyers should balance convenience with the need for thorough, secure service.     
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Unsold Property Surplus Weighs Heavily on Housing Market 

The housing market is burdened by a significant overhang of unsold properties. 
Property listings remain high, while buyer demand is subdued. 
The surplus of unsold homes is causing downward pressure on prices. 
High interest rates and tighter lending criteria impact buyer affordability. 
Sellers are facing longer times to sell and are adjusting prices. 
The RBNZ's OCR increases have cooled the housing market. 
Some regions are experiencing sharper price declines than others. 
Investors are less active due to unfavourable market conditions.   
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Auckland’s Housing Completions Under Threat from Slowdown 

Around 1,700 new dwellings are being completed each month in Auckland. 
This completion rate could decrease due to a slowdown in new building consents. 
The current completion rate is insufficient to meet demand. 
The high demand is driven by population growth and immigration. 
Government policies and economic conditions impact the construction sector. 
Supply chain issues and rising costs are affecting the building industry. 
Kainga Ora continues to contribute to new housing projects. 
The construction industry faces challenges in maintaining the current pace.   
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Wellington House Listings Double Amid Market Uncertainty

House listings in Wellington have doubled over the past year. 
The surge in listings is attributed to increased economic uncertainty. 
Sellers are motivated by high interest rates and market conditions. 
The rise in supply has created a more competitive market for buyers. 
Property prices are facing downward pressure due to increased listings. 
Some properties are taking longer to sell, leading to price adjustments. 
The overall market is adjusting to new economic realities.    
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Kiwi Property Investors Shift Focus to Australian Market

Increasing number of property investment dollars are moving to Australia. 
Investors seek better returns and stability in the Australian market. 
New Zealand's property market faces challenges from high interest rates and regulatory changes. 
Australia's housing market is perceived as more favourable for investment. 
Some investors are diversifying portfolios by investing abroad. 
Factors include economic conditions, tax policies, and market growth potential. 
The trend reflects broader concerns about New Zealand's property investment climate.  
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Cyclone-Hit Areas See Biggest Rent Increases 

Gisborne and Hawke's Bay, affected by the cyclone, saw the biggest rent increases. 
The rent increases are driven by a shortage of habitable housing. 
Other regions also experienced rent rises, but at a slower pace. 
Supply constraints and high demand contribute to rental market pressures. 
Government assistance is ongoing for cyclone recovery efforts. 
Rents in Wellington and Auckland showed more moderate increases. 
Property investors are impacted by changing market conditions and regulations. 
Housing availability remains a critical issue in affected areas.  
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Granny Flats Offer Income, Limited Value Increase 

Granny flats, or minor dwellings, can generate rental income but may not significantly boost property value. 
Building costs range from $200,000 to $300,000, with rental potential between $400 and $600 per week. 
Investors seek these for cash flow, not substantial property value increase. 
Properties with granny flats may take longer to sell. 
Examples include a cabin costing $10,000, rented for $120 per week, covering costs within two years. 
Regulatory changes ease construction but must meet building codes. 
Some regions like Sydney have high suitability for granny flats.   
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