NZ residential rental market news, October 25

3000+ properties withdrawn, water reform could cause woes, and the RBNZ will be cautious moving forward.

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

Investors show renewed interest amidst rising yields

Mortgaged multiple property owners (MPOs) are slowly returning to the market. 
The share of MPO purchases has risen to 22.6%, up from 20.4%. 
Lower mortgage rates and tax changes are key factors. 
Gross rental yields have increased, now standing at 3.9%. 
Auckland and Wellington rental yields are around 3-3.5%, while other cities are closer to 4%. 
Investors may return further if mortgage rates fall to 5.5%, but DTI limits could pose challenges. 
Exemptions for new-builds remain attractive for investors.      
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First home buyers remain steady, low equity mortgages rise

About 5000 people move into their first home each month. 
First home buyer mortgage approvals remain steady, averaging 2344 per month. 
Average purchase price for first home buyers is stable, around $655,000 to $677,000. 
Many first home buyers are using low equity mortgages, with 37.7% approved in September. 
Interest rates and seasonal activity may drive slight increases in first home purchases over the summer.     
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More properties withdrawn from sale amid stagnant market.

Over 3000 residential properties are being taken off the market each month. 
This is due to vendors having unrealistic price expectations. 
Properties that linger unsold are often withdrawn from sale. 
Despite high stock levels, buyers remain cautious. 
Vendors may re-list these properties if market conditions improve. 
The housing market remains a buyer’s market with no clear direction.     
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Insurance premiums soar, causing financial pressure on consumers

Insurance premiums have risen significantly, causing financial strain. 
Consumers report large increases in house and contents insurance. 
Premium hikes are attributed to inflation, reinsurance costs, and increased claims. 
Consumer NZ highlights the need for transparency from insurers. 
Some policyholders face difficult decisions about adjusting cover to manage costs.      
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Water reform could lead to financial strain for homeowners

Concerns raised over the financial burden of water reform on communities. 
Local councils warn that people could lose homes due to rising costs. 
Water infrastructure upgrades will require significant investment. 
Deep-pocketed investors may be necessary to fund reforms. 
Critics argue that without financial support, the reform could hurt homeowners.      
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RBNZ cautious about inflation, future OCR decisions careful

RBNZ Governor Adrian Orr highlights concerns about ongoing inflationary pressures. 
The central bank is closely monitoring inflation trends to avoid economic instability. 
Future OCR decisions will depend on inflation data and economic conditions. 
Orr emphasises the importance of global factors in influencing domestic inflation. 
RBNZ remains cautious about easing monetary policy too soon. 
The bank is balancing inflation control with supporting economic growth. 
Long-term inflation targets remain a priority for the RBNZ.       
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Government to review fire safety standards in Building Code

The government is reviewing fire safety provisions in the Building Code. 
This comes after concerns about fire protection in medium- and high-density housing. 
The review aims to ensure the safety regulations keep up with modern construction methods. 
Stakeholders will be consulted to update fire safety rules. 
The review follows increased attention on fire risks after recent incidents.          
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Kiwibank's loan growth signals strong market competition

Kiwibank is gaining a 25% share of new home and business loans. 
ANZ CEO highlights that this demonstrates strong competition in the market. 
ANZ defends its lending focus, particularly on agriculture and housing. 
The pandemic profitability of ANZ was due to a lag in repricing deposits and loans. 
ANZ faces higher funding costs than its Australian parent due to perceived investment risk in the country.       
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Auckland's residential construction faces potential sharp decline

Auckland's residential construction may face a significant slowdown. 
Building consent applications have been decreasing in recent months. 
Apartment construction is expected to be impacted the most. 
Rising construction costs and weaker demand are key drivers of the slump. 
The slowdown could have a notable effect on the broader economy and employment. 
Developers may delay or cancel projects due to market conditions.       
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