NZ Residential Rental Market News, January 31

Newest Tenancy Law Changes, Thousands of Dollars in Subletting Fines, and a Light at the End of the Housing Market Tunnel?

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

New tenancy laws Rebalance Rights for Landlords and Tenants 

The Residential Tenancies Amendment Act 2024 introduced significant changes to rental laws. 
From 30 January 2025, landlords can end periodic tenancies with 90 days' notice without providing a reason. 
Landlords can now give 42 days' notice in specific circumstances, such as when the property is needed for their own use. 
Tenants' notice period for ending periodic tenancies has been reduced from 28 to 21 days. 
Landlords can end fixed-term tenancies at the expiration date without a specific reason. 
Pet-related changes, including the introduction of pet bonds, are expected to take effect in late 2025. 
Changes to improve clarity and efficiency, such as online bond lodgement, will be implemented from 20 March 2025. 
The new laws aim to encourage more rental properties in the market and balance the interests of landlords and tenants. 
Guidance on the changes will be available from the Tenancy Services website. 
Both landlords and tenants are advised to familiarise themselves with these new regulations to ensure compliance and understand their rights. 
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Tenant Fined $1000 for Subletting One-Bedroom Flat 

A tenant in Auckland sublet his one-bedroom flat to three people without the landlord's permission. 
The tenancy agreement limited occupancy to one adult, with additional occupants requiring written approval. 
During an inspection, the landlord discovered the three people living in the flat. 
The tenant was fined $1000 for breaching the tenancy agreement by subletting. 
A counterclaim by the tenant for compensation was dismissed. 
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Housing Market Nearing Potential Recovery

Property values dropped by 0.1% in January, continuing a trend of limited movement. 
Since August, there has been minimal decline of just 0.4%, suggesting potential price recovery. 
National median value is $803,819, down 17.5% from peak levels in 2021/2022. 
Key cities show varied results, with Hamilton (+0.5%) and Dunedin (+0.1%) seeing growth, while Wellington (-0.6%) remains weak. 
National stability in values could signal future growth opportunities. 
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Borrowers Advised to Consider Locking in Interest Rates 

ANZ economists suggest borrowers consider how much longer they want to wait before locking in interest rates, as further significant declines are not anticipated. 
They expect the OCR to bottom out at 3.50% in April, with limited impact on wholesale and mortgage rates, as these cuts are already priced in. 
Short-term fixed rates have been popular, but the potential for further decreases is minimal, prompting consideration of longer-term fixes. 
For instance, a two-year fixed rate at 5.44% may be more certain than betting on one-year rates falling to 5.29% within a year. 
ANZ forecasts a 6% rise in house prices over the year.    
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RBNZ Chief Economist Discusses Future Interest Rates 

RBNZ Chief Economist Paul Conway states that interest rates are unlikely to return to pre-COVID levels. 
The neutral Official Cash Rate (OCR), which neither stimulates nor constrains the economy, has risen due to weak productivity growth and an aging population. 
Conway estimates the neutral OCR to be between 2.5% and 3.5%. 
Currently, the OCR stands at 4.25%, with two-year mortgage rates ranging from 5.29% to 5.49%. 
Before the pandemic, the OCR was 15%, and two-year mortgage rates were below 4%. 
Economists anticipate the RBNZ will lower the OCR to 3.75% in the upcoming monetary policy meeting. 
Conway emphasizes the need for higher investment and productivity growth to improve per capita incomes and reduce the likelihood of negative economic growth during restrictive monetary policy periods. 
New Zealand has been in a per-capita recession since the September quarter of 2022, with GDP falling 1.0% in the September quarter of 2024.      
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Real Estate Commissions Rise Following Sales Volume Growth

Vendors paid an estimated $1.77 billion in sales commissions in 2024. 
Commission revenue increased by 16% from 2023, signalling recovery. 
The growth was driven by a 14% rise in sales volumes, not price increases. 
Over 70,000 residential properties were sold, still 19% below the 2021 peak. 
Average commission per sale was just over $25,000, slightly up from 2023 but down from 2021.           
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