NZ residential rental market news, October 4

Chasing $18.6M in overdue rent, landlord is ordered to pay $18,000, and most Kiwis are unaware of the benefits of mortgage advisors.

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

House prices continue to drop despite rate cuts

Property values dropped by 0.5% in September, marking the seventh consecutive monthly decline. 
National property values have fallen 4.7% since February. 
Some areas, such as Wellington, showed variability, with slight increases in certain regions. 
Auckland property values continued to fall, with a total decline of over 7% recently. 
Lower mortgage rates are boosting confidence, but affordability issues and higher listings persist. 
DTI restrictions may limit borrowing capacity despite falling mortgage rates.      
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Over 50,000 property investors face financial losses amidst rising rates

More than 50,000 property investors are reporting losses, largely due to rising interest rates. 
Interest deductions on loans have been phased out, increasing financial strain on investors. 
Property investors are now exploring rent increases to cover costs. 
Approximately 20% of property owners reported losses from rental investments in the past tax year. 
Larger investors, with more properties, face greater financial pressure due to rising costs and reduced tax benefits.     
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Major bank cuts home loan and term deposit rates

The country’s largest bank has cut home loan rates following a drop in wholesale interest rates. 
This follows a reduction in term deposit rates, with expectations of more cuts to come. 
Mortgage rates are now more competitive as banks adjust to changing market conditions. 
Lower wholesale interest rates are driving these shifts, benefiting both borrowers and deposit holders. 
Further reductions are likely as the OCR is expected to be cut.       
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Interest deductibility policy for new builds faces mixed outcomes

Government promised interest deductibility for new builds to increase supply. 
Investors building new properties can still claim interest deductions. 
Some existing property investors cannot claim deductions, increasing their tax burden. 
The policy is intended to encourage building but hasn't significantly boosted housing supply. 
New builds are facing financial challenges due to rising interest rates and construction costs. 
Critics argue the policy is insufficient to solve housing affordability issues.     
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Government revives Kiwibuild-style scheme for housing developments

The government is reviving a Kiwibuild-style underwrite scheme to support housing development. 
The scheme guarantees the sale of units in developments that struggle with financing. 
It helps developers meet presale requirements for bank financing. 
The scheme has no price caps and could apply to luxury housing. 
There are no restrictions on eligible buyers, and it’s available nationwide. 
The scheme is time-limited but has no set end date.      
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Building consents fall, construction industry faces tough times 

The number of new homes consented has fallen to a five-year low. 
33,632 new dwellings were consented in the 12 months to August 2024, down from 42,110 the previous year. 
The biggest decline was in apartment consents, dropping by 55%. 
Construction companies are struggling, with 546 firms liquidated in the past year. 
Non-residential building work also declined, falling by 8%. 
Standalone houses held up better, with a smaller decline of 9.7%.        
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Census reveals over 100,000 homes vacant amidst housing crisis 

Over 100,000 homes were reported empty in the latest Census. 
Ghost houses make up 7.8% of total dwellings in the country. 
Auckland and Wellington recorded the highest numbers of vacant homes. 
Many homes were empty due to renovations or being holiday homes. 
High vacancy rates are concerning given the current housing crisis. 
Policy responses may be required to address underutilised housing.          
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Kainga Ora faces $18.6m in overdue rent from tenants 

Kainga Ora is owed $18.6 million in overdue rent from current and former tenants. 
71% of the overdue rent is owed by current tenants, while the rest is from former tenants. 
The agency has implemented various repayment plans but faces challenges recovering the debt. 
Most tenants owe less than $1000, but a small number have significant debts. 
Kainga Ora has a policy of not evicting tenants based solely on rent arrears.       
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UK family wins damages over unliveable rental property, landlord appeals 

A UK family was awarded over $18,000 after renting an "unliveable" home. 
Issues included broken appliances, unsafe decking, and a faulty fireplace. 
The landlord is appealing the decision, seeking a rehearing. 
Tenants claimed their privacy was breached, as the landlord allegedly spied on them through security cameras. 
The Tenancy Tribunal found multiple breaches of the Residential Tenancies Act. 
The landlord was also fined for requiring six months' rent upfront, which is illegal.         
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Most Kiwis unaware of benefits offered by mortgage advisers 

Research shows most New Zealanders lack awareness about mortgage advisers. 
Many people mistakenly believe advisers charge a fee, discouraging them from seeking advice. 
Mortgage advisers are often free for clients, as they are paid by lenders. 
Awareness about the benefits of using advisers is low despite them helping navigate complex mortgage processes. 
Increased education on mortgage advice could lead to better financial outcomes for borrowers.       
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OCR likely to drop, but inflation risks remain for 2025

The OCR is likely to drop by 0.5% next week. 
Inflation is easing, encouraging RBNZ to cut rates. 
Inflation could return in 2025, potentially slowing future rate cuts. 
Business confidence is low in the short term but more positive for 2025. 
Buyers are active in the property market, but price gains are still muted. 
The housing market remains a buyer's market, with no significant price increases expected soon.        
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US home insurance rates surge due to natural disasters 

Home insurance rates in the US are increasing significantly. 
Natural disasters like hurricanes and wildfires are major contributors to these rising costs. 
Insurers are responding to increased risks by raising premiums and becoming more selective about coverage. 
Some companies have even withdrawn from high-risk areas, limiting coverage options for homeowners. 
The climate crisis and frequency of extreme weather events are driving up claims and costs for insurers.        
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Home ownership increases despite affordability challenges 

Home ownership rates increased for the first time in three decades, reaching 66%. 
This reverses a decline since ownership peaked in the early 1990s. 
Affordability improvements in 2019 and 2020 contributed to the rise. 
Auckland had the lowest home ownership at 59.5%, while Waimakariri had the highest at 82.2%. 
Affordability has worsened since 2021, and the rise may not continue. 
More homes have heat pumps, likely due to Healthy Homes standards. 
Damp homes have decreased from 21.5% in 2018 to 18%.        
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