NZ residential rental market news, May 5

Latest House Price Index breakdown, immigrants' property market share increasing & Auckland median price goes sub $1M.

The bullet points from this week:

Core Logic House Price Index

New Zealand's property market declined by another 0.6% in April which is smaller than the drops of about 1% in each of February and March. 
Nationally, average values are 10.3% lower than the same month last year and $115,000 below their March 2022 peak. 
The slowdown in the rate of decline could be signalling a near-term floor for house prices. 
Mortgage rates could start to increase buyers' confidence in the coming months, while employment remains high, alongside a slight decline in available listings and rising net migration. 
Impending relaxation of the loan-to-value (LVR) rules could also impact values, an effect which could be amplified if investors try to buy in advance of debt-to-income ratio limits to be introduced next year. 
The latest round of changes to the Credit Contracts and Consumer Finance Act (CCCFA), which comes into force this month, could help a few more borrowers to access the market. 
Approximately 2,500 recent first home buyers could owe more than the value of their property. 
Wellington has fallen the most to date (among the main centres), but it could be a key market to keep an eye on in terms of potentially finding a floor first. 
Debt-to-income ratio limits from March next year could restrain a market recovery. 
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Immigrants make up 12.5% of NZ home buyers

12.5% of homes sold in New Zealand in Q1 2023 were purchased by immigrants with residence visas. 
Immigrants' share of the residential property market in New Zealand has been steadily increasing for the past four years. 
People with residence visas accounted for 7.5% of property purchases involving a dwelling in Q1 2019. 
Immigrant dwelling purchases have been steadily increasing while sales of dwellings by immigrants have remained largely flat. 
Immigrants purchased 4.1% of total sales in Q1 2019 and 4.3% in Q1 2023. 
Purchases of New Zealand dwellings by overseas buyers who do not hold either a NZ residence visa or NZ citizenship have declined by a third. 
Overseas buyers' share of total purchases declined from 0.6% in Q1 2019 to 0.4% in Q1 2023.  
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Man sells his property through a $1 reserve auction

A homeowner in Palmerston North, is selling his property through a $1 reserve auction after experiencing a lack of interest. The three-bedroom property has been listed for three weeks, and the auction will be held on May 10. The homeowner hopes to sell the property for around $420,000 to $430,000, which is $150,000 below market value, due to falling prices and decreased interest in auctions.
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Auckland's median price goes sub $1M

Auckland’s median property price fell to under $1 million last month for the first time since January 2021. 
Barfoot & Thompson's data showed that prices and sales declined in April, after a busier month in March. 
Auckland’s median price dropped 2.9% to $995,000 from $1.02 million in March and was down by 12.8% on $1.14m in the same time last year. 
The average sale price fell 1.5% to $1.08 million from $1.10 million in March, and was down by 10.4% on $1.21 million last March. 
Sales of properties were 473 in April, a decline of 38.2% on March, and the number was last seen 22 years ago. 
Rural and lifestyle markets to the north and south of Auckland showed more activity than in the metropolitan area. 
Nationwide, residential properties were selling for on average $39,500 less than asking price, and in Auckland, the median selling price was $69,000 below the median asking price. 
Some commentators suggested the market downturn could be nearing its end, but the Kiwibank chief economist Jarrod Kerr said it was necessary to see a sustained increase in activity. 
The market is quietly heading into the weaker (colder) months.
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Kiwis are opting for smaller homes as build-to-rents become more common.

New Zealanders are downsizing where they live due to high living costs. 
Trade Me's latest Rental Price Index shows demand for apartments or 1 to 2 bedroom homes has increased by 55% from last year. 
People are trying to maximise their spend by compromising on the size of the property they're looking for. 
While smaller properties are cheaper, their rental prices have also increased due to high demand. 
The national increase in rental prices is around 8% to $540 a week nationwide, which is higher than the typical increase of 3-4%. 
The rental prices in Auckland, Taranaki, Southland, Bay of Plenty, Canterbury, and Hawke's Bay regions have hit record highs. 
Auckland's weekly median rent has increased to $650, Taranaki's is $600, Southland's is $430, Bay of Plenty's is $640, Canterbury's is $540, and Hawke's Bay's is $625. 
There are now more build-to-rent projects in the pipeline to cater to the rising rental population. 
350 apartments are set to be built at a site in Takapuna in Auckland's North Shore
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