NZ residential rental market news, September 6

KO takes aim at arrears, Kiwibank doubles its market share, and is the housing market due to tighten?

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

Housing market faces further challenges despite falling rates

Property values fell by 0.5% nationally in August, marking the sixth consecutive drop. 
Auckland saw a 1.0% decrease, while Christchurch values rose slightly. 
Buyers currently have more bargaining power due to high stock listings. 
Affordability remains a challenge despite falling mortgage rates. 
Lower mortgage rates may support housing in the near term but won’t trigger a boom. 
Job losses and DTI limits are expected to restrain property values.     
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Opinions divided on housing market timing amid uncertainty

ASB survey reveals mixed opinions on whether it's a good time to buy a house. 
27% of respondents think it's a good time to buy, while 28% believe it's not. 
Concerns include high interest rates and economic uncertainty. 
Those who think it’s a good time point to falling house prices as an opportunity. 
Confidence in the housing market remains split, reflecting ongoing market volatility.      
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Barfoot & Thompson prices fall, stock at 14-year high

Barfoot & Thompson's average and median selling prices dropped again in August. 
The average selling price decreased by $19,802 from July, now $119,658 lower than March's peak. 
Stock levels are at a 14-year high for August, with 5162 homes available. 
Buyers remain in a strong negotiating position due to elevated stock levels. 
New listings fell to the lowest since January, but stock remains 24% higher than last year.      
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Buyers' advantage may shrink as housing market tightens soon

Buyers currently hold the upper hand in the housing market. 
This advantage is due to high property stock levels and price drops. 
The window for buyers may close within the next year as supply reduces. 
If interest rates fall or confidence improves, competition could increase. 
Sellers may regain control, especially if market conditions tighten sooner than expected.     
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Looser borrowing rules and lower rates may boost property market

Borrowing rules have loosened, making it easier to get loans. 
Interest rates are expected to fall, with banks already cutting rates. 
House prices dropped but may stabilise in the next 6–9 months. 
Property listings are higher than last year, benefiting first-home buyers with more choice and negotiation power.       
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OCR cut boosts property buyer enquiries, investor interest rises

Buyer interest in property has surged following the OCR cut. 
The OCR reduction has made mortgages more affordable, increasing buyer enquiries. 
Despite rising buyer interest, housing stock remains high, maintaining buyer power. 
Investors are showing renewed interest in the property market due to lower interest rates. 
The property market's recovery may take time, but sentiment is improving.         
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Interest rates fall but remain above pre-pandemic levels

Interest rates have fallen, but remain higher than pre-pandemic levels. 
Mortgage rates are dropping, with some banks offering rates below 6%. 
Borrowers may still face higher rates on re-fixing, compared to previous loans. 
The fall in rates is driven by RBNZ's recent OCR cut, easing borrowing costs. 
The decrease provides relief, but affordability remains a concern for some.        
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Slight rent declines signal balanced rental market in July

Median rent nationwide held steady at $600 per week in July. 
Nine regions saw rent declines, with the largest drops in Gisborne, Hawke's Bay, and Tasman. 
Five regions experienced rent increases, led by the West Coast. 
Wellington had a modest decline of $5 per week. 
The number of properties newly tenanted in July remained similar to last year, suggesting balanced supply and demand. 
If the downward trend continues, it could signal an oversupply and further rent reductions.     
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Low yields and negative cash flows hurt rental property returns

Rental yields for three-bedroom houses are low, often resulting in negative cash flows. 
High property prices and rising interest rates contribute to lower yields. 
Many investors struggle with covering costs, even with rising rents. 
Some areas, especially in Auckland, offer higher yields than others, but the trend is generally poor. 
The gap between rent income and mortgage payments continues to widen due to high interest rates.      
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Kainga Ora takes action on increasing tenant rent arrears

Kainga Ora is addressing significant tenant rent arrears. 
The agency aims to assist tenants while recovering owed rent. 
Kainga Ora has implemented support measures for those struggling to pay. 
They face challenges with the increasing number of tenants in arrears. 
Evictions are a last resort, with Kainga Ora focusing on sustaining tenancies. 
They work closely with tenants and support services to manage arrears and prevent homelessness. 
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A look abroad as England bans no-fault evictions but broader rental issues remain

England will ban no-fault evictions to protect tenants from sudden evictions. 
The reform aims to give renters more security but has limitations. 
Landlords may still evict for other reasons, including rent arrears. 
The ban might discourage landlords from renting due to fear of being unable to regain possession. 
Renters' problems such as affordability and housing quality will remain unsolved. 
More comprehensive reforms are needed to address the broader issues faced by private renters.     
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Offset and revolving credit accounts offer mortgage flexibility

Maintaining financial discipline post-high interest rates is key. 
Avoid lump sum repayments and keeping high mortgage payments. 
Offset accounts and revolving credit are better options. 
Revolving credit acts like an overdraft, saving interest but offering flexibility. 
Offset accounts reduce mortgage interest by linking savings, potentially involving family. 
Revolving credit provides real-time debt reduction, but offset accounts offer flexibility. 
Both options require careful management to avoid unnecessary debt exposure. 
Financial discipline is essential for making these tools effective.     
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Looser LVRs boost lending; investors cautiously return to market

Recent changes to LVR rules have increased low-deposit lending, especially among investors. 
Mortgage rates remain high, limiting significant impacts from DTI caps. 
Smaller property investors are returning to the market, focusing on new-builds. 
The labour market is weakening, with job losses potentially affecting housing demand. 
New dwelling consents in July showed signs of stabilisation, but the outlook remains uncertain. 
Short-term fixed mortgage rates are increasingly popular, driven by falling interest rates.      
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Kiwibank doubles its share of new mortgage lending

Kiwibank has grown its share of new mortgage lending, now more than double its market share. 
The bank's share of new mortgages increased to 13.7% in the June quarter. 
Kiwibank’s market share of overall mortgage lending remains at 6.7%. 
This growth highlights a strategic focus on attracting new home loan customers. 
Kiwibank’s success is driven by competitive rates and active customer engagement.     
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FMA investigates mortgage advisers for compliance with regulations

The Financial Markets Authority (FMA) is investigating the mortgage advice sector. 
The investigation focuses on whether advisers are adhering to new regulations and giving appropriate advice. 
Key areas include the suitability of advice, client understanding, and whether recommendations align with client needs. 
The FMA aims to ensure mortgage advisers maintain high standards of professionalism and compliance. 
The investigation could lead to penalties or reforms in the sector.     
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Edmonds stresses insurance's role amid rising climate risks

Labour Finance Spokesperson Barbara Edmonds emphasises the importance of insurance for financial stability in light of increasing natural hazard risks. 
Rising insurance premiums are attributed to more frequent extreme weather events. 
Edmonds highlights the need for better climate adaptation and risk mitigation strategies. 
Insurers face challenges in pricing due to unforeseen events like Cyclone Gabrielle. 
If insurers pull back, it could affect financing options, requiring government intervention. 
There are calls for the government to improve coordination on climate adaptation.     
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