NZ residential rental market news, August 9

Homeowners advised to save, Mortgage rates stabilise, and Quicker inflation decline expected.

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

Property Values Decline Amid High Listings, Easing Rates 

Property values down 2.5% since February's mini-peak. 
Median value now $827,515, 16% below January 2022 peak. 
Auckland and Wellington show the largest recent declines. 
Auckland's townhouse boom increases listings, keeping prices stable. 
Regional markets show mixed results, with some resilience. 
RBNZ expected to cut OCR, easing mortgage rates. 
High listing levels give buyers negotiating power.    
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Auckland Apartment Losses Rise Amid Sluggish Market 

Auckland apartment sales for a loss have increased, with 44% sold below purchase price. 
CoreLogic reports 35% of all apartment sales in Q2 2024 were at a loss, the highest since 2012. 
Median resale loss for apartments was $50,500, slightly higher than for standalone houses. 
Apartments held for a median of 4.2 years before selling at a loss. 
Despite the losses, apartment values dropped 5% since March 2024, similar to houses. 
The market may remain sluggish until 2025.       
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Realestate co nz Asking Prices Drop Amid Market Adjustments

Average asking prices on Realestate.co.nz have decreased by $110,515 since February. 
Auckland saw a significant drop, with prices down by $143,000. 
This decline reflects broader market adjustments and buyer caution. 
Lower demand and increased listings contribute to the price drop. 
National asking prices are also affected by rising interest rates and economic uncertainty.     
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Southland, West Coast Best for Homes Under $500,000

Houses priced under $500,000 are increasingly rare. 
Southland, West Coast, and Manawatū-Whanganui regions have the best chances. 
In these regions, about 30% of listings are under $500,000. 
Auckland and Wellington have few options in this price range. 
Nationwide, affordability remains a significant challenge for first-home buyers.     
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Investors Gain Market Share as First-Home Buyers Struggle  

First-home buyers' market share has decreased recently. 
Investor activity is on the rise, taking advantage of market conditions. 
High interest rates and tighter lending conditions challenge first-home buyers. 
Investors benefit from better access to capital and less stringent lending criteria. 
Market dynamics are shifting, with investors gaining more influence.     
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Housing Affordability Declines Amid Rising Prices and Policy Changes

Housing affordability has worsened over decades due to rising property prices. 
1990s reforms led to reduced state housing and increased reliance on the private market. 
Rapid property price growth since the 2000s has outpaced income growth. 
RBNZ policies and LVR restrictions have influenced affordability trends. 
Government interventions have had mixed success in improving affordability. 
Current challenges include high house prices, interest rates, and limited supply.         
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Mortgage Rates Stabilise as Banks Adjust Fixed Terms

Mortgage interest rates are stabilising, with some banks lowering rates slightly. 
Two-year fixed rates range from 6.75% to 7.19%, with most banks at the lower end. 
One-year rates are generally around 6.79%, with some as low as 6.59%. 
Floating rates remain higher, typically over 8%. 
Rates may continue to fluctuate, depending on RBNZ’s decisions on the OCR. 
Borrowers are advised to consider their financial situation carefully before fixing rates.       
Read the article

Banks Cut Rates Ahead of OCR Announcement, Reflect Caution

ASB, BNZ, and Kiwibank have lowered some lending and term deposit rates. 
These changes come ahead of the upcoming OCR announcement by RBNZ. 
The rate reductions reflect expectations of no further OCR hikes this year. 
Banks are adjusting rates to stay competitive as the market anticipates stabilisation. 
The rate cuts are modest, indicating caution amid ongoing economic uncertainty.     
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Experts Warn Against Long-Term Fixing at 5.99% Rate

Experts advise caution against fixing mortgages at 5.99% for long terms. 
Lower rates may look attractive but could be risky if rates fall further. 
Shorter fixed terms may offer more flexibility in a changing market. 
Fixing for longer may lock borrowers into higher rates if the OCR is cut. 
Borrowers are encouraged to assess personal circumstances and market trends.      
Read the article

Interest Rate Cuts Alone Insufficient to Fix Economic Issues

Interest rate cuts are unlikely to resolve the current economic challenges. 
High inflation, reduced consumer spending, and global uncertainties are key issues. 
Rate cuts might not boost spending due to high debt levels and cautious consumer behaviour. 
Economic recovery may require broader fiscal policies and structural changes. 
Over-reliance on interest rate adjustments might not address deeper economic problems.  
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Homeowners Advised to Save 3-6 Months of Expenses 

Homeowners should maintain an emergency fund covering 3 to 6 months of living expenses. 
This fund should include mortgage payments, utilities, groceries, and essential bills. 
The exact amount depends on personal circumstances, such as job security and family needs. 
It's crucial to adjust the fund size based on any changes in income or expenses. 
Having this financial buffer can prevent significant stress if employment is lost.    
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Business Leaders Anticipate Quicker Inflation Decline

Business leaders expect inflation to drop faster than previously anticipated. 
Improved supply chains and stabilising costs are key factors driving this expectation. 
The OCR may peak sooner, with potential cuts earlier than projected. 
Consumer confidence remains low, contributing to reduced spending and price pressures. 
Some sectors still face challenges, but overall inflation outlook is improving.    
Read the article

Building Costs Stabilise, But Retirement Units See Increases 

Building costs are stabilising, with exceptions for retirement units. 
The average size of standalone houses is decreasing. 
Smaller house sizes are partly due to increased construction costs. 
Retirement units are seeing a rise in building costs, bucking the trend. 
Overall, the building industry is experiencing a slowdown, leading to stabilisation in costs.    
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Kiwibank Lauded as Market Disruptor in Mortgage Sector 

Mortgage firm endorses Kiwibank as a significant market disruptor. 
Kiwibank is recognised for its competitive rates and innovative products. 
The bank's focus on customer service and community engagement is highlighted. 
Kiwibank's approach challenges traditional banks and benefits consumers. 
The firm believes Kiwibank's presence strengthens the overall mortgage market.    
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