The rise in residential rents that occurred in many parts of New Zealand last year may be petering out.
According to the latest bond data from the Ministry of Business Innovation and Employment's Tenancy Services division, the national median rent for all property types was $560 in February.
That's down from $575 a week in January and up by $10 a week compared to February last year, giving an annual increase of 1.8%.
Most bonds received by Tenancy Services are for newly tenanted rentals, and new tenancies tend to set the benchmark for market rents, so are a leading indicator of where rents are headed.
The table below shows the median rents in all regions for properties tenanted in February and their annual rates of change.
Significantly, there were four regions, Northland, Auckland, Wellington and Tasman, where rents were unchanged from a year ago, while at the other end of the scale Gisborne and Taranaki had double digit annual increases.
However a closer look at the numbers suggests most of the increases in rents occurred in the first half of last year and rents in most places tended to stabilise in the second half of last year. In some places they've started to decline at the beginning of this year.
Median rents declined in February compared to January in nine regions - Northland, Waikato, Bay of Plenty, Hawke's Bay, Taranaki, Tasman, Nelson, Marlborough and Otago, were unchanged compared to January in Auckland, Wellington, West Coast and Canterbury, while just three regions - Gisborne, Manawatu/Whanganui and Southland, had higher median rents in February than they did in January.
If that trend continues it could have serious implications for landlords, who may have difficulty recovering higher costs from rising mortgage interest rates and from other expenses such as insurance and rates, which could put their cash flows under pressure.
It was also significant that the bond data for Auckland CBD, apartments, which is dominated by investors and which has recently been buoyed by the return of international students to these shores, also showed a significant drop in median rents in February.
The median rent for one bedroom apartments in Auckland's CBD declined from $430 in January to $400 in February while the median rent for two bedroom apartments declined from $560 to $530.
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116 Comments
“Hardworking mum and dad investors”
Good on them for taking one on the chin and doing their part to reduce inflation.
Specuvestors that bet big, will feel the pain equally hard..
They will find all excuses possible to blame everyone
Many/Most 'Mum and Dad' investors have little to no mortgage.
As such rents WILL decrease IF landlords have to compete for tenants, which isn't seemingly the case atm.
Reluctant Landlords are growing in numbers. They are taking a long overdue hammering with stagnating/declining rents, especially when adjusting for inflation. For the Mum and Dad Landlords it was all about the capital gain too - whoops. Despite advice to the contrary, its not easy exiting a commodity that's notoriously illiquid on the ride down. Yesterdays interest.co quote of the day is very appropriate now: "A reliable way of making people believe in falsehoods is frequent repetition, because familiarity is not easily distinguished from truth".~ Daniel Kahneman
"A reliable way of making people believe in falsehoods is frequent repetition, because familiarity is not easily distinguished from truth".~ Daniel Kahneman
That might be the first reference to Kahneman I can remember seeing on interest dot co. Understanding the behavior and attitudes of the sheeple is crucial, but you rarely see meaningful dialog promoted by the media and the gubmint in this regard.
...and another I like
“Most of the so-called facts are just opinions that have only been accepted by the majority.”
― Mwanandeke Kindembo
Kahneman, Shiller, Taleb, Akerlof etc have been critical authors/speakers/teachers that have shaped my views and the resulting commentary on this site. As I mentioned below, the ability to maintain independent thinking is very taxing - it is hard as you have to continuously analyse everything people say and do. Why? Because the majority of the human population are most likely using system 1 thinking that is easy and fast (it is instinctive but very prone to error), but not slow and deliberate. And system 1 thinking is full of poor heuristics and biases that result in suboptimal views and poor decision making.
It is possible to spot system1 thinking on this site as it will repeat popular phrases and narratives without viewing wider data sets over longer periods of time to see if they are really true and adjusting their views based upon risk/possiblity/probability and the severity of outcome if a particular event were to eventuate. And results in recency and confirmation bias in its thinking - which has been a common thread in the comment section of this site (ie past performance of something = future performance).
by Independent_Observer | 4th Jul 22, 10:51am
Yes and many people think they are using independent, rational thinking, but in many respects their brains have been hijacked by a group think narrative that is often suffering from recency/confirmation bias.
Great books I've read around these topics include;
- Animal Spirits (Shiller & Akelof)
- Thinking Fast and Slow (Kahneman)
- Tipping Point (Gladwell)
- Irrational Exuberance (Shiller)
- Phishing for Phools (Shiller & Akelof)
- Narrative Economics (Shiller)
Summary of reading these thousands of pages on behavioural economics is that people regularly 'lose their minds', but convince themselves they haven't/are being rational because everyone else around them is thinking the same way. Independent thought, beyond the herd is hard as it has to be continuously highly analytical (system 1 vs system 2 thinking - Kahneman)...this is very tiring because you have to fight the urge to agree with the group or assume what you are being told is true - so most people chose not to do it as it is too hard to sustain.
The Tipping Point (Gladwell) is also quite interesting in terms of noticing when the collective all wake up at the same time and realise that what they were thinking before was wrong (lost their minds) and pivot to another way of thinking (e.g. the peak or bottom of an asset bubble). I witnessed this in the US during the GFC. And its possible we could be transitioning into a similar period now.
A good indictor for me is that if a person refuses to consider that an alternative outcome that is possible, is impossible, that they have probably lost their mind and are suffering from an irrational paradigm (e.g. bitcoin to the moon, or property prices never fall).
Mighty stuff IO. A kindred soul. I never finished Thinking Fast, Slow. The way the book is written, you shouldn't have to. I've read everything Taleb has written. Changed my life to the point where I can even see the foibles and fragility of Taleb himself.
Yes Fast and Slow isn't something that you sit down and read in one hit....its something that you have to read a few pages of then stop, put down and reflect upon for a few days, before picking it up again. It forces you to use your system 2 brain to read - vs reading a popular fiction novel that is fun and fast to read (i.e. it employs system 1 thinking only).
Probably took me a few months to get through that book. I now laugh sometimes when I catch myself using system 1 thinking and know that I'm getting lazy - i.e. I'm now conscious of those 2 types of thinking and the bad outcomes that can sometimes result if/when my thinking is lazy. But it is scary when you meet people who are completely unaware they are running 100% on autopilot and never realise that this is the case (they would be described as unconscious - the political division and protests we've witnessed recently etc are to me groups people running near 100% on system 1 thinking).
Have looked at Kahnemans recent book in the bookstores lately but yet to read (Noise). Be great to hear any reviews if anyone here has read this.
Also interesting JC about Tipping point - it would appear to me that 2022 was a tipping point when a lot of the NZ population have suddenly become aware of the risks of the zero interest rate policies, high debt, risk of inflation, bank risks, insane price/income ratio of our housing in our country. Before then the common narratives were 'can't lose with housing' or 'best to get as much housing debt as you can while rates a low'.
In the past people would call me a doom goblin (even on this site) for mentioning these issues and the associated risks of such views. And now these same people are on this site (and people I talk to in person) have become the doom goblins themselves and saying everything is going to turn out very badly - and all based upon the same things they were previously were suggesting to be very good or the wise thing to do.
I'll say to them, 'gee you've changed your views on these issues' and that this is 180deg out from what you have just said the last 10 years, but they will argue that they haven't which is completely baffling/bewildering. It is like they can't see the hypocrisy of viewing an issue one way at one time, without acknowledging the risks of those views, and then taking the complete counter view which they had previous ridiculed as being stupid.
Reminds me of the US when their housing market was on the precipice of collapse during the GFC. The tipping point is when the common narrative within society switches from collective greed to collective fear - but it is like the common man is running on autopilot and can't see when one paradigm is the dominant force within a society that is deluding their decision making process and views of the associated risk.
Good on you for sticking your neck out and warning people.
Also interesting JC about Tipping point - it would appear to me that 2022 was a tipping point when a lot of the NZ population have suddenly become aware of the risks of the zero interest rate policies, high debt, risk of inflation, bank risks, insane price/income ratio of our housing in our country
Oh yes. But I think you can also apply that to people in the ruling elite - Robbo, Orr, Conway, Cindy. Even Lord Key. Pretty much all of them.
Interesting if you watch the recent Elon Musk vs BBC reporter interview.
A great example of a system 2 brain (highly analytical and data driven) vs a system 1 brain.
The system 1 brain (BBC reporter) was simply asking questions based upon what the company party line was or what they had heard, but never based upon data or deep analysis of things in which they wished to discuss. Musks strong system 2 brain was able to make the system 1 brain look foolish - even though it was it that probably arrived thinking it held the ace before the discussion began (it fooled itself into thinking it knew everything it needed to).
Great comment. I'll have to add those books to my reading list.
... people regularly 'lose their minds', but convince themselves they haven't/are being rational because everyone else around them is thinking the same way.
As seen broadly during the pandemic years...
Yes, I was assuming Independent Observer would get to that. But perhaps he doesn't think that way about the pandemic?
Groupthink has been very very strong over the last 3 years. In fact, even on this site, contrarian views/comments have been disallowed.
Property spruikers , Tony alexander, sales agents to name a few
Hmm, I personally wouldn't put too much stock in the decline for the Auckland CBD apartments because of how these categories are formulated. In the CBD you both have 'nicer' 1 and 2 beds rented or owned by professionals/retirees and you have 1 & 2 bed shoeboxes rented by the international students.
If the latter property types have been in less demand with those students gone, then when demand for them picks up again (as it has) they'll pull the median rents for these property types down, simply because the distribution of rented properties has changed.
In other words, median rents declining for 1 and 2 bed apartments in Auckland CBD is consistent with a return of international students, presumably this is also accompanied by a reduction in vacancy rates.
Agreed.
I wonder if $ per sqm rented for apartments might give a better picture. It's one of the measures that I use.
That's an interesting theory but I doubt it is correct because the Auckland CBD apartment rental market is so heavily dominated by student/smaller apartments. Retirees are more likely to be owner-occupiers. Also there was a big jump in CBD rents in January, which corresponded exactly with the return of students - Here's a link to that story: https://www.interest.co.nz/property/120470/apartment-market-auckland-cbd-full-recovery-mode-overseas-students-return-vacancy. If the theory about more student rentals pushing down median rents was correct, the median rent should have declined in January.
Rents easing, tax rinsing easing, legislated minimum condition, legislation favoring tenants, interest rates up, more new stock coming to market, govt adding to KO stock, prices in decline and free-fall in the leading metro areas looking to spread, and Infometrics forecasting interest rates to be higher for longer.
Money in the bank is looking pretty good at the moment as the kaaaarrrrk moment approaches.
Money in the bank is looking pretty good at the moment as the kaaaarrrrk moment approaches.
Yes and no. As Cameron Bagrie pointed out the other day, median bank balances hold only $8K (mean holdings is closer to $2K).
A fair chunk of the popn is still living paycheck to paycheck or living like a drunken sailor.
Pretty sure that’s mathematically impossible.
But but but... all that debt is " someone elses asset".
"Parasite struggles to drink additional lifeblood from wage cattle."
So true V M ...... all these "astute" P I 's now think the whole world owes them a favour, because the ""shoe is on the other foot" and capital gains are now CAPITAL LOSSES
That was the only thing keep the PPP (Property Ponzi Party) going .....while the taxpayer were subsidising their rents.
And this is for HW2 ....get your hands out of my pocket, if your tenant can't pay your rents, not my problem mate !
How could this be? Landlords truly are providing a charitable service for their tenants during this time of hardship.
- Minimum wage up.
- Hourly earnings up 7.4%.
- Interest rates up.
- Interest deductibility phasing out.
- National Party are all over this new "tenant tax" Labour introduced, whatever that is.
- Costs related to healthy homes standards.
Yet despite cost pressures, and increased cash flow potential (rent comes before other expenses) rents are up well behind inflation.
No idea if it's an accurate assumption but we might be seeing more people renting individual rooms out to help pay the mortgage, as well as others who previously left houses empty being forced to rent them out. We could also be seeing a quiet exodus of higher income renters leaving as they have the means to go to higher wage economies overseas as the value proposition over here is well cooked for those jobs if you haven't been lucky enough to have rich parents or already own property.
Looks like HW2 has slept in today, he's normally all over any article that points towards a further crash of the housing market like a rash. Here I'll cover for him, select any of the below with increasingly shrill and desperate tone:
- we're getting record immigration, rents are increasing and about to skyrocket
- Look at Australian rents
- 95% of mortgage application being declined, massive repressed demand
- Region's house prices aren't falling as quickly as big centres
- very few mortgagee sales
- we're still up pre-covid
- interest rates are going to come down soon
- we're very attractive to people wanting to flee nuclear Armageddon
- houses cost X amount to build so pricrs can't fall below that
- any negative news is just spin by doom goblins
increasingly shrill and desperate tone
If you're meaning me you could not be more wrong.
For the record our rents are on the up, 20 percent over previous tenants. The new guy, top quality tenant, had been told what the old guy paid, $80 lower, and wanted the same deal. I dropped $5 but then did not have to replace the old benchtop.
At the new rent we are still about $60 below median
Don't take this as a boast, its a response to your trolling.
More regulation in the comment section please. The amount of personal attacks and insults is high.
Like this comment to Simon. Below the belt, thinly disguised racism
by Nzdan | 12th Apr 23, 6:50pm
It's cute when you get angry. Your broken English starts to show
I said it was cute. Nothing racist at all about it.
Out of interest, other than "market rent", was there anything else which justified a 20% increase?
HW2 ....the important figures are your gross and net percentage returns ...my golden rule is that your should be getting at least an 8% gross return.
But the vast majority of NZérs were not even looking at these figures - as everything was covered by "low interest rates forever" and "property doubles every 7 - 10 years"...now those days are gone, and as a property investor who bought in the USA around 2012-13 I was getting 12% and 15% gross returns and even then wouldn't touch anything in NZ, as even then, I knew the writing was on the wall.
So your greed and BS stories about providing a "roof over someones head" are just that, as if there was no profit in it, you wouldn't of even bothered getting into property investment.....shown above by "The new guy, top quality tenant, had been told what the old guy paid, $80 lower, and wanted the same deal. I dropped $5 but then did not have to replace the old benchtop"..........that "I dropped $5 ....." says all I need to know.
And you wonder why, some of us want to get rid of the accommodation supplement ?
TLDR
"TLDR" = too long; didn't read: used in response to an online post, text message, article, etc., that is thought to be too lengthy, and usually taken as a rude comment, ...
......or paraphrased you can't handle the truth.
200 words how much shorter can you really make it lmao.
Housing make up is probably the only thing I can see as making some difference. In our area of Hamilton, multiple 1 or 2 bedroom units are replacing a single 3 bedroom home. It would show as an average rental decrease, even though the land is bringing in 2 or 3 times as much.
This has been happening for a while now though, so it's only a small opposing force.
In Auckland, median rents for 2 bedroom (mostly apts or flats not houses) is over $600 per week. For a 3 bedroom home is over $700
Even without any future increases, a lifetime renter is in for a world of pain
How so? The cost to buy a home, currently nose diving in value, and pay a mortgage, rates, maintenance etc is essentially double the cost of renting (if not worse in akl).
So standard is now $1200~1400 pw for homeowners? If so, what an incredible turn of events in a short amount of time. We moved overseas at the peak of madness (late 21) when renting was a fools game so haven’t been around for the fallout. I wish mortgage payments and rents were referred to in the same terms (ie x amount per week, or x per month) in the news. Obvs easy to work out yourself, but still I think it would drive home as a point of comparison for many. I agree too that rents decreasing are people realising that renting out their spare room (or idle empty house) is the only way to go from here.
HW2.. you are a good numbers guy and you seem to have invested well. If I were a new landlord, there is no way I'd look at the ROI as a good thing currently. I guess cashed up investors position is getting stronger and stronger by the week.
We tried to buy well whenever the time suited and had more than our fair share of luck.
Certainly looking at current ROI numbers might make the heart faint. There is always something which has more X factor than the rest. The ups and downs are challenging but worth it longterm.
All the best
Absolutely zero owners will care about this news. Lots of new supply and population declining for most of the year, yet rents merely flatlined? That is not going to cause anyone to lose sleep, especially now there will be very little supply growth, high immigration for a phase, and minimum wage just got a bump.
Why would supply be limited? There is something like 90,000 building consents issued in Auckland over the past 5 years but half that rate of homes completed. There is a lot of building consents out there - and the economics say build even when house prices fall.
Because a lot of the consents are for townhouse developments by small developers that were applied for in 2021-2022 and no longer make sense. The resale value of their houses are too low to justify the risk. One site = 6-8 consents.
Those owners who bought recently to develop are now confronting making big losses on their sites, so development is probably off the table, and those who had owned for a while and had cheap land are either no longer able to get funding, or will wait until it makes sense to develop.
The RBNZ bringing in DTIs will be interesting. I wonder if they will carve for out owners who develop, or that supply tap will be turned off for good.
Yes, increasing interest rates to make housing more affordable is offset by developers being unable to build to make housing more affordable (through increased supply).
A common misconception. It may not pay to build the townhouses based on buying the land at last year's prices. However, if you bought the land two years ago a development it is the best option to quit the site. Your alternatives are to:
- sell the site with the building consent at a lower price to reflect the new house prices. This then goes to a developer at a price that makes development viable - albeit at a lower land price than a year ago.
- develop the site, gaining less than you hoped for a year ago but better than selling at a loss.
In addition, the viability of the development with a current building consent is likely to be based on pre-pandemic prices anyway. so while building cost have gone up the overall viability has not changed.
I keep hearing that the supply will be cut because of house prices falls but I don't think that follows logic. Auckland has built about a net 16,000 houses (after allowing for houses removed) while the population has actually dropped - and there is a truck load of building consents to be brought to market.
Free advice from ex socialist.
Have you seen the immigration stats? The population of Auckland is increasing quickly. The excess houses are being absorbed.
Calm before the storm. RBNZ and govt/banks are battling. Economist Report today reckons it will be 18 months to kill inflation with more OCR increases - which will have a huge impact on OCR and rates. And people who are praying for a change wont get reprieve
For people approaching retirement, leveraged up homeowners/landlords, people who are made redundant or whose businesses struggle -> expect increasing volumes of firesales in the next couple of years. Likely impact will be:
- Significant drops in property values (nothing to do with population growth, simple math as people cant afford prior prices at new rates)
- the best tenants will become homeowners.. those with stable jobs and money will exit renting as prices are affordable
- inflation and job losses will cause serious stress for lower paid renters who will become problematic in payments and usage of properties.
Basically it will be no time be be a non professional landlord.
None of this points to declines in rent, which was the point of the article.
Actually it does. Directly. As a product becomes cheaper the cost to lease said product will fall.
Timber cost fell 30% this year. i am hiring a painter now and seeing discounts for services at low rates with sooner start dates etc.
The second that houses become hard to find 'decent' tenants for and the pool of available rentals grows (those that cant sell - new and old, those where tenants leave to buy, the many that have stood empty for capital gains...).. then those that can afford to charge less to secure good tenants, will.
Give it a year and see what i mean.... there will be a deflation of all products that start to fall in price to find customers. Housing and rentals being high on that list
You're assuming the same number of customers and the same number of suppliers.
you assume there will be sufficient immigration to make up for the shift.
I remain unconvinced that NZ will remain attractive for the immigrants that we want and need to have good tenants with $money required to rent. I wonder if its possible to see immigration broken down by category.
I know that IT is struggling to attract workers, ditto healthcare. suspect most now are ow skilled again. NZ is pretty crappy destination for the others vs eg. Au and NZ. expensive and very low wages comparatively, and low std of living
Yep, we are at a crossroads here to decide what type of economy we want to be in. Do we want to be a high-wage economy with high-productivity jobs, or do we want to continue focusing on low-value industries like hospitality and tourism. The main appeal of New Zealand is lifestyle, and we are eroding this benefit through speculative behavior and a misallocation of capital into unproductive assets.
I've posted this before and probably will keep posting it because I think it's something more New Zealanders should watch, but Sir Paul Callaghans talk on New Zealand's productivity gives a really good insight into the direction we are heading in and the problems we might face because of it.
OldSkoolEconomics's comment mentioned a nose-diving economy, more unemployment, the most financially stable renters exiting the renting market to become homeowners - they all point to declining rents
OSE, OCR rises are having less and less impact on retail lending rates. The last two 0.5% OCR hikes (=100 bps) have resulted in very minimal one and two year interest rate increases and longer terms have actually dropped.
i agree - however RBNZ will simply continue to raise and make life difficult in anyway they can until spend and employment drop sufficiently.
It certainly kills off the AC commentary that healthy homes and tax changes will push up house rentals.
It is almost like supply and demand is influencing the prices - and the growing supply of homes in Auckland during a static population has more impact than cost-plus mindset.
The tax change will skew supply and that will push up house rentals. It will take time to flow through. More to the point, houses are being given to social housing providers instead of regular renters, which is quite a perverse outcome in my mind.
Healthy homes is different. I used to live in a very cheap rental and a couple of tenants after I moved out the landlord had to spend about $20K on insulation, heating, replacing windows etc etc. They wound up spending a bit more and did other cosmetic renovations then rented it out at market. So the rent went to the normal level for the area. I suspect that played out in many properties but it would not have pushed market rent up, instead it would have removed cheap (and nasty) homes from the market. This is a good thing overall, a similar analogy would be that old, dirty and potentially dangerous vehicles are better off not on our roads, even though it removes cheap options.
The so called growing supply of rentals is an urban myth
I'll add that one to the list
What's up with the REINZ stats not being out yet? Was March so bad that they're still working out how to spin it?
Peter Thompson is a reliable one to be able to professionaly polish a turd.
Out next Monday 17th
Couldn’t be school hold could it? Is also late out in January after the Christmas break.
As I have said before, the CBD situation was overhyped. I mentioned previously that the university had built a stackload of student accommodation. An article in the Herald the other day said there’s still plenty of capacity in that accommodation.
MouseHouse - demand for CBD and city fringe accommodation is increasing significantly more than the few hundred units the university has built.
HouseMouse
I think that there is need to respond to your comment yesterday made just before the third time that you have said that you leaving.
Your comment was “Printer8 thinks those bank economists are great” which you then acknowledged was intended as a dig at me.
Yes, I critically read and take note what bank economists have to say, the RBNZ, and as well as other economists; they are well qualified, have considerable experience and access to both a wide range of data and models. Yes, economic forecasting is not an exact science and one needs to critically look at not just their headline statement but also more importantly their rationale and come to one’s own conclusion.
You have made this comment numerous times as an intended slur without acknowledging the background.
Last year ANZ stated that the OCR was likely to go to 3.5% by the end of 2022 (which was based on RBNZ statements), and your response was that they were “fools” and you with your overinflated ego said that the “OCR would not go beyond 1.75 to 2.00% this cycle” - something that you continued to push numerous times over many months.
I said at the time, what the banks were saying should be noted as they were the ones who determine mortgage interest rates and were clearly indicating the basis for their long-term rates.
You not only posted numerous times that the OCR not going to go over 2%, but also that mortgage interest rates would not go high and would return to 2 to 3% by the end of this year.
The bank’s comment on the outlook for the OCR and interest rates is a significant consideration when choosing one’s mortgage term - your baseless predictions was extremely poor and if taken, costly advice to those reading this site.
Your continual slagging-off the teams of banks economists, RBNZ, and recognised economists with your constant baseless ego-driven predictions has meant undermining and dismissing the value of their views on this site. As I have said many times; economic forecasting is not an exact science, but like racing tipsters, one needs to consider their rationale and come to one’s own conclusion. You are like the know-all Wally who runs around baselessly calling “Horse No5.”
You also act like that Wally, you will selectively skite about the one lucky winner but never acknowledging the numerous times when you are wrong.
I suggest that you also need to get over your common use of derogatory slagging-off and subtle bullying of other commenters who you disagree with. Yes, for about six months or so, I wasn’t commenting because I was heavily involved in a contract; however, in my absence I did read the comments and noted your slagging me off such as “not having a brain.” I think it a bit rich when you feel that you are being got at and cry “poor me.”
I am not going away and will continue to constructively respond to your posts.
I have to be honest I clicked on this link not to read the article but to laugh at HW2's Spruiking and Denial.
You can have a period of rising rents while prices of houses continue to fall.... This is simply becasue house prices are so high and tax situation so bad, that new investors will not enter at these levels, as they would simply be subsidising the tenants... per week.... (and more importantly EVEN investors now think house prices will continue to fall for some time, evidence log into Facebook investment groups.....)
People need a place to live hence rising rents...
Investors need a return hence falling prices....
New mortgage rates and inflation makes the gap still wide. National will reduce the gap not eliminate it, and Orr will keep pushing rates up till he gets traction.
I letting a 4 bedroom property in Nelson. Rent of $680. 26 enquires so far. No sign of market resistance.
Yes, we had 100 enquires for our 3 bedder in Rotorua. Good people. Desperate. It was really sad. $570 per week which is top of the range.
Nelson is chocca currently. People pleading all over FFB groups for a caravan or tiny home due to change in circumstances and hardly any rentals around it seems. Perhaps all the influx of people here over the last 2 years has pushed it to capacity having less rentals via more owner occupier.
Queenstown is well beyond capacity as well. The ski season hasn't even started yet and it's already impossible to find a rental.
In these types of places it will be remote workers who have been unleashed from the cities. Also professionals in jobs you get paid the same no matter where you are eg teacher, builder, healthcare worker. People coming from overseas for lifestyle too. Certainly no quality of life or value for money moving to the bigger cities of NZ anymore (maybe excluding Chch).
Adding to that comment of mine. The only person I have chosen to show through leaving existing nearby home. The owner of that 12 month old property will take a $100,000 hit in selling price. Another Auckland investor with one only rental.
The once very lucrative residential property investment in NZ is dead!
- dropping capital values
- higher interest rates
- 10 year capital gains tax
- end of interest cost deductibility from income
- housing supply catching up to demand
- higher rates and insurance
- upgrade to "Health homes standard"
- stagnant rents
Today, residential property investment equals doing work to lose money, a lot of money!
doing work to lose money, a lot of money!
A bit like having children
"A bit like having children" - if your hearts in the right place and you can actually afford it, you don't constantly think about how much it costs - aye?
We will rent from the state and be grateful. Long live the state.
With so many families unable to afford rent only a matter of time before the government has to build with low cost rent maybe when building companies go under government should by them out cheaply. Many areas up and down the country society is falling apart crime people living in cars drug problems kids having to fend for themselves.
They might as well just nationalize Fletchers and give everybody a cheap house.
Correct me if I am wrong here, but is that not basically what we had with the Ministry of Works and State Housing?
What is there to buy out, a few diggers and makita power tools? the Ford Ranger and Hilux where leased and the knowledge goes with the people. Many of these people will move offshore or move into commercial construction etc before accepting low wages at a new Min of Works....
If gov decide to build and tender hard we will have the Christchurch courthouse fletchers fiasco all over again.
EVEN THE COMB admits all this
he words it as Investors are not active in the market..... for all the reasons yvil stated above.....
But he is paid to Spruik so he aims his Spruiking at FHBers.... Due to the fact that no one wants to loose 10k a month NO ONE is buying or if they are trying they are offering 20% below ask, rachetiung down 1.5% per month..... painful as it maybe the only way to sell in such a market is get lucky and find a sucker or cross the spread.
Markets can move a LONG WAY in price, on very low volume.
Rent vs Buy
It's significantly cheaper to rent right now.
I know someone renting in the regions for $650 per week -a 120sqm 3 bed house. Value $800k.
If you buy with 20% down ($160k) your mortgage is $640k. 30yr mortgage @ 6% interest = $885pw + $50pw insurance + $60pw rates + $50pw maintenance.
Total ownership costs = $1045pw minimum.
Or you keep renting for $650pw and keep that deposit in the bank and pocket the $100pw from interest after tax (5%) and also save $395pw difference in outgoing cost. So in this situation they are +$500pw (+$26k per year) ahead compared to buying. So next year their deposit is going to be $186k without lifting a finger.
Starrider ....love these "real" scenarios with actual $$$ figures .....not the BS rhetoric that are still in these comments, of people that bought over a decade ago etc and are so afraid their "property portfolio" losing it's capital value.
You probably need to take the principal amount out of the mortgage payment?
However agree you are still better off renting than buying in that scenario...
..you didn't factor in the additional gain -
The $800k house will have dropped to say $680k
Your original 20% deposit has grown to 27% of purchase price.
ITGuy and others (agnostic above), it would be nice if you stopped with the personal attacks and name calling, and commented on the subject instead of other people.
What do you think David Chaston and Greg Ninness?
https://classroommanagementexpert.com/blog/how-to-manage-chronic-compla…
Yvil, you fail to acknowledge how much progress has been made in cleaning up this forum already. Its come along way from the insults that used to be hurled around here. Try and be positive :)
It certainly takes the shine off the recent appeal for supporters.
You sound like a converted person.. keep it up
If you're referring to me I suggest you reread my comment.
There is no hint of insult or personal attack. It was a lighthearted dig at HW2 using his words and arguments and previous behaviour on the comments section.
I have no issue with HW2, I just fundamentally disagree with his analysis and point of view on the housing market and I though it was OK to call it out. I also thought he was big enough to take a little dig.
HW2, if I have offended you please say so and I will apologise unreservedly.
Lighthearted dig... HW2, if I have offended you please say so and I will apologise unreservedly.
Thanks agnost no worries. Accepted.
Have a good evening.
You too.
In a recession, rents drop. Housing demand slackens and vacancies increase, pressuring rents lower. Once rents drop, valuations follow, as valuations eventually reconnect with the fundamentals of income generated by the asset. Once prices of houses and flats start dropping, owners can no longer count on appreciation. Suddenly, a low-risk asset acquires a different risk profile: it's losing value, not gaining value.
To lock in gains, the wealthy rentier class and corporations have to sell. Nice, but to whom?
https://www.oftwominds.com/blogapr23/housing-bubble4-23.html
During the GFC, the biggest crash since the depression, I had to drop rents by ten bucks for a while.
I don't know how I made it through. If I have to drop rents by twenty this time for a while I may be homeless.
If median rents equated to 30% of median household income (before tax) in these regions - then the median weekly rents would be:
Northland $362
Auckland $518
Waikato $420
Bay of Plenty $455
Gisborne/Hawkes Bay $428
Taranaki $410
Manawatu/Wanganui $386
Wellington $550
Tasman/Nelson/Marlbourough/West Coast $397
Canterbury $435
Otago $392
Southland $420
An earlier poster referred to the composition of properties being let. Using medians is a good way to track overall price changes but says nothing about the make-up within.
Maybe you can save that one for Monday when we learn the market has taken another hit in march - and roll out
Maybe house prices are down as only the cheaper ones are being sold.....
Which is quite funny and perhaps true until you learn that in wgtn in seatoon the avg is down 330k ish
and in high end AKL about the same in many suburbs.
In which of the last 6 months did the market bottom HW2? because you said now is a great time to buy every month
You should tell us when you think it will be. Instead of hiding behind "6 months after 6 monthly moving average" weasel statements
Also you told us, that the S&P500 is not in a bear market but it was range trading. That comment from months ago, I believe now needs updating
Have you noticed IT GUY that I am just chipping away, looking at stuff objectively, and the pillars of your position are falling one by one. When house prices turn and go, then so will you and your comments.
"Looking at stuff objectively"
lol!
Good, hopefully other CPI basket items will also stabilise or fall.
Everywhere you look in Auckland there are new multi unit developments on previously single house sites.
Who in their right mind now would pay 900k for a new attached home that might rent for $700 a week and will probably depreciate in the short term? Especially if they need to borrow any of that purchase price at current interest rates to close the deal.
How much margin do these small developers have to give up before they are upside down on the development? Are their lenders just extending and pretending, hoping that interest rates will come down before the piper just has to be paid?
The major banks turned away from funding a lot of these some time ago.
Some will be sold off plan with the developer hoping to sunset clause everyone to increase the price by 150k a unit, now they are history.....
Some will have a huge amount of their own equity at risk here.
I don't think the banks are at as much risk there as they are from owner occupiers who purchased near top and now have no equity and will be 20% under by the time a sale occurs.... they will be doing what they can to help, int only etc etc
And no doubt wiped out their kiwisaver in doing so.
Frank doesn’t believe that retirement savings should be able to be used before retirement.
Purchase price is now less, rental price should now be less.
Holding costs are now more, rental price will now go up. Hence the label "tenant tax"
rents have to cover costs of being in the rental game, so rents will need to move up as prices fall a lot..... basically this is yields rising whatever way it happens if the yield does not cover the costs then the investor is subsidising the tenant , capital gains are now capital losses.
Prices go up, rents go up, prices go down, rents go up, prices hold, believe it or not, rents go up.
It's almost as if rents and prices operate different cycles. Who would have guessed.
A tide of change is coming and that is what you fear
The earthquake is a coming, but you don't want to hear
You're just too blind to see
Have you seen the writing on the wall?
Have you seen that writing?
Can you see the riders on the storm?
Can you see them riding?
Can you see them riding, riding next to you?
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