February 6, 2025 • 20 mins
For better or worse, house prices have been a cornerstone of our economy for decades.
But a rise in prices now put home ownership out of reach for many Kiwis.
Things could be changing though.
Wellington City’s new rateable valuations show that, on average, house values have plummeted 24.4% since 2021.
It comes as the city -- which once made headlines for its hotly contested rental market -- now sees landlords fighting to fill their homes.
So, is this a nationwide phenomenon, and is the dream of owning your own home becoming more of a reality?
Today on The Front Page, co-host of Opes Partners’ The Property Academy Podcast, Ed McKnight, is with us to run through the latest in property.
Follow The Front Page on iHeartRadio, Apple Podcasts, Spotify or wherever you get your podcasts.
You can read more about this and other stories in the New Zealand Herald, online at nzherald.co.nz, or tune in to news bulletins across the NZME network.
Host: Chelsea Daniels
Sound Engineer/Producer: Richard Martin
Producer: Ethan Sills
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
Yoda. I'm Chelsea Daniels and this is the Front Page,
a daily podcast presented by The New Zealand Herald. For
better or worse, house prices have been a cornerstone of
our economy for decades, but a rise in prices now
put home ownership out of reach for many kiwis. This
(00:28):
could be changing though. Wellington City is a new rateable
valuations show that on average, house values have plummeted twenty
four point four percent since twenty twenty one. It comes
as the city, which once made headlines for its hotly
contested rental market, is now seeing landlords fighting to fill
their homes. So is this a nationwide phenomenon? And it
(00:51):
is the dream of owning your own home becoming more
of a reality Today on the Front Page, co host
of Opus Partners, the Property Academy podcast and Mcknightter's with
us to run through the latest in property add a
twenty four point four percent decrease is a big drop
(01:12):
in any market. Why have the property valuations fallen so
much in Wellington?
Speaker 2 (01:17):
Well the main reason is they were last set when
property prices were really, really high. So Wellington City last
updated their CVS around about mid twenty twenty one, and
since their property values have really really fallen. In fact,
from their peak to their trough, Wellington City house prices
dropped closer to twenty seven percent.
Speaker 1 (01:37):
How big of a difference is there between property and
market valuations? Are different things considered?
Speaker 2 (01:44):
Yeah, So the way these cvs are set is a
lot of councils, and there are sixty seven different councils
around the country who set these cvs. They usually hit
up a company like qv which is a government owned company,
and they run a couple of algorithms very similar to
a Hobes dot co dot ed Z or a one
roof and they just spit out a whole heap of
property values. Now, the way they figure that out, well,
(02:05):
the way that algorithm runs is they look at what
properties are selling for right now, and that gives a
sense of okay, well what might your house actually be worth.
Speaker 1 (02:15):
Have we seen this drop happen nationally? I remember when
we last spoke, you mentioned a big eighteen percent drop
right after COVID. But where does that set long term?
Speaker 2 (02:25):
Yeah, so if we think about the country, it's eighteen
percent down from the absolute peak to the absolute trough. Now,
if we think about Wellington. Wellington got hit so hard,
and I'll tell you the reason why. It's because right
up into that peak in twenty twenty one, Wellington went
through two booms. So it actually started back in twenty sixteen.
Now that was the good old days if you were
(02:48):
buying a property in Wellington City because house prices had
been flat for like nine years. But what happened in
twenty and sixteen as Wellington property prices started taking off,
and they took off in most of regional New zeal
Then in twenty twenty, what happened where had the COVID
lockdown's interest rates came down? Wellington basically got a second boom,
and property prices just went up and up and up
(03:10):
and up.
Speaker 3 (03:10):
And that is the.
Speaker 2 (03:11):
Reason why from peak to trough, Wellington City prices they
dropped twenty seven percent, which is more than that eighteen
percent average around the country. Lower Hut they had it
even harder. They dropped thirty percent, and Upper Hut dropped
about twenty nine percent.
Speaker 3 (03:25):
So Wellington region as a whole they.
Speaker 2 (03:27):
Have really borne the brunt of this property value decrease.
And it's mainly because of what happened in the years
leading up to it. From twenty sixteen to twenty twenty one,
we had that double boom.
Speaker 1 (03:39):
What's Auckland done differently to Wellington to keep valuations pretty consistent?
Speaker 3 (03:44):
Well, two things happening there.
Speaker 2 (03:46):
First of all, Auckland house prices didn't go up by
quite as much of the preceding years, so little property
history lesson. From twenty twelve to twenty sixteen, Auckland house
prices boomed. They were really recovered after the GFC, and
then the Reserve Bank came out and introduced the LVR
restrictions and that slowed down the housing market in Auckland
(04:10):
because the Reserve Bank actually had tougher rules for Auckland
compared to the rest of the country. Then we saw
house prices slowed down and flatlined for four years. So
during the COVID boom, Auckland didn't have that same double
boom that we saw. But the other thing you've got
to remember is Auckland house prices still have been hit
really really hard. From pitt to Trough, property values fell
just under twenty four percent, but you might not see
(04:33):
the cvs are just quite as much where those new
values come out, just simply because it's all about, well,
when did the council last rerun those cvs. So if
you are in Wellington City, an area where the council
last set those cvs, where property prices were really high,
well you really notice it now because property prices are
(04:56):
full of lot. If you're at a different area, Totoga
comes to my BELI believe that they last set their
CVS with property prices words is close.
Speaker 3 (05:03):
To the peak and so you don't observe that same drop.
Speaker 1 (05:06):
And the latest Auckland property valuations were done in October
twenty twenty four, but have now been delayed into at
least May this year. Why do you think this might be?
Is something to be worried about.
Speaker 2 (05:17):
I wouldn't necessarily be worried about it, and I often
encourage people to not worry too much about the CV
because you've got to really understand what is this all about.
Your CV doesn't really tell you what your house is
going to sell for today. Because even if we think
about these Wellington CVS that have only just come out,
they were done in September twenty twenty four, they're five
(05:37):
months old, and the property market moves month to months.
So just because some algorithm five months ago said your
house was worth X, it doesn't mean it's actually going
to sell for that today. And even if you think
about some of these algorithms, they're not that accurate. So
if we think about stuff like homestock code on endz,
where you go online you see the homes estimate, even
(05:58):
though that is updated every single month. In fact, I
believe sometimes maybe even fortnightly, only about just over fifty
percent of properties will sell within ten percent of whatever
price that's show.
Speaker 3 (06:11):
Now let's put that into context.
Speaker 2 (06:13):
Let's say that your logo that says your property is
worth a million bucks, Well, you've only got just over
a fifty percent chance, just over a coin flip chance
of your properties selling for somewhere between nine hundred k
and one point one million dollars. And then you go, ah,
that's not that high a chance. It's actually not that accurate.
So the CV doesn't really impact what your house is
(06:35):
going to sell for, even though some people will try
to use it as a bit of a negotiation tactic.
Real estate agents offered here this idea, Well, I don't
want to pay above CV, but where it does affect
you is just the proportion of the rates bill that
you actually pay. So what some people think, especially when
cvs are going up as oh well, the council just
wants to put up a CV so that they can
(06:57):
collect even more rates and sped more money.
Speaker 3 (06:59):
That's it's not actually how it works.
Speaker 2 (07:02):
Because everybody at Wellington City you're seeing your CV go
down by twenty four to twenty five percent. Your rates
bills not going down by twenty five percent. It's probably
going up by ten to fifteen percent something like that.
All the cvs are used for is to divide up
the share or to determine how much of the total
rates are you paying.
Speaker 3 (07:22):
And the council basically.
Speaker 2 (07:23):
Says, if your house is worth a million bucks, well
you're probably a bit richer, so you're going to pay
more rates. If your house is worth half a million bucks,
well you don't have as much money as this other guy,
and so you're not going to pay quite as much rates.
That's what cvs are really used for. And I do
think that here a hell it do we read a
little bit too much into them.
Speaker 4 (07:45):
For years we've said that there's not enough housing and
so there's been a lot of pressure on that in
the last government.
Speaker 3 (07:50):
Rather than kind of fix the supply issue. They focused
on the demand. So they did.
Speaker 4 (07:55):
They introduced policies that were kind of anti lenl right there,
interested up to bill their roles. They made it tougher
to be a landlord, healthy homes, and trying to sort
of soften that demand from the investor side so that
it kind of took some of the heat out of
the market. Now this government's going on a different approach.
They're saying, well, actually, the way we fix it is supply.
Speaker 1 (08:18):
One of the big issues in this country for decades
has been housing supply, or lack thereof. Take your pick
of any random Auckland street and you'll come across about
ten townhouses where there used to be just two. How
much has that supply increased and how is that impacting
house prices?
Speaker 3 (08:35):
Well, it's increased quite a lot.
Speaker 2 (08:36):
We had a massive building boom during the COVID years,
and I like to think of it in terms of
new buildings per person of this country because our population's
going up. So the long term average is about every
year we built six houses for every one thousand people.
Speaker 3 (08:53):
That's the average.
Speaker 2 (08:54):
And during that big COVID boom, we got up to
ten houses per thousand people here in New Zealand, and
so you're like, okay, that's actually quite a large increase.
We were building two thirds more houses than normal during
that period. And the other reason there's a lot of
supply at the moment is if we look at those
dwelling consents and we match it up with sales, how
(09:18):
many properties are real estate agents actually selling. The number
of properties sold in New Zealand peaked in June twenty
twenty one.
Speaker 3 (09:26):
Now, at that point.
Speaker 2 (09:27):
As real estate agents stopped selling quite as many properties,
what did developers do. Did they think, oh, wow, there's
not as many properties being sold, I better not build
as many properties. No, they kept on buying land and
consenting properties and applying to build even more townhouses.
Speaker 3 (09:44):
And it happened for about a year.
Speaker 2 (09:46):
We still saw developers going like the clappers, having all
of this confidence, even as the market started to drop away.
Now two three years later, that's the reason why you
might see a lot of townhouses going up, and they
might might not all be full, they might not all
be sold right now. It's because developers two years ago
was still building even though the market was weakening.
Speaker 1 (10:08):
So given that these new builds are not slowing down
at all, at least not in Auckland. Could we get
to a point where we actually have more supply than
prospective buyers.
Speaker 2 (10:17):
So what I think we'll see is this period where
there's quite a lot of supply is going to be temporary.
Because it takes time to build a house somewhere between
twelve months and twenty four months, depending on the development
for apartments, it's going to be much longer than that.
And what we are still dealing with is the hangover
of all of that consenting that was happening in twenty
twenty two through to maybe early twenty twenty three. Right
(10:40):
now we are actually just back at that long term
average and have been for the last couple of months
of six new dwellings consented per thousand kiwis. And so
I'm pretty confident that if we move two years into
the future, you won't have that same supply of new
builds that are on the market and developers are really
struggling to sell. One of the other issues you have
(11:01):
at the moment, and why there is a little bit
of supply is some developers are not able to meet
the market. And what I mean by that is they
bought land when it was really expensive, they took out
loans and now they've built those houses, but they can't
sell them for what would be a fair market price.
And that's because they would take too much of a hit.
(11:23):
And so you've got some developers who are holding on
to completed stock and they are not willing and not
able to lower the price to a point where it
would actually clear the market.
Speaker 1 (11:47):
On the other side of the coin, obviously, is renters.
Going back to Wellington, I remember when UNI students and
public servants were fighting each other to get into some moldy,
leaky garden shed just to have a roof over their heads.
Ports in the last month of seeing landlords offering grocery
and patrol vouchers to try and get people to move in,
(12:07):
what's changed there.
Speaker 2 (12:09):
Oh, there's been a huge change to the rental market,
just massive. So if I take it back to twenty
twenty three, if you looked at the surveys of landlords,
way more landlords would say actually, it's really easy to
get a tenant, compared to those who say, actually, I'm
finding it a bit tough at the moment. At the moment,
a net twenty percent of landlords are saying actually it
(12:31):
is really tough to find a tenant, so way more
landlords are saying it's hard compared to those who are
saying it's easy, and we are seeing that turn into
either flat rents in most of the countries, so christ Church,
Auckland pretty flat at the moment. We're actually seen in
some parts like Wellington, rents just slightly decreasing.
Speaker 3 (12:49):
At the moment.
Speaker 2 (12:49):
There'll be some landlords who are increasing rents still some
who are decreasing it, but the average is falling.
Speaker 3 (12:55):
Awey bit. This is really coming down to a couple
of things.
Speaker 2 (12:57):
First of all, that supply question, where we saw way
more properties being built and so that supply is coming
onto the market. I think the other thing as well
is all of these keywis moving over to Australia. Seeing
so many keywis move over, that means they're leaving properties
that perhaps they've rented, and we are still seeing more
people arrive in New Zealand compared to those who leave.
(13:19):
Our net migration is positive in other words, but those
people coming in maybe they don't rent straight away, maybe
they stay with friends, so we're not seeing that have
that same impact on the rental market. It's not that
rents are massively declining, but it's that they are flatlining
compared to the average increases usually kind of four to
five percent, and so that is a sign that the
(13:41):
rental market is very soft.
Speaker 1 (13:43):
Right, So are we seeing favorable renter conditions like this
around the country.
Speaker 2 (13:49):
Across most of the country. Yes, But this is a
good point just because things are going poorly if you're
thinking about from a landlord's perspective at Wellington or Aukland,
or just because conditions are very very favorable for renters
in Auckland or Wellington. That's only part of the country.
So if I take you down to Southland, we are
seeing really strong rental signals down there. At the moment,
(14:12):
rents are going up by above that long term average.
In parts of Otago you were seeing that as well,
and so at the bottom of the South Island you're
seeing quite a strong rental market for most of the
rest of the country. If I look at trade means data,
what we see is that the number of searchers, the
number of people logging on and try to fight a
rental property, it's kind of plus or minus two percent
(14:33):
year on. Yes, some regions are a little bit up,
some are a little bit down. It's basically flat. The
supply of rental listings though the number of properties on
trade me on one roof on realestate dot co dot NZ,
those are up sometimes twenty five even thirty five percent,
depending on the month.
Speaker 3 (14:49):
You're looking at different story.
Speaker 2 (14:51):
Down in Southland we're actually seeing yep, rental listings might
be up by five percent, but rental demand those searchers
are up like ten percent. So it's that demand supply
story that means that Southland strong, but the main centers
are pretty weak at the moment.
Speaker 5 (15:06):
The thing that jumps out when you have a good
look at cropper market in New Zealand is that there
is no such thing. Yes, the property market in New Zealand,
it's been quite expert. We don't explicitly forecast different regions,
but when I look at some of the drivers, I
think you can see at the moment signs that the
housing market, in particular in the South Island is tighter
than it is in other parts.
Speaker 1 (15:26):
Of the country.
Speaker 5 (15:27):
So if you look at canabury Otago houses selling will
rapidly that are tighter in terms of demand versus supply
and sales to listing ratios and things like that. So
my senses that we will see those markets perhaps perform
a little bit more strongly than the average.
Speaker 1 (15:45):
Core Logic reckons property sales volumes will rise from about
eighty K to ninety K this year, citing lower mortgage rates.
Of course are the anticipation of a growing economy as well,
but they do mention further job losses on the horizon
might dampen the market a bit. Despite that, though they
say no doubt it will be a busier buying year.
Do you agree, Yeah.
Speaker 3 (16:06):
We're seeing that in the data.
Speaker 2 (16:08):
It depends what Every time you quote property data, there
are kind of three or four companies that put out numbers,
so I'll say numbers that are slightly different. When I
look at sales reported by real estate agents. There's definitely
been a rebound. We bottomed out at about fifty eight
thousand sales a year. That happened kind of early twenty
twenty three. That is way down from the peak. Like
(16:29):
the peak was like one hundred thousand properties sold in
a year, a lot of houses sold. Our long term
average is about eighty thousand. At the moment, we're sitting
just above seventy thousand, so we are below average. We've
curtedly recovered from the bottom, which was in twenty twenty three.
We are seeing more property transactions that probably will start
to go up towards that long term average of eighty thousand.
(16:52):
You know, maybe we'll get up to ninety thousand. I
probably don't think will happen there that this year. But
what's really fascinating as we are seeing those property volumes,
those property sales recover and recover quite strongly. It's up
thirteen percent year on year, but we are not seeing
that translate into higher prices for most of the country.
(17:12):
Now that's really good if you're a buyer because there's
a lot of stock out there on the market, so
there's a lot of listings online, makes it much more
likely that you're able to find that property that you
like and you're able to stag it at a price
that is pretty close to the bottom of the market.
So it's a great time to buy a property. In fact,
I wrote a piece late last year for One roof
talking about the reasons I was buying a property to
(17:34):
live in at that specific time because there are a
lot of good buying signals at the moment but what's
fascinating is as we are seeing those sales recover, we're
not seeing prices move just yet. And I think first
home buyers especially have a real opportunity.
Speaker 1 (17:47):
Right, So, overall, ed, what would your predictions be on
house prices, rents, housing supply, all that jazz for twenty
twenty five.
Speaker 3 (17:55):
So at the rest of gee the ball wrong.
Speaker 2 (17:56):
I'm going to give you numbers anyway, because that's what
most people want to know. I think that we will
see moderate house price growth. Now, what does that mean?
Kind of five percent? Six percent is what most economists,
most banks are kind of thinking.
Speaker 3 (18:08):
That's where most of our heads are at.
Speaker 2 (18:10):
In terms of housing supply, In terms of new dwellings consented,
I expect it will be a bit flat. If not,
i'd expect it to actually drop down just slightly, because
I know that developers are still struggling from a couple
of years ago. There are also a couple of new
rules out in Auckland, which of course is over a
third of our population. There are new rules that are
(18:31):
making it much more difficult to develop water care who
manages all of the water pipes. They've got new rules
where they're saying, well, if you build in this area
or that area, Yeah, you might have resource consent, but
we're actually not going to let you connect to the
toilets to our pipes until you do a few things.
So it's becoming more expensive for developers. That's going to
scare some of them off in our largest city. So
(18:51):
I would expect new dwellings to either kind of stay
flat go down a bit in terms of total listings
on the market. There is a backlog of properties that
need to be I think they will start to drop down,
but I don't think there's going to be huge pressure
for buyers in terms of lots and lots and lots
and lots of competition because we've got a backlog to
work through. Just to put that into context, if a
(19:11):
single property was not listed on any of those online platforms,
trade me one roof for the next half a year,
it would still take that half a year to clear
and sell all of those properties that are currently listed online,
because that's how many there are. There's about twenty four
weeks worth of inventory or inventory depending.
Speaker 3 (19:30):
On how you say it, available online.
Speaker 2 (19:32):
That compares to a ten year average of about eighteen weeks.
Speaker 3 (19:36):
Thanks for joining us, ED No trouble, happy to be
back any time.
Speaker 6 (19:42):
That's it for this episode of the Front Page. You
can read more about today's stories and extensive news coverage
at enzadherld dot co dot MZ. The Front Page is
produced by Ethan Sells and Richard Martin, who is also
our sound engineer.
Speaker 1 (19:58):
I'm Chelsea Daniels. Subscribe to the Front Page on iHeartRadio
or wherever you get your podcasts
Speaker 6 (20:05):
And tune in tomorrow for another look behind the headlines.
Yoda. I'm Chelsea Daniels and this is the Front Page,
a daily podcast presented by The New Zealand Herald. For
better or worse, house prices have been a cornerstone of
our economy for decades, but a rise in prices now
put home ownership out of reach for many kiwis. This
(00:28):
could be changing though. Wellington City is a new rateable
valuations show that on average, house values have plummeted twenty
four point four percent since twenty twenty one. It comes
as the city, which once made headlines for its hotly
contested rental market, is now seeing landlords fighting to fill
their homes. So is this a nationwide phenomenon? And it
(00:51):
is the dream of owning your own home becoming more
of a reality Today on the Front Page, co host
of Opus Partners, the Property Academy podcast and Mcknightter's with
us to run through the latest in property add a
twenty four point four percent decrease is a big drop
(01:12):
in any market. Why have the property valuations fallen so
much in Wellington?
Speaker 2 (01:17):
Well the main reason is they were last set when
property prices were really, really high. So Wellington City last
updated their CVS around about mid twenty twenty one, and
since their property values have really really fallen. In fact,
from their peak to their trough, Wellington City house prices
dropped closer to twenty seven percent.
Speaker 1 (01:37):
How big of a difference is there between property and
market valuations? Are different things considered?
Speaker 2 (01:44):
Yeah, So the way these cvs are set is a
lot of councils, and there are sixty seven different councils
around the country who set these cvs. They usually hit
up a company like qv which is a government owned company,
and they run a couple of algorithms very similar to
a Hobes dot co dot ed Z or a one
roof and they just spit out a whole heap of
property values. Now, the way they figure that out, well,
(02:05):
the way that algorithm runs is they look at what
properties are selling for right now, and that gives a
sense of okay, well what might your house actually be worth.
Speaker 1 (02:15):
Have we seen this drop happen nationally? I remember when
we last spoke, you mentioned a big eighteen percent drop
right after COVID. But where does that set long term?
Speaker 2 (02:25):
Yeah, so if we think about the country, it's eighteen
percent down from the absolute peak to the absolute trough. Now,
if we think about Wellington. Wellington got hit so hard,
and I'll tell you the reason why. It's because right
up into that peak in twenty twenty one, Wellington went
through two booms. So it actually started back in twenty sixteen.
Now that was the good old days if you were
(02:48):
buying a property in Wellington City because house prices had
been flat for like nine years. But what happened in
twenty and sixteen as Wellington property prices started taking off,
and they took off in most of regional New zeal
Then in twenty twenty, what happened where had the COVID
lockdown's interest rates came down? Wellington basically got a second boom,
and property prices just went up and up and up
(03:10):
and up.
Speaker 3 (03:10):
And that is the.
Speaker 2 (03:11):
Reason why from peak to trough, Wellington City prices they
dropped twenty seven percent, which is more than that eighteen
percent average around the country. Lower Hut they had it
even harder. They dropped thirty percent, and Upper Hut dropped
about twenty nine percent.
Speaker 3 (03:25):
So Wellington region as a whole they.
Speaker 2 (03:27):
Have really borne the brunt of this property value decrease.
And it's mainly because of what happened in the years
leading up to it. From twenty sixteen to twenty twenty one,
we had that double boom.
Speaker 1 (03:39):
What's Auckland done differently to Wellington to keep valuations pretty consistent?
Speaker 3 (03:44):
Well, two things happening there.
Speaker 2 (03:46):
First of all, Auckland house prices didn't go up by
quite as much of the preceding years, so little property
history lesson. From twenty twelve to twenty sixteen, Auckland house
prices boomed. They were really recovered after the GFC, and
then the Reserve Bank came out and introduced the LVR
restrictions and that slowed down the housing market in Auckland
(04:10):
because the Reserve Bank actually had tougher rules for Auckland
compared to the rest of the country. Then we saw
house prices slowed down and flatlined for four years. So
during the COVID boom, Auckland didn't have that same double
boom that we saw. But the other thing you've got
to remember is Auckland house prices still have been hit
really really hard. From pitt to Trough, property values fell
just under twenty four percent, but you might not see
(04:33):
the cvs are just quite as much where those new
values come out, just simply because it's all about, well,
when did the council last rerun those cvs. So if
you are in Wellington City, an area where the council
last set those cvs, where property prices were really high,
well you really notice it now because property prices are
(04:56):
full of lot. If you're at a different area, Totoga
comes to my BELI believe that they last set their
CVS with property prices words is close.
Speaker 3 (05:03):
To the peak and so you don't observe that same drop.
Speaker 1 (05:06):
And the latest Auckland property valuations were done in October
twenty twenty four, but have now been delayed into at
least May this year. Why do you think this might be?
Is something to be worried about.
Speaker 2 (05:17):
I wouldn't necessarily be worried about it, and I often
encourage people to not worry too much about the CV
because you've got to really understand what is this all about.
Your CV doesn't really tell you what your house is
going to sell for today. Because even if we think
about these Wellington CVS that have only just come out,
they were done in September twenty twenty four, they're five
(05:37):
months old, and the property market moves month to months.
So just because some algorithm five months ago said your
house was worth X, it doesn't mean it's actually going
to sell for that today. And even if you think
about some of these algorithms, they're not that accurate. So
if we think about stuff like homestock code on endz,
where you go online you see the homes estimate, even
(05:58):
though that is updated every single month. In fact, I
believe sometimes maybe even fortnightly, only about just over fifty
percent of properties will sell within ten percent of whatever
price that's show.
Speaker 3 (06:11):
Now let's put that into context.
Speaker 2 (06:13):
Let's say that your logo that says your property is
worth a million bucks, Well, you've only got just over
a fifty percent chance, just over a coin flip chance
of your properties selling for somewhere between nine hundred k
and one point one million dollars. And then you go, ah,
that's not that high a chance. It's actually not that accurate.
So the CV doesn't really impact what your house is
(06:35):
going to sell for, even though some people will try
to use it as a bit of a negotiation tactic.
Real estate agents offered here this idea, Well, I don't
want to pay above CV, but where it does affect
you is just the proportion of the rates bill that
you actually pay. So what some people think, especially when
cvs are going up as oh well, the council just
wants to put up a CV so that they can
(06:57):
collect even more rates and sped more money.
Speaker 3 (06:59):
That's it's not actually how it works.
Speaker 2 (07:02):
Because everybody at Wellington City you're seeing your CV go
down by twenty four to twenty five percent. Your rates
bills not going down by twenty five percent. It's probably
going up by ten to fifteen percent something like that.
All the cvs are used for is to divide up
the share or to determine how much of the total
rates are you paying.
Speaker 3 (07:22):
And the council basically.
Speaker 2 (07:23):
Says, if your house is worth a million bucks, well
you're probably a bit richer, so you're going to pay
more rates. If your house is worth half a million bucks,
well you don't have as much money as this other guy,
and so you're not going to pay quite as much rates.
That's what cvs are really used for. And I do
think that here a hell it do we read a
little bit too much into them.
Speaker 4 (07:45):
For years we've said that there's not enough housing and
so there's been a lot of pressure on that in
the last government.
Speaker 3 (07:50):
Rather than kind of fix the supply issue. They focused
on the demand. So they did.
Speaker 4 (07:55):
They introduced policies that were kind of anti lenl right there,
interested up to bill their roles. They made it tougher
to be a landlord, healthy homes, and trying to sort
of soften that demand from the investor side so that
it kind of took some of the heat out of
the market. Now this government's going on a different approach.
They're saying, well, actually, the way we fix it is supply.
Speaker 1 (08:18):
One of the big issues in this country for decades
has been housing supply, or lack thereof. Take your pick
of any random Auckland street and you'll come across about
ten townhouses where there used to be just two. How
much has that supply increased and how is that impacting
house prices?
Speaker 3 (08:35):
Well, it's increased quite a lot.
Speaker 2 (08:36):
We had a massive building boom during the COVID years,
and I like to think of it in terms of
new buildings per person of this country because our population's
going up. So the long term average is about every
year we built six houses for every one thousand people.
Speaker 3 (08:53):
That's the average.
Speaker 2 (08:54):
And during that big COVID boom, we got up to
ten houses per thousand people here in New Zealand, and
so you're like, okay, that's actually quite a large increase.
We were building two thirds more houses than normal during
that period. And the other reason there's a lot of
supply at the moment is if we look at those
dwelling consents and we match it up with sales, how
(09:18):
many properties are real estate agents actually selling. The number
of properties sold in New Zealand peaked in June twenty
twenty one.
Speaker 3 (09:26):
Now, at that point.
Speaker 2 (09:27):
As real estate agents stopped selling quite as many properties,
what did developers do. Did they think, oh, wow, there's
not as many properties being sold, I better not build
as many properties. No, they kept on buying land and
consenting properties and applying to build even more townhouses.
Speaker 3 (09:44):
And it happened for about a year.
Speaker 2 (09:46):
We still saw developers going like the clappers, having all
of this confidence, even as the market started to drop away.
Now two three years later, that's the reason why you
might see a lot of townhouses going up, and they
might might not all be full, they might not all
be sold right now. It's because developers two years ago
was still building even though the market was weakening.
Speaker 1 (10:08):
So given that these new builds are not slowing down
at all, at least not in Auckland. Could we get
to a point where we actually have more supply than
prospective buyers.
Speaker 2 (10:17):
So what I think we'll see is this period where
there's quite a lot of supply is going to be temporary.
Because it takes time to build a house somewhere between
twelve months and twenty four months, depending on the development
for apartments, it's going to be much longer than that.
And what we are still dealing with is the hangover
of all of that consenting that was happening in twenty
twenty two through to maybe early twenty twenty three. Right
(10:40):
now we are actually just back at that long term
average and have been for the last couple of months
of six new dwellings consented per thousand kiwis. And so
I'm pretty confident that if we move two years into
the future, you won't have that same supply of new
builds that are on the market and developers are really
struggling to sell. One of the other issues you have
(11:01):
at the moment, and why there is a little bit
of supply is some developers are not able to meet
the market. And what I mean by that is they
bought land when it was really expensive, they took out
loans and now they've built those houses, but they can't
sell them for what would be a fair market price.
And that's because they would take too much of a hit.
(11:23):
And so you've got some developers who are holding on
to completed stock and they are not willing and not
able to lower the price to a point where it
would actually clear the market.
Speaker 1 (11:47):
On the other side of the coin, obviously, is renters.
Going back to Wellington, I remember when UNI students and
public servants were fighting each other to get into some moldy,
leaky garden shed just to have a roof over their heads.
Ports in the last month of seeing landlords offering grocery
and patrol vouchers to try and get people to move in,
(12:07):
what's changed there.
Speaker 2 (12:09):
Oh, there's been a huge change to the rental market,
just massive. So if I take it back to twenty
twenty three, if you looked at the surveys of landlords,
way more landlords would say actually, it's really easy to
get a tenant, compared to those who say, actually, I'm
finding it a bit tough at the moment. At the moment,
a net twenty percent of landlords are saying actually it
(12:31):
is really tough to find a tenant, so way more
landlords are saying it's hard compared to those who are
saying it's easy, and we are seeing that turn into
either flat rents in most of the countries, so christ Church,
Auckland pretty flat at the moment. We're actually seen in
some parts like Wellington, rents just slightly decreasing.
Speaker 3 (12:49):
At the moment.
Speaker 2 (12:49):
There'll be some landlords who are increasing rents still some
who are decreasing it, but the average is falling.
Speaker 3 (12:55):
Awey bit. This is really coming down to a couple
of things.
Speaker 2 (12:57):
First of all, that supply question, where we saw way
more properties being built and so that supply is coming
onto the market. I think the other thing as well
is all of these keywis moving over to Australia. Seeing
so many keywis move over, that means they're leaving properties
that perhaps they've rented, and we are still seeing more
people arrive in New Zealand compared to those who leave.
(13:19):
Our net migration is positive in other words, but those
people coming in maybe they don't rent straight away, maybe
they stay with friends, so we're not seeing that have
that same impact on the rental market. It's not that
rents are massively declining, but it's that they are flatlining
compared to the average increases usually kind of four to
five percent, and so that is a sign that the
(13:41):
rental market is very soft.
Speaker 1 (13:43):
Right, So are we seeing favorable renter conditions like this
around the country.
Speaker 2 (13:49):
Across most of the country. Yes, But this is a
good point just because things are going poorly if you're
thinking about from a landlord's perspective at Wellington or Aukland,
or just because conditions are very very favorable for renters
in Auckland or Wellington. That's only part of the country.
So if I take you down to Southland, we are
seeing really strong rental signals down there. At the moment,
(14:12):
rents are going up by above that long term average.
In parts of Otago you were seeing that as well,
and so at the bottom of the South Island you're
seeing quite a strong rental market for most of the
rest of the country. If I look at trade means data,
what we see is that the number of searchers, the
number of people logging on and try to fight a
rental property, it's kind of plus or minus two percent
(14:33):
year on. Yes, some regions are a little bit up,
some are a little bit down. It's basically flat. The
supply of rental listings though the number of properties on
trade me on one roof on realestate dot co dot NZ,
those are up sometimes twenty five even thirty five percent,
depending on the month.
Speaker 3 (14:49):
You're looking at different story.
Speaker 2 (14:51):
Down in Southland we're actually seeing yep, rental listings might
be up by five percent, but rental demand those searchers
are up like ten percent. So it's that demand supply
story that means that Southland strong, but the main centers
are pretty weak at the moment.
Speaker 5 (15:06):
The thing that jumps out when you have a good
look at cropper market in New Zealand is that there
is no such thing. Yes, the property market in New Zealand,
it's been quite expert. We don't explicitly forecast different regions,
but when I look at some of the drivers, I
think you can see at the moment signs that the
housing market, in particular in the South Island is tighter
than it is in other parts.
Speaker 1 (15:26):
Of the country.
Speaker 5 (15:27):
So if you look at canabury Otago houses selling will
rapidly that are tighter in terms of demand versus supply
and sales to listing ratios and things like that. So
my senses that we will see those markets perhaps perform
a little bit more strongly than the average.
Speaker 1 (15:45):
Core Logic reckons property sales volumes will rise from about
eighty K to ninety K this year, citing lower mortgage rates.
Of course are the anticipation of a growing economy as well,
but they do mention further job losses on the horizon
might dampen the market a bit. Despite that, though they
say no doubt it will be a busier buying year.
Do you agree, Yeah.
Speaker 3 (16:06):
We're seeing that in the data.
Speaker 2 (16:08):
It depends what Every time you quote property data, there
are kind of three or four companies that put out numbers,
so I'll say numbers that are slightly different. When I
look at sales reported by real estate agents. There's definitely
been a rebound. We bottomed out at about fifty eight
thousand sales a year. That happened kind of early twenty
twenty three. That is way down from the peak. Like
(16:29):
the peak was like one hundred thousand properties sold in
a year, a lot of houses sold. Our long term
average is about eighty thousand. At the moment, we're sitting
just above seventy thousand, so we are below average. We've
curtedly recovered from the bottom, which was in twenty twenty three.
We are seeing more property transactions that probably will start
to go up towards that long term average of eighty thousand.
(16:52):
You know, maybe we'll get up to ninety thousand. I
probably don't think will happen there that this year. But
what's really fascinating as we are seeing those property volumes,
those property sales recover and recover quite strongly. It's up
thirteen percent year on year, but we are not seeing
that translate into higher prices for most of the country.
(17:12):
Now that's really good if you're a buyer because there's
a lot of stock out there on the market, so
there's a lot of listings online, makes it much more
likely that you're able to find that property that you
like and you're able to stag it at a price
that is pretty close to the bottom of the market.
So it's a great time to buy a property. In fact,
I wrote a piece late last year for One roof
talking about the reasons I was buying a property to
(17:34):
live in at that specific time because there are a
lot of good buying signals at the moment but what's
fascinating is as we are seeing those sales recover, we're
not seeing prices move just yet. And I think first
home buyers especially have a real opportunity.
Speaker 1 (17:47):
Right, So, overall, ed, what would your predictions be on
house prices, rents, housing supply, all that jazz for twenty
twenty five.
Speaker 3 (17:55):
So at the rest of gee the ball wrong.
Speaker 2 (17:56):
I'm going to give you numbers anyway, because that's what
most people want to know. I think that we will
see moderate house price growth. Now, what does that mean?
Kind of five percent? Six percent is what most economists,
most banks are kind of thinking.
Speaker 3 (18:08):
That's where most of our heads are at.
Speaker 2 (18:10):
In terms of housing supply, In terms of new dwellings consented,
I expect it will be a bit flat. If not,
i'd expect it to actually drop down just slightly, because
I know that developers are still struggling from a couple
of years ago. There are also a couple of new
rules out in Auckland, which of course is over a
third of our population. There are new rules that are
(18:31):
making it much more difficult to develop water care who
manages all of the water pipes. They've got new rules
where they're saying, well, if you build in this area
or that area, Yeah, you might have resource consent, but
we're actually not going to let you connect to the
toilets to our pipes until you do a few things.
So it's becoming more expensive for developers. That's going to
scare some of them off in our largest city. So
(18:51):
I would expect new dwellings to either kind of stay
flat go down a bit in terms of total listings
on the market. There is a backlog of properties that
need to be I think they will start to drop down,
but I don't think there's going to be huge pressure
for buyers in terms of lots and lots and lots
and lots of competition because we've got a backlog to
work through. Just to put that into context, if a
(19:11):
single property was not listed on any of those online platforms,
trade me one roof for the next half a year,
it would still take that half a year to clear
and sell all of those properties that are currently listed online,
because that's how many there are. There's about twenty four
weeks worth of inventory or inventory depending.
Speaker 3 (19:30):
On how you say it, available online.
Speaker 2 (19:32):
That compares to a ten year average of about eighteen weeks.
Speaker 3 (19:36):
Thanks for joining us, ED No trouble, happy to be
back any time.
Speaker 6 (19:42):
That's it for this episode of the Front Page. You
can read more about today's stories and extensive news coverage
at enzadherld dot co dot MZ. The Front Page is
produced by Ethan Sells and Richard Martin, who is also
our sound engineer.
Speaker 1 (19:58):
I'm Chelsea Daniels. Subscribe to the Front Page on iHeartRadio
or wherever you get your podcasts
Speaker 6 (20:05):
And tune in tomorrow for another look behind the headlines.
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