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RNZ News
3 hours ago
- Business
- RNZ News
Rents fall for first time since 2009
Auckland's rents were down almost 2 percent year-on-year. Photo: RNZ Rents have fallen on an annual basis for the first time since late 2009, property research firm Cotality says. Its latest data points to an update from the Ministry of Business, Innovation and Employment, which showed national median rents in the three months to May were down 0.3 percent from the year before. It follows reports of drops in the price being asked for advertised rental properties . Cotality chief economist Kelvin Davidson said it was a notable change after big rental increases between 2021 and 2023. "I think it's quite significant. There aren't many periods in the past where rents have fallen. The latest numbers are only down slightly but you have to go back to 2009 to find a period where annual rental growth on these numbers has been negative and before that it was the late 1990s. So around the Asian financial crisis and the GFC." He said it showed a shift in the market. Auckland and Wellington had experienced bigger drops. Auckland's rents were down almost 2 percent year-on-year. Dunedin experienced strong rental growth, up almost 10 percent. Hamilton's were also up, but only about 4 percent. "I'm not saying it's easy to be a tenant by any means but the growth rate has petered out. That's consistent with the fact that rents are already high. That's a natural handbrake on any further growth, as well as migration coming down to reduce the marginal extra demand for property. And of course more listings on the market too." He said a change in the composition of the rental market, with more, smaller, properties coming on to the market could have influenced the drop but would not be the full story. Davidson said it should not be expected that rents were going to decline steadily for a long period of time. "What's more likely is that you get a long flat patch and that's how the rental market tends to adjust, the rents go flat for a while and affordability is improved by incomes going up. "Of course the flipside is for landlords there's going to be continued challenges in terms of getting rental increases through if that's what they're looking to do." The data showed house price values nationwide increased 0.2 percent in June but were down 0.1 percent over three months, In the 12 months to June, 85,951 properties changed hands. The average gross rental yield now stand at 3.8 percent, which is the highest level since mid-2016. This measures rental income as a proportion of the value of property. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
RNZ News
3 hours ago
- Business
- RNZ News
Rents fall for first time sine 2009
Auckland's rents were down almost 2 percent year-on-year. Photo: RNZ Rents have fallen on an annual basis for the first time since late 2009, property research firm Cotality says. Its latest data points to an update from the Ministry of Business, Innovation and Employment, which showed national median rents in the three months to May were down 0.3 percent from the year before. It follows reports of drops in the price being asked for advertised rental properties . Cotality chief economist Kelvin Davidson said it was a notable change after big rental increases between 2021 and 2023. "I think it's quite significant. There aren't many periods in the past where rents have fallen. The latest numbers are only down slightly but you have to go back to 2009 to find a period where annual rental growth on these numbers has been negative and before that it was the late 1990s. So around the Asian financial crisis and the GFC." He said it showed a shift in the market. Auckland and Wellington had experienced bigger drops. Auckland's rents were down almost 2 percent year-on-year. Dunedin experienced strong rental growth, up almost 10 percent. Hamilton's were also up, but only about 4 percent. "I'm not saying it's easy to be a tenant by any means but the growth rate has petered out. That's consistent with the fact that rents are already high. That's a natural handbrake on any further growth, as well as migration coming down to reduce the marginal extra demand for property. And of course more listings on the market too." He said a change in the composition of the rental market, with more, smaller, properties coming on to the market could have influenced the drop but would not be the full story. Davidson said it should not be expected that rents were going to decline steadily for a long period of time. "What's more likely is that you get a long flat patch and that's how the rental market tends to adjust, the rents go flat for a while and affordability is improved by incomes going up. "Of course the flipside is for landlords there's going to be continued challenges in terms of getting rental increases through if that's what they're looking to do." The data showed house price values nationwide increased 0.2 percent in June but were down 0.1 percent over three months, In the 12 months to June, 85,951 properties changed hands. The average gross rental yield now stand at 3.8 percent, which is the highest level since mid-2016. This measures rental income as a proportion of the value of property. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
RNZ News
16-07-2025
- Business
- RNZ News
The return of the property investor - but why?
The rebound is being driven by investors who own up to four properties, says Cotality. Photo: RNZ Investors seem to be returning to the property market - but why? Cotality has released its latest property data, which shows that while first-home buyers remain a strong presence in the market, investor activity is picking up. Mortgaged multiple property owners were responsible for 23 percent of purchases in the second quarter, up from 21 percent in the middle of last year. In Auckland and Christchurch, they were 26 percent of transactions. Cotality chief economist Kelvin Davidson said the rebound was being driven by investors who owned up to four properties including their own home. Their share rose from 12 percent to 14 percent. They seemed to be targeting the more affordable end of the market, he said. Their share of purchases in the bottom 30 percent of properties by price rose from 21 percent last year to 24 percent so far this year. They were also more likely to buy existing properties, compared to last year, which Davidson said was probably driven by the absence of the tax advantage that used to come with buying a new build. But forecasts for capital gains are soft. Infometrics expects house prices to be 20 percent lower than 2021's peak in real terms even next decade . Rents have also been forecast to be subdued well into next year . Migration is weak and there has been a lift in housing supply, which keeps the pressure off prices. "If you're thinking about the future, well, the tax system might not be quite so favourable for property, the Government's pushing pretty hard on land supply," Davidson said. "We've got debt-to-income ratio restrictions now and that long-term downward trend in interest rates can't be repeated so I think there are reasons to be fairly cautious about future capital growth rates. "I speak at a few investor events and investors are certainly concerned about costs such as council rates going up." So what is pulling investors in? Davidson said property was still a "trusted" asset class. "Even if you think capital gains will be lower in the future there will probably still be some capital gains and people have still got their trust factor - they can still see the property, they kind of vaguely know how it works. "That's still a factor as to why people are buying rental properties." He said the changes to the loan-to-value restrictions and brightline test had helped, and the reintroduction of investors' ability to offset their interest costs against their income for tax purposes. "For me the biggest thing is lower interest rates. If you go back to the middle of last year when interest rates were still pretty high, a top up on a standard rental property could have been $400 or $500 a week - that's pretty chunky for your average mum and dad. Come forward to now and it might be $200 a week. It's still there but it's a lot lower than it was. That's a really big factor." He said it would not be a bad thing for investors to focus on the cost and income of a rental property rather than buying purely for the hope of capital gains. Sarina Gibbon, general manager of the Auckland Property Investors Association, said it did seem counterintuitive for investors to be more active. "I reckon it is to do with long-term confidence in the resilience of property as an investment vehicle. The 'headwinds' are very much perceived as short-term turbulence. "Overall, there is still a deeply seated belief among Kiwis that property will hold its value better than most other assets over time. Additionally, the sort of control and leveraging power you get with property, you're just not going to get that with anything else. "There are also some really interesting paradoxical forces at play. It seems like the weaker the economy gets, the more people are convinced about second or alternative income streams. And property still delivers that overall stability and confidence for Kiwis as a way to support and provide for their families. "So what we are seeing isn't a bet on capital gains, it is a hedge against the fading dream of upward mobility. Amongst investors, property is becoming less about wealth creation and more about income replacement. In terms of narrative, we've definitely moved away from the Covid era of FOMO, 2025 property investment is very much Plan B." Infometrics chief forecaster Gareth Kiernan said the growth was coming off a low base. "If you look at the number of investor mortgages over the last year… the total of 32,284 is still lower than at any time between 2015 and February 2022. "I don't see a lot of substance to the pick-up, or the growth being sustained, particularly when you look at how negative the trends are in rents at the moment, the fact that net migration and population growth are still easing, and consent numbers of about 34,000pa are substantially above underlying demand for new housing. "Part of the growth over the last year or so is likely to have been driven by more favourable tax treatment for mortgage interest making the numbers financially a bit more attractive …the reduction in the brightline test to two years meaning people are perhaps more willing to take a shorter-term punt on capital gains. The decline in interest rates will also have led to people looking for better returns thank banks are offering, which might have helped buoy investor demand for property a bit." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
RNZ News
08-07-2025
- Business
- RNZ News
House building costs rise at strongest rate in nearly two years, Cotality index shows
EMBARGOED UNTIL 0001 WEDS JULY 09 House building costs have risen at their strongest rate in nearly two years, according to Cotality's Cordell Construction Cost Index. Photo: RNZ House building costs have risen at their strongest rate in nearly two years, suggesting the slowdown in cost growth has reached the bottom. Cotality's Cordell Construction Cost Index showed a growth rate of 0.6 percent for the three months ended June, for an annual rate of 2.7 percent, the strongest since the third quarter of 2023. Chief property economist Kelvin Davidson said the increase was partly a reflection of the removal of a 1.1 percent fall a year ago and might not signal a return of price pressures. "Although the annual growth rate has nudged higher, it's important to recognise this is more about base effects than any significant reacceleration." Cotality chief property economist Kelvin Davidson. Photo: SUPPLIED At the peak of the pandemic building costs surged 10.4 percent, and the long term average was 4.2 percent, but Davidson said the sector had seen increased spare capacity as the number of houses being built has fallen sharply . "That decline has taken the heat off both wages - which account for around 40 percent of the index - and material costs, which represent roughly 50 percent." The index is based on the cost of building a standard single storey three bedroom house, with two bathrooms in brick and tile. The report showed varying price moves among key materials with weatherboard 6 percent higher but decking timber and ceiling batts 1 percent cheaper. "Cost movements are now being driven by specific supply and demand dynamics rather than broad-based inflation," Davidson said. However, he said building costs remained high even if the growth was contained. "Households can be more confident costs won't run away during a project, but the total cost to build remains a hurdle. With ample existing stock on the market, builders may still face challenges attracting new projects in the short term." Davidson expected a gradual pick up in the construction sector with population growth, easing interest rates and the loan-to-value and debt-to-income lending restrictions favouring new builds. "Cost growth may well have bottomed out, with some renewed upward pressure possible in 2026. But a return to the double-digit growth rates of 2022 seems unlikely." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
Business Times
03-07-2025
- Business
- Business Times
New Zealand house-price recovery remains modest, says consultancy
[WELLINGTON] New Zealand house prices rose for the first time in three months, adding to signs of a modest recovery as interest rates fall. Prices gained 0.2 per cent in June from May, when they dropped 0.1 per cent, property consultancy Cotality said on Thursday (Jul 3). That lifted values back to February levels, while the 0.7 per cent annual decline was the smallest since September. New Zealand's property market lacks any strong momentum even after an aggressive series of rate cuts by the central bank, mainly because of a large overhang of houses for sale that favours buyers and keeps a lid on values. A sluggish economy and rising unemployment are also curbing enthusiasm to borrow. 'The subdued labour market remains an important factor,' said Kelvin Davidson, chief property economist at Cotality in Wellington. 'It's not only the direct job losses that are problematic, but a reduction in security for those who have kept their jobs will also be weighing on the property market.' Filled jobs are down to levels last seen in early 2023 as global uncertainty makes employers cautious about hiring. Economists expect the jobless rate to creep higher this year from 5.1 per cent in the first quarter. The interest rate on a two-year fixed-rate home loan is below 5 per cent at most local banks, the lowest since March 2022, although it is uncertain how much further borrowing costs will decline. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up The Reserve Bank of New Zealand (RBNZ) has cut the Official Cash Rate (OCR) by 225 basis points to 3.25 per cent but in May removed an explicit easing bias, and economists at the four largest local banks expect policymakers will pause at next week's meeting. There is less than a 50 per cent chance of the OCR falling below 3 per cent this year, swaps data show. House prices have risen less than 1 per cent in the six months to June, and Davidson expects no more than a 3 per cent increase for the year to December, less than the 5 per cent he had previously projected. The RBNZ has projected 3.5 per cent. 'For every upwards influence on the housing market at present, you can probably find a downwards factor,' he said. 'In this environment where buyers have the upper hand and economic sentiment remains subdued, it's hard to see these flat market conditions suddenly turning around within a month or two.' BLOOMBERG
