Monthly Landlord Newsletters

Prices in the market are changing, and first-time homebuyers are making moves

First time homebuyers are finally able to enter the market again after months and months of inaccessible prices at the bottom of the market. According to Interest, selling prices in the Bay of Plenty decreased by over $96,000 from December 2022 to January this year. Other regions marking a similar drop include Manawatu/Whanganui, Auckland, and Nelson/Marlborough.

Waikato and Hawke’s Bay were the only regions that reported an increase in selling prices.

Following the recent decline in prices, there are presently six regions throughout the country where the lower quartile selling price has dropped by over $100,000 since reaching its peak in November 2021, these are:

• Auckland -$216,000
• Bay of Plenty -$104,000
• Hawke's Bay -$107,500
• Manawatu/Whanganui -$105,000
• Wellington Region -$165,000
• Nelson/Marlborough -$117,000

The lower quartile price in Otago has also decreased to $99,500, which is just below $100,000. Nationally, the lower quartile price has fallen by $93,000 since its peak in November 2021.

In addition to the drop in house prices, first-time homebuyers were also able to take advantage of steady mortgage interest rates. The major banks' average two-year fixed rates remained at 6.58%, the same as in December 2021. This combination has created a more favorable situation for aspiring homebuyers. However, this may not last for long as the Reserve Bank plans to review interest rates as early as this week.

Flooding and cyclone damage is changing the rental market in Auckland

Demand for Auckland rentals has completely soared in the past year, and property managers are attributing the most recent interest to the impacts of severe weather. Propertyscouts Director, Ryan Weir provided comment for a recent Stuff article that highlighted the impact flood displacement is having on the demand for rental properties in the region.

Fully furnished units are of highest interest to this displaced community, though they’re far and few between, thanks to many being listed on Airbnb and unavailable for long-term rental.

The increase in demand has been further bolstered by tertiary students returning to school and renting flats, loosened immigration guidelines, and increased tourism taking homes away from traditional rental and into Airbnb.

While the additional demand is expected to put pressure on rents temporarily, we’re yet to see a significant increase in rental prices, so renters affected by floods aren’t facing an additional pressure at this time.

Thankfully, the increase in demand is expected to ease, especially as homes in the flood zones are remediated and placed back on the market or residents can move back in (as was the case following the Christchurch earthquakes).

House prices continue their downward slide

For more than a year now, house prices have been on a steady decline, and most experts agree that the trend won’t end anytime soon. House prices peaked in 2021, and, after a massive spike, they’ve been falling ever since. Latest numbers from the Real Estate Institute indicate that prices are down 16.2% since their peak in 2021. While the market is expected to stabilise eventually, buyers and market watchers are a bit uneasy wondering when that will happen.

More than 90% of people in a recent survey ventured to guess that the market won’t even out until at least mid-2024, though other experts think the bottom will happen by the end of 2023. Prices may fall up to 20% before they hit bottom, which is concerning, since interest rates are expected to increase to slow inflation.

Regardless, most market watchers aren’t expecting a quick recovery after this prolonged downturn.

Rental Property Damage - Who’s Responsible for the Repairs and Costs?

From faded curtains to wine stains on the carpet, there are different types of rental property damage that landlords and tenants should be aware of. But who is responsible for covering the cost of repairs? We’ve developed a free guide that breaks down each type of damage, explains who is responsible for the repairs, and who is liable for the costs. Check it out now: www.propertyscouts.co.nz/tenants/tenant-resources/rental-property-damage

Tony Alexander Investor Insights Summary

Key points from this month’s investor insights are:

• The Reserve Bank released their review of monetary policy settings, and people were interested to see how they would respond to Cyclone Gabrielle and how they would weigh indicators of inflation.
• The Reserve Bank chose to treat both as transitory shocks, so they’re not planning on imposing a monetary policy response.
• They increased the official cash rate by 0.5%, matching market expectations.
• Consumer sentiments and spending intentions are still very low.
• Quote from the Reserve Bank about inflation: “While there are early signs of price pressure easing, core consumer price inflation remains too high, employment is still beyond its maximum sustainable          level, and near-term inflation expectations remain elevated.”
• Very special low rates are being offered by some banks to support them meeting mortgage sales targets.
• Thanks to the Reserve Bank’s excessive bond buying between 2020-22, deposit rate rises are expected to be limited.
• Investors should take up the low rates offered by banks, but they shouldn’t expect one-year swap rates to start dropping any time soon.

Agents turn to hard data to manage a tough market

According to CoreLogic, real estate agents are using data to support them in a challenging market. Since the peak of market values, agents have been faced with reduced buyer confidence and prolonged sales periods. In response, they’re turning to data about hyper-local markets to make more informed choices about prospective opportunities.

Data is helping agents stay informed about suburb and market trends, insights for prospective buyers, and high-opportunity listings give agents a competitive edge. Securing listings and making sales is easier with more information, and that can be a lifesaver in a declining market.

Seasonal Update: Autumn is Coming, and Winter is Right Behind It

March is here! Early autumn is the best time to prepare for the worst of winter before it gets too cold. Here are a handful of things your property manager can organise that will help prepare your rental property for cooler weather.

A gutter clean

With falling leaves and debris during autumn, it's important to ensure gutters and downpipes are clear to prevent blockages and potential water damage.

A roof inspection

Autumn is also a good time to inspect the roof for any signs of damage or wear and tear, and make any necessary repairs before the wetter months set in.

An annual heat pump service

Landlords have an obligation to keep heaters in good working order and efficiency is key in the colder months. Having your heating system serviced before winter will ensure it's working efficiently and will reduce the risk of breakdowns when your tenants need it most.

If you would like to request any of the above services, get in touch with your property manager who can facilitate the work on your behalf.

The Scouting Space

At Propertyscouts, we're all about making your life easier. That's why we created The Scouting Space – a platform that connects you directly with credible developers and industry experts.

No more going through third parties or dealing with unnecessary hassle. With The Scouting Space, you get access to exclusive property investment opportunities and the chance to connect with experts who know the industry inside and out.

If direct access without the middleman sounds like a bit of you, register your interest in The Scouting Space today: www.propertyscouts.co.nz/the-scouting-space.

Quote to Ponder

"Most people think buying is investing, but they’re wrong [it] doesn't make you an  investor any more than buying groceries makes you a chef."

            -Gary Keller

We love this quote because we feel it’s important to remember how much work goes into investing. So many people think that passive income is just that: passive, simple, easy. Rather, real estate investing takes a lot of decision making, risk assessment, care, and commitment. Becoming a chef is hard work: it’s so much more than buying groceries! It takes research, mentors, taking risks, and lots and lots of practice. Investing is like that, too.

True investors understand the work that goes into it. They know that the skills and know-how don’t come overnight. Instead, there is so much trial and error, making mistakes, learning on-the-go, and gaining valuable experience over time.

What is investing like for you? Do you feel like a chef, or a grocery shopper?

Disclaimer

Given the opinions expressed in parts of the email it’s important that we make it clear that the contents are opinions and observations and made in good faith.   

Propertyscouts NZ (2020) Limited, trading as Propertyscouts, and its associated parties (including directors, agents, employees, officers or otherwise) have attempted to provide   this information to the best of their ability but do not make any representations or warranties of any nature (intended or implied) as to the accuracy of the information on this communication. All recipients of this communication should conduct and rely on their own enquiries in relation to the information on this communication.

The information available on the properties listed for sale, rent or otherwise, has been obtained from the vendor or landlord of the property and the appropriate professional service providers. We do not and cannot verify or guarantee the accuracy of the information obtained in relation to the properties.

The information and/or materials available in this communication are intended to be general information only and may be changed at any time, without notice to you. The information and/or materials in this communication should not be relied on under any circumstances as a substitute for legal, financial, real estate, or other professional and/or expert advice. To the maximum extent permitted by law, Propertyscouts and its associated parties disclaim all liability, responsibility, and negligence for any direct or indirect loss or damage suffered by any person arising from the information and/or materials presented in this communication or any information and/or materials that arise from it.