Welcome to our latest update on the property market in New Zealand. Today, we are breaking down the shifting dynamics in the rental market, looking at why major banks are revising their house price forecasts, and exploring how recent legislative changes will impact your back pocket. We also share essential tips on navigating housing affordability and how to read your annual KiwiSaver statement effectively.

Key Takeaways for the Property Market in New Zealand

• Rental Imbalance: “Flatmates wanted” listings are up 18% nationally, while tenant inquiries have dropped 57%, largely due to seasonal trends and young Kiwis heading overseas.
• Revised Forecasts: Westpac and other major banks have lowered their house price growth predictions for the year, though none are predicting significant value drops.
• Legislative Relief: Recent July changes, including the end of the Auckland Regional Fuel Tax and the reduction of the Brightline test to two years, offer targeted financial relief.
• Affordability Strategies: Multi-generational living is rising as young Kiwis stay home longer to save for a deposit and leverage their KiwiSaver.
• KiwiSaver Check-Up: The Financial Markets Authority urges all New Zealanders to proactively review their annual statements, paying close attention to total returns and fees.

1. Room Listings Rise While Demand Drops

According to Trade Me Property, there has been a notable increase in rooms available for rent across major centres, yet fewer potential flatmates are interested. Nationally, the number of “flatmates wanted” ads has risen by 18% compared to last year. Auckland saw a 38% increase, Christchurch 26%, and Wellington City 5%.

However, online queries for these rooms have dropped by 57% nationally. Christchurch experienced the largest demand drop at 67%, followed by Auckland at 63% and Wellington City at 62%. Several factors are contributing to this, including a record number of young people leaving New Zealand for opportunities overseas, and others opting to live with relatives due to high living costs.

At Property Apprentice, our view is that winter typically sees lower tenant activity as most people avoid moving during the colder, rainy months. We expect an uptick in interest come spring, making this more of a seasonal fluctuation rather than a permanent long-term trend.

2. Major Banks Lower House Price Growth Predictions

Westpac has recently revised its house price growth forecast for this year, predicting a 2.1% increase instead of the previously anticipated 5.8%. This adjustment is largely due to sluggish market momentum and the impact of sustained high interest rates. Other major banks, including ASB, ANZ, and BNZ, have also softened their forecasts.

Despite the high interest rate environment, it is important to note that none of the banks are predicting a decrease in property values. While high rates significantly impact borrowing capacity, we anticipate the Reserve Bank of New Zealand (RBNZ) will lower the Official Cash Rate (OCR) before year-end, provided the economic data supports it. This should inject fresh activity into the property market in New Zealand. It is crucial for investors to remain optimistic and prepared for these potential shifts.

3. Legislative Changes Impacting Drivers, Parents, and Investors

Several recent legislative changes will affect Auckland drivers, parents, and property owners. Paid parental leave has increased to $754.87 per week, and early childhood education tax credits of up to $75 a week are now available. As Brad Olsen, Chief Executive and Economist at Infometrics, notes, supporting new parents is crucial amidst current financial challenges.

Additionally, the Auckland Regional Fuel Tax has ended, providing some much-needed relief at the pump. For property investors, the Brightline test has been reverted to two years. This means capital gains on investment properties sold within two years of purchase will be taxed, but properties held for longer than two years are exempt. However, be aware that several councils are planning significant rate increases to address infrastructure deficits, which may offset some of these household benefits.

4. Housing Affordability for Young Kiwis

Many younger New Zealanders are understandably frustrated by the current housing market. The affordability challenge has intensified, leading to a rise in multi-generational households as young adults delay moving out.

However, staying with parents longer can be a highly effective strategy to aggressively save for a deposit. Starting your financial planning early and optimizing your KiwiSaver can play a massive role in helping first-home buyers get onto the ladder. We firmly believe that young people should not be disheartened by negative media coverage. With the right financial strategies, education, and support, achieving homeownership is still entirely possible.

5. How to Read Your Annual KiwiSaver Statement

Stuart Johnson, Chief Economist at the Financial Markets Authority (FMA), stresses the need for all Kiwis to assess their annual KiwiSaver statements carefully.

These statements provide vital insights into your contributions, current balances, investment returns, and the fees you are paying. Understanding your net returns and evaluating those fees is crucial for ensuring your retirement savings are working as hard as you are.

Engaging proactively with your KiwiSaver is essential. If you need help translating the numbers, consider consulting an independent financial adviser. At Property Apprentice, we offer comprehensive KiwiSaver and financial planning as part of our core services, ensuring our clients make the best long-term financial decisions.

Ready to Secure Your Financial Future?

Whether you are looking to buy your first home or expand your investment portfolio, having a solid strategy is essential in the current property market in New Zealand. We are here to help and guide you.

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(Disclaimer: Property Apprentice provides education and general information. The content in this article does not constitute personalized financial advice. We always recommend seeking advice from a qualified professional before making investment decisions.)