Real estate agents in South Auckland have noticed more property “flippers” in auction rooms this year. The speculators were targeting cheaper properties and hoped that a lift in the market would help them score a profit when they resold. Ray White’s Tom Rawson warns of risks as the market has not risen significantly, noting profits are often negligible – around $5000 to $10,000. Rawson says increased speculator activity is pricing out property traders, who buy neglected properties and renovate them to sell, with competition driving up auction prices.
Slump in building consents for new shops and warehouses (Source)
Building consents for retail premises and warehouses have plummeted to record lows. Statistics NZ figures show only 35 retail consents were issued in Q4 2024, a 24% drop from Q4 2023 and the lowest since records began in 1990. Warehouse consents fell to 66, a 30% decline, marking the lowest in 32 years.
The total consented floor space also hit new lows, with retail space at 21,110 sqm (second lowest since 1990) and storage space at 124,413 sqm (lowest since Q3 2019).
Despite this decline, building costs are soaring. Retail premises costs hit a record high of $4920 per sqm, while storage buildings cost $2142 per sqm, with all highs occurring within the last two years. This trend suggests construction remains focused on high-end projects.
Our view: With both warehouses and retail properties in our portfolio, this article is highly relevant to some of our investors. As with residential properties, a reduction in supply is expected, increasing demand for existing properties. Additionally, rising construction costs are making buying existing properties more attractive than building new ones.
Renters face record pressure (Source)
CoreLogic’s latest housing affordability report reveals that renting in New Zealand is tougher than it has been in at least 20 years. The median rent-to-income ratio remains at a record high of 28%, up from 26.4% five years ago and 25% ten years ago.
CoreLogic chief economist Kelvin Davidson notes that while homeownership is becoming more affordable, renting remains difficult, especially for lower-income households. Wellington has the lowest rental burden at 23%, while Christchurch and Dunedin face increasing costs.
Without wage growth or more affordable housing, rental costs will remain a significant challenge.
However, home affordability has improved since the peak, with the time needed to save a deposit dropping from 13.5 years to 9.8 years. Auckland and Wellington have seen the most significant improvements. Davidson says while housing is not cheap, it's more affordable now than it has been since pre-Covid-19, but more housing supply is essential to keep affordability in check.
Our view: Housing supply is a concern moving forward. We have all seen the articles about high construction costs and fewer building consents coming through the pipeline, which does paint a picture of reduced housing supply ahead. However, it is a great time for first-home buyers to get on the property ladder and those looking for investment properties to secure a property while there is plenty of choice in the market and more affordable house prices.
More listings than sales: How to sell your house (Source)
New Zealand’s housing market is stabilising, but selling remains challenging due to high stock levels keeping prices down.
In January, the nationwide ‘days to sell’ measure was 54, compared to 37 in January 2022 (Real Estate Institute figures). Available houses for sale increased by nearly 19% from the previous year.
Our view: There is a lot of stock available at the moment. It does create choice for buyers and less competition per house compared to when stock levels are reduced, at which time prices tend to increase due to demand.
What will happen to house prices this year? Major bank changes its mind (Source)
ASB has lowered its 2025 house price forecast from over 9% to 3.4%, citing sluggish sales and declining migration.
Overall, major bank economists are predicting moderate house price growth this year due to lower mortgage rates and a labour market recovery boosting consumer confidence. However, weak net migration is expected to limit growth in 2026.
Price growth predictions for 2025: ANZ (6%), BNZ (6.8%), Westpac (7.2%), Infometrics (5.6%), ASB (3.4%) and Treasury (3%).
Infometrics' expects lower growth than most banks due to high affordability and debt servicing costs, predicting no significant surge in prices.
Housing stock for sale passes a 10-year high on Trade Me Property (Source)
Buyers continue to have plenty of choice as residential property listings on Trade Me Property reached their highest level in over a decade in February, up 12% from last year. Despite supply outpacing demand, demand is rising, hitting a three-year high with an 8% increase from February 2024.
The national average asking price was $851,500, down 2.8% from last year. Wellington saw the largest annual price decline at -4.9%, followed by Auckland at -4.3%.
Stock growth was strongest in Otago (up 25%), with Wellington, Southland, and Canterbury all experiencing 19% growth.
Australian News
Melbourne house prices: Home buyers turn bullish after rate cut (Source)
Melbourne’s housing market recovery is forecast to gather steam as buyers embrace a better borrowing environment. Buyer sentiment rose 15.3% in March according to the Westpac Consumer Sentiment Index. The recent interest rate cut has boosted confidence, resulting in higher selling prices and increased competitive bidding.
Auction clearance rates in Melbourne remain strong at over 70%, while home values rose 0.4% last month. Mortgage pre-approvals have increased by 30%, with first-home buyers and investors eager to buy before prices rise again.
Demand for apartments is also improving, though supply remains high. The market outlook remains optimistic, with both local and interstate buyers showing interest.
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Have a relaxing weekend everyone.
From the team at Erskine Owen.
