Welcome to our Weekly Property Roundup, with the latest property market news.
Here are the articles of interest from the week:
First up, there were several announcements from Housing Minister Chris Bishop this week:
Bishop's backtrack delays housing reform to 2027 (Source)
In a speech to the Property Council summit in Auckland on Thursday, Bishop admitted the National Party’s housing reforms won’t be fully implemented until 2027 due to delays and resource management changes.
National had previously scrapped the bipartisan housing agreement and the MDRS (medium-density residential standards), allowing councils to opt out of denser housing rules. However, no council has formally adopted the alternative policy. Reforms will instead be phased in alongside a new Resource Management Act that will standardise zoning nationally, making development easier and limiting council regulations.
In the meantime, the Government will offer cheap loans to developers for building on city outskirts, repaid by homeowners through levies. (See article below). Rules will also be changed to allow housing on lower-quality agricultural land, enabling urban expansion before denser housing policies take effect.
Our view: It is positive for the country to see action being taken to increase its housing supply. Recently, Kāinga Ora began selling around 200 properties in Auckland's more expensive areas, aiming to use the funds to build more homes elsewhere. This development will likely occur in greenfield areas where more growth is being encouraged. It will be interesting to see the new RMA later this year and how this takes shape moving forward; however, once implemented, such changes typically take time to take effect.
New funding lines coming for housing developers, Chris Bishop says (Source)
Housing Minister Chris Bishop this week also announced a new scheme providing low-cost funding for housing developments.
The Greenfield Model involves NIFFco (the Government’s National Infrastructure and Financing Agency) lending to a Special Purpose Vehicle at competitive interest rates during early development. Once projects are complete, private markets refinance the debt, and homeowners repay it via a levy. Bishop said the development phase of a project is the riskiest and private financiers reflect this by charging higher interest rates. “This support will bridge the financing gap and help ensure that new homes continue to be built in areas where they are needed most,” he said.
Bishop also announced the removal of LUC-3 land protections that restricted development on lower-quality agricultural land. The Government will consult on creating special agriculture zones to protect key horticultural areas like Horowhenua and Pukekohe.
'Capital city of growth': central Auckland plan change to allow taller buildings and more development brought forward (Source)
Auckland Council has until May 30 to decide on upzoning and extra development capacity in the central city, following a directive from Housing Minister Chris Bishop. This accelerates part of Plan Change 78 (PC78), originally notified in 2022 to comply with Government policies and directives to liberalise planning rules and free up housing supply.
For the central city, PC78 aims to increase building heights, with unlimited heights in the city core and up to 72.5 metres elsewhere. The Independent Hearings Panel (IHP) has already heard submissions for the city centre central city and is expected to make recommendations in time for the council to make decisions by May 30.
Bishop, speaking at the Project Auckland launch, said current planning laws were broken and bringing forward the central city part of PC78 would bring forward decisions on the city centre by 10 months from the previously required date of March 2026 to May 2025.
“This will almost immediately support the enablement of thousands of dwellings and significant development potential in the heart of Auckland – where basically everyone accepts this kind of growth is critical,” he said.
BNZ's chief economist sticks with prediction of 7% house price growth this year (Source)
BNZ economists are sticking with their prediction of a 7% rise in house prices this year. In the bank’s Property Pulse Report, chief economist Mike Jones says mortgage rates have fallen enough to encourage buyers, despite rising costs like local rates and insurance.
However, Jones warns the abundance of housing supply could weaken the usual link between sales and price growth, and economic or political uncertainty might slow market activity. He expects gradual, steady growth, but not the rapid boom seen in 2020-2021.
Now is the time to buy a house, buyers tell Trade Me (Source)
New data from Trade Me shows two-thirds of people think it’s a good time to buy a house (up from 53% in October 2024), which Trade Me attributes to falling interest rates and a changing market. But even though listings are at a 10-year high, buyers are still struggling to find suitable properties. Regional interest is growing, partly due to remote work. Nearly half of respondents expect prices to rise, and Trade Me predicts continued market positivity in the coming months.
Our view: Lower mortgage rates have certainly attracted more buyers to the market. However, supply remains high, which benefits buyers by giving them more choice. Getting vendors' expectations to align with buyers' can be a challenge, but over time, this should stabilise, and sales increase.
Will RMA change mean cheaper houses? (Source)
Changes planned for the Resource Management Act (RMA) should reduce house prices and improve supply – provided they are able to be enacted, economists say.
The government plans to replace the Resource Management Act (RMA) with two new laws by the end of the year to streamline planning, lift the number of permitted activities, and set environmental limits, which should reduce administrative and compliance costs by 45%.
Economists say the changes should boost housing supply, limit house price growth and improve access and affordability, but warn changes will take years to bed in and show results.
While the proposal marks a significant shift, it must be effectively implemented and withstand political changes. Experts stress the need for bipartisan support and thorough consultation to ensure lasting reform.
Building supply costs track up, builders forced to pass on hikes (Source)
Price hikes for building supplies have disappointed the residential build market where margins are already thin, with builders saying they’ll have to pass on the costs.
The NBR reports ASX-listed weatherboard and cladding supplier James Hardie is the latest to announce a 4% price rise across the board. Fletcher Building’s Comfortech Building increased prices for Pink Batts insulation by 4% last month and Winstone Wallboards increased Gib by 3.9%.
ITM was expecting price increases of under 5% across key products such as plasterboard, insulation, fibre, cement and plywood.
Generation Homes said there was little firms like his could do to control external costs.
Data from credit bureau Centrix points to the impact of tighter building conditions, with residential builder failures up 28% last year and construction businesses deemed 2.3 times more likely to fail than other firms.
The Certified Builders Association said there are builders who have no pipeline of work who are finding it tough, with some looking to exit their business.
Australian News
Australia property market: Wealthy suburbs turn to buyers' markets as house prices slump (Source)
Australia’s wealthiest suburbs have become more favorable for high-end buyers after house prices slumped by as much as 13% in some areas over the last year, which means buyers priced out of Sydney’s eastern suburbs, the inner west and northern beaches, along with Melbourne’s inner south can pick up houses discounted by up to one million compared to their median selling price last year.
The premium housing market has responded positively to last month’s decision by the Reserve Bank Australia (RBA) board to cut rates by 25 basis points and has started to show early signs of a turnaround. But the head of research at Cotality (formerly CoreLogic), said it would take some time for prices to take off.
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Have a fabulous weekend everyone.
From the team at Erskine Owen.
