Housing Minister Chris Bishop this week unveiled Kāinga Ora’s turnaround plan to refocus the agency after a period of financial strife.
It includes the sale of about 900 of its older houses a year, but new builds would ensure no net reduction in state houses from the current total of about 75,000.
The focus would be older properties in high-value areas, with proceeds going to provide other units in different areas.
The Cabinet paper said one of the reasons for prioritising the sale of older homes in more expensive suburbs was because of restrictive planning rules. Large areas of inner Auckland, for example, are subject to character protections.
Kāinga Ora would refocus on its core role as a social housing landlord.
Average Wellington house prices plummet nearly 25 percent in latest official valuations (Source)
New rating valuations are due to drop in Wellington, and they show average house values in the Capital have plummeted nearly 25% over three years.
Compared to the 2021 valuations, the new valuations (September 2024) show the value of residential housing has dropped on average 24.4%, with the average house value now sitting at $1,086,000.
The average land value fell 36.7% to an average of $62,000 over the three years.
QV says RVs are like a snapshot of the market at a point in time and between 2021-2024 the sentiment had changed from being a sellers’ market to a buyers’ one.
Where are the mortgagee sales? (Source)
More Kiwis are struggling to keep up with their home loan payments, with mortgage arrears rising by 7% to represent 1.5% of mortgage lending as of December 2024, affecting 22,100 mortgages.
Despite the increase in reported financial hardships (19% over the year to December), with many linked to mortgage repayments—there have been few mortgagee sales, with banks being more actively speaking to customers who are struggling with repayments. Instead of resorting to sales, banks were actively restructuring loans and deferring payments instead or encouraging borrowers to put it on the market themselves.
Our view: The banks are aware that we’re currently in a buyer’s market, and they understand that by supporting homeowners through temporary financial difficulties — even if the homeowner is struggling to keep up with payments — the property's value may increase over time. This strategy creates a better chance for the bank to recover their investment when the property is eventually sold.
Number of homes for sale in January hits 10-year high (Source)
January saw the highest number of homes on the market in a decade, with 32,412 properties for sale—5,000 more than January 2024. That’s the highest January stock since 2015, particularly for Auckland, with more than 11,465 listings (the most since 2012).
Realestate.co.nz said the data highlights slower selling times, and there had been a significant increase in listings for secondary homes up for sale in popular holiday spots like Coromandel and Pauanui.
Despite the spike in listings, asking prices remained stable, with the national average at $868,969, down just 1.3 percent year-on-year.
The market could become more appealing to buyers as interest rates declined.
New dwelling consents down a third last year compared to 2022 peak (Source)
The value of building work for new housing in New Zealand dropped nearly $5 billion in 2024 compared to the peak in 2022. Construction of new homes may be down by about a third this year compared to the 2020/21 peak, as the number of residential building consents continues to fall.
Statistics NZ reports 33,660 new dwellings consented in 2024, down from 37,239 in 2023 and well down on the 49,538 and 49,007 consents in 2022 and 2021, respectively—reflecting a 32% decrease from the 2022 peak.
Standalone houses remained the most popular type of dwelling, with 15,780 consented last year (down 21,400 or 26% on 2022). Townhouses and home units saw a similar decline, with 14,141 consents (down 32% from 2022). Apartment consents fell sharply by 55% to 1,981, while retirement village units fell by 43% to 1,698.
The total estimated value of building work consented for new dwellings, excluding land, was $15.36 billion last year, down from $16.46 billion in 2023 and $20.23 billion in 2022 - a 24% drop over the past two years.
Our view: The issue of less consents is concerning simply because it means that we are likely going to be short on housing at some point in the future. When there are less properties, competition for existing stock increases, pushing house prices up.
Economist warns Kiwis not to 'bet the house' on housing market (Source)
Infometrics chief economist Brad Olsen has predicted house prices in New Zealand are likely to remain flat over the next five years, indicating a shift away from the strong capital gains seen in the past.
He told a Financial Services Council event this week that while there may be minor price fluctuations, overall prices are expected to go slightly up or sideways in the coming years. stabilize or slightly increase.
“Slightly up is an important shift from previously when it was solidly up all the time,” Olsen said.
“I think we’re becoming a little bit more accustomed to the idea… people are looking at the housing market and going, ‘it’s not fundamentally what it was a decade ago or even five years ago.
“You can’t bet the house on it any more, when you could before, and people did.”
This stabilization could enhance affordability and allow more people to enter the market.
Other experts highlight a more subdued future for house prices with affordability still stretched, rising debt-to-income ratio limits and government plans to increase housing supply.
Additionally, younger people seemed less interested in investment property, signalling a potential cultural shift towards diversifying investments.
Our view: The housing market tends to follow a cyclical pattern, and it could be argued that we are currently at the bottom of the cycle. While there is still housing stock to be cleared before we see any meaningful upward movement, the situation is evolving. With fewer new builds being approved, the existing inventory will eventually be absorbed, which will lead to increased competition for the properties that remain. Will this process take five years? It is difficult to say - Possibly not.
As for young Kiwis, is their interest in property waning? That’s unlikely. Many still see the value in homeownership, especially if they’re keen to avoid paying someone else’s mortgage. With more OCR announcements on the way and the potential for interest rates to decrease further, many young people are likely biding their time, waiting for the right moment to secure the best deal within their budget.
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Have a relaxing weekend everyone.
From the team at Erskine Owen.
