We are always aiming to improve our service to you. We believe it is beneficial to all property investors to be constantly up with the play so you can make better investment decisions, either now or in the future. To save you from trawling through all the key publications, we are offering a short weekly roundup where we will highlight current market activity and what it means for property investment.
Below is this week's news of interest. If this is something you are keen to receive each week, we encourage you to opt-in.
Chris Bishop recently announced the new housing policy. (source) A key focus is to release more supply by putting pressure on councils to rezone more land to residential. Will this flood the market with supply and thus kill capital growth? Too early to say as we need to understand the detail. However, at a high level, it's not that simple – we have the RMA that needs to be navigated and the wheels of the council bureaucracy move slowly. For this reason, our initial reaction is that it's not a concern. Watch out for the next market commentary for more on this.
Kāinga Ora has put a hold on buying more properties(source) while it cleans house. This will be making some developers nervous and will also slow up delivery of the wider pool of housing supply. Social housing is a big issue and not easy to supply. Our understanding from talking to an MP is that the government is agnostic about owning versus renting. Why would the government want to buy when they could get the private sector to own – especially if they offered a 30-year lease.
General sentiment re interest rate drops seems to be changing(source) in that now there is a growing expectation that they will drop pre-Christmas. Erskine Owen Director, Alan Henderson has said for some time that he believes rates must drop because inflation has already been tamed if you look at it on a month-by-month basis (read his monthly Directors Thoughtpiece). The economic pain we know many are experiencing is becoming more noticeable with reports of more business failures. Historically when rates drop its not a ‘one and done’ event…the rate drops become consistent for a period of time until the RBNZ feels the economy is back on track.
Remote building inspections are on the cards (source) to speed up the consenting process.
Rents are down…? Really. (source) Stats NZ source data is from bond lodgments – so a relatively small sample. It will be interesting to see if this is just a blip. Perhaps it is just desperate landlords that want to quickly fill a vacancy to meet the higher interest rate payments rather than wait for better rent. Regardless – this is further support for dropping the OCR.
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