Is the NZ Housing Crisis Finally Over? | Lessons from the Last Decade

Topic #1:  Oneroof 11th of August - Has NZ finally solved its housing crisis? Ten years after soaring prices triggered nationwide panic

Topic #2: Good Results 13th of August - Gloomy home ownership results

Topic #3: RNZ 14th of August - More people making losses when selling their homes

Topic #4: 1News 13th of August - Warning after real estate agents caught altering sale agreements

Topic #5: RNZ 13th of August - Living apart together or bird nesting? Divorce in a tough property market

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Transcript

 Hi everyone. I'm Debbie Roberts, owner and financial advisor at Property Apprentice. Join us today for the week in review where I talk about current events for the everyday investor and home buyer. Our topics for this week. Topic number one, from  📍 Oneroof on the 11th of August, has New Zealand finally solved its housing crisis 10 years after soaring prices triggered nationwide.

Panic. Topic number two from  📍 Good Returns, . On the 13th of August, gloomy home ownership results. Topic number three, from  📍 RNZ on the 14th of August. More people are making losses when selling their homes. Topic number four from  📍 1News on the 13th of August. Warning after real estate agents court altering sale agreements.

Topic number five, from  📍 RNZ on the 13th of August. Living apart together or bird nesting divorce in a tough property market. 

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So first up for this week in review from Oneroof on the 11th of August, has New Zealand finally solved its housing crisis 10 years after soaring prices triggered nationwide panic.

And as always, the links to these articles are in the show notes below. Auckland's housing market has moved from a decade long shortage to an oversupply marking the end of an investor driven era and improving conditions for first home buyers. According to this article. In the mid 2010s, rising migration and strong investor demand pushed prices to record highs concerns over foreign buyers prompted policies such as the 2018 Foreign Buyer Ban Loan-to-value restrictions or LVR restrictions,

the Bright Line Test and the Auckland's unitary plan, intensification measures. These combined with market changes gradually reduced investor dominance. Independent economists, Tony Alexander observed that many small scale investors are exiting the market due to higher interest rates, insurance costs, and tenant friendly rule changes.

He credited government's efforts to free up land and increased construction with largely resolving the Auckland's housing shortage. Lower migration, rising listings and reduced investor demand have shifted the market in favor of first home buyers who've been active since early 2023. CoreLogic, chief Economist Kelvin

 Davidson, noted that mortgage payments is a share of income, have returned to 2014, levels around 48% after peaking above 60% during the pandemic.

He pointed out, however, that affordability is still no better than it was a decade ago. Infometric's Chief Forecaster Gareth Kiernan said government and Reserve Bank interventions had moderated the market but had not fixed the underlying affordability issue. He also highlighted a shift among younger New Zealanders towards share market investment contrasting with older generations who turned to property after the 1987 stock market crash.

Ray White Manukau co-owner Tom Rawson reported that lending conditions are now far stricter than 10 years ago, making auctions more attractive for sellers. He added that prices have dropped significantly from pandemic highs. For instance, Otara Homes that once exceeded $1 million, now sell for $600,000 to $700,000, leaving buyers cautious about potential future gains.

While Alexander expects house prices to remain at six to seven times, , the average income, housing advocate, Hugh Pavletich predicts affordability could return to three times income within the next decade. Pavletich praised policy progress cited international prefabrication projects, and pointed to AI driven manufacturing efficiencies as potential drivers for lower costs.

Although Auckland remains severely unaffordable at eight times the average income, Pavletich argued that New Zealand is outperforming Australia where Sydney's ratio is nearly 14 times the average income. He described the country as a global leader in tackling structural housing issues and expressed optimism about substantial improvements ahead.

My thoughts on this are that this is something that should be sung loud and proud that we have a very balanced housing market at the moment, which is giving first time buyers some great opportunities, and where there's a will, there's a way. So once you've saved up a house deposit, and it doesn't have to be 20%, as soon as you've got enough and you can get enough lending to purchase a home, maybe just get your foot on the ladder.

Don't worry about trying to buy the forever home as your first step. Just make progress and then you will move forward for a more comfortable retirement. 

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Topic number two from Good Returns, . on the 13th of August. Gloomy Home Ownership Results. A new survey by Perceptive found that 72% of New Zealanders who do not own a home believe that property ownership is beyond their reach.

According to Peter White, managing director of the Finance and Mortgage Advisors Association of New Zealand or FAMNZ, the findings are unsurprising, but highlight a common misconception. Many people who are turned down for finance by a bank believe they have no other options. White explained that while banks offer strong products, they can only provide their own solutions, which may not suit all borrowers.

Mortgage advisers however, have access to both bank and non-bank lenders, the latter, often having different lending criteria and not being available directly to the public. This can be particularly beneficial for self-employed applicants or those who do not meet standard bank requirements. He noted that advisors have often been able to secure financing or refinancing for clients who were previously declined by a bank.

White encouraged aspiring homeowners and those considering refinancing to consult a mortgage advisor for a broader range of options. My thoughts on this are that's a great idea because even though you might've direct, you might've approached the bank directly yourself.

If you don't meet that bank's lending criteria, they're gonna say no. Whereas a mortgage adviser can look at a variety of different options for you. So don't take no for an answer. If you're just dealing directly with a bank, seek some more alternatives.

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 Topic number three, from RNZ on the 14th of August.

More people making losses when selling their homes. Property data firm Cotality reports that the proportion of New Zealand home sales made at a loss is the highest in over a decade with Auckland sellers hitting hardest. In the second quarter of this year, sellers nationwide lost a combined $128.4 million, while 10.6% of all sales were at a loss.

To be fair, that's just under 90% that were not sold at a loss, Auckland's loss rate rose to 15.9% compared with 13.2% in Tauranga and 11.9% in Wellington. Christchurch had the lowest proportion at 4.9%. Cotality chief Property Economist Kelvin Davidson, attributed Auckland's figures to sharper price declines and the higher number of apartments which were more likely to sell at a loss in the current market if they were purchased at the peak of the boom.



The median gain for profitable sales was $279,000, which is well below the $440,000 median at the 2021 peak while the median loss was $52,500. Nearly half of loss making sales were for properties held less than three and a half years, whereas gains were typically on homes owned for over nine years, the longest hold period since the mid nineties.

Davidson noted that weaker values may be prompting owners to hold properties longer, to build equity, while others are delaying sales due to transaction costs, lending restrictions, or job uncertainty. Some sellers were also withdrawing properties from the market rather than accepting low offers.

Standalone houses were less likely to sell at a loss, but 34% of apartments sold for less than their purchase price. Again, the majority of apartments are selling the higher than their purchase price. Investors and owner-occupiers experienced similar rates of loss, 10.7% and 10.1% respectively. Though investors tended to have slightly larger profits and losses in Auckland, 17% of investor sales were at a loss, and I suspect those were people that purchased new builds at the peak of the boom.

Infometrics Chief Forecaster Gareth Kiernan compared the current downturn with those from 1998 to 2001 and 2008 to 2012, noting that prices remain 13% below the 2021 peak, much deeper than past cycles at the same stage, however, not significantly lower than where median prices were just two months before the peak of the boom.

He warned that buyers from the peak could still face losses well into 2030, making it one of the longest loss making periods in modern New Zealand housing history. Davidson also described the downturn as more severe and prolonged than the GFC with prices falling 17 to 18% from the peak to trough, and the market's still far from recovery.

So my advice on this is you need to be careful when you buy property, because property is a long-term investment strategy. And I think a lot of people bought the wrong sort of properties for their financial position in the peak of the boom. But at the end of the day, you're not gonna lose money on that if you hold it long enough.

So if you can afford to hold it, time fixes everything in the property market. Just about.   📍  📍 If you'd like to learn more about investing in property. You join me at one of our free events called How to Succeed With Property Investing. I'll discuss strategies for successful investing from my perspective as an experienced investor and a financial advisor, and all of our free events are available live and online.

Check out www.propertyapprentice.co.nz for upcoming dates and register today. We don't sell property, so it's all about increasing your knowledge to reduce your risk.  If   📍  📍 you've already been to one of our free events and would like to find out more about how we can help you to reach your financial goals, you can also book a no obligation phone call or meeting with my husband Paul Roberts via the website.

 Topic number four from 1News on the 13th of August, warning, after real estate agents caught altering sale agreements, the Law Association is warning that changes made by some real estate agents to sale and purchase agreements could put home buyers, particularly those using Kiwisaver funds at risk.

Its property law committee has raised concerns with the Real Estate Institute after noticing cases where agents altered agreements to remove buyer's title requisition rights, which normally give time to check and address title issues even on unconditional offers. Some contracts were also being modified to allow early release of buyer deposits to vendors.

Law Association President Tony Herring said the issue was not widespread, but had been found in several agreements. He explained that without the title requisition clause, buyers could face serious problems if defects were found, such as errors in cross lease titles, which can be expensive in time consuming to fix.

In such cases, banks may refuse to release mortgage funds until the issue is resolved, leaving buyers unable to settle despite being legally obliged to do so. Herring noted that standard agreements require deposits to be held for 10 working days, which matches the title requisition period. Early release could cause problems if the vendor spends the money and the contracts later canceled.

He said this poses particular risks for KiwiSaver users whose funds must be returned if settlement falls through a process made difficult, if the deposit's already gone, the Real Estate Authority REA said it has issued guidance to the sector reminding agents that deposits must be held for 10 working days unless both parties agree otherwise or court orders early release. Chief Executive Belinda Moffitt stated that inserting early release clauses into agreements undermines consumer protections, and that any early release should require informed consent from both parties.

My advice is, make sure that you get your sale and purchase agreements checked by your lawyer, before you go unconditional. 

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Topic number five, from RNZ on the 13th of August. Living apart together or bird nesting divorce in a tough property market: a sluggish housing market is making it difficult for some couples to separate according to divorce.

Coach Bridget Jackson who says financial stress, job losses, and rising unemployment are adding pressure to relationships. Jackson has observed a growing trend of separated couples remaining in the same home because they can't afford to sell their biggest asset. Some opt for bird nesting where each partner alternates staying in the family home with the children, but she warns that this requires careful planning.

Cotality data shows that homeowners moving from one property to another now make up just 26% of sales down from 30% in 2021. In Auckland, the figure is 23% while first home buyers account for 29%. Many recent buyers have lost much or all of their deposits as prices remain 16% below the peak. David Cunningham, chief Executive of Mortgage Advisory firm Squirrel has also seen couples choose to stay put after splitting, though he generally recommends moving on. He predicts property prices will rise only in line with inflation in the coming decades.

Jackson says separations often expose other challenges such as disputes over childcare arrangements, the economic impact on women who've taken time out of the workforce and disagreements about asset division. She advises clients to understand their finances fully, keep a source of personal income, and carefully choose a lawyer whose style suits their situation.

She's also noticed more women initiating separations often due to feeling overburdened and a rise in late life divorces, which can be particularly difficult for those who haven't worked for many years. Mortgage rates are dropping, and that's a good news for property investors and for home buyers. To be fair, like the current market conditions are great as long as you're buying the right property for your situation.

Don't miss out on this window of opportunity.   📍  📍 Join us at one of our free events called How to Succeed With Property Investing. These events are all available online so that you can gain valuable insights and strategies. Tailored to today's market conditions regardless of where you live, whether you're an experienced investor or just getting started, this free session will equip you with the key tools and insights to make confident, informed decisions.

Don't miss out. Register today and take the next step towards achieving your financial success. In our free events, I'll also tell you more about how we can help you as a client to achieve your investing goals. We are not just gonna sell you a new build and then wish you a bit of the best of luck moving forward.

 We are there with you right throughout the process, regardless of what sort of properties you purchase. And so if you'd like to find out more about how we can help you, visit www.propertyapprentice.co.nz today and register for one of our free events. If you've   📍  📍 already been to one recently and you'd like to know more about how we can help you on your journey book a no obligation phone call or meeting with my husband Paul Roberts through our website.

That's property apprentice.co  nz. Thanks for listening. 

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