New Build Reality Check, The KiwiSaver Shift & Manufacturing Equity | NZ Property Insights Ep. 9

Are the surging building consent numbers hiding a deeper economic reality?  In Episode 9 of New Zealand Property Insights, Paul and Debbie Roberts unpack three major shifts in the New Zealand financial landscape.

In this episode, Paul and Debbie cover:
Surging Consents vs. Economic Reality: Stats NZ data reveals 37,534 new homes were consented in the year to February, representing a 12% year-on-year increase. Auckland remains the growth engine, with multi-unit dwellings like townhouses making up over half of all new homes consented. However, Paul and Debbie explain why rising construction and excavation costs are making project feasibilities highly sensitive, and why buyers must use sunset clauses and fixed pricing.

The KiwiSaver Shift: On April 1st, the default KiwiSaver contribution rate increased from 3% to 3.5%. An ASB survey found that 51% of people planned to increase their contributions to match this new rate. While this is a minor weekly adjustment—around $7 extra for someone earning $70,000—it has a massive compounding effect over time. We discuss why younger investors stand to benefit the most, despite having the lowest awareness of the changes.

The Balanced Property Market: A new CBRE valuers report shows the housing market is currently stable and balanced. First-home buyers are the most active demographic, but they are heavily favoring move-in ready homes. This creates a massive opportunity for savvy investors to purchase unrenovated "do-ups" with less competition and manufacture their own equity in a flat market.Whether you are looking to build a new townhouse, check your KiwiSaver settings, or find hidden property deals, this episode provides the factual insights you need.Resource

Links:
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Transcript

 Hi everyone. Welcome back to episode nine of the New Zealand Property Insights. I'm Paul Roberts. And I'm Debbie Roberts. We are the owners of Property Apprentice and we are here to help you navigate the New Zealand property market with facts and insights, not just headlines. Today we've got a packed episode looking at the three major shifts in the New Zealand financial landscape. We're breaking down the latest building consent numbers, which are surging, uh, but come with a major catch regarding construction costs. We will also be looking at the KiwiSaver changes that took effect on the 1st of April and what the latest research says about New Zealander's long-term financial confidence. And then finally, we dive into a brand new report from CBRE Valuers showing highly balanced property market dominated by first home buyers, which is great. And we'll discuss exactly where the opportunities lie for savvy investors when the market goes flat. So let's dive in. So first segment, we are looking at surging consents versus economic reality. Starting today with some fresh data from Stats New Zealand regarding the home building pipeline. On the surface, it looks like excellent news for housing supply, but economists are warning that the actual delivery of these homes is becoming increasingly uncertain. Yeah, I think a, a strong pipeline usually points to more lending opportunities and investment stock. But right now, developers are facing some serious headwinds. So let's have a look at the numbers. So the facts are Stats NZ figures show 37,534. New homes were consented in the year to February, which is 12% increase from the previous years. Economic indicators. Spokesperson Michelle Feyen noticed that the annual numbers of new home consents has increased for seven consecutive months. It's in highest level since late 2023. Auckland remains the engine growth with a 16% year-on-year increase, heavily, driven by townhouses and medium density projects. Multiunit dwellings now make up more than half of all new homes consented. However, Westpac senior economist Satish Ranchhod cautioned that while the lift is encouraging, these figures predate recent global conflicts. Recent QV Cost Builder data supports this showing that elemental and trade costs are up with diesel intensive work like excavation and site preparation, posting much larger rises. So this is a classic case of headlines not telling the whole story. Seeing a 12% jump in consent is fantastic for future supply. But as we always say, a consent doesn't mean a completed house. And that's the critical takeaway here. Westpac's actually revised down its house price growth forecasts because weaker economic conditions are weighing on by demand, making developers much more cautious. However, you do need to remember that all of the economists' predictions as to what's going to happen doesn't mean that that's a certainty. You know, we all saw how everyone's predictions during COVID were catastrophic and that didn't happen. So if you are an investor looking at off the plan townhouses. Or considering your own development, you have to factor in rising trade and excavation costs. So project feasibilities are becoming highly sensitive to fuel and freight shocks right now. In other words, construction costs are increasing, which will flow through to sale prices or even in some cases, what property you end up with. In a past example, we have seen developers change the specs of their build, to retain their margin. This highlights why you can never just rely on raw data. Your due diligence has to account for potential construction delays, cost overruns before you sign any contracts, ensure you are using a trusted building company with fixed pricing And sunset clause so you can get out if you need to, I think you know for people that are buying off the plan, hoping for the best. I think if you're in a good position, you're using a good company, that's fine, but be very, very careful because you may not end up with what you expected. Absolutely. And also make sure you get good mortgage advice on this as well, because some build contracts will allow you to have an approval for 12 months. But yeah. Depending on the situation, you don't wanna end up in a position where bank lending rules have changed and you're not gonna be able to settle. Yeah, we saw that, didn't we? In 2021? Absolutely. Um, after 2021 where people had fixed price bill contracts, it was 12 months, build went longer than 12 months, they had to reapply for all of their lending. And they couldn't afford it anymore. So you know, that's what we are here for, is to make sure that clients of ours understand exactly the right way to do things so that you are not concerned and we are there to help you with any due diligence. So for our second topic today, we are stepping slightly outside of the property market to look at KiwiSaver. So as of the 1st of April, the default contribution rate has changed, and new research from ASB shows exactly how New Zealanders are responding. It's a small change to your weekly paycheck, but remember that property investment is just one part of your overall wealth creation strategy. KiwiSaver is another massive pillar for Kiwis and staying on top of these changes is key to a long-term retirement plan. So let's have a look at the facts from the 1st of April this year, the default KiwiSaver contribution rate increased from 3% to 3.5%, and this is part of a phased move that will eventually take the rate to 4% by 2028, and that's for employees as well as employers. An ASB survey found that 51% of those surveyed planned to increase their contributions to this new 3.5% default rate, while 19% are already contributing at that level or higher. So to put it into context, a person earning $70,000 would've been paying about $40 and 38 cents a week into their KiwiSaver fund from the 1st of April. That's increased to about $47 and 11 cents a week, so about seven bucks ASB's Senior Economist, Chris Tennent-Brown observed that the willingness to make higher voluntary contributions demonstrates strong confidence and long-term saving goals despite global uncertainty. However, awareness is an issue. One in four respondents aged 18 to 24 said they weren't even aware that the changes were coming and say, look, from, from my perspective as a KiwiSaver adviser I love seeing data like this because it shows that Kiwis are looking at the big picture. Tennent-Brown pointed out that even in uncertain times, people recognize the value of staying the course, and that's the exact mindset you need for long-term investing, such as KiwiSaver and property investment. Yeah, it really is a jump of about $7 a week might feel like a minor adjustment now, but when you look at that compound in effect over 20, 30 years, that significantly strengthens your position for retirement. Exactly. And it's a wake up call for younger investors. They stand to benefit the most from these higher contributions 'cause they'll be in it for longer, and yet they had the lowest awareness. So if you've got young adults in your family, this is a great week to encourage them to check these settings. So whether it's KiwiSaver or property, the goal is to build long-term wealth. If you aren't sure how these changes fit into your broader financial plan, remember, 📍 📍 Property Apprentice provides for personalized financial and retirement planning services to help you stay on track, which includes KiwiSaver managed funds, property investment, et cetera. So segment three for this week is, uh, the balanced property market, which I think is really exciting personally. Finally, we're looking at the state of the housing market through the eyes of the professionals who value it, and CBRE has just released its quarter 1 2026 Residential valuations property market survey. The overriding theme is stability. The market is looking much more balanced but less buoyant, which has massive implications for how you should be assessing your borrowing capacity and negotiating mortgage rates right now. So, CBRE's survey of 36 valuers nationally show that most local markets now are characterized as balance rather than clearly favoring buyers or sellers. So first time buyers are the most active group, which is great. Uh, with 95% of valuers listing them as the key buyers. This reflects the sharp shift away from investors since late 2025. These buyers are discerning, and an Auckland valuer noted that moving ready, well presented homes are selling fast. While unrenovated properties requiring work do take much longer and, and that makes sense 'cause. If you're a first home buyer, you are, you are struggling enough to get the deposit together, to get the loan, to buy the property. You haven't got the money to then renovate the thing as well. Um, I still think there's plenty of opportunity for people, uh, first home buyers or investors to be negotiating really well. We're seeing some great deals with our clients at the moment. National sales volumes in February were 6.8% lower than a year earlier. And a NZ has cut its 2026 highest price inflation forecast from 5% down to 2%. Which isn't surprising with what we've got going on overseas at the moment, but fingers crossed it doesn't take all that long. Absolutely. And this balance market means that there's fewer forced compromises, but you've gotta look where the demand is. And at the moment, it's all on clean, renovated stocks. So this creates an opportunity for savvy buyers. If first time buyers are avoiding do-ups, which like Paul said is understandable, then the competition for unrenovated properties has dropped significantly. And since an Auckland value was specifically mentioned that these properties are taking longer to move, that means that the owners of that property could get more and more motivated to sell the longer the property sits on the market. And I think that's a huge opportunity for investors. If you can buy well located, but Unrenovated homes at a good value level, uh, you can manufacture your own equity, your own growth in that property, basically with a pen by buying it well. The rest, while the rest of the market is flat, you aren't just relying on capital gains , you are actually creating that yourself. And I think that's one of the things that we talk a lot with our clients. Just for the last two weeks, we, all the clients we've been dealing with have bought very well, below value property factored in their costs for the renovation and, and made it just absolutely sing. And don't forget, if you are renovating the property, you are actually increasing the rental return on the property because now it's at its top best possible, market level for that rental return. So you never buy the golden goose off Trade Me or www.realestate.co.nz You have to create your own rental return and your own growth. Capital growth comes on its own. That's the bonus. Long term. Yeah, exactly. And look, this isn't a market where the capital growth will do the heavy lifting for you. It's a market for strategy and thorough due diligence, and with that comes massive opportunities. Having said that, I think that there's a lot of people that will run the risk of missing the opportunities that are out there and when they're ready to step into the market because they might be feeling a bit more confident. And there's a good chance that interest rates will be higher by then. And as interest rates increase, banks also increase their test rates, which means that you're not gonna be able to borrow as much money when that happens 'cause they'll be stress testing you at a higher level. With recent data that's come out about consumer behavior, it looks as if the buyer's market is actually back in place and likely to be here for longer than we previously thought, which is. Great news for both home buyers and property investors. Absolutely. And you know, it does asto me that when the property market goes gangbusters and everybody's buying, that's when we have the block back on the tv and that's when we've got all everything going on and everyone's talking about property, and that's the wrong time to buy because you're paying full price. Now's the time to buy and ride that wave and do it well. You can still make money in a booming property market, but the strategies are different, you know, and, and relying on capital growth, which you've got no control over is a flawed strategy for investing. So, if this episode made you realize that you need a stronger financial plan, or if you wanna learn how to negotiate and create equity when the market is flat and moving through to the next cycle, and for the rest of your investing journey, we are here to help. Yeah, absolutely. So that wraps up, uh, episode nine of New Zealand Property Insights. We've covered a lot today from the surge in building consents, the KiwiSaver shifts that we've had and opportunities in, that are hiding in the balanced housing market. 📍 📍 📍 We run free online events called How to Succeed With Property Investing. It's an incredibly valuable session where we go into much deeper detail about how to buy, well manage your risks and spot the opportunities in the current market. It's completely free and online with no hard sell. We don't sell property so you don't have to worry about being hounded by sales people pushing you into buying a new build. We are here to provide the education and the financial advice if you choose to become a client so that you can make your own informed decisions. You can find the link in the show notes or head to www.propertyapprentice.co.nz Thanks for tuning in and we'll see you next time. 📍 ​