Crash or Correction? ANZ’s 2% Warning + Record $903 Rents | NZ Property Insights Ep. 10

Is the New Zealand housing market heading for a total crash, or are we just seeing a temporary hit to confidence? In Episode 10 of New Zealand Property Insights, Paul and Debbie Roberts tackle the latest Reserve Bank "hawkish" hold, a record spike in rental prices, and a shocking investigation into rogue landlord practices. 

In this episode, we cover:

• The RBNZ's Hawkish Hold: The Official Cash Rate remains at 2.25%, but the message is clear—if inflation doesn't drop to 2%, timely increases are coming. We discuss why ANZ is now predicting a 2% house price drop and what this means for your current equity. 
• The Rental Market Crossroads: While national listings fell by 3.2% in March, some regions are hitting extreme pressure points. Average rents in the Central Otago Lakes district have hit a staggering record high of $903 a week. We also address why a record 26% of investors are considering the "exit door." 
• Rogue Landlords & Compliance: We break down the high-profile investigation into a mother-and-son pair facing $30,000 in penalties for substandard rentals and failing to lodge bonds. Professional standards are no longer optional—they are a survival requirement in the 2026 market. 
• Counter-Cyclical Strategy: When the masses hesitate, the "educated" investors find their best deals. Learn how to split your debt to avoid rate shocks and why "buying when others are scared" is still the fastest way to fund your retirement. 

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Transcript

Paul: 0:00

Hi everyone. Welcome back to the New Zealand Property Insights. I'm Paul Roberts.

Debbie: 0:03

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, not just headlines.

Paul: 0:11

So today we're starting episode 10 by addressing the big question, is the New Zealand housing market heading for a crash or we just seeing a temporary hit to confidence with the Reserve Bank's latest decision and global conflicts weighing on the economy. There's quite a bit to unpack here.

Debbie: 0:26

So we'll also be looking at the rental market. We listings are starting to fall as a record number of investors consider selling their portfolios.

Paul: 0:34

Then finally, we're gonna discuss high profile investigation into rogue landlord practices. It as a stark reminder why professional standards and compliance should be non-negotiable in this industry and why regulating the property management industry is so important. So let's dive in.

Debbie: 0:53

We're gonna start today by having a look at the Reserve Bank's announcement about the official cash rate holding steady amidst global uncertainty. On Wednesday, the Reserve bank held the official cash rate at 2.25%, but the message that came with it was definitely more hawkish than many were expecting.

Paul: 1:12

Yeah, and while the rate didn't move down, the warning was clear. If core inflation doesn't drop to around 2%, we should expect a decisive and timely increases to the OCR. This comes at a time when global events, specifically the conflict in the Middle East, are already putting the brakes on for the domestic market. So the facts are the Reserve Bank held the cash rate, at 2.25%, but warn that timely increases would be required if inflation risks persist. ANZ has predicted a 2% drop in house prices this year as the war in the Middle East impacts economic sentiment. We've had a two week ceasefire, although that came to an abrupt end, so we'll see how the next two weeks go from here. Bailey's head of Insights Chris Farhi noticed that while a crash is unlikely, because New Zealand has already gone through a significant correction, the market remains neutral and sensitive to shocks. Real estate agents report that supply's currently outweighing demand with buyers increasingly concerned about overextending themselves financially. But I think one thing to remember is if we look at the Australian market, who didn't have the official cash rate as high as long as we did. They're going through a major boom and inflation has picked up and they're increasing their OCR. So,

Debbie: 2:32

and their interest rates were already a lot higher than we've got here. Yeah.

Paul: 2:36

So we are due, I, I don't think that the, there's gonna be any price drop and I think that we are actually due once things stabilize overseas for a good, uplift. So when you see a 2% drop of prediction from a major bank like a NZ, it is easy for people to panic.

But Chris made an excellent point: 2:55

we've already had a massive correction, so maybe the property market has just taken a breath while people wrap their heads around the Middle East conflict. And the fact of course, that we have an election this year.

Debbie: 3:06

It's context that matters in situations like this. You know, we've seen house prices drop 15 to 20% in some areas since the peak of the boom in late 2021, but to be fair, we also saw increases almost that much and a few short months leading up to the peak of the boom. Property values have been pretty stable ever since, with some months showing slight increases and some showing slight decreases. Median values nationwide are back to where they were two months before the peak of the market. Our take on the prediction of a 2% dip in the market this year is, like Paul said, it's just a prediction. It's not a certainty. What we're seeing at the moment is an increase in uncertainty, which generally results in people freaking out about what may or may not happen with property values, so they pause making decisions between the Middle East conflict, the Reserve bank warnings about how they might need to start increasing interest rates sooner than previously thought, and the election this year, buyers are simply hesitating. After early signs of a property market and economic recovery, people are worried that this is gonna change now. And so they're waiting for a green light to tell them it's okay again.

Paul: 4:20

And I think it's interesting to think back to even the global financial crisis or as straight after COVID, uh, or before COVID. You know, people were scared and what happened? Values just went up. It, it is a supply and demand equation. So, um, Tom Rawson mentioned, uh, that the supply and demand equation is real, and if there are more listings than buyers, as a buyer, you have the leverage. This is actually an opportunity for buyers to negotiate hard, especially if they've got their finances sorted and ready to go,

Debbie: 4:51

and that's the key. Sorting out your finances. Andrew Chambers mentioned a tiered mortgage approach, and I couldn't agree more. Splitting your debt across varying interest rate expiry dates means that you're not exposed to massive rate shocks all at once. If and when the reserve bank does start to increase the official cash rate when interest rates come down again, you can also take advantage of that sooner rather than later with staggered expiry dates on your mortgages. Also, remember that the official cash rate has very little effect on the longer term interest rates, so get yourself a good mortgage advisor to help you with your mortgage interest rate decisions, and have a good strategy in place to help you to reduce risk. It

Paul: 5:33

is all about taking the emotion out of it. Don't let the news in the Middle East decide your financial future. None of us know how long this will go on for and how much of an impact it may have on the market, but New Zealand is pretty isolated as a country when we think about the real estate market. But what we do know is that for now at least, it looks as though the buyer's market will be around for a little bit longer than we thought. Which is great news for prone buyers and property investors. As long as you're managing, managing your risk and you understand what is financially right for your situation, and that is where people get it wrong. There are literally great deals everywhere at the moment. Stick to your numbers. Stress test your mortgage rates at higher rates than what we've currently got. And remember, if you are a client of ours, we are here to help you and guide you through that process. Just get in touch with us.

Debbie: 6:24

That's right. And don't let short-term uncertainty stop you from reaching your long-term financial goals. As interest rates increase. Bank lending criteria is also likely to get tighter, meaning that you might not be able to borrow as much as you could right now. When confidence returns to the market again, and market activity picks up, prices will start to rise. The country is literally on sale in New Zealand at the moment, so why would you wait until it gets more expensive if you don't have to?

Paul: 6:54

Exactly. It's called counter countercyclical investing, going against the grain, and that's what gives you the financial rewards. If it's done well, you can help fund your retirement, learn how to negotiate, and what to look for in a purchase, and you will reap the rewards. Segment two rental listings fall as some investors weigh selling up. For our second segment, we are shifting into the rental market. Fresh data from www.realestate.co.nz shows that the market tightened in March. Not surprising. End of financial year, uh, with fewer new listings and a dip in overall stock.

Debbie: 7:31

And this is a significant shift because it's happening right as investor sentiment is hitting a crossroads. While rents have eased slightly on a national level, the underlying supply issues suggest that this could be about to change. It all boils down to supply and demand. If there's a lot of rental properties available and not many tenants looking to rent, rents come down. When the opposite happens, which is what we are starting to see, rents will start to increase. So let's have a look at the facts. New rental listings in March, were down 3.2% year on year with total slipping by 2.8%. The national average rent dropped by 2% to $632 a week. A recent survey indicates a record net 26% of residential investors are considering selling in the next 12 months. Central Otago Lakes district remains a major pressure point with average rents hitting a record high of $903 a week. Listing surged in Hawkes Bay and Southland, but plunged 37.4% in Otago.

Paul: 8:42

It's amazing, isn't it? And then you think about parts of Sydney, where to rent a room in a house is $430, a week Just for the room.

Debbie: 8:52

One room.

Paul: 8:53

Yeah. That 26% figure of property investors considering selling in the next 12 months is huge. One in four investors looking at the exit door. That tells me that the feeling is that the pinch of high interest rates and compliance costs, and people that have owned properties for many, many years, or maybe they'd bought the wrong sort of property for their financial position.

Debbie: 9:16

Or their financial position might have changed, meaning that they might need to downsize in order to help fund a cash shortfall, for example. But here's the irony, as other investors sell, the rental supply drops even further, especially if it's home buyers who purchase those rental properties. So when there's a lower supply of rental properties and still high demand, rents start to increase.

Paul: 9:42

And what's the stat on private landlords versus government?

Debbie: 9:48

Private landlords and trust it's own. About 85% of all of the rental accommodation in New Zealand and over a third of New Zealanders are tenants.

Paul: 9:57

Yeah. So it's a necessary part of the economy that we need. And as we said in a previous one, we bring in $24 billion a year, in moving this economy forward. So I think that's great.

Debbie: 10:13

And that supply and and demand imbalance is why we see Central Otago hitting average rental costs of $903 a week. If you're a tenant there, that's a terrifying number, but if you're in investor there, it shows the power of scarcity. When supply plunges by 37%, the remaining landlords will have stronger rental returns as market conditions increase rent. However, you can't just look at the high rent. You have to look at the yield versus risk balance. In places like Hawkes Bay, for example, where listings are surging by 38%, landlords might have to work a lot harder to find and keep good tenants.

Paul: 10:55

That's why we always tell our clients: you don't buy based on national average. You need to know the street level data. If everybody is selling, that might be your best time to buy, provided you are overextended or buying in an area with a huge oversupply of rentals or businesses that have shut down.

Debbie: 11:13

Absolutely. And that brings us to the final segment for this episode, rogue Landlords and the Importance of Compliance. So, you know, today we need to talk about a story that's been making waves regarding a mother and son landlord pair who currently are under investigation by Envy. It's a situation that highlights the absolute necessity of following the rules and also just being a decent human being as a landlord.

Paul: 11:40

Yeah. The power have been described as having a history of nefarious conduct. They have been investigated after allegations of providing substandard rentals and failing to lodge bonds, both of which are against the law. This is a sobering look at what happens when the legal and moral obligations of landlording are ignored. This is the sort of behavior that we do not want, and it makes a huge damage to the reputation of property investors in the industry. That run this as a business. All of our clients, and I know the property investors at federations and associations are acting responsibly in treating their tenants with respect.

Debbie: 12:16

Which is good practice at the end of the day. So let's have a look at the facts. MBS Tenancy Compliance Team has been investigating Nick Hoogwerf and Donna Miers for a year. Allegations include failing to lodge bonds, providing unsanitary and uninhabitable properties, and failing to meet healthy home standards. One report detailed, the pier subletting a property at twice the rent to a vulnerable grandmother without the owner's knowledge. Despite multiple tribunal orders, the pair often failed to attend hearings or paid the ordered compensation. The government's currently working on strengthening accountability across the rental sector.

Paul: 12:58

Yep, and I hope they do. So this kind of story is what I gi gives our industry a bad name, unsanitary conditions, leaking, sewage and not lodging the bonds. It's just completely unacceptable.

Debbie: 13:11

It's more than unacceptable. It's a massive liability. These landlords were ordered to pay $30,000 in one case alone. Some people seem to think that they can save money by cutting corners on maintenance. For, or forgetting to lodge a bond. But the Tenancy Tribunal has zero tolerance for that now,

Paul: 13:31

and I think rightly so. As a landlord and a business owner, you are providing a service, a home. It's not up to standard, how can you expect somebody to rent it?

Debbie: 13:40

Let alone look after it? Yeah. Yeah. That's the Property Apprentice Gold standard we talk about, we always tell our clients Healthy Home Standards are the minimum. Not the goal. If you treat your tenants with respect and provide a high quality compliant home, you get better tenants, fewer vacancies, and you also stay outta the headlines for the wrong reasons. We wanna see more headlines about great landlords and excellent tenants, because let's face it, that's by far the majority of landlords and tenants in this country. But unfortunately, bad news sells better than good news, so we're not likely to see that in the media.

Paul: 14:17

So if you're a new investor, don't be intimidated by the rules. They're there to protect everybody. Professionalism is what separates a cowboy from a successful long-term investor. If you aren't sure how to check your own compliance, that's exactly what our coaching and advice and support is for. We wanna make sure that you are a landlord people want to rent from, uh, you own the property, but it will be also somebody else's home. Happy tenants are good for the industry, the country, and the economy. And I also think that a tenant is not a tenant. They are your client of your business,

Debbie: 14:54

and you need to treat them like your most valued client. Yeah, absolutely. Look after them and they'll look after your property.

Paul: 15:02

So that wraps up episode 10 of the NZ Property Insights. We've cut a lot today. RBNZ hawkish hold on the OCR tightening of the rental market and some critical importance of landlord's compliance.

Debbie: 15:13

If today's episode made you realize that you need to tighten up your own strategy, or if you wanna learn how to build a property portfolio that's both profitable and fully compliant, we are here to help.

Paul: 15:24

We run free online events, How to Succeed with Property Investing, pretty much every week, and it's a dedicated session where we go much deeper into the due diligence process and the risk management strategies we've discussed today.

Debbie: 15:37

It's completely free and online. Property Apprentice doesn't sell property, so our only goal is to give you the education, coaching, support, and financial advice to help you to succeed. You can find the link in the show notes or head to www.propertyapprentice.co.nz to register.

Paul: 15:55

That's it for today. Thanks for tuning in! Debbie: And keep learning and and we'll see you again soon. Bye.