New Zealand real estate market trends to watch in 2022
For New Zealand’s real estate market, 2021 was the year the government stepped in and regulatory pressures increased in an attempt to curb the rapid rise in house prices.
Nationwide, the 12-month change in median values saw jumps from 6.7% in Sunshine Bay to a whopping 47.7% in Woodville.
The figures, published in CoreLogic’s Best of the Best 2021 report, show the top-selling property was 73 Argyle St, Auckland, which grossed $ 22 million.
In March, the government extended the Bright-line Test for existing properties and announced the phase-out of interest deductibility, unless investors purchase new construction, from October 1.
At the time, Finance Minister Grant Robertson said:
“Taxation is neither the cause nor the solution to the housing problem, but it does have an influence, and it is part of the government’s overall response.
The Reserve Bank of New Zealand has also been given the authority to use other credit restrictions such as ceilings on debt-to-income ratios, which are currently being consulted and are already in effect at some banks.
“The RBNZ itself reinstated the loan-to-value ratio rules on March 1, 2021, before raising required investor deposits to 40% on May 1, 2021,” the report said.
“Then, from November 1, 2021, homeowners were also faced with tighter limits, with the low deposit loan threshold being dropped from 20% to 10%.
“In other words, no one has escaped the tightening credit environment, especially first-time homebuyers, who also face additional pressures now in the form of limited (or no) pre-approvals. “
Herne Bay in Auckland recorded the highest median value for 2021, at $ 3.5 million, while the lowest median price was $ 193,700 in Runanga in Gray.
Likewise, Runanga had the highest gross rental yield of 9.6 percent, while Herne Bay had the lowest at just 1 percent.
Karaka Bays in Wellington recorded the highest median weekly rent of $ 875 per week, while the lowest median rent was just $ 285 per week in Twizel in MacKenzie.
But if this was the strongest growth in rent rates you’ve been looking for, then Ashhurst and Fitzherbert in Palmerston North were the top suburbs, with rents increasing 40.6%.
However, if you owned an investment property in the Dunedin suburb of Dalmore, Liberton, North East Valley, or Pine Hill, you would have seen rental rates drop 9.7%.
It was the fastest to sell a property in Port Waikato, in just four days, while it took 74 days in Athenree, in the Western Bay of Plenty.
The report showed sales activity got off to a good start in New Zealand in 2021, but from around June the market showed signs of fatigue.
“Some softening has been caused by the sheer lack of listings,” the report said.
“Growth in property values has also generally slowed since mid-year based on monthly / quarterly measures, although the annual rate is still high, reflecting a weaker base a year ago due to the first market disruption by COVID. “
Trends to watch in 2022
CoreLogic chief economist Kelvin Davidson said he expected a significant housing market slowdown in 2022.
“Sales volumes have already passed a milestone and should be much calmer in 2022, the rate of annual value growth will surely continue to slow down, going from a figure of more than 25% for the 2021 calendar to perhaps be single-digit, even low. single-digit, in 2022, ”he said.
- Other loan rules
Mr Davidson said it was likely the RBNZ would impose a floor on service interest rates from the middle of next year, before removing those in favor of formal ceilings on debt-to-income ratios ( DTI) at the end of 2022.
“It’s up to where those caps are set – for example, they previously indicated it could be six for investors and seven for homeowners, but the latest consultation papers have suggested that a flat rate, maybe seven, for all might be more likely, ”he said.
“It is also conceivable that any introduction of formal DTI could also relax the LVR rules a bit. But whatever the latest details, it looks certain that DTI would hit investors the most. “
- Registration provision
Previously tight supplies have started to turn the page, with higher stock levels across the country, especially in areas such as Hawke’s Bay, Wellington, Otago and Southland.
“It’s not so much the take-off of new listings, but more of a slowdown in sales,” Davidson said.
- A buyer’s market
Some investors may look to crystallize their past capital gains and list their properties and more choice for buyers equates to reduced price pressure.
“It may take some time for suppliers to respond to the changed terms and some may take down their listing rather than accept a lower price than they hoped for,” Davidson said.
“However, this dynamic can only prevail for a limited period of time, and 2022 should ultimately shift into a buyer’s market.”
- The construction sector slows down
Mr Davidson said there was a very real prospect of the booming construction industry slowing down next year, as rising costs could discourage demand for new homes.
“In turn, reduced volumes of new real estate will tend to support existing values,” he said.
“On the contrary, our concerns tend to focus on parts of the lower part of the North Island, such as Tararua, Horowhenua, Whanganui, Porirua and Lower Hutt, as well as other areas such as Wairoa, Otorohanga , Kawerau, Westland and MacKenzie.
“At the same time, areas like Ashburton, Timaru, Waimakariri, Selwyn and Tasman seem a bit more secure, although nowhere is ever safe from all market forces.
“No doubt there will be a lot more twists and turns for the housing market in 2022, and that’s before you consider any further disruption related to COVID.
“But we certainly expect a significant slowdown, and for 2022, it will be a year where we see buyer choice increase even with intensified funding restrictions.”
Best sale 72 Argyle Street, $ 22 million
Highest median value Baie Herne, $ 3,504,850
Lowest median value Auckland Central, $ 613,000
Shortest days on the market Helensville, 10 days
Longest days on the market Piha, 57 days
Highest gross rental yield Orere Point, 5.1 percent
Lowest gross rental yield Herne Bay, 1%
Best sale 350 Exelby Road $ 9.6 million
Highest median value Flag pole, $ 1,110,800
Lowest median value Whitiora, $ 606,150
Shortest days on the market Grandview Heights, 7 days
Longest days on the market Hamilton Center, 28 days
Highest gross rental yield Enderley, 4.1%
Lowest gross rental yield Hamilton Lake, 2.5 percent
Best sale 307A Oceanbeach Rd, $ 7.5 million
Highest median value Mount Maunganui, $ 1,407,200
Lowest median value Parkvale, $ 681,750
Shortest days on the market Papamoa, 16 days
Longest days on the market Tauranga Sud, 26 days
Highest gross rental yield Parkvale, 4.2 percent
Lowest gross rental yield Mount Maunganui, 2.3%
Best sale 36 Central Tce, $ 6.5 million
Highest median value Seatoun, $ 2,046,050
Lowest median value Wellington Central, $ 546,300
Shortest days on the market Timberlea, 7 days
Longest days on the market Pukerua Bay, 24 days
Highest gross rental yield Ascot Park, 5%
Lowest gross rental yield Kelburn, 1.5 percent
Best sale 21 Wairarapa Tce, $ 8 million
Highest median value Fendalton, $ 1,541,450
Lowest median value Phillipstown, $ 401,500
Shortest days on the market Belfast, 12 days
Longest days on the market Akaroa, 29 days
Highest gross rental yield Kainga, 6.3%
Lowest gross rental yield Fendalton, 1.8 percent
Best sale 135 Tirohanga Road, $ 2.85 million
Highest median value Maori Hill, $ 1,027,300
Lowest median value Dunedin South, $ 445,100
Shortest days on the market Outram, 9 days
Longest days on the market Waverley, 18 days
Highest gross rental yield Ocean Grove, 4.7 percent
Lowest gross rental yield Maori Hill, 1.6 percent