Research Hub

ISSUE 156

Healthy Homes Guarantee Guidelines

This month in our latest CPII survey in association with IPSOS, we asked investors about the proposed Healthy Homes Guarantee guidelines. The new law has been introduced to ensure that every home in New Zealand meets minimum standards concerning insulation, heating, ventilation, draughts, drainage and moisture.

Awareness of Healthy Homes Guarantee Guidelines

Some 96% of investors are aware of the proposed Healthy Homes Guarantee guidelines – a positive sign given the impending introduction of the law in July 2021.

Monetary Spend to Be Compliant with the Healthy Homes Guidelines

Following the introduction of the Healthy Homes guidelines, 58% of investors believe they will have to spend money to be compliant with the Act, whilst 30% believe they won’t have to, perhaps an indication that these homes are already compliant. A small percentage are unsure whether their property will be compliant.

Investment Plan in Next 2 Years

Some 42% of the investors say they will not be affected by new Act; whereas 40% indicate that as a result of its introduction they will have to increase rents to offset losses. Only a small proportion were likely to reduce property overheads as a result.

Likelihood of Selling the Property as a Result of Healthy Homes Guidelines

Some 24% of respondents claim that they will be more likely to sell their property as a result of the Healthy Homes guidelines coming into effect, and 66% claim that this will not change their likelihood of selling their property. A small portion of investors (10%) were less likely to sell their property.

Crockers Property Investment Index

Despite heated coverage of the proposed CGT, both the Auckland Rental Property Investment Index and the Auckland Rental Property Performance Index have experienced slight increases this month, due to a decrease in the proportion of pessimistic investors.

Building Consents & Median Sales Prices

This month we compare the Auckland 2018 median sales data with Auckland building consent data (the number of new dwellings consented). In 2018 there were a total of 12,144 building consents issued between February and December, an increase of 1,789 building consents compared with the same period in 2017 (10,355 building consents). The most building consents were issued in May (1,530), and the fewest in September (854). The major spike in building consents in May saw no real change in the median sales price over this time, perhaps suggesting that in 2018 there was no notable relationship between median sales price and building consents. However, it is worth noting that these results should be interpreted with caution, as there is a delay between a house being consented and then being put on the market.

This month we also compare average interest rates with median sales prices in Auckland. In 2018 there was a slight increase in mortgage interest rates, whilst house prices softened slightly on 2017. From 2009 to 2013, as the interest rate moved down, the median sales price increased, whilst since then we have witnessed no clear relationship between the two. With mortgage rates likely to be reduced during 2019 and the government walking away from CGT, the housing market may recover, or it could continue to soften. There are no clear indications which direction the market will take in light of these.

Auckland Sales & Rental Update

Auckland Median Prices

The median sales price for Auckland residential properties increased from $850,000 in Feb ‘19 to $856,000 in Mar ‘19; the median sales price now sits at a substantially lower point than Mar ‘18 ($880,000), indicating that the market has softened.

Auckland Sales Numbers

The sales volume this month has shown an increase from 1,358 to 2,006, a peak seen on an annual basis. Despite this, it is the lowest point for March sales numbers recorded in the past five years of tracking.

Auckland Rental Prices

The average Auckland rent for 2-bedroom residential properties dropped from $503 in Feb ‘19 to $489 in Mar ‘19, while the average 2-bedroom rental across New Zealand increased from $430 to $435. This has been driven by increases in 2-bedroom rental prices in Christchurch and Dunedin, resulting in the Auckland 2-bedroom premium reaching its lowest point in the past two years of tracking.

The average rent for 3-bedroom properties in Auckland increased from $632 in Feb ‘19 to $648 in Mar ‘19. This represents a seasonal high for 3-bedroom properties in the month of March. This in turn has led to an increase in the NZ average for 3-bedroom properties, as well as a slight increase in the Auckland 3-bedroom premium.