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January 2020 Real Estate Market Update
As predicted last year the housing market is set to boom in 2020. January saw the highest number of residential sales for a January month in 4 years.
Nationally sales were 0.9% higher than 12 months ago. Auckland was up 9.7% year on year.
Nelson, Manawatu / Whanganui, Bay of Plenty and Marlborough all had sales increases of more than 10% over January 2020. Prices too are continuing to rise strongly.
The median price increased in all of the 16 regions of New Zealand.
Some of these regions achieved new record medians:
Waikato up 8.9% to $598,000
Taranaki up 9.1% to $420,000
Bay of Plenty up 17.8% to $683,000
Otago up 19.9% to $570,000
Hawkes Bay up 22.2% to $550,000
Manawatu / Whanganui up 24.5% to $ 411,000
Southland up 28.7% to $359,000
Canterbury equalled the previous record of $465,000 set in October the previous year. The time taken to sell has fallen Nationally by 6 days and in Auckland by 8 days compared to January 2019.
The number of listings – properties for sale Nationally has decreased by 21.7% compared to January 2019.
New Landlords Obligations Will Increase Rents!
A whole lot of changes are in the process of being imposed on landlords that will most likely result in fewer people wanting to be landlords (less houses to rent) putting upward pressure on rents.
Many current landlords will find the regulations and increased costs means that they would rather sell than have all the worry, extra restrictions and costs.
Most of those houses will be sold to first home buyers – meaning fewer rental houses available leading to increased rents.
For those landlords that continue to rent out properties their costs will increase because of the Healthy Homes Regulations. Some of these typical costs are:
Heating to be installed – $2,000 – $3,500
Roof insulation to be installed – $2,500 – $ 4,000
Underfloor moisture barrier to be installed – $1,000 – $2,500
Ventilation – kitchen, & bathroom extractors installed – $750 – $1,500
Drainage and guttering checked at the end of each tenancy
Compliance statements – ongoing at change of tenancy – $200
What Other Changes are in the Pipeline for Landlords?
Insurance – tenant is only responsible for the damage done to the property to the excess of the landlords insurance even if they do thousands dollars more damage and the excess is say $500.
There are increased penalties for non-compliance by landlords. The changes to the Residential Tenancies Act 1986 currently in parliament will make it far less attractive to be a landlord.
90 days notice without giving a reason will make it much more difficult to remove “bad” tenants. Why would a landlord want to remove a good tenant?!
Rent increases will be changed from 6 months to 12 months. Tenants can make minor (what is minor?) alterations without a landlords consent.
What one person regards as minor another may regard as significant. There will likely be numerous time take and costly disputes as a result of this change. There are also increased penalties for non-compliance by landlords.
Apart from putting people off buying properties to rent and therefore creating an even greater shortage of rentals which pushes up rents, these extra cost and regulations will increase landlords costs, increasing rents even further.
In New Zealand the vast majority of landlords are Mum and Dad investors with one rental brought as a long term retirement investment to supplement their pension.
Every good tenant should enjoy a safe, dry, warm home. Every slum landlord should be driven out of the rental market. Many of the changes coming are very good and long overdue BUT some are counterproductive.
Make no mistake however rents will rise rapidly as a result.