Significant 18-month Stretch Of Price Stability: Will Monday’s Regulation Changes Shake Things Up?

New regulations on debt-to-income ratios (DTIs), loan-to-value ratios (LVRs), interest deductibility and the bright-line period are now in effect

• Price stability reigns, but West Coast returns to the bottom of the table
• Choices aplenty for renters, prices yet to catch up

The latest real-time data from realestate.co.nz shows that average asking prices were again stable during June, marking a full year and a half of unchanged prices nationally. Total stock was up in all regions, increasing nationally by 28.6% year-on-year in June. Although stock was down by 2.6% compared to May, the total number of homes has remained above 30,000 for five consecutive months. New listings also rose by 25.5% year-on-year during June. However, this is a return to normal after low listing levels in 2023.

Sarah Wood, CEO of realestate.co.nz, says this is a significant period of price stability. But suggests that this week's new regulatory changes, including new debt-to-income ratios (DTIs), loosened loan-to-value ratios (LVRs), a more relaxed bright-line test, and earlier changes to interest deductibility, could impact the market:

“Anecdotally, real estate agents have reported a backlog of properties waiting to be listed until the new bright-line rules took effect on 1 July; as more landlords struggle to sustain their rental properties with such high interest rates.”

She adds, however, that the new regulations, paired with current market conditions make it even more critical for those transacting to research their local market:

“Stable prices could benefit those looking to buy an investment property. However, with a large supply of rental properties currently available, new investment buyers will need to really understand rental demand in their area.”

“Those choosing to sell following the shortening of the bright-line test also need to price realistically. Some may struggle to get their desired price, especially if they bought at the peak of the market and potentially face selling for less than they purchased.”

Price stability reigns, but West Coast returns to the bottom of the table

Southland saw the largest increase in its average asking price of any region, up 12.1% year-on-year. After holding the title of the most affordable region for three consecutive months, Southland was overtaken by the usually low-cost West Coast in June. The West Coast's average asking prices dropped 13.6% month-on-month to $476,892 after staying above $500,000 for three consecutive months.

In Wellington, average asking prices returned to normal, rising 10.9% month-on-month to $818,352. This increase brought the capital's average asking price back above $800,000 after an unusual dip in May.

Nationally, and in the Bay of Plenty, Manawatu/Whanganui, Waikato, and Wairarapa, prices remained static between May and June, with changes of less than 1.0%.

“Prices have fluctuated between $860,000 and $890,000 since November 2022. That’s a year and a half of buyers and sellers facing some level of certainty around prices, which is a silver lining in an uncertain economic environment.”

In the meantime, Wood advises sellers to ensure their property is well marketed, work with a real estate agent experienced in selling their type of property and take the time to understand market insights and local price expectations:

“Understanding your local market will be more important than ever now that DTI ratios will cap how much a buyer can spend at six times their income.”

Choices aplenty for renters, but prices yet to catch up

People looking for a rental property had plenty of choice last month. Compared to June 2023, new rental listings were up nationally by 26.9%. Despite a 10.4% decrease from May’s unseasonal new listings jump, this is the second consecutive month of high new rental listings.

Wood suggests that financial pressures on investors could be driving the surge in new rental listings, perhaps leading them to convert short-term rentals and Airbnbs into longer-term rentals.

"Additionally, some landlords may have planned to sell with the new bright-line rules in July but have reconsidered after evaluating average asking prices, opting instead to place their properties back on the rental market."

Up 5.9% to $653, the average weekly rental price increased nationally and in all regions year-on-year, except Wairarapa, where it decreased by 1.2%.

Month-on-month, the national average rental price remained relatively unchanged, down just 0.9% from the all-time high of $660 recorded in May. Notably, Waikato reached an all-time rent high of $572, marking record rental prices for the region in three of the last four months. Wood observes that the increase in new rental listings has not yet impacted average rental prices.

“Landlords report a challenging environment. Even after lowering prices, some have found interest from potential tenants remains low, indicating a softening rental market.”

Expert advice essential in changing times

Wood predicts that buyers and sellers are likely experiencing confusion. She expects that some will be watching and waiting to see the impacts of new regulations on the market before transacting:

"Typically, Kiwis don't like to transact during uncertain times. Right now, there's a lot of economic uncertainty, acronyms to decode, and property market regulations to process."

“The good news is that the slower pace of the current market allows buyers and sellers more time to conduct due diligence and seek expert advice.”

She adds that the most common method of sale during June was ‘display price’, which makes the negotiation process more transparent.

About realestate.co.nz

We’ve been helping people buy, sell, or rent property since 1996.

Established before Google, realestate.co.nz is New Zealand’s longest-standing property website and the official website of the real estate industry.

Dedicated only to property, our mission is to empower people with a property search tool they can use to find the life they want to live. With residential, lifestyle, rural and commercial property listings, realestate.co.nz is the place to start for those looking to buy or sell property.

Whatever life you’re searching for, it all starts here.

Want more property insights?

Market insights: Search by suburb to see median sale prices, popular property types and trends over time.

Sold properties: Switch your search to sold to see the last 12 months of sales and prices.

Valuations: Get a gauge on property prices by browsing sold residential properties, with the latest sale prices and an estimated value in the current market.

Glossary of terms:

Average asking price (AAP) is neither a valuation nor the sale price. It is an indication of current market sentiment. Statistically, asking prices tend to correlate closely with the sales prices recorded in future months when those properties are sold. As it looks at different data, average asking prices may differ from recorded sales data released simultaneously.

New listings are a record of all the new residential dwellings listed for sale on realestate.co.nz for the relevant calendar month. The site reflects 97% of all properties listed through licensed real estate agents and major developers in New Zealand. This description gives a representative view of the New Zealand property market.

Stock is the total number of residential dwellings that are for sale on realestate.co.nz on the penultimate day of the month.

Inventory is a measure of how long it would take, theoretically, to sell the current stock at current average rates of sale if no new properties were to be listed for sale. It provides a measure of the rate of turnover in the market.

Seasonal adjustment is a method realestate.co.nz uses to represent better the core underlying trend of the property market in New Zealand. This is done using methodology from the New Zealand Institute of Economic Research.

Truncated mean

is the method realestate.co.nz uses to supply statistically relevant asking prices. The top and bottom 10% of listings in each area are removed before the average is calculated to prevent exceptional listings from providing false impressions.

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