March has been a month marked by significant updates in the property market:
Mortgage Interest Deductibility: Associate Finance Minister David Seymour announced on March 10th that the Government had agreed to restore deductibility for mortgage interest on residential investment properties. This means affected taxpayers can claim 80 percent of their interest expenses from April 1, 2024, and 100 percent from April 1, 2025.
Read more: (https://www.beehive.govt.nz/release/government-agrees-restore-interest-deductions)
Bright-line Property Rule Change: Posted on the 15th of March, the Government announced that from 1 July 2024 the bright-line property rule will change. The date you sell a property will determine the application of the bright-line property rule, which will only apply if the property is sold within 2 years of purchase.
Tougher Stance on Social Housing: on the 18th of March, the housing and finance ministers sent a letter demanding Kāinga Ora – Homes and Communities take a tougher stance on unruly social housing tenants, if they exhibit “persistent antisocial behaviour”. The ministers saying the “Sustaining Tenancies Framework” – which aims to keep tenants in a home – has meant there is no incentive for them to improve antisocial behaviour or stop damaging the houses.
The letter, signed by Chris Bishop and Nicola Willis, called for the social housing agency and landlord to replace the framework, and “strike a different balance between the benefits to a disruptive tenant of sustaining the tenancy and the impacts of that approach on neighbours”. The move was in line with a commitment set out in the National-ACT coalition agreement. In a statement, Bishop said the framework had “exactly the effect you’d expect”. “There are hundreds of serious complaints every month – the most recent stat has been 335 serious complaints per month – of things like intimidation, harassment, threatening behaviour and worse. And yet, in all of 2023 only three tenancies ended due to ‘disruptive behaviour’. The letter also called for a stronger approach to social tenants who fail to pay rent, urges the organisation to fill untenanted homes as quickly as possible, and meet social housing targets for the 23/24 and 24/25 years.
ACT leader David Seymour said the “threat of eviction is an essential incentive to discourage malicious behaviour”.
On tenant debt, figures show state house tenants’ debt has increased from $1 million to $21m between 2017 and 2023 and more than 450 Kāinga Ora tenants each owed more than $10,000 in rent at the end of last year. “Frankly, this isn’t in anyone’s best interests – not taxpayers, and not the tenants themselves – so Kāinga Ora needs to address the current rental arrears issues and prevent future arrears from escalating,” Bishop said.
Finally, Bishop is also instructing the housing agency to engage more genuine engagement with communities because he was “concerned about the loss of social licence for social housing in communities” that didn’t feel properly consulted with about housing developments.
We watch these developments earnestly.
House Price Trends: The latest OneRoof-Valocity House Value Index indicates a nationwide average property value increase of just 1% ($10,000) in the three months to the end of February. This slight increase is attributed to uncertainty around interest rates, which has curbed buyer appetites.
Reported by OneRoof House Price Report – March 2024, Auckland property sales in January were the region’s lowest monthly tally since April 2020 when the country was in lockdown in response to the Covid-19 pandemic. February sales have been similarly challenged. Quarterly value growth in the region slowed to 0.2%, down from 2.5% in the three months to the end of November.
It is now predicted, however, based on the five-year average growth rate pre-2020 that New Zealand house prices will take less than two years to return to their post-Covid peaks from current levels, new figures suggest. According to market projections by OneRoof and its data partner Valocity, the nationwide average property value will return to its February 2022 high of $1.098 million in the third quarter of 2025. Auckland and Wellington regions will have to wait a little longer, though. Both regions suffered larger declines than the rest of the country and have more to recover. The OneRoof-Valocity forecast pins Wellington’s return to peak value in the second quarter of 2026 and Auckland’s return to peak six months later. The OneRoof-Valocity projections are based on the average quarterly growth rate for each region in the five years to the end of 2019.
Wayne Shum, senior research analyst for Valocity, said higher for longer interest rates, a cost-of-living crisis and the impact of the planned debt-to-income ratios would lengthen the housing market’s recovery time. “The growth rate since values hit their trough last year suggests it is returning to pre-Covid patterns. And while past performance may not be a perfect indication of future performance, the Valocity forecast does give homeowners a rough guide for the next two years in the housing market,” he said.
Stay informed and make wise decisions in this ever-changing market. If you have any questions or need assistance with your property matters, please don’t hesitate to contact us.
