Housing market stabilising as mortgage rates ease
The national housing market is showing fresh signs of stabilising as mortgage rates ease, according to Cotality NZ.
Cotality's Mapping the Market report revealed that the pick-up of standalone houses is beginning to regain ground in many suburbs.
Between April and June, 62% of suburbs (1652 out of 2661) recorded
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1News
6 days ago
- 1News
With falling house prices, fewer retirees can rely on their home as a nest egg
Retirement is beginning to look very different for Kiwis, with growing numbers still renting, paying a mortage, or owning a home of decreasing value. Claire Dale reports. Changes to KiwiSaver, global economic uncertainty and predictions house prices could drop by as much as 20% by 2030 all mean retirement is looking very different to how it once did. A retirement strategy based on the equity held in a house is no longer as reliable as it has been in the past. Home ownership in Aotearoa New Zealand fell from 75% in 1991 to 60% in 2023 and is projected to fall to 48% in 2048. The average age of a first-home buyer has also risen to 36, meaning an increasing number of New Zealanders (13%) are paying off their mortgages after they reach retirement age. Renting into retirement is becoming a new normal. (Source: ADVERTISEMENT The number of retirees renting is also on the rise. By 2048, 40% of them will rent, placing pressure on New Zealand's housing stock. KiwiSaver is unlikely to replace the traditional housing nest egg. New Zealanders have, on average, NZ$37,079 in their KiwiSaver accounts, with thousands of people reaching close to retirement age with less than $10,000 saved. Investing at the price peak The prospect of retirement looks bleakest for those currently aged between 35 and 49 years old. A recent report from credit agency Centrix found this group was struggling the most financially. The 35-49-year-old age group tends to struggle financially. (Source: A big part of the problem is that house prices skyrocketed just as they became first-time home buyers. The average asking price for residential property rose by 60.3% over the past decade, from $556,931 at the beginning of 2015 to $892,579 at the end of 2024. While incomes have also increased, they have not matched housing prices. In 2000, houses cost about five times the median household income. But by 2025, the median price had risen to 7.5 times the median household income. ADVERTISEMENT Those who bought their first home around the peak in 2021 are likely to be hit hardest by the forecast drop in house values. According to data insight firm Cotality (formerly Corelogic), nominal prices are expected to pass their 2021 peak by mid-2029. But when adjusted for inflation, prices in mid-2030 would be a fifth below the peak. Working into retirement Older New Zealanders are also facing significant housing pressures. According to a 2022 report from Treasury, over half of superannuitants still paying off mortgages spent more than 80% of their superannuation income on housing costs. Those who are mortgage-free are spending less than 20% of their super on housing. Between 2019 and 2024, the percentage of overdue mortgages for the 50+ age groups ranged between 2% and 2.5%, compared to a range of 1% to 1.5% for all mortgages. People between the age of 55 and 64 are likely to have purchased their homes in the late 1990s and early 2000s, so are less likely to be hurt by the 2021 peak and subsequent trough. Despite this apparent advantage, only 38% of people between 55 and 64 are mortgage free. ADVERTISEMENT The morning's headlines in 90 seconds, including an Auckland teen seriously ill in Vietnam, Trump slams supporters, and Icelandic volcano prompts evacuations. (Source: 1News) KiwiSaver issues The possibility of using accumulated KiwiSaver funds to clear a mortgage is also diminishing. As a result of the 2025 Budget changes to KiwiSaver, employee and employer contributions will rise from April 2026 to 3.5% and from April 2028 to 4%, offsetting the reduced annual government contribution. The end of employer contributions matters particularly to the 24% of those aged over 65 years who are still in the workforce. A rule change in 2021 means employers are not required to make contributions or to deduct employee contributions, unless the employee continues to make KiwiSaver contributions. But current global crises are affecting KiwiSaver returns. Uncertain and volatile markets, especially for actively managed funds, mean fund managers reallocate money to try to minimise losses. Not all their bets pay off. By 2030, Stats NZ projects that approximately 265,000 people aged 65 and over will be in the workforce. Half of those in their sixties are employed in New Zealand. (Source: ADVERTISEMENT The Office for Seniors notes that although older workers have challenges finding and staying in paid work, a third of the workforce is aged over 50 and 50% of people aged 60 to 69 are employed. Importantly, as the Retirement Commission research found, a third of people over 65 were not working by choice. An increasing number, who neither own their home nor have significant retirement savings, have to continue working past 65 because they need the money to eat and pay the bills. As New Zealand's population ages, and more seniors have to work to pay for the essentials, it's clear retirement is going to look different. Betting on the value of a house to fund life after 65 is less certain than it used to be. More than ever, New Zealanders need to consider how they will live well in their later years. Claire Dale is a research fellow at the Pensions and Intergenerational Equity (PIE) research hub, University of Auckland, Waipapa Taumata Rau. This article is republished from The Conversation under a Creative Commons licence.
RNZ News
6 days ago
- RNZ News
The return of the property investor - but why?
The rebound is being driven by investors who own up to four properties, says Cotality. Photo: RNZ Investors seem to be returning to the property market - but why? Cotality has released its latest property data, which shows that while first-home buyers remain a strong presence in the market, investor activity is picking up. Mortgaged multiple property owners were responsible for 23 percent of purchases in the second quarter, up from 21 percent in the middle of last year. In Auckland and Christchurch, they were 26 percent of transactions. Cotality chief economist Kelvin Davidson said the rebound was being driven by investors who owned up to four properties including their own home. Their share rose from 12 percent to 14 percent. They seemed to be targeting the more affordable end of the market, he said. Their share of purchases in the bottom 30 percent of properties by price rose from 21 percent last year to 24 percent so far this year. They were also more likely to buy existing properties, compared to last year, which Davidson said was probably driven by the absence of the tax advantage that used to come with buying a new build. But forecasts for capital gains are soft. Infometrics expects house prices to be 20 percent lower than 2021's peak in real terms even next decade . Rents have also been forecast to be subdued well into next year . Migration is weak and there has been a lift in housing supply, which keeps the pressure off prices. "If you're thinking about the future, well, the tax system might not be quite so favourable for property, the Government's pushing pretty hard on land supply," Davidson said. "We've got debt-to-income ratio restrictions now and that long-term downward trend in interest rates can't be repeated so I think there are reasons to be fairly cautious about future capital growth rates. "I speak at a few investor events and investors are certainly concerned about costs such as council rates going up." So what is pulling investors in? Davidson said property was still a "trusted" asset class. "Even if you think capital gains will be lower in the future there will probably still be some capital gains and people have still got their trust factor - they can still see the property, they kind of vaguely know how it works. "That's still a factor as to why people are buying rental properties." He said the changes to the loan-to-value restrictions and brightline test had helped, and the reintroduction of investors' ability to offset their interest costs against their income for tax purposes. "For me the biggest thing is lower interest rates. If you go back to the middle of last year when interest rates were still pretty high, a top up on a standard rental property could have been $400 or $500 a week - that's pretty chunky for your average mum and dad. Come forward to now and it might be $200 a week. It's still there but it's a lot lower than it was. That's a really big factor." He said it would not be a bad thing for investors to focus on the cost and income of a rental property rather than buying purely for the hope of capital gains. Sarina Gibbon, general manager of the Auckland Property Investors Association, said it did seem counterintuitive for investors to be more active. "I reckon it is to do with long-term confidence in the resilience of property as an investment vehicle. The 'headwinds' are very much perceived as short-term turbulence. "Overall, there is still a deeply seated belief among Kiwis that property will hold its value better than most other assets over time. Additionally, the sort of control and leveraging power you get with property, you're just not going to get that with anything else. "There are also some really interesting paradoxical forces at play. It seems like the weaker the economy gets, the more people are convinced about second or alternative income streams. And property still delivers that overall stability and confidence for Kiwis as a way to support and provide for their families. "So what we are seeing isn't a bet on capital gains, it is a hedge against the fading dream of upward mobility. Amongst investors, property is becoming less about wealth creation and more about income replacement. In terms of narrative, we've definitely moved away from the Covid era of FOMO, 2025 property investment is very much Plan B." Infometrics chief forecaster Gareth Kiernan said the growth was coming off a low base. "If you look at the number of investor mortgages over the last year… the total of 32,284 is still lower than at any time between 2015 and February 2022. "I don't see a lot of substance to the pick-up, or the growth being sustained, particularly when you look at how negative the trends are in rents at the moment, the fact that net migration and population growth are still easing, and consent numbers of about 34,000pa are substantially above underlying demand for new housing. "Part of the growth over the last year or so is likely to have been driven by more favourable tax treatment for mortgage interest making the numbers financially a bit more attractive …the reduction in the brightline test to two years meaning people are perhaps more willing to take a shorter-term punt on capital gains. The decline in interest rates will also have led to people looking for better returns thank banks are offering, which might have helped buoy investor demand for property a bit." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
RNZ News
14-07-2025
- RNZ News
Is it worth paying a real estate agent to sell your house?
Three quarters of agent-listed properties in the past 10 years were successfully sold, compared to 65.1 percent of privately listed properties. File photo. Photo: You might pay a real estate agent $30,000 or more to sell your home. But is it worth it? Analysis by property data firm Cotality suggests it might be. Each year, a small number of people opt to sell their homes privately - from a low of 3.1 percent in 2021 to 8 percent in 2016. Last year, it was 7.6 percent. But Cotality head of research Nick Goodall said agents seemed to sell properties more quickly and effectively. "The sales success rate is higher for agent sales - by an average of 11.5 percent over the 10 year period." Roughly 76 percent of agent-listed properties in the past 10 years were successfully sold, compared to 65.1 percent of privately listed properties. Last year 65 percent of agent listed properties sold, compared to 52.8 percent for private sales. Goodall said real estate salespeople would often have an understanding of which buyers might be in the market for a particular property and could target them more effectively than a private seller might. "The typical days on market for agent sales is also most often shorter. In 2021 - the market peak - the median days on market for agent sales was 24, while it was 40 for private sales. Interestingly last year was the one year to buck that trend, with agent sales taking a median of 75 days, compared to 71 days for private." He said the median sales price for properties sold by agents was higher, too, but that could reflect a different mix of properties being sold. "Vendors may be more likely to sell their property privately when it's a lower value property, whereas owners of more expensive property might be more likely to use an agent." He said last year's higher rate of private sales could reflect vendors being aware that prices were not strong and looking to save money where they could. "Nonetheless, for the record, the median sales price of properties sold by agents this year is $740,000, compared to $662,500 for private sales. Last year the respective figures were $735,000 for agents and $704,000 for private." Goodall said the data was not definitive enough to say whether agents were delivering enough extra value to pay their commission. At Barfoot & Thompson, for example, a $750,000 sale would incur $23,978 in commission. A $1 million sale would mean just under $30,000. "The figure for this year is almost $100,000 so I'd say that would justify it if it was like-for-like properties. But the year before was closer so you might be sort of borderline there." Goodall said people selling privately would also need to account for the time they would need to spend on the process. "Having to take time off work or the opportunity cost or what else you could be doing if you have to spend all that time preparing to sell a property on your own, you know that might bring the calculation a little bit closer as well." Real estate agent Brooke Gibson said she could understand why people would sell privately. She did it herself before she entered the industry. But she said she could see that agents would add value for most people, particularly when it came to negotiating. "You could actually easily kill the deal because you know, if someone comes up to you and you're opening up your house to them and they go 'how much do you want?' and you say $1 million and he thinks it's worth $700,000 for example, he's going to be like 'nah not interested." Wellington salesperson Mike Robbers agreed. He said agents would also often present properties a bit better than private sellers would, with professional photography and home staging. "Private sellers often start out with a very high price in mind, then reduce it over time when there's no interest, but by then the listing has gone 'cold'. Agents tend to use their market knowledge to get the pricing strategy right from the outset, so the listing doesn't sit as long on the market." He said some buyers also expected to pay less for a private sale because the seller did not have to cover commission. Real Estate Authority chief executive Belinda Moffat said whether it was better to sell privately or through an agency would depend on the seller's specific circumstances, the property itself and the seller's knowledge and experience. "Licensed real estate professionals are trained and experienced in working on behalf of homeowners to help them navigate property transactions with confidence and are legally required to seek the best outcome for their client." She said all real estate salespeople were required to follow the standards in the Code of Professional Conduct and Client Care and meet their obligations under the Real Estate Agents Act 2008. "If a person works with a licensed real estate professional, and an issue arises with their professional conduct, the person has the option to make a formal complaint to REA and/or to raise the issue with their agency." Agents should provide a current market appraisal (CMA) of what a property might sell for before they signed an agency agreement. "(CMA) of what they think the property might sell for before the seller signs an agency agreement. The CMA must be informed by comparable recent sales in the area and can be helpful in understanding what the property may be worth. They will also prepare a proposed marketing plan which the seller can discuss, amend and agree to. "They also understand and can advise on the important legal disclosure obligations a seller has when selling a property, including in relation to defects and unconsented alterations. If a seller knowingly fails to disclose relevant information to buyers, they could be in breach of the terms of their agreement with any buyer, meaning the sale could fall over or the buyer could seek compensation and take court action." She said vendors might be able to negotiate commission. People choosing to sell privately should research the process so they understood what was require, she said. Moffat said confidence in the industry had lifted from 70 percent in 2021 to 82 percent last year. Goodall said there was demand for property but there remained high numbers of listings. "I think if you're willing to be very, very flexible on that price then it's probably not that difficult to get a sale, but it's all about you know, your expectation, what you want to do, if you're buying in the same market, if you're moving elsewhere..." He said some people were still hung up on the prices being paid at the peak of the market and were finding it hard to adjust their expectations. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
