Number of rental properties advertised on Trade Me Property hit an all-time high in May

this reflects the data I've been seeing for some time in the hutt valley - if you read to the bottom of this weeks Hutt valley report - you can see my insights into rentals within the region. two key points

1. Number of properties for rent is double this time last year

2. Rental listing prices are starting to fall as a result of the extra supply.

Hutt Valley Market Update 27^th June

For those that didn’t see last weeks headlines – 2 lower hutt suburbs – Petone and Alicetown have had the biggest fall in house prices since the peak at the end of last year.

For Petone “considered this time last year” a hot Wellington suburb (think Ponsonby 5 years ago) with most houses selling for 200-300K over their valuation, growth YOY is now just 2% and it’s likely the current average house price of $1.05M will fall below the $1 Million mark before spring.   

Current Market Listings

583 houses on the market- Down 11 on last week –whilst lower than in April and May when listed number of houses peaked at 652 houses in early April, there are still 2.5 times the number this time last year when 230 houses were for sale

Based on the REINZ data which showed that 96 sold in Feb and 104 sold in March and 98 in April and 96 in May giving an average sale of 25 houses per week– 583 houses means there is 23.5 weeks stock on the market.

House Price Reductions

312 houses have a listed price

63% of the houses listed with a price have reduced their price since listing

The average markdown has increased to 96K.  (last week 91K)

Of those that have listed prices (pool 312) -51 have reduced their prices by 100K

11 have reduced their prices by over 200K, 6 have reduced their prices by 300K  and 1 now has reduced their price by 400K with the biggest reduction been 425K (a total 25% reduction)

The data continues to show the majority of houses listed are under 900K. The Median house price for all 583 listings is now 830K. (Down 9K last week)

The latest QV valuations (valuations by QV which are updated every month and give an approximation of a houses value) have dropped $130K since Jan for the Hutt.

In April the QV valuation had dropped 80K – approximately 20K a month since the start of the year but this escalated in May – dropping 50K in one month.

Meanwhile Homes based on last weeks update is inline with QV and indicating there has been an approximate $160K drop on house prices in the Hutt valley– since the peak which they are indicating was early Nov 21.  According to homes prices are back to June 21 prices – so flat with this time last year.

Houses sold vs houses removed

My records show 213  houses listed with a Price have sold YTD (up 4 from last week).

I have records of a further 179 houses (up 9 from last week) that have been removed from the market unsold YTD. 

28 of those houses removed from the market have been listed on the rental market

Length of time on the Market

• 432  houses have been on the market for over 30 days  - 74% (last week it was 430)

•  306 houses have been on the market for over 60 days - 52% (last week it was 311)

• 189  houses have been on the market for over 90 days – 32% (last week was 197)

•  120  houses have been on the market for over 120 days (last week was 121) -  20%
• 77 of the houses have been on the market for over 150 days  - 13%

The number of houses on the market over 60 days is now over 50%.   This has risen from 32% of houses in mid March (one in three) and just over 1 in 3 houses have now been on the market more than 3 months , almost 1 in 5 have been on the market over 4 months and 1 in 8 have been on the market over 5 months.

The time to sell continues to get longer and longer. 

Rental Market

As already noted the rental market has 207 properties for rent (down 8 on last week and 25 from 2 weeks ago) but up 102 on this time last year, – when just 105 houses were for rent. The number of rentals has now doubled on last year

Average rental price reduction is at $51 a week

As noted last week I have also been noting how many properties are listed for rent over $650 a week.

At the moment the percentage of properties listed at $650 is 43% - last week it was 40%.  Still well below the 53% of houses listed over $650 on the 23^rd March.

Similar story in the for sale listings. 6 months ago, listings were at their lowest for at least 5 years, for the time of year. Now we are at a 5-year high. Things have changed very quickly. 

My local rental agent has noted phone has stopped ringing and cannot give away (rent) 1-2 bedroom townhouses - Eastern Suburbs and North Shore

You love to see it. 

there were always 30,000 empty properties in Auckland -- that if occupied would have cured the  rental and housing aspect ( not FHB affordability) of the crisis overnight including significantly reducing rents and possibly capping price rises as returns dropped 

Increased mortgage rates and dropping capital values may have forced many of those owners back into the rental market -- instead of simply sitting unoccupied and still earning $3000 A WEEK plus in capital gains ( why put up with those nasty  horrible tenants with that sort of return!) Sarc BTW

Instead of all the frittering around  on interest relief and SHA's etc --  targetting and taxing the existing 30,000 empty homes  could have been a quicker solution to many issues - 

No surprise that Auckland and Wellington leading the charge here --  i wonder what the drivers are in Malborough - maybe the slips /floods -  or just people letting holiday baches /Air B n B homes  go on the longterm market to help service mortgages ?   

Exactly.

certainly my monitoring on TradeMe has shown a constant lift in rental listings over the past 1-2 months.

based on this rents should be flattish over the next 12 months. Good for the inflation picture, not so good for landlords under financial stress.

Wow, 45% increase for Wellington...I wonder what happened to cause such dramatic increase...

No no. No, this can't be correct. I was informed by the "investors" over at Stuff that they'd simple increase the rents to cover all the costs (inflation, rates, healthy homes etc). It'll be the renters, not them, that will suffer!

House prices are simply due to supply and demand... However, their rentals are diffrunt! /s

Wellington a 45% increase in rentals on TMe. I know it gets a little cold down there this time of year but 45%?

Perhaps they know something I don't?

Such a toxic backdrop for residential property investing - no income increase, higher funding costs, and reducing tax deductibility of interest.

Prices on existing residential stock need to halve to make them competitive on an after tax return basis, in the context of current interest rates.

I suspect people packing up and moving to greener pastures (Australia) has something to do with this - will be interesting to compare stats to see if there's any correlation if and when net migration data becomes available. Possibly more internal migration away from cities towards regional centres as well (with more organisations offering flexible work from home arrangements (aka. work from anywhere)(

Good. Can we stop concreting over our best growing land now?

Been calling a housing oversupply for a while, there is still of developments at their beginning stages, who is going to live in all of these, though I hope for the main part it will people who own them. 

On Newstalk ZB some property investors association guy said the biggest change is young NZers breaking there fixed term rentals due to going overseas adding to supply, no students coming in and increased supply from new builds and people who cannot sell, says there us now "obviously" an over supply of rental accomodation....     i am not sure the tide has gone out.... might be a TSUNAMI coming.

Fly, fly, fly my little birds. Go see the world. It helps.