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Property market continues to adjust

Last year saw house prices rise significantly with Auckland hitting its peak in November – a median of $1,300,000. This represented a staggering increase of 13% from the 6 months prior. Factors contributing to this were a housing supply shortage, historically low interest rates and easy access to lending.

2022 has seen rising mortgage rates, a tighter credit environment and increase in housing supply all leading to a decrease in price growth.

Last month Auckland saw negative annual median price growth for the first time since October 2019. A decrease of 2.2% year-on-year to $1,125,000 – down from $1,150,000 in May last year.

A look at our local markets saw varied price growth. Rodney’s median price increased year-on-year to $1,290,000, up 13.2%. The North West median remained unchanged at $1,050,000 and the North Shore decreased 1.9% to $1,305,000.

While price growth stats were varied, a decrease in sales volume was consistent among the three areas: -37% in Rodney, -28.7% in the North West and -29.6% on the North Shore.

Buyers continue to make considered purchasing decisions, resulting in an increase in the median days to sell: 43 days for Rodney and the North Shore, and 45 days for the North West.

The Government has amended some of the Healthy Homes Standards for rental properties through the Residential Tenancies (Healthy Homes Standards) Amendment Regulations 2022.

Amendments include changes to the heating requirements to reflect the higher thermal performance of new homes built to the 2008 building code requirements for insulation and glazing and certain apartments, as well as other minor changes to the ventilation and moisture ingress and drainage standards. Changes became law on 12 May 2022.

CHANGES TO THE HEATING STANDARD
The heating formula
The changes to the heating standard will generally allow smaller heaters to be installed in homes built to the 2008 building code requirements for insulation and glazing and apartments.

The updated formula for these building types means that tenants will still benefit from a living room which
can be heated to and maintained at 18ºC on the coldest day of the year. The heating assessment tool on the Tenancy Services website has been updated to reflect these changes.

Heating assessment tool
The original heating formula remains suitable for most of the rental housing stock in Aotearoa New Zealand. Buildings which are not apartments and are not built to the 2008 building code requirements for insulation and glazing still need to comply with the original Healthy Homes Standards heating requirements, unless they meet the requirements of one of the alternative pathways described below.

Compliance dates for landlords
To assist in transitioning to these new arrangements, private landlords of new homes built to the 2008 building code requirements for insulation and glazing and certain apartments will have a later deadline to meet the heating standard. Landlords will have until 12 February 2023 to comply with the heating standard.

Alternative pathways to comply with the heating standard using innovative and energy-efficient technologies.
The Government has also introduced more flexibility for properties with innovative and energy-efficient
technologies.

Developers can now use new and different heating technologies to comply with the heating standard. This requires a specialist to estimate the housing needs according to specific criteria, including that the system must be able to heat the living room to 18ºC on the coldest day of the year. In many new housing developments, a heating specialist will already be engaged for code compliance and/or design purposes. Geothermal heating systems that provide direct heat to a living room will also meet the heating standard. This will be utilised primarily by homes in Rotorua.

Heaters installed prior to 1 July 2019
The Government is also allowing electrical heaters to boost the heating capacity to what is required when qualifying heaters installed prior to 1 July 2019 are short of capacity by 2.4kW or less, rather than 1.5kW or less. The trigger point to top up or replace existing heating installed before 1 July 2019 has been revised to existing heaters that are at 80% of the required heating capacity, instead of 90%. Over time, as heaters need to be replaced due to wear and tear, they will need to meet the full requirement of the heating standard.

Clarification to the heating standard
if the landlord is not the owner of the whole tenancy building
A minor change to the heating standard has been made to clarify situations where the landlord is not the owner of the whole tenancy building and therefore cannot meet the heating standard. If the required heating capacity is over 2.4 Kw, a landlord must install at least one qualifying heater that has a heating capacity of at least 2 Kw. A fixed electric heater with a thermostat is an acceptable heater for this situation.

CHANGES TO THE VENTILATION STANDARD
Amendments to the healthy homes ventilation standard now support the use of continuous mechanical ventilation which extracts moisture to the outdoors from kitchens and bathrooms. Continuous mechanical ventilation will meet the ventilation standard where they have been installed in homes that have first received building consent, and the system was part of that original consent on or after 1 November 2019.

For retrofitted homes where installation of continuous mechanical ventilation took place before 1 November 2019, or if the mechanical ventilation system wasn’t part of the original consent, the system must provide ventilation for multiple rooms and meet minimum exhaust capacity requirements.

CLARIFICATION TO THE MOISTURE INGRESS AND DRAINAGE STANDARD
A minor change to the moisture ingress and drainage standard for moisture barriers has been made. It clarifies that landlords are not required to install alternative moisture barriers where installation of a polythene barrier isn’t reasonably practical.

Market eases into the winter months

Residential sales activity slowed further in April as the market settled into its current rhythm.

 

Sales volume New Zealand-wide decreased annually by 35%. Auckland also saw a decrease in the activity of 41.3%. As did our local markets – the North Shore and North West – seeing a decrease of 43% and 36.5% respectively.

 

Although sales volume eased significantly, price growth remained moderate with the median sale price for the North Shore increasing 11.3% year-on-year and the North West seeing a median increase of 8.9%.

 

In April it’s not uncommon to see a drop in sales numbers coming off the back of March – one of the strongest months in the annual property market cycle. This is further accentuated by a number of public holiday weekends.

 

As properties remain on the market for longer, buyers are given more choice – resulting in prices easing and sales volume decreasing. The median days to sell in April for the North Shore increased by 9 days to 41. The North West saw an increase to 37 days, up 8 days from April 2021.

Looking at buying a new property? As an astute buyer, you will probably have a list of things to check out before you make your offer such as council records, water tightness issues and a building report.

However, many people miss out one very important subject… the property’s susceptibility to natural hazards. And in a country punctuated by everchanging extreme weather patterns, the Earthquake Commission (EQC) has launched a new public education campaign – Home Safe Home? – to inspire home buyers to view a prospective property through a ‘natural hazard lens’.

Buying a home is a critical time for some people to make risk-based decisions, while others might be willing to make additional investments to improve the safety and resilience of their new home. But EQC public education manager Hamish Armstrong says the message is clear; before you buy a home, find out how natural hazards might affect it and what you will need to do to remedy any damage.

“There’s a lot to think about when buying a new home,” Hamish says. “However, top of the list might not be how it will stand up to a natural hazard.

“The campaign is not intended to tell people not to buy a particular home – instead we want to encourage them to be more ‘risk aware’ during the process. We want home buyers to consider actions they might need to take if they’re going to buy it.

“We hope this will continue to improve people’s awareness of the natural hazard risks we face in New Zealand and help home buyers spot the risks that might affect them and their property before they buy.”