There is “no robust evidence” Kāinga Ora activities impact house prices in surrounding areas, a leader in the state housing agency says.
But a Rotorua councillor disagrees, referencing locals’ “terrible, sad and upsetting stories” and offering to arrange for property experts to take the agency “through the evidence”.
The exchange came as representatives of the country’s biggest landlord addressed Rotorua Lakes Council’s Community and District Development Committee on Wednesday.
Kāinga Ora has about 900 homes in Rotorua and is making a major push to build more with 500 homes in the pipeline for 2024/25 – two-thirds of those new builds.
The scale of the building programme had some residents fearing Rotorua becoming the “social housing capital of New Zealand”, councillor Don Paterson said.
Kāinga Ora deputy chief executive, Central, Daniel Soughtton told the meeting a lower proportion (about 2.5 percent) of Rotorua’s housing was publicly owned compared to the national average of 4 percent.
“The large build you are seeing right now in your community is helping this community catch up to where other places are.”
He also said there was “no robust evidence” Kāinga Ora activity impacted the housing market “in terms of prices”.
“There is actually a positive effect. Where we have been upgrading and growing our housing as part of the Canterbury recovery following the earthquake, the surrounding areas actually did better in terms of property prices compared to those that didn’t have that level of investment.”
Councillor Conan O’Brien said the robust evidence councillors had was from living in Rotorua.
“We accept the emails, we listen to our constituents, we get the phone calls. We listen to some very terrible, sad and upsetting stories by people affected by some of the things you are not directly responsible for, I respect that. Personal behaviour is personal responsibility.”
O’Brien said he would be happy to organise a meeting for Kāinga Ora to hear from local real estate agents and rental agencies to talk them “through the evidence”.
“I hope that would be robust enough for you.”
Zero forced evictions
Kāinga Ora Bay of Plenty regional director Darren Toy said in the last six months 38 households in Rotorua had been “causing us a bit of grief”.
Complaints varied from noise issues, property care and disruptive behaviour. Toy said most were resolved with communication and formal meetings while more serious issues followed the Residential Tenancies Act process.
He said it was “actively issuing breach notices” but had not forced any evictions from Kāinga Ora or other properties in the past two years.
“We have had some moved on after discussions with them,” Toy said. “Without having to formally evict them.”
O’Brien said he believed some people impacted by poor Kāinga Ora tenant behaviour no longer complained to the council because they were “numb” to the issues.
$240m investment
Toy said the agency would invest $240 million in Rotorua in the 2024/25 year.
“We are targeting locals. Local subcontractors, local builders, local suppliers.”
There were no confirmed housing growth plans past that year until the government-commissioned independent review of Kāinga Ora was complete.
This was expected by the end of the month.
Given the number of projects happening in Rotorua, it was taking a city-wide approach to community engagement rather than project-by-project.
A map of all developments in the city could be viewed on its website.
Paterson, who instigated inviting the agency to the meeting, said he believed the number of builds contributed to a community perception.
“The whole rationale behind this [meeting] was to try and put these perceptions behind us so we can move on … a fair amount of [the perceptions] are just, because of what they have gone through.”
“People think the only building that is going on here is community housing … they are worried we are being turned into, the term that is being bandied about, the social housing capital of New Zealand.”
Paterson said while this was unfair, that was the perception.
Council district development general manager Jean-Paul Gaston said about half the consents coming to council were for government-assisted builds.
He said bringing the city up to the national average of public housing was “quite important”.
Rotorua had about 1.5 percent of the country’s population, 2.5 percent of beneficiaries and 3.3 percent of the housing register.
Rotorua’s higher unemployment and socio-economic positioning drove housing need, he said.
By the numbers: Rotorua public housing
- 2.5 per cent: Public housing in Rotorua housing stock, compared to about 4 per cent nationally
- About 950 households are on the Ministry of Social Development register, 250 in emergency housing
- 200 on the register were 55 or older
- 150 homes tenanted since July 2022, most from coming motels and temporary housing – family groups prioritised
- 130 homes built since June 2022
- 12 vacant Kāinga Ora homes
- 500 houses in the pipeline for 2024/2025. Of these, 332 were new builds and the rest existing stock renewals
- $240 million: Total planned Kāinga Ora investment in 2024/2025 year.
Source: Kāinga Ora
LDR is local body journalism co-funded by RNZ and NZ On Air.
The house market has flattened out with diminishing demand expected to continue, as interest rates and other costs remain high, according to the latest QV House Price Index.
The index indicates property values fell 2 percent over the three months ended in February, but were up 1.3 percent on the same quarter the year earlier.
That was the first annual increase in the price of residential property since August 2022, bringing the national average home value to $925,812.
“The slow but steady growth that we have been experiencing since June last year now appears to be flattening even further,” QV operations manager James Wilson said.
Just three of the main urban areas had positive home value growth in the three months ended January, including Tauranga (3.1 percent), Nelson (1.2 percent) and Marlborough (3.1 percent).
Auckland’s three-month rolling average fell into negative territory (-0.1 percent) for the first time since August last year. Values in Wellington (2.5 percent) and Christchurch (2.4 percent) continued to grow at a reduced rate.
“This flattening trend is largely being driven by diminishing demand. In some areas, it appears that the increase in the number of new listings that came onto the market in late January and in February appears to have met market demand, cooling competition in places like Auckland in particular, and therefore flattening home value growth,” Wilson said.
“This trend is expected to continue over the next few months.
“But with such strong economic headwinds in place, we’re also unable to pinpoint anything that would spark a return to strong value growth over the next 3-6 months.
“There is still a reasonable amount of uncertainty about what the Reserve Bank will do next – whether we’ll see it cut the OCR late this year, or whether we might even see it rise further.
“Either way, the real estate market doesn’t tend to like this sort of uncertainty,” Wilson said.
Regions mixed quarter on quarter
Northland saw slow and steady quarter-on-quarter growth.
Auckland’s slow-but-steady home value growth stalled in February.
Tauranga’s home value growth remained relatively robust compared with most other main centres.
Waikato’s home value growth – including Hamilton – was slow.
Values nudged up across the Taranaki region.
Hawke’s Bay was mixed, with values up in Napier and down in Hastings.
Property values largely stabilised in Palmerston North.
Home values in Wellington continued to slowly push upward.
Nelson saw another modest increase in average home value.
Low sales volumes on the West Coast was causing home value levels to peak and trough.
Home values continued to grow in Canterbury, but at a slower pace.
In Christchurch, the average home value had increased by 2.4 percent.
Home values rose across the wider Otago region by an average of 3.4 percent.
Dunedin saw the smallest amount of growth within this period, with its average home value increasing by 1.8 percent.
Home values continue to climb upward in Queenstown by 4.2 percent.
Invercargill’s residential property values fell 0.5 percent.
The Property Investors Federation says the government’s move to restore tax deductions for interest on residential investment properties will improve the rental market.
President Sue Harrison told Morning Report the change would increase the supply of rental properties by the “mum and dad” investors she represents.
“They’re at the coal face. They’re working with people in the small towns and the big towns and they’re trying to provide properties – 85 percent of property is in private hands in New Zealand so it’s a public-private partnership and there has to be balance in that relationship to make it work at all levels, whether it’s suppliers, developers, builders, or the people who own the property [and]… we need to make it work for the renters.”
The tax break was a “normal business expense”, Harrison said.
“It’s good tax practice and [its removal] was brought in by stealth through the last government… but the restriction in supply has gone the other way for renters because, inevitably, everything ends up down at the bottom.
“The person who’s [supplying] that property is trying to survive themselves so the costs have to come from somewhere.”
She said the change to tax deductibility would hopefully increase the supply of rental properties.
“We have people trying to do the numbers on their retirement and working backwards, and thinking if we supply a property into the rental market these are the numbers.
“But suddenly interest rates have increased on them and there’s a new tax that wasn’t even in the budget when they began, so they’re trying to survive with that.”
Housing stock is a ‘national embarrassment’ – Renters United
Earlier on the show, Revenue Minister Simon Watts said the tax reversal would be a “win-win” situation for investors and renters alike.
However, an advocate for tenants does not believe anything will change for them once the tax breaks return.
Renters United spokesman Luke Somervell told Morning Report the savings would not be passed on to renters, and would be a “cash handout for landlords”.
“Rents are high because we don’t have enough houses, and there are enough desperate people, unfortunately, who will pay for them. I’m one of those desperate people, in fact.”
He doubted it would impact on supply.
“It’s just going to be a cash handout for landlords who rent the same old homes at a greater profit every year.”
Somervell disputed statements by the Revenue Minister that it would reduce rents as there was no incentive for landlords to do so.
“They are making record profits, rents keep going up, more people are looking for homes so I don’t really see why there is any incentive for them to do that.”
The new policy was designed to insulate the market from risk and encourage the “feeding frenzy” of property speculation, he said.
“It’s just going to prop up the status quo that’s given us the housing crisis in the first place.”
He called for more new homes to be built – whether they were rented out or bought by first-home buyers.
“We’ve got a decaying housing stock that’s a national embarrassment and we need to have meaningful enforcement through the Tenancy Tribunal… of Healthy Homes specifications.
“The government is saying that they’re trying to help out renters – but then they’ve got no-cause evictions that are going to boot renters out of their homes.
“I think the minister should come clean and admit that there’s nothing here for renters and stop trying to pull the wool over our eyes.”
The Ministry for Primary Industries (MPI) is set to slash its nearly $58 million spend on consultants in a bid to save money.
As part of the coalition’s 100-day plan which ends today, the government told the public sector to reduce expenditure and cut down on consultants.
MPI said in the 2022-23 financial year it spent $57.81 million on consultants and contractors for projects such as developing the new electronic trade certification system, work on the agricultural emissions pricing system and the Mycoplasma bovis eradication programme.
It was working to cut that by 34 percent to $38.2m this financial year.
When it comes to overall spend, MPI has a target savings reduction of 7.5 percent.
“We are working carefully to identify credible savings options, final decisions will be made as part of the Budget 2024 process,” a spokesperson said.
Another part of the 100-day plan was to establish a permanent rural regulation review panel to assess all regulations affecting the primary sector and to propose solutions to cut red tape.
MPI said it had not been instructed to start work on this yet.
It is not clear how the new panel would differ from the Office for Rural Communities, which carries out similar work.
Private messages sent from Auckland mayor Wayne Brown to Transport Minister Simeon Brown reveal a request for consultants working on the Waitematā Harbour crossing study to be blacklisted.
Correspondence between the two, obtained by RNZ under the Local Government Official Information and Meetings Act, shows them discussing issues including the Regional Fuel Tax, axing Auckland Light Rail, and water reforms.
In one text sent on 14 January, Wayne Brown congratulated the minister for his work on Auckland Light Rail, before shifting focus to the harbour crossing study and calling for a list of consultants, and how much they were paid, so they could be blacklisted.
Wayne Brown criticised the study in the message as even more money wasted.
The documents do not show a response from Simeon Brown.
Last year, Auckland Council comprehensively rejected the previous Labour government’s proposal for transport tunnels underneath Waitematā Harbour.
The council’s transport committee voted against the proposal a day after a report showed it would cost $56 billion and did not have the support of the Ministry of Transport nor Auckland Transport.
Wayne Brown had been critical about a second crossing for the Waitematā harbour, saying council was looking forward to working on some better, faster and cheaper plans.
A spokesperson for the mayor said his comments were tongue-in-cheek.
They said the mayor was appalled by how much the government paid consultants to plan mega-projects that “will never get started”.
The spokesperson said Wayne Brown was ramping up his focus on Auckland Council’s approach to procurement, and that he expected the government to do the same.
Simeon Brown’s office did not respond to RNZ’s request for comment.
An Auckland property developer is offering cashback deals of up to $20,000 in a bid to move unsold apartments in a multimillion-dollar development.
There are about 40 unsold apartments in Ockham’s 210-unit Maanaki apartment block in Onehunga.
One-bedroom apartments in the development start at around $670,000, with those buyers eligible for $10,000 cash back.
The cheapest three-bedroom apartment is about $895,000, with buyers eligible for $20,000 cash back.
Ockham Residential co-founder Mark Todd told Checkpoint the property market had been an “arm wrestle” since the end of 2021, with sales down right across the sector.
“Three quarters of New Zealanders or more cannot really afford housing with the current interest rates,” he said.
While the costs for developers were no longer rising, they were not falling either, he said.
“I can’t build new houses for anything less than what they’re worth now, people can’t afford them, that’s why we’re seeing low sales volumes. So what we’re actually doing is showing a bit of manaaki, generosity of spirit.”
Ockham was also keen to sell the last Manaaki apartments to “free up” capital for its next developments, Todd told Checkpoint.
“If we have to we could sit on them for three years and lease them out, but it’s much more productive for us to build more apartment blocks.”
Todd said he was offering cashback deals instead of simply lowering the ticket price so he could “protect the value” of the apartments for Manaaki’s 170 existing owners.
When asked if he would be offering retrospective cashback deals to those owners, he said he would not.
“You can’t go back through in time. Everyone’s got to play their chips on the board,” he said.
“We’re the ones that borrowed $80-odd million and had $30-odd million of equity in that development to get it built. Everyone took a certain risk profile.”
The sales of those 170 apartments were settled two months ago without any problems, Todd said.
“What I would say is the purchasers from three years ago bought at lower prices, the price went up and now it’s come down again and it’s worth roughly what it was.”
Housing Minister Chris Bishop sets 'long-term' price target of three to five times household incomes
The new housing minister has set a target of having homes costing just three to five times household incomes – well below what they are now in most of New Zealand.
But Chris Bishop does not want too quick a fix to the country’s housing affordability crisis – saying a crash “tomorrow” would “cause enormous economic and financial instability to people”.
“What I want is for house prices to moderate over time, so that in 10 to 20 years’ time, we have essentially gone a long way towards solving our housing affordability problem,” he told Checkpoint on Tuesday.
Earlier in the day he outlined the first steps in his plan, saying most of the country’s biggest cities will be flooded with land for residential development.
In a speech delivered to Wellington’s Chamber of Commerce, Bishop confirmed councils will have to earmark 30 years’ worth of land for housing development.
They will be able to opt out of housing density rules that allow homes up to three stories high on most residential sites without the need for a consent – a bi-partisan rule that National signed up to in opposition. Instead, councils will be able to choose exactly where high density housing goes.
He also promised to make it easier to build granny flats or dwellings less than 60 square metres.
In his speech, Bishop said the status quo was costing the country the equivalent of 15 Transmission Gully motorways every four years “just on helping people to be housed”.
“The taxpayer subsidises rents for people in social housing, we pay for emergency housing grants, we pay for transitional housing, we help people with their bond payments and so it goes. A failure to reform housing has made it extremely expensive for government.”
And in a briefing to Cabinet, Bishop said housing affordability was arguably the single most pressing economic and social issue.
Speaking to Checkpoint, Bishop said New Zealand was not short of land, but rules “make it very difficult to use that land”.
“What we’re saying is we need to go out at the edge of our cities and we also need to go up inside our cities.”
Inside existing limits, Bishop said the coalition government would keep Labour’s policy of allowing up to six storeys “within walkable catchment areas of rapid transit stops”, and give councils more discretion over what areas had to allow up to three storeys.
Asked how councils would be prevented from pushing most of the intensification to certain suburbs and leaving others alone, he said: “There are natural limits on the intensification that would take place in suburbs. There are infrastructure limits, for example.
“But also, you know, over time suburbs will change and the nature of our cities will change. I mean, if you think about the Auckland CBD now, compared to say 50 years ago, it is much more dense, many more people live in apartments, they live in tower blocks in the CBD. The same is true to some extent of Wellington.
“But you know, the Wellington of today will look very different to the Wellington of 30 years’ time. Change will be gradual. It is not going to happen immediately, change will happen over many, many years.
“But what I am saying and what the government is saying is that we need more houses. We have an affordability problem in New Zealand and have done so for 30 years because we have designed a planning system that has made it very difficult to build more housing, and it is a social and economic problem we’ve simply got to grapple with.”
Pressed on how much he would like to see house prices drop, Bishop cited the internationally popular metric of prices to household incomes.
“In housing markets that we consider to be affordable, a house price to income ratio of between three and five is considered affordable. That’s not the case in most of our major cities right now.”
Current data shows that multiple nationwide is currently 6.6. In Auckland it is 8.1, Wellington 6.14, Christchurch 5.84, Hamilton 6.57 and Dunedin 5.7. In Queenstown-Lakes, the multiple is almost 15.
“Over time as you moderate house prices and incomes grow, [three to five] is what we would like to see things get to, but as I say, that is not going to happen immediately and it is not going to even happen in the next two to three or four years. This is something that has to happen in the medium- to long-term.
“And unless we do that, house prices will continue to go up and people will continue to be locked out of the housing market.
“I want house prices to be affordable, and a house price to income ratio of seven, eight, nine, 10, 11, 12, in some cases 13 to one in some parts of New Zealand is not affordable, entrenching inequality and poverty in our cities.”
He refused to give an exact timeframe, saying that would be making the same mistake the Labour-led government did in claiming it could build 100,000 houses in 10 years.
“Land markets and the economy is much more complicated than that. What I am saying to you is that we have [an] extensive and comprehensive work programme based on evidence to make housing more affordable in the medium- to long-term.”
The housing market is continuing to see slower sales, though the number of properties for sale is picking up.
The Real Estate Institute of New Zealand (REINZ) house price index rose 2.2 percent in January over the year earlier, with a national median house price of $760,000.
“January is usually a slower month for the completion of sales in New Zealand and this year is no exception with 2,995 properties being sold,” REINZ chief executive Jen Baird said.
“While this is 4.9 percent more than January 2023, the increase in listings is a stronger indicator that the
market continues to pick up.”
The number of listings rose more than 10 percent or by 5 percent, when Auckland is excluded from the national total.
The biggest month-on-month increase in listings were seen in Wellington at 148 percent, followed
by Gisborne at 84 percent, Canterbury at 81 percent and Auckland at 77 percent.
“Despite the wave of listings favouring buyers, the challenges of last year, including the cost of living, inflation, interest rate changes, and government reforms, mean some buyers remain cautious,” Baird said.
“However, most regions are reporting more buyer activity across the board, with some seeing a particular surge in first-home buyer interest.
“Vendors are also being confident but realistic with prices as activity increases over the summer months.”
Baird said changes to the support property investors was expected to bring more buyers into the market.
“2024 is shaping up to deliver a series of changes and shifts in dynamics for the market. The property sector is expecting the new government to make good on its promises to reduce the bright line back to two years and reintroduce interest deductibility on investment properties, changing the dynamics
of the property market again.”
A small Bay of Plenty town has stood out in recent real estate statistics, with house prices there skyrocketing.
The latest QV House Price Index said the average home in the Bay of Plenty town of Kawerau had quadrupled in the past 10 years.
For the fifth consecutive year Kawerau, with a population of just under 7500, had experienced the biggest housing price growth in a decade.
However, it still sat at the lowest-priced district in the country having reached $443,093 in 2023.
A former mayor said early investors were away laughing, but a local said the growth was piling pressure on rent prices and local businesses.
Former mayor and Bay of Plenty regional councillor, Malcolm Campbell, who served on the Kawerau District Council for 27 years, said the town had become a haven for retirees who wanted to be mortgage-free and “live the good life”.
Now, he said the town was simply playing catch-up.
“We were so far behind the 8-ball you could come and buy a house in Kawerau for $50,000, 10 to 15 years ago without too much problem at all. They had to go up, there was no two ways about that.”
Long-time residents would be stoked they invested in the town, Campbell said.
“Motorhomers particularly who came here and decided to set up their home base here in Kawerau, they’ll be laughing all the way to the bank and good on them, so they should be.
“But our average house price is still around about a hundred grand less than, say, Whakatāne, Edgecumbe or Ōpōtiki.”
Like the rest of the country, he said house sales were starting to slow.
But Kawerau Enterprise Agency general manager Kevin Power said those who were not homeowners had the short straw.
A housing shortage was putting pressure on renters, Power said.
“The rents are extremely high for the quality of the house and the wages here, so there’s a lot of pressure on locals housing-wise.”
Out-of-towners with a bit of cash were swooping in to nab listed properties, which was having a flow-on effect, Power said.
“There’s plenty of work here, but there’s not enough housing, so the downturn, it’s affecting the smaller jobs, your small sparkies, or your small engineering firm or the domestic side [has] really dropped off, they’re certainly noticing the pressures.”
Property Brokers Kawerau salesperson Matt Stephenson said the town’s quick climb in prices all came down to competition.
“A lot of the influence on Kawerau’s market is how Whakatāne’s doing and Tauranga,” he said.
“As those places have kind of become more affordable again as things have slowed off, there’s just more people looking towards those bigger centres rather than the smaller towns, but property is still selling its just slowed down.”
Stephenson said a smaller buyer pool was also leaving properties in sales limbo for longer.
However, analytics company CoreLogic told RNZ a small uptick in buyers and prices was anticipated across the country for 2024.
House prices are continuing a gradual recovery, but a national price index is still behind where it was a year ago.
The latest QV House Price Index for three months ended January shows the average home increased by 2 percent on December, but it still slower than in October and November.
QV operations manager James Wilson said the housing data remained volatile in some areas where sales numbers were relatively low.
“It doesn’t take much change in activity to increase or decrease the value performance of some of our less populous regions, but the overall trend is the housing market is slowly but surely strengthening.”
The national average value was $925,461 – 1 percent less than a year ago.
Only Invercargill (-0.6 percent) posted a small drop in average home value in the quarter, following six consecutive months of growth.
Otherwise 10 of the 16 main urban areas recorded more growth in the January quarter, with Queenstown (4.4 percent), Christchurch (3.4 percent), and Dunedin (3.1 percent) experiencing the largest gains on average.
“Over the last few months there’s been a pretty major shift in mindset,” Wilson said.
“Many prospective buyers are now thinking that things can only get a bit better this year when interest rates eventually reduce and interest deductibility is reintroduced for investors, so they’ve been cautiously returning to the market in slowly increasing numbers, trying to get ahead of any further price rises.”
He said house prices were expected to show slow but steady growth overall, with higher sales activity through to March.
“Outside of our largest cities, I expect that we’ll still see some fluctuations from month to month, with patchy, often variable growth – especially where continued high immigration is less of a factor and activity is low,” Wilson said.
Decade surge doubles prices
Meanwhile, a new report from property website www.realestate.co.nz shows prices more than doubled in many parts of the country over the past decade.
The figures showed average property prices at least doubled in 12 of the country’s 19 regions in the last 10 years, and increased by at least 50 percent in the remaining districts.
Bay of Plenty township Kawerau experienced the most significant growth, with the average asking price almost quadrupling from $122,665 in 2014, to $443,093 in 2023.
Nationally, the average asking price was up by 77.5 percent, increasing from $504,388 in 2014 to $895,289 in 2023.
Realestate.co.nz chief executive Sarah Wood said the data showed New Zealand had a resilient real estate market, despite last year’s fall in property prices.
“We saw the market go through a correction in 2023 after rapid growth during the previous few years. Despite prices dropping back last year, they are still up substantially in most places when we compare them to the years before Covid-19 ignited the market.”
Between 2019 to 2022, the national average asking price increased by almost 40 percent in the four-year period.
“This unprecedented growth can be attributed to several factors, including low interest rates, population growth, and limited housing supply, which have combined to create a competitive market environment,” Wood said.
Kawerau stand-out in price rises
While Kawerau remained New Zealand’s lowest-priced district, the data showed its average asking price increased by 261.2 percent during the past decade, reaching $443,093 in 2023.
It was the fifth consecutive year Kawerau has experienced the biggest decade growth, Wood said. “In 2019, the first year we analysed this data, Kawerau was the only district that had doubled in 10 years, up by 112% on 2010. Since then, it has achieved the biggest growth in average asking prices every year compared to the 10 years prior.”
Kawerau District Council spokesperson Tania Humberstone said enabling new housing options in the area has been a council priority over the past seven years, spurring demand.
The Hauraki Gulf Islands saw the next biggest increase in prices in the past decade, with a 171.8 percent rise from $713,123 in 2014 to $1,938,342 in 2023.