Letter from Brent Worthington

May 2022

Property market slows, prices remain stable Sales activity in the residential property market continued to slow in April. Although there were fewer listings sold, property prices remained stable, according to the figures from the Real Estate Institute of New Zealand (REINZ). Compared to March, there was nearly a 30 percent decrease in sales across the country in April. However, March is typically a strong month for real estate sales. While the change is significant,theseasonallyadjustedfiguresforNew Zealand show a decrease of 0.9 percent moving from March to April – only a marginally weaker result than usual for this month.

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However,itiscleartherehasbeenachangeinthe property market, and the demand for property has weakened, REINZ chief executive Jen Baird said. “We’re seeing a slowdown in activity, there is more stock staying on the market for longer, and while annual price growth is more moderate, the month-on-monthtrendshows a fall in median prices.” “April residential property sales decreased annually by 35.2 percent across New Zealand, a story reflected across all regions. Looking at the underlyingreasonsforthecontinueddecreasein sales count, the seasonally adjusted figures provide some insight. Last year sales volumes were underperforming due to supply challenges, andpost-October2021whenwebegantoseean influx of stock, it became a market underperforming due to demand challenges.”

Baird also noted REINZ received reports of fewer peopleattendingopenhomesandauction rooms, aswellasadecreaseinbuyerenquiries.However, the number of public holidays in April may have influenced this trend.

“Thosewhoarebackedbyequityandsecureina job market with a low unemployment rate, will continuetoseeopportunityinthemarketasmore stock increases choice, and prices ease. Owneroccupiers are the most present and active in the market, so while we see a softening in the mid to lowpricerange,interestissolidinthemidtohigh bracket,”she said.

Kiwi Bank Senior Economist Jeremy Couchman saidthedatashowsthehousingmarketis paying for last year’s excesses.

“It’s also clear that the NZ housing market is in for a rough ride over the year ahead. The market is adjusting to the new reality of rising housing supply, investor-related tax changes, and far tighter credit conditions. Mortgage rates rose sharply over April as financial markets anticipate ongoing andaggressiveOCRhikestobedelivered by the RBNZ this year and next,” Couchman said.

As always, we trust you enjoy this month's publication.

Kind Regards,

BrentWorthington Principal LJ Hooker Drury &Rent Exchange Property Management T 029 294 7500

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DruryPlanChangesApproved

At long last the decisions have been published for Drury Central Precinct (PC48, Kiwi Property), Drury East Precinct (PC49, Fulton Hogan) and Waihoehoe Precinct (PC50, Oyster Capital).All 3plan change applicationshave been approved.Links to thehearing decisions are here:

https://www.aucklandcouncil.govt.nz/UnitaryPlanDocuments/pc-48-decision.pdf https://www.aucklandcouncil.govt.nz/UnitaryPlanDocuments/pc-49-decision.pdf https://www.aucklandcouncil.govt.nz/UnitaryPlanDocuments/pc-50-decision.pdf

Thisshouldmean thatKiwi Property are ableto go ahead with work on their Metro Centre and Business Mixed Use developments relatively quickly.

The Drury East and Waihoehoe Precinct developments may be delayed as these plan change applicationsincluded land which has nowbeen approved to be rezoned fromFuture Urban Zone to residential zones: Terraced Housing and Apartments, Mixed Housing Urban and Mixed Housing Suburban. As mentioned in my article in the previous Property Chronicle, the Enabling Housing Supply Act passed in December 2021 requires Council to make changes to the rules for these residential zones to accommodate higher density, especially for those areas in the ‘walkable catchment’ of the new train station.

As the infrastructure requirements for the Drury East and Waihoehoe Precinct developments were calculated based on the residential density of the old Mixed Housing Urban and Mixed Housing Suburban zones, the Council willneed tomakesome decisionsregarding what rules to apply in the Drury East development in particular in order to get the right balance between encouraging more intensive development and ensuring that infrastructure needs are met.

Thisshouldall become clearer in August, when the Council’sproposed changesto theDruryOpakeke Structure Plan are notified to the public.

Watch thisspace!