By Paul McBeth
July 3 (BusinessDesk) - Quotable Value has a watching brief on whether new law requiring proper insulation on rental properties will drive up rents as expected, at a time when Auckland's slowing housing market is dragging down national prices.
Regulations requiring landlords to provide adequate heating, insulation and ventilation came into effect from July 1 in an effort to improve the quality of the nation's 600,000 rental homes, although there's a five-year transition period for landlords to comply with the standards depending on the type of tenancy.
"With the healthy homes bill having taken effect this week, we’ll be closely monitoring the impact this has on the investment market and on rents," QV general manager David Nagel said in a statement.
"At this stage, we have observed no major impact on the investment market although we may well see some upward pressure on rents, as landlords face up to the increased costs of keeping their properties insulated to the required standards."
QV data today show residential property values rose at a 2 percent annual pace across New Zealand to an average $687,021, slowing from the 2.3 percent pace reported in May. Auckland remained a weight on the national average, with property values shrinking 2.7 percent to $1.03 million in June from a year earlier.
Nagel said there remains a lack of impetus in the market as is the norm at this time of year.
"Demand remains steady and listings relatively low, resulting in stable market conditions but subdued value growth. We anticipate this will continue over the coming months, with supply remaining fairly constrained and demand either staying flat or dropping slightly in many areas," he said.
The state-owned valuer's figures are for June but its index is based on settled house sales and is prepared on a three-month rolling average basis, so the data can include house sales that went unconditional in March or even earlier. The Real Estate Institute's monthly data records unconditional sale agreements and is more timely.
Nagel said house affordability remains a major constraint, which has made outskirts to city centres more attractive, especially for first-home buyers.
"The wider Wellington region is a great example of this with areas like the Hutt Valley continuing to attract young families and professionals looking to take their first step on the property ladder," he said.
"This section of the market continues to benefit from the low interest rate environment as well as less competition during the quieter winter period."
The affordability dynamic has also affected the types of properties selling, with an increase in the volume of townhouses changing hands.
Government data yesterday showed a spike in new building consents for townhouses, flats and units in the month of May - up 73 percent from a year earlier. That helped drive new residential permits to a 45-year high.
QV data showed Wellington property values rose to $709,803, up 7.9 percent from a year earlier, while those in Hamilton increased 4.7 percent to $585,264. Christchurch prices were up 1 percent at $499,934, and Dunedin values climbed 12 percent to $460,448. Queenstown Lakes' property values dipped to $1.17 million, down 0.1 percent from a year earlier.
Kawerau reported the biggest annual gain, albeit from a low base, up 27.5 percent at $268,491. Auckland City central posted the biggest annual decline, down 4.7 percent at $1.05 million.