Still Dealing with Meth in Rentals? You’re Not Alone — Here’s What Could Change

Topic #1:  Good Returns 7th of May - House prices, rent rises to be restrained in the short term: RBNZ

Topic #2: RNZ 7th of May - Methamphetamine use still a headache for landlords, regulatory decisions due this year

Topic #3: Stuff 7th of May - ‘It's tough out there at the moment’: Number of adult children moving home on the rise

Topic #4: Oneroof 7th of May - Tony Alexander: Home loans are cheaper, so why has the housing market stalled again?

Topic #5: Oneroof 7th of May -Revealed: Green homeowners could save up to $98,000 on their mortgage bill

Transcript

 Hi everyone. I'm Debbie Roberts, owner and financial advisor at Property Apprentice. Join us today for the weekend review where I talk about current events for the everyday investor and home buyer. Our topics for this week. First up from good returns on the   📍 7th of May. House prices rent rises to be restrained in the short-term, RBNZ .  Second topic for this   📍 week

in review from RNZ on the 7th of May, methamphetamine use still a headache for landlords regulatory decisions due this year.  Third topic from   📍 Stuff on the 7th of May. It's tough out there at the moment. Number of adult children moving home on the rise.  Topic number   📍 four, from Oneroof on the 7th of May.

Tony Alexander. Home loans are cheaper, so why has the housing market stalled again?  And last but not least, for this week in review from Oneroof on the 7th of May,   📍 revealed green homeowners could save up to $98,000 on their mortgage bill.  

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So first up, for this week, in review from good returns on the 7th of May, house prices, rent rises to be restrained in the short-term from RBNZ.

The Reserve Bank of New Zealand, RBNZ expects house prices and rent increases to remain subdued in the short-term due to weak market conditions, a large stock of unsold properties and low net migration are contributing to this restraint while residential construction activity is also limited by low demand.

Credit demand from households and businesses remains low despite easing interest rates and rising unemployment. Banks have relaxed presale conditions for some developers to encourage lending and non-bank lenders, including overseas investment funds, are helping finance new projects. RBNZ noted that although mortgage lending has picked up recently, it remains below pre November, 2021

levels. Much of this activity comes from borrowers switching providers. Investor interest has grown supported by falling rates and recent policy changes, such as the reinstatement of mortgage interest deductibility, and shortening of the bright line test to two years. National House prices have stayed mostly flat over the past year, still sitting about 13% below their November, 2021

peak. Sales volumes have risen as mortgage rates decline despite high interest rates and soft labor and housing markets. Household borrowers have shown resilience. Non-performing loan levels appear to have peaked and could decline as debt servicing costs ease. RBNZ highlighted that many borrowers are moving from fixed to floating or shorter term fixed rates, anticipating further cuts to the OCR.

The official cash rate, which currently sits at 3.5%, down from 5.5% last August. Another reduction to 3.25% is expected. Later this month. Around 60% of mortgage debt is projected to reprice to lower rates within six months and 80% within a year. That's a significant amount that's coming up for re-fixing. New debt to income or DTI rules are having minimal effect currently, but Reserve Bank of New Zealand sees them as a safeguard against risky lending if housing demand rebounds.

It's also reviewing bank capital requirements, considering more detailed risk weights for residential mortgages. Looking ahead, RBNZ cautioned the global economic uncertainty, including potential US tariffs could increase New Zealand's risk premium, and hinder access to credit. The current account deficit at 6.2% of GDP in 2024 may come under scrutiny.

Structural unemployment driven by artificial intelligence could also increase credit and mortgage default risk, though recent surveys show minimal job losses to AI so far. Despite global equity volatility, RBNZ does not expect a significant impact on consumer spending as KiwiSaver equity holdings are relatively small compared to the $1.6 trillion tied up in residential property.

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Topic number two from RNZ on the 7th of May. Methamphetamine use still a headache for landlords regulatory decisions due this year, eight years after a government report found no evidence that third-hand death. Methamphetamine exposure causes health issues and two years after regulatory consultation began, uncertainty still surrounds how meth contamination and rental properties should be handled.

Recent tenancy tribunal cases show tenants are often being held financially responsible for meth testing and cleanup. In one Upper Hutt case, five out of 10 test results exceeded the safety threshold, including a bathroom fan reading of 185 micrograms. Tenants were ordered to pay the landlord's $2,500 insurance excess.

A similar case in Kaikohe, involved in average contamination level of 21.6 micrograms across 10 samples. Despite only part of the property exceeding the 15 microgram safety limit, the tribunal noted that testing and decontamination costs would likely surpass the claim amount. In another instance, tenants were charged approximately $800 for testing and cleaning costs.

Sir Peter Gluckman's 2018 reports said a new acceptable meth residue threshold at 15 micrograms per 100 square centimeters. That's 10 times higher than the previous standard. However, legally binding rules have yet to be implemented. And the Ministry of Housing and Urban Development completed a public consultation on proposed regulations between November, 2022 and March, 2023.

A spokesperson confirmed that work is ongoing with cabinet decisions expected by the end of the year. Matt Ball of the New Zealand Property Investors Federation acknowledged that understanding of meth contamination has improved but stressed that the absence of formal regulation still leads to confusion as inconsistent handling and high remediation costs.

He expressed hope that the proposed rules would address these issues. The Insurance Council of New Zealand noted that meth related claims have remained stable over the past five years, covering a range of policies, including home, contents, vehicle, and business insurance. While policies tailored for property investors generally include meth contamination cover standard, home insurance may not provide the same protection, especially in cases of short-term rentals like Airbnb.

The council advised property owners to check with their insurers to ensure that they have the appropriate coverage. Our advice is still pre-test before you put a tenant into a property so that you've got a baseline reading just in case the tenants do contaminate your property. Because if you turn up to, Tenancy Tribunal and you can't prove that it wasn't already contaminated, you might have a tough job trying to get any money out of Tenancy Tribunal.

Readings. Okay. So yeah, play on the safe side and test before you put tenants into a property to get that baseline.   📍  📍 If you'd like to learn more about investing in property, join me at one of our free events called How to Succeed With Property Investing. I'll discuss strategies for successful investing from my perspective as an experienced investor and financial advisor, and all of our free events are available live online.

Check out www.propertyapprentice.co.nz for upcoming dates and register today. We don't sell property, so it's all about increasing your knowledge to reduce your risk.   📍  📍 If you've already been to one of our free events and you'd like to find out more about how we can help you to reach your financial goals, you can also book a no obligation phone call or meeting with my husband Paul Roberts via the website.

 

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Topic number three from Stuff on the 7th of May. It's tough out there at the moment. Number of adult children moving home on the rise. The number of young New Zealanders living with their parents well into adulthood is rising, driven largely by economic pressures and housing affordability. According to the 2023 census, over 200,000 people age 20 to 34 live with their parents.

A 34% increase since 2013. More than a third of families with children now have at least one adult child at home. That's up 27% in a decade. This trend is becoming increasingly common as seen with former TV NZ presenter Hayley Holt, who recently moved in with her parents, along with her partner and children, with her partner working in the struggling construction sector.

The couple decided to rent out their walkworth home in order to ease financial strain. Stats New Zealand defines an adult child as anyone aged 18 or older, or a 15 plus year old in full-time employment. Many are returning home not just for support, but to accelerate their savings. Stuff journalist Nile Bijoux age 31 moved back in with his mother after a separation, aiming to save for a move to the UK sharing the home with five others, including his new partner and brother. He described the arrangement as surprisingly smooth. With shared chores and staggered schedules, even the single bathroom hasn't been a major issue.

The setup helped him save around $800 a week, which is far more than the $100 a week he managed when renting. Economists Shamubeel Eaqub attributed the trend primarily to economic pressures. High rents and housing costs are prompting many young adults to delay leaving home or return after moving out often to save for a house deposit.

He noted that New Zealand's increasing ethnic diversity has also made multi-generational living more accepted, though economic necessity remains the key driver. Sociologists Paul Spoonley described this as a delay in the traditional milestones of adulthood where previous generations might have left home in their late teens.

Many now stay into their mid or late twenties. He added that this pattern mirrors trend seen in Europe, especially since COVID-19 and is gradually becoming normalized in New Zealand as well. Spoonley noted that people often return home when entering serious relationships or planning for property ownership.

In many cases, not only adult children, but also their partners are living with parents to save on costs and work towards home ownership. So this is something that we saw after the global financial crisis as well. You know, children were moving back home with the parents to save a bit of money in terms of economic crisis.

So it's not hugely surprising that we are seeing the same sort of shift this time round in this recession. Although we are now technically out of the recession. Finally, yay. 

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Topic number four for this week in review from Oneroof on the 7th of May, Tony Alexander. Home loans are cheaper, so why is the housing market stalled again?

The housing markets recovery has stalled for the second time since the pandemic ended. After the first post pandemic recovery in 2023, driven by first home buyers capitalizing on lower prices, income growth, and strong job security. The market showed signs of weakness in early 2024. In 2023, the number of buyers displaying FOMO the fear of missing out surged from 4% to 40%

by October. However, a combination of rising vendor activity and a 0.9% hike in mortgage rates led to a slowdown. The economy contracted by 1.1% in the June and September quarters of 2023, spurred by higher rates job insecurity, and rising business tax debts. As a result, FOMO dropped to a record low of 1% by June, 2023.

Everything changed in July when the Reserve Bank signaled interest rate cuts, consumer and business sentiment improved and FOMO climbed back to 19%. However, Tony Alexander's latest survey of real estate agents reveals that only 6% now report buyers fearing that they'll miss out. Additionally, a net 9% of agents say fewer people are attending auctions compared to 27%

in late 2023 and 23% feel house prices are starting to decline again. Despite a 2% drop in mortgage rates and better sentiment than mid 2024, the housing recovery appears to have stalled. This can be attributed to overly optimistic expectations about how much the economy would benefit from lower interest rates combined with uncertainties over global economic conditions

particularly in the us The weakness is also due to buyers realizing they're in a strong negotiating position and don't need to rush into the market. The number of properties for sale has risen 7% compared to a year ago, and listings are more than twice the level seen in 2021. In cities like Auckland and Christchurch, there's a notable oversupply of townhouses.

Even as the number of new building consents remain high. Additionally, some older investors are selling due to increased costs of maintaining rental properties and declining rents. Ultimately, the market is seeing more sellers than buyers. With ongoing economic uncertainty and turbulence abroad, buyers are feeling confident that they have the upper hand In negotiations, this trend could change when the economy stabilizes, which may take until 2026 or even later this year.



Given that the first official cash rate cut was in August, 2023, solid momentum for both the economy and housing market may start by early next year. 

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Topic number five, from Oneroof on the 7th of May revealed: green homeowners could save up to $98,000 on their mortgage bill. Investing slightly more upfront in a homestar rated home can save homeowners tens of thousands of dollars over the life of a mortgage.

According to new research from Infometrics. The study found that although building a homestar home typically costs between 0.5% and 1% more, the long-term financial benefits significantly outweigh the initial investment. Homeowners could save up to $98,000 over a 30 year loan term through a combination of discounted mortgage rates and lower energy costs.

Despite the advantages, only 13% of new homes consented in 2020, it's around 5,000 dwellings, were Homestar certified. However, awareness is growing. And for metric, CEO, Brad Olsen said the findings should encourage more New Zealanders to consider green certified homes even amid challenging economic conditions.

He noted that these properties offer both financial and environmental advantages describing them as a housing match made in heaven. Homestar Certified homes endorsed by the New Zealand Green Building Council. The N-Z-G-B-C are designed to be warmer, drier, healthier, and more energy efficient. Olsen pointed out that these homes can qualify buyers for mortgage discounts such as ANZ's Healthy Home Loan Package, which offers rates 25

percent or 0.25%, sorry. Below standard specials, 25% would be great, but no 0.25% below standard specials over the course of a typical mortgage. This could save buyers around $40,000. Although energy savings are smaller in comparison, they still provide value averaging $435 annually for a standalone home.

Rising electricity prices could increase those savings to between $580 and $900 a year by 2050. Over time, total savings from mortgage interest and power bills could range from $62,800 for a terraced house in Auckland to as much as $98,000 for a standalone home in Wellington, for example. Olsen emphasized that while buyers may pay more initially, they usually recoup that investment within a few years and ultimately come out financially ahead.

He also noted that one reason more homes aren't built to homestar standards is the general lack of public awareness about the financial incentives. At present, A NZ appears to be the only bank offering mortgage discounts for green homes. Olsen believes more banks will follow as the model supports both sustainability goals and customer's financial wellbeing.

Andrew Eagles, CEO of the N-Z-G-B-C added that the perception that sustainable homes are more expensive to build is misleading. He said the report confirmed what the council has long advocated that better homes promote healthier living, reduce environmental impact, and are more cost effective in the long run.

According to the research, a Homestar home can reduce mortgage payments enough to shorten a loan term by two years. Eagles also

highlighted the benefit to developers with some banks now offering discounted development finance for green-certified builds a potential game changer for the construction sector.

Eagles likened the growing interest in homestar homes to the rising popularity of electric vehicles as public awareness increases. He predicted that homeowners, home buyers in particular would begin to demand higher quality, healthier homes as the new standard.   📍  📍 Whether you are a first time buyer, investor, or just trying to make sense of the market, we'll help you to cut through the noise.

Join us at one of our free events called How to Succeed with Property Investing, and these events are all available live online so you can gain valuable insights and strategies tailored to today's market conditions. Whether you're an experienced investor or just getting started in the market looking to purchase your first time, this free session will equip you with the key tools and insights to make confident and informed decisions.

Don't miss out. Register today and take the next step towards achieving your financial success. In our free events, I'll also tell you more about how we help our clients to achieve their investing goals. So if you're interested in finding out more about what we do, visit www.propertyapprentice.co.nz today and register for one of our free events.  📍  📍 

If you've already been to one and you wanna know more about how we can help you on your journey book a no obligation phone call or meeting with my husband Paul Roberts through our website. And that's www.propertyapprentice.co.nz.  Thanks for listening.