Supply Outpaces Population Growth & KiwiSaver Hits $123B Amid Rising Non-Contributors

Topic #1:  Good Returns 9th of September- Slumping house prices good news for first home buyers

Topic #2: RNZ 9th of September - Wellington house prices slump 30 percent from peak, QV says

Topic #3: TradeMe 9th of September - House prices up for the first time in over a year

Topic #4: The Mortgage Mag 11th of September - Keeping a lid on house prices – housing supply outpaces population growth

Topic #5: NZ Adviser 10th of September - KiwiSaver grows to $123bn but non-contributors rising

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Transcript

 Hi everyone. I'm Debbie Roberts, owner and financial adviser at Property Apprentice. Join us today for the week in 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 9th of September. Slumping house prices, good news for first home buyers.

Topic number two from  📍 RNZ on the 9th of September. Wellington house prices slump 30% from the peak QV says.  📍 Topic number three from TradeMe on the 9th of September. House prices up for the first time in over a year. And topic number four from  📍 The Mortgage Mag on 11th of September. Keeping a lid on house prices, housing supply outpaces population growth.

And finally, topic number  📍 five from New Zealand adviser On the 10th of September, KiwiSaver grows to $123 billion, but non-contributors are rising. As always, the links to the full articles are in the show notes below. 

So first topic for this week from Good Returns on the 9th of September. Slumping house prices, good news for first time buyers.

Housing affordability is on the upswing in New Zealand, largely driven by a continued decline in house prices. According to Qvs latest data, the National House Price Index dropped by 0.8% over the past three months, putting prices of full. 13.4% below their peak back in January of 2022. This welcome trend combined with mortgage rates that are starting to ease or continuing to ease, this has really helped make homes more affordable for many potential buyers.

The BNZ for instance, reports that housing affordability is improved by 17% since its low point in December, 2021. The bank's chief economist, Mike Jones, notes that the combination of falling prices, lower mortgage rates and sustained wage growth, has brought affordability to its best level since December, 2020.

However, there are still significant headwinds. Higher living costs, rising unemployment, and a broader economic slowdown are still limiting demand. Regionally, the picture is varied. While Auckland and Wellington have seen the most significant improvements in affordability, they still remain two of the most expensive cities.

On the other hand, a market like Otago hasn't seen a similar shift in affordability. Looking ahead, the BNZ expects that the nationwide index will hold steady. Mike Jones cautions that while things are moving in a helpful direction with factors like required deposits and mortgage servicing costs improving, it can still be incredibly difficult to fully regain affordability after a house price

boom. My thoughts on this are, if you're in a position to get lending, it is a great time to be buying in the current market before the house prices do start picking up again. So, with increased activity, we do tend to see, um, house prices start to climb unless there's, unless that's balanced by an increased number of listings at the same time.

So watch this space. 

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Topic number two, from RNZ on the 9th of September, Wellington house prices slumped 30% from the peak QV says. According to a new data from QV, the New Zealand housing market continues to slide with some areas experiencing significant price drops. Nationally, the average house value's now a little over $900,000, which is 13.4% below the January, 2022 peak.

While this signals a steady decline overall, the experience varies dramatically by location. Wellington, for example, has been hit particularly hard with some parts of the city seeing values fall by nearly 30% from their peak. My thoughts on that are that it's potentially because the new government did reduce the number of employees quite significantly, so government workers do tend to move out of the area, if they're no longer required.

So yeah, that could have increased the number of listings in Wellington quite significantly. Similarly, Auckland values are down by about 20%. On average, though some suburbs have seen steeper drops than others. And likewise, in Auckland, we've seen a lot of new development, which continues at the moment. So an increase in supply does tend to stabilize house prices or see decreases in prices.

Over the last three months, Nelson and Wellington experienced the biggest declines while Queenstown and Hastings saw their prices actually rise. QV spokesperson, Andrea Rush, stated that his home values come down and interest rates begin to ease. Affordability is slowly improving for buyers in many areas.

However, she noted that other factors like higher living costs, rising unemployment in a general economic downturn continue to limit via demand, same as the previous report. She also pointed out that net migration has slowed with more people now leaving New Zealand than arriving, which contrasts with the strong inflows that previously helped fuel house price growth.

So again, all boils down to supply and demand. The exception to this trend is Queenstown, which has seen its values increase by nearly 17% over a five year period. Rush explained that this is likely due to the ongoing residential construction and infrastructure projects in the area, as well as people priced out of Queenstown looking for homes in nearby districts like Mackenzie.

She concluded that while falling interest rates may influence the market, she expects several headwinds to persist into 2026, keeping the housing market relatively subdued. And I would agree with that because interest rates are what we call influencers in the property market. They don't drive the property market to the next stage.

 

Topic number three from TradeMe on the 9th of September. House prices are up for the first time in over a year, while the colder months tend to coincide with the cooling housing market. Three regions across Aoteroa have shown strong resilience despite the falling temperatures. Both Gisborne and Southland saw consecutive year on year asking price increases from June through to August.

The latest data shows Gisborne recorded a 10% increase in August, following a close to 6% increase in July. The average asking price in Tairawhiti currently sits at $679,600. Part of the reason for this could be the number of properties that were damaged in the extreme weather events at that. That affected, uh, Gisborne quite significantly.

It's a similar story further down the motto with Southland, also showing strong performance over the winter season recording, year on year growth of 6.7% in August, following a 4.4% increase in July. With an average asking price of $537,150, Southland remains one of the country's more affordable regions.

The West Coast has shown two months of consecutive increases in both July and August, 2024. In August, the average asking price rose close to 16%, up to $467,650. The increase followed an 8% increase in July.   📍  📍 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.

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Topic number four from the mortgage Mag on the 11th of September, keeping a lid on house prices, housing supply, outpaces population growth. Housing supplies recently outpaced population growth in Auckland and Wellington, which is great news for first home buyers and has helped keep a lid on prices.

According to a new report from Cotality the supply of new homes in these two major cities has exceeded the increase in their populations over the last five years. In Wellington, for example, the population actually saw a slight decline, as I mentioned before, due probably to the number of government workers who were made redundant or laid off.

While the number of homes grew by over 4%. This has led to fewer residents per household. Auckland also saw a significant increase in housing supply, which outpaced its strong population growth. Kelvin Davidson Totality, chief Property Economist, explains that this shift in the supply and demand balance has contributed to the weakness in property values in these areas.

However, other parts of the country showed the opposite trend. In Hamilton and Tauranga, Population growth has been much higher than the growth in new housing. Davidson notes that these markets have been more resilient with less improvement in housing affordability compared to Auckland and Wellington. In other high growth areas like Selwyn and Waikato, construction's largely kept pace with population increases leading to a more balanced market and exception to this is Queenstown.

Where despite a strong increase in housing, stock affordability, pressures remain intense. And Davidson points out that the unique market dynamics of Queenstown driven by accumulated wealth, help insulate property values even when there is strong supply growth. Overall, while other factors like listings and income also play a role, this data suggests that property values in Wellington and Auckland may remain soft, while other main centers like Hamilton and Tauranga could see stronger performance in the near future.

My thoughts on this, you know, this is great news for people that are looking to enter the property market or looking to grow their rental portfolio. You know, whenever house prices are stable, it's a good time to be buying and, certainly has improved affordability in those areas. For people who already own properties in those areas, though it can be a little bit disappointing to not see that strong capital growth yet.

My thoughts are, you know, this is a moment in time. At the moment, we've got below average net migration levels and it's not gonna take much to turn that around. So then, you know, at some stage we are likely to get back to a point where we will get capital growth again. Even in the areas which have softened recently.

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Topic number five, from New Zealand Adviser On the 10th of September, KiwiSaver grows to $123 billion, but non-contributors are rising. New Zealand's KiwiSaver scheme has demonstrated resilience despite economic pressures with total funds under management growing by 10% over the past year to reach $123 billion.

This growth was fueled by $12.2 billion in contributions and $6.4 billion in net investment returns. The financial markets authority, the FMA, Chief Executive Samantha Barras has stated that KiwiSaver is firmly established as New Zealand's primary retirement savings. The FMAs report highlights that almost half of all members are now invested in growth funds aligning with the scheme's long-term purpose.

However, Barras also raised a significant concern about the growing number of members who are not contributing to their accounts. Currently 30% of working age members are non-contributors. That's a notable increase from 20% in 2020. In 2010. Sorry, and my thoughts on this are is that it's indicative of the fact that a lot of people are struggling to make ends meet in the current economic environment.

Barras warned that this trend could worsen long-term inequality between contributing and non-contributing members. The report also pointed to a rise in hardship withdrawals, most likely due to the number of people who've been facing redundancy or who've lost their jobs through liquidations. In response, the FMA is urging providers to increase their engagement with members, particularly those in default funds.

Providers are being encouraged to support members through periods of economic volatility and to proactively reach out to those end nearing the end of a savings suspension. The goal is to ensure that KiwiSaver continues to function as intended to help New Zealanders build long-term savings and financial independence for retirement.

The housing market is a bit of a puzzle right now. We've seen crisis drop significantly in cities like Wellington and Auckland, while other areas like Gisborne and Queenstown are experiencing strong growth. We've also heard from experts who have different views on whether interest rate cuts will truly help borrowers and how a mismatch in housing supply and population growth is affecting affordability.

My thoughts on this is that this is a normal. Stage of the property cycle and just remember, it's all about supply and demand. That's what causes price increases and price decreases or stability.   📍  📍 So come along to one of our free events if you'd like to learn a little bit more about this.

Our events are all available online so you can gain valuable insights and strategies tailored to today's market conditions regardless of where you live. Whether you're an experienced investor or just getting started, this free session will help you equip you with the tools and insights to make more confident, informed decisions.

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So if you are interested in finding out more about how we can help you on your journey, visit www.propertyapprentice.co.nz today and register for one of our free events.  If   📍  📍 you've already been to one and you'd like to find out more about how we could help you specifically on your pathway, book a no obligation phone call or meeting with my husband Paul Roberts through the website.

That's www.propertyappprentice.co.nz  Thanks for listening. 

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