October 2021 Market Update

by Hamish Wilson on Mon Oct 2021
October 2021 Market Update

Lack of supply still dominates, lockdowns effect Healthy Homes standards deadlines, is the heating calculator inaccurate? Plus more changes made to RTA...

With just 85 rent days to Christmas, the year is well and truly flying by.  We hope that you and your whanau are safe and well wherever they are in New Zealand.  It is pleasing that most of the country is returning to some form of normality, albeit restricted in some places.

Lockdowns effect Healthy Homes standards deadlines

On 10 September, Transport Minister, Michael Wood, made an announcement stating that due to the Delta outbreak and lockdowns which affected so many people, driver licenses, Warrants of Fitness (WOFs), Certificates of Fitness, vehicle licenses and license endorsements that expired on or after 21 July 2021 will be valid until 30 November 2021.  What’s your point you ask?

This leaves us asking a simple question - if transport gets to extend their WOF’s until the end of November, what about landlords?

With the introduction of the Healthy Homes Standards, landlords are facing deadlines of their own and for many, these will now be unattainable due to the lockdown. When a region is locked down and a rental property is non-compliant with healthy homes, the 90-day deadline does not stop.  The outcome of this means that many landlords may end up breaching healthy homes standards and there is absolutely nothing that can be done about it.

When it comes to assistance from the Government in these days of lockdowns and pandemics, landlords never seem to get a look in. If the Government is prepared to offer extensions for vehicles that are on our roads, wouldn’t it make sense to offer extensions to properties as well, especially as the days get warmer and longer?

Heating calculator inaccurate?

What has been an issue is that the Government also admitted that they were having significant issues with their heating calculator. Many new builds are failing Healthy Homes inspections due to the open plan nature of many of the properties. The concern that the Government has is that the heating calculator is inaccurately overstating the heating requirements for the living space. 

The role out of healthy homes has been compromised by a heating calculator that is apparently not fit for purpose and a lockdown that is leading to delay times in getting properties compliant that will likely surpass the 90-day deadline. 

ACT Deputy leader and housing spokesperson Brooke van Velden has picked up on the issue in regards to Healthy Homes compliance. She recently stated that common sense and compassion must be used with regard to rental regulations.

More changes made to RTA 

You would have seen the Government announcement around interest deductibility this week. However, another announcement was made in regards to changes to the Residential Tenancies Act (RTA). The Government will now have the power to stop termination of tenancies with a 'switch on-switch off' model if we ever find ourselves back in Level 4 lockdowns.  Interestingly this legislation will not include a rent increase freeze like last time.  With the move to Level 3 and COVID cases still emerging, I thought the days of Level 4 lockdowns were over. Perhaps they know something we don't.

What is happening in the current market?

Enough of Politics and onto the market.  An overall theme of lack of supply still dominates the local and national markets.   In Christchurch, 817 properties are available, this is more than 400 down from what we’d call the “norm” and a massive 1600 down from the glut post rebuild and if you like numbers, only 280 odd away from the shortage post quakes.  Interesting figures I say.  

We still see steady demand from a strong tenant pool, I do wonder where all the people are coming from but there is no doubt that Canterbury continues to be an attractive option for long term residents. 

As we know, supply and demand is a driver of rents, so continued pressure in that area is becoming the norm.  The local exception to that being the newly built multi-unit complex small two bedroom/one bathroom apartments/units with little or no off-street parking.  These currently hold over 33% of total stock here in Christchurch and only a certain portion of the market is looking for that type of property.  These are still renting but as supply is exceeding demand the pressure on rents is not as prevalent with healthy competition.  

As always, we do truly appreciate your business and the team and I are always just a phone call away.  We are always available for a free chat and are happy to share our experience and knowledge wherever we can be helpful.  

Hamish Wilson

Hamish Wilson

An active investor for over 25 years & qualified builder, property has always been a part of life. Hamish has sat on the committee of the Canterbury Property Investors Association including two years as President.