Residential - Boom or Bust

[winner (n)]

No worries as the much lauded Kelly at Westpac says house prices will go up 4% in 2025 and then growth to return to average rates of growth next year with prices up more than 6% in 2026

So looking good.

[Dolcile]

I can't see much - if any - property growth for the next few years.  It is really tough times out there for most kiwis. 

[Shareguy]

Good news for councils and rate payers but owners of leaking/defective homes will suffer big time.

The PM and Building Minister Chris Penk have announced two major amendments to the Building Act aimed at (i) speeding up NZ's sluggish consenting system, (ii) easing the cost burden on councils/ratepayers, and (iii) ultimately lowering build costs (with the average standalone house in NZ ~50% more expensive than in Australia). https://www.nzherald.co.nz

Proportionate liability: The current joint-and-several framework will be scrapped, with liability shared more evenly across builders, designers, suppliers, and engineers. Councils will no longer shoulder 100% of risk, which should reduce defensive consenting practices and ease ratepayer exposure (particularly when it comes to defective building work

[Shareguy]

Got to be good for the housing market.

Interest rates on the decline and now this

https://www.nzherald.co.nz/business/personal-finance/reserve-bank-to-ease-mortgage-lending-restrictions-from-december/3UZYVO3WHZAFBF34LH33TBSKQ4/

Property data for September 2025 has been released this morning showing slight price growth MoM nationally (+0.8% or +1.3% once seasonally adjusted). Days to sell at 43 still sits above the 10 year average of 40, but still down 6 days YoY. National sales were up 3.1% year-on-year to 6,346 sales, and New Zealand, excluding Auckland, saw a rise of 7.5%, to 4,421. https://www.reinz.co.nz

I wonder which stocks would benefit from a improving property market🤫

[Shareguy]

Well ended up buying another house. A cross lease that we plan to convert to fee simple. I see opportunity. Only time will tell if I'm right.

With all the doom and gloom we have just sold after owning for 7 months. Took 6 months for the fee simple approval.

And was it worth it. Yes a very nice Xmas present with the price achieved giving us a nice 13 percent gain, plus we took a good sized parcel of land to add to our property which alone is worth $170k based on current CV land value.

A big risk but it payed off. We of course have added value to our own property with a fee simple title.

[Basil]

Congrats.  It'll be interesting how your accountant calculates the taxable gain under the bright line rules.  Is it just the net gain after all expenses including legal fees and real estate commission that's taxed or does it include the value of the extra land you took to include with your home's land ?  I would think its highly likely to be the latter, which if that's the case you'll need to get that separately valued and add that to the taxable gain, but I haven't come across this before.  Sounds like it's been a LOT of hard work as well as the considerable risk.  It must be quite a relief to get it sold.

[Shareguy]

Congrats.  It'll be interesting how your accountant calculates the taxable gain under the bright line rules.  Is it just the net gain after all expenses including legal fees and real estate commission that's taxed or does it include the value of the extra land you took to include with your home's land ?  I would think its highly likely to be the latter, which if that's the case you'll need to get that separately valued and add that to the taxable gain, but I haven't come across this before.  Sounds like it's been a LOT of hard work as well as the considerable risk.  It must be quite a relief to get it sold.

Thanks Basil,

Yes great relief to get it sold. My accountant will sort the bright line tax payment with my normal return so will find out soon enough.

[Shareguy]

Thanks Basil,

Yes great relief to get it sold. My accountant will sort the bright line tax payment with my normal return so will find out soon enough.

Accountant says no capture of added value of increased section size in bright line. It's just the net gain after all expenses.

[Shareguy]

This is going to have major consequences if it gos ahead.

https://www.nzherald.co.nz/business/companies/construction/home-owners-could-be-left-exposed-as-govt-gives-itself-an-out-on-requiring-new-build-warranties/premium/DOV6PJFOGZAXXPPQS5WZBWF3IY/

[Shareguy]

15 years of flat house price growth says Bill English.

https://thespinoff.co.nz/business/24-06-2026/nz-still-seems-to-think-house-prices-will-rise-good-luck-with-that

[Basil]

Good article and I agree with the prognosis outlined.  We had an unprecedented boom for 25 years from the mid 1990's to 2021 when house price growth vastly outstripped inflation.

Makes sense it will take about 25 years to blow off that once in a hundred year boom.  Every year house prices go sideways they're really dropping at the inflation rate.  Last years drop of 0.6^ is really 4.6% with inflation.

Auckland now down 31% in real inflation adjusted terms from the peak, and Wellington 39%.

In real terms we could see them fall 50-60% in total before we find a floor and yes, I expect there is still a really substantial period when house prices will track sideways.

The boom is over, investors need to look at the real yield they are getting after all expenses and tax and deduct from that the expected fall in house prices per annum. 

Rental investors are on a hiding to nothing in the years ahead in my opinion.

[Shareguy]

Yes owning rentals is losing its shine. The left have made it clear that they don't really want landlords, sooner or later they will be in power. 

In New Zealand, approximately 84.6% of all renting households rent from private individuals, trusts, or businesses rather than public housing or community providers, according to the last official Stats NZ Census data. The government and NZ Taxpayer is going to have to step up and supply more housing as the private sector sells down.

When you take out the Covid boom the fall in house prices is not that bad. The apartment and terraced townhouse boom in the main centres is also skewing the figures. Certainly in Auckland rental prices have come down but not that much and for long-term investors will still be making very good returns. Yes when you look at what the property value is currently worth, the returns are not looking flash and not worth the wait for capital gain given the risks involved.

I think there will be a lot of people selling down their rentals in the next few years which is going to cause issues. Owning rentals has for us personally been the best financial decision we have made, and enabled us to retire in our forties. But agree the days are numbered and we will be selling down over the next few years.

https://newsroom.co.nz/2026/06/29/house-prices-have-been-flat-for-three-years-heres-what-the-numbers-tell-us/

https://www.mpamag.com/nz/specialty/residential/fewer-rentals-more-renters-nzs-supply-gap-is-growing/579028

[entrep]

Agree the classic investment case for buying a rental is no longer there. Sold last rental last year and think there are much better opportunities around. Also have enough property exposure with family house. Interestingly a lot of friends have recently bought or see it as their goal to buy a property to rent (40s). I just don't see it. I am watching the Australian housing market implosion with interest though, overall I think Oz has much better prospects and could be useful to get a foothold there somehow (how I am not quite sure though).

[Shareguy]

Yes the family home is a pretty big exposure on its own to residential property. There is still a lot of people that prefer to invest in bricks and mortar and are very sceptical of the share market. Many have either lost money or remember their family or friends losing money especially on the NZX. But I agree going forward there are better places for your money.

We have also looked at buying in Australia many times, however there has always been something that has held us back. If some of our family end up living over there for work opportunities then that will probably be the time we look at buying something. A lot of Kiwis spend the winter in Queensland.

[entrep]

We have also looked at buying in Australia many times, however there has always been something that has held us back. If some of our family end up living over there for work opportunities then that will probably be the time we look at buying something. A lot of Kiwis spend the winter in Queensland.

How deep did you end up looking, and would you have bought and then rented it out until you needed it? Would you have been buying mortgage-free or taking out a loan? If the latter, would you have used an Australian or New Zealand bank?