"The pressures on rental stock have only grown this year, not helped by the Auckland floods and Cyclone Gabrielle. What's more, tomorrow won't help tenants, with landlords being further hit by a loss of tax deductibility on their mortgage interest costs," says Tim Kearins, Owner of Century 21 New Zealand.
However, one ray of sunshine is the opportunity to successfully purchase a property. REINZ's latest nationwide real estate numbers showed the overall number of houses available for sale has returned to more normal levels, with sales transactions lifting in February.
Sadly, rents continue to head north. MBIE's Tenancy Services Rental Bond Data released in March showed that median rents nationwide are up $175 per week since 2017 – reaching $575.
"Not only have thousands of Kiwis had their houses yellowed or red stickered, over 20,000 are on the public housing waiting list, and thousands remain in emergency housing including motels. This adds incredible pressure on rental property availability, and hence rents won't be easing any time soon," says Mr Kearins.
"This winter will be a good time to first-home buyers to purchase, if they can stump up a deposit and secure adequate finance. As well as finding a good mortgage broker, now's the time to check out the government support schemes for many first-home buyers, as well as consider a flatmate or border to help with debt serviceability," he says.
Next week, on 5 April, the Reserve Bank will again review the Official Cash Rate (OCR).
The Century 21 leader says while the Reserve Bank's decisions impact debt affordability, the Government can change things to help tenants – such as bringing back tax deductibility on interest costs.
Once 100% of interest could be claimed as an expense by residential landlords, but that is now being incrementally phased out. Currently at 75%, that moves to 50% tomorrow - 1 April; to 25% on 1 April 2024; and then to zero on 1 April 2025.
"It's a tough time for tenants, and for vendors it's taking longer to sell properties. However, this environment also throws up opportunities for those considering a residential investment property, as well more choice for those looking to buy their first or next home," says Mr Kearins.
He says tenants sick of paying sky-high rents should do their sums on a mortgage calculator and then visit a broker to see what's possible. They might be surprised.
"It might take some help from 'The bank of Mum and Dad' to cobble together a deposit, and you may have to rent out your spare bedroom to satisfy your banker or broker.
"Nonetheless, homeownership has proven time and time again, a great way for Kiwis to improve their standard of living and retire more comfortably. Now's the best time in recent years for many to secure their future," says Tim Kearins.
Doing business with Century 21 New Zealand comes with the bonus of readily available access to mortgage broker, Julius Capilitan of Century 21 Financial. For further information, email: julius.capilitan@century21.co.nz