1. Not much choice out there for tenants
It’s relatively well-known by now that the total stock of for-sale listings on the market has started to shrink gradually, as slowly rising sales activity outweighs the flow of new listings coming onto the market. But it’s also just as interesting to note that similar patterns are currently being seen for rental properties too.
Indeed, the number of rental properties listed each week so far in 2023 has been about 15% below normal at the national level, and even quieter in Auckland and Otago. One part of this lack of listings could simply be that investors have found it hard to get the sums to stack up on a first/extra property purchase lately, which will be limiting the flow of rentals coming to market.
And with net migration rising (hence more property demand), it’s clear that rental properties are still being snapped up – with the end result being a stock figure that’s currently about 40% below normal across NZ. In a nutshell, there’s not much choice out there for the tenants who are currently actively looking for their next property, and it’d be no major surprise to see the actual growth rate for rents accelerate in the coming months.
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2. NZ Activity Index pointing to continued recession?
It’s been quiet for fresh data releases over the past 7-10 days, so this week’s article is mostly about looking ahead. First up, we have the May NZ Activity Index (NZAC) from Stats NZ on Tuesday. This indicator proved fairly accurate in signalling a recession in the first quarter of 2023, and so it’s a little concerning that April’s figure (0.7% annual rise) was even softer than what we saw for the NZAC over January-March (average of 1.2%). We’ve seen continued labour market strength lately – giving some support to property – but a lingering recession would raise the risks of job losses.
3. Filled jobs up further in May?
Speaking of the labour market, we get the next update from Stats NZ on Wednesday, and there seems a good probability that filled jobs will have grown further in May – continuing a run of 12 increases in the previous 13 months. This growth phase will surely end sometime, but for now it’s one of the key factors why house price falls are close to finishing (if not already).
CoreLogic chief economist Kelvin Davidson: “It’d be no major surprise to see the actual growth rate for rents accelerate in the coming months.” Photo / Peter Meecham
4. Looser LVRs could be evident in more lending in May
Prior to filled jobs, however, the Reserve Bank of New Zealand will publish the latest mortgage lending data on Tuesday. These figures will be really interesting, as they might finally have started to expand a bit again, given that the announcement of looser LVR rules from June 1 was actually made in late April – meaning some banks may have acted early in May. On top of that, we already know that sales activity showed the first hints of renewed growth in May, so a rise in mortgage lending is also on the cards.
5. Inflation expectations key to watch
ANZ’s June business and consumer confidence survey results will be out on Thursday and Friday respectively. Lately the activity/confidence components of these surveys have remained weak (and that’ll probably still be the case on the latest numbers), but if anything more focus has been on the inflation expectations results, and these have been dropping a bit. Another similar result this week would certainly reinforce the belief that the Reserve Bank has now done enough in terms of tighter monetary policy, and hence that mortgage rates have also peaked.
- Kelvin Davidson is chief economist at property insights firm CoreLogic
