REINZ: Freeze Rental Increases
Freezing rent increases for tenants is a “sensible and moral step to take”, writes Bindi Norwell, chief executive at the Real Estate Institute of New Zealand.
11 October 2021
The government has already outlined that the strict Alert Level 4 measure means that in the coming months many people are likely to lose their jobs.
To have to deal with a potential rent increase at this time could be incredibly stressful for a tenant to have to deal with, so we welcome the government’s announcement around this measure.
For landlords who have already spoken to tenants about a rental increase in the previous few weeks, we believe this will be unable to go ahead, but we will work through what this means for these situations as the finer details of the announcement become available.
In the short term, we encourage landlords, tenants and property managers to keep the lines of communication open – as some rent may be better than no rent in the current environment.
What if you’re due to move house?
We’re fielding questions from real estate agents, property managers, landlords, tenants and people who are due to move or sell their house in the coming weeks.
The overwhelming question is, can I still move?
It’s our understanding that moving house would be deemed as ‘non-essential’ during the four-week lockdown period.
However, as soon as we have further clarification on this from the government, we’ll be able to offer more advice to people in this situation.
Will house prices drop?
The other big question people want to know, is what’s likely to happen to the housing market overall – and whether house prices will drop.
It’s too early to tell exactly what will happen from a price perspective, so the only real way we’ll be able to accurately measure the impact, is to look at recent examples.
What happened during the GFC?
The Global Financial Crisis (GFC) provides us with some reasonable comparatives.
Data from that period showed us that in the first 12 months after the GFC started, median house prices across the country fell 5.9 per cent year-on-year.
The recession technically lasted till June 2009, but prices began rising again after January 2009. In the year ending January 2010, median prices increased by 9.4 per cent and were sitting NZ$10,000 above where they were in January 2008 when prices started falling. This highlights how (relatively) quickly the market can recover from times of economic uncertainty.
Sales volumes are also likely to slow significantly during the next few weeks as agents will be unable to conduct open homes and auctions.
However, those who are well prepared may already have a pipeline of properties already photographed and virtual reality tours already set up, which means that they may still be able to sell properties during this time.
What we do know is that those in the real-estate profession will ‘keep calm and carry on’ as much as possible, despite the uncertainty around us.
Published 24 March 2020
Bindi Norwell is the chief executive at the Real Estate Institute of New Zealand (REINZ).
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